Court Opinion

ID: 9863503
Source: CourtListenerOpinion
Date Created: 2023-09-25 05:31:24.468141+00
Date Added: 2024-06-11T11:49:00.305772
License: Public Domain

Judge BERNARD
specially concurring.
I concur with the result reached by the majority that ACH was not entitled to post-judgment relief in this case under C.R.C.P. 60(b)(2). It is my view that most of the relief ACH requested was affirmative relief, unavailable under C.R.C.P. 60(b), which should have been brought in a separate claim. ACH's requests to reform the settlement agreement, to enter a cash judgment against Smith and Bunnell, and to award ACH exemplary damages were beyond the relief authorized by C.R.C.P. 60(b), and, therefore, beyond the trial court's reach here.
However, I respectfully disagree with the majority's conclusion that the trial court lacked authority to grant any of the relief requested in ACH's motion to reform the settlement agreement (the Motion to Reform). For reasons explained below, I would conclude that some of the relief ACH requested was expressly available under C.R.C.P. 60(b)(2), because ACH alleged that Smith, Bunnell, and their counsel had committed a fraud upon the court. However, I would conclude that the trial court did not abuse its discretion when it denied the Motion to Reform.
I. Request for Alternative Relief in the Motion to Reform
Here, ACH's legal memorandum in support of the Motion to Reform alleged that:
[Smith and Bunnell's] actions in misrepresenting the consideration proposed for settlement [were] intended to prevent this action from going to a jury, and constitute[ ] a fraud upon this Court as well as a fraud upon [ACH].
This Court should discourage [Smith and Bunnell] from further engaging in real estate fraud by concealment upon Colorado Courts, Colorado Juries, Colorado litigants, and Colorado citizens. Given the actions of [Smith and Bunnell], as shown at Trial, this Court should impose every sanction it is empowered to impose upon [Smith and Bunnell]. ...
[ACH] would be within its right to seek rescission of the Settlement Agreement rather than reformation of the Agreement. If [ACH] elected this remedy this Court and the citizens of Colorado would have to bear the cost of another trial because of [Smith and Bunnell's] froud.
(Emphasis added.)
There are three factors in the Motion to Reform and the accompanying legal memorandum that convince me that ACH clearly raised a claim that imbued the trial court with the authority to resolve it: (1) ACH specifically cited C.R.C.P. 60(b)(2); (2) ACH alleged that Smith, Bunnell, and their coun*517sel had perpetrated a fraud upon the court; and (3) ACH requested "such other and further relief as this Court deems appropriate under the cireumstances," and "every sanction it is empowered to impose upon [Smith and Bunnell]." I would further conclude that the combination of these three factors constituted a clearly sufficient request for the type of relief that is available under C.R.C.P. 60(b)(2): setting aside the dismissal and reinstating the case; vacating the settlement agreement; and returning the parties to the positions they occupied at the case's inception.
IL Fraud upon the Court
Fraud has long been recognized as an exception to finality that justifies setting judgments aside. See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244-45, 64 S.Ct. 997, 88 L.Ed. 1250 (1944) ("From the beginning there has existed along side [rules of finality] a rule of equity to the effect that under certain cireumstances, one of which is after-discovered fraud [upon the court], relief will be granted against judgments regardless [of when they were en-teredl."), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976). Federal courts have the inherent power to vacate judgments on proof of fraud. Kokkonen v. Guardian Life Inswrance Co., 511 U.S. 375, 380, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 580, 66 S.Ct. 1176, 90 L.Ed. 1447 (1946) ("The inherent power of a federal court to investigate whether a judgment was obtained by fraud is beyond question."). It appears Colorado courts have similar power. See Clemes v. Fox, 25 Colo. 39, 45, 53 P. 225, 228 (1898) ("[A] court of equity would have jurisdiction, for good cause shown, and upon the grounds of fraud or mistake, to vacate at a subsequent term one of its own judgments.").
One of the grounds for obtaining relief under C.R.C.P. 60(b) is fraud:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for ... (2) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party....
Intrinsic fraud is "such that the alleged fraud pertains to an issue involved in the original action or where the acts constituting the fraud were or could have been litigated in the original action." Southeastern Colorado Water Conservancy Dist. v. Cache Creek Mining Trust, 854 P.2d 167, 176 (Colo.1993).
Extrinsic fraud has been defined as going to
the jurisdiction of the court, or consti-tut[ling] a fraud upon the law of the forum, or which operates to deprive the person against whom the judgment was rendered of an opportunity to defend the action when he has a meritorious defense. It is such as prevents the party complaining from making a full and fair defense.
Id. (quoting Fahrenbruch v. People ex rel. Taber, 169 Colo. 70, 76, 453 P.2d 601, 605 (1969)). Extrinsic fraud
corrupts the judicial power and serves to turn a court of law into an instrument of injustice. A fraud upon the court, as contemplated by Rule 60(b), is one which interferes with the judicial machinery itself.
Id. Examples of extrinsic fraud are "bribery or other corruption of the court or of a jury, or where an attorney is complicitous in perpetrating the fraud." Id. at 176 n. 11. "Fraud upon the court is closely aligned with, but somewhat narrower than, extrinsic fraud." In re Marriage of Gance, 36 P.3d 114, 118 (Colo.App.2001).
Extrinsic fraud and intrinsic fraud have different effects upon judgments:
When extrinsic fraud is shown to exist, the judgment may be collaterally attacked, for such fraud renders the judgment not merely irregular, but void. As such, the judgment has neither life nor incipience-as a nullity it may be attacked directly or collaterally at any time. Intrinsic frauds, however, cannot give rise to collateral attack, though they may create voidable judgments, be the basis of a successful direct appeal, or be the subject of a motion for relief from judgment under C.R.C.P. 60(b).
*518In re Estate of Bonfils, 190 Colo. 70, 75, 543 P.2d 701, 705 (1975) (citations omitted).
III, Analysis
Fraud upon the court "interferes with the judicial machinery itself." Southeastern Colorado Water Conservancy Dist., 854 P.2d at 176. Thus, fraud upon the court implicates interests that transcend those of the parties, because it calls into question the legitimacy of the court's judgment. See Calderon v. Thompson, 523 U.S. 538, 557, 118 S.Ct. 1489, 140 L.Ed.2d 728 (1998) ("This ... is not a case of fraud upon the court, calling into question the very legitimacy of the judgment."); Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.1989) ("A fraud upon the court' occurs where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense.").
Courts must have a prompt opportunity to act when the legitimacy of their judgments is called into question. See Estate of Bonfils, 190 Colo. at 75, 543 P.2d at 705 (judgments obtained by extrinsic fraud are void and may be attacked collaterally or directly at any time). Indeed, the Supreme Court has ree-ognized that federal courts may assert their ancillary jurisdiction "to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees." Kokkonen, 511 U.S. at 380, 114 S.Ct. 1673; see also In re Hunter, 66 F.3d 1002, 1005 (9th Cir.1995)("If [a party] had alleged fraud upon the court, the court could have asserted ancillary jurisdiction because that doctrine is available to a court to 'vindicate its authority, and effectuate its decrees."'" (quoting Kokkonen, 511 U.S. at 380, 114 S.Ct. 1673); Valerio v. Boise Cascade Corp., 645 F.2d 699, 700 (9th Cir.1981)(district court "had jurisdiction over plaintiff's claims of fraud on the court in the earlier settlement").
In my view, the trial court had the authority to grant appropriate relief under C.R.C.P. 60(b)(2), and appropriately considered the information provided by both parties to reach a decision on the merits of the allegation of fraud upon the court. However, ACH's allegations were not supported by sufficient evidence to justify granting relief. I would, therefore, conclude that the trial court did not abuse its discretion in denying the Motion to Reform, because the record does not contain "clear, strong, and satisfactory proof" establishing fraud. See Sharma v. Vigil, 967 P.2d 197, 199 (Colo.App.1998); see also Wark v. McClellan, 68 P.3d 574, 578 (Colo.App.2003) (an abuse of discretion is only established when the trial court's ruling is manifestly arbitrary, unreasonable, or unfair).
I would reach this conclusion because:
@The written agreement contained language stating that (1) the parties had independently verified and assessed facts likely to affect their judgment; (2) they assumed the risk that the facts were different from those known when the agreement was signed; and (@) there were no representations or warranties other than those listed.
@Twelve days elapsed between the date when the settlement agreement was reached and the date when the written agreement was signed, during which ACH could have required Smith and Bunnell to identify the properties in order to inspect them and investigate their condition by consulting records.
@ There were factual disputes about what was said during the mid-trial settlement negotiations, and so it fell to the trial court to resolve those disputes, assess the credibility of witnesses, and weigh the evidence. See Morris v. Askeland Enterprises, Inc., 17 P.3d 830, 831 (Colo.App.2000).
e ACH does not claim that the other conditions of the written agreement were unsatisfied.
Last, I concur with the majority's decision to deny Smith and Bunnell attorney fees under C.A.R. 38(d).