Court Opinion

ID: 9742065
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:06:02.268173+00
Date Added: 2024-06-11T07:24:28.289246
License: Public Domain

Riley, J.
(concurring in part and dissenting in part). Justice Boyle holds that a defendant who becomes the party to a settlement may not bring an action at law for damages alleging that the settlement was fraudulently induced and that the defendant may only obtain relief through MCR 2.612(C). Justice Boyle, however, fails to address whether a similarly situated plaintiff is also limited to the same remedy, thereby leaving intact the common-law right of a plaintiff to obtain relief from a settlement allegedly induced by fraud through an independent action at law. Because I would find that a party may only obtain relief from a fraudulently induced settlement through MCR 2.612(C),11 write separately._
*180Not unlike Justice Boyle, I find that the entirety of the court rules and accompanying statutory provisions appropriately balance the competing interests of deterring fraud, vindicating the interests of a defrauded party, and maintaining the finality of judgments. MCR 2.612(C) provides a balanced method of revoking a judgment induced by fraud, while also allowing for the finality of judgments after the passage of a reasonable time. MCR 2.625(A)(2) and MCL 600.2591; MSA 27A.2591 deter fraudulent actions by mandating that a court sanction a party that files a frivolous motion. Likewise, MCR 2.114(C) requires an attorney to sign each pleading and certify that "to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the pleading is well grounded in fact and is warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law,” MCR 2.114(D)(2), and that it was not filed for the purpose of harassment or delay. MCR 2.114(E) mandates that attorneys and parties may be sanctioned if they violate the certification requirement. Similarly, MCR 2.309(B)(1), (3) require that all parties certify that their answers to interrogatories provide "such information as is available to *181the party served,” while MCR 2.302(G)(3)(a), (4) provide sanctions. Because sanctions include "the costs and fees against the nonprevailing party and their attorney,” MCL 600.2591(1); MSA 27A.2591(1),2 the remedies provided by statute and court rule effectively "vindicate the interests of the defrauded party”3 by ensuring that the original settlement is rescinded, while compensating the defrauded party for its legal costs. This is especially true because sanctions are mandatory. MCL 600.2591(1); MSA 27A.2591(1) ("if a court finds that a civil action or defense to a civil action was frivolous, the court . . . shall award to the prevailing party the costs and fees incurred by that party”).4
Furthermore, Justice Boyle also correctly notes that "it would be a rare case in which a tortfeasor in the first action, upon finding that the plaintiff had acted fraudulently during settlement negotiations, would move to rescind the settlement under *182MCR 2.612(C).” Ante at 177. This is so because a defendant alleging fraud would not be forced to rescind the settlement while suing for damages arising from fraud, while the court rule requires the parties to return to a clean slate. In other words, the court rule will become obsolete because there exists no advantageous reason to utilize it.
Justice Boyle’s rationale, however, applies with equal vigor to plaintiffs. A' sophisticated plaintiff will also file a suit for damages in similar circumstances. Indeed, the bulk of authority on the issue involves an original plaintiff filing suit against a defendant whom the plaintiff claims defrauded him during the settlement process. Yet, Justice Boyle fails to address the issue whether a plaintiff, under similar circumstances as defendant in the instant case, may file an independent action at law for damages. As noted by the majority, however, in Kordis v Auto Owners Ins Co, 311 Mich 247; 18 NW2d 811 (1945), this Court held that plaintiffs may file such an action. Hence, Kordis is still viable precedent, and Michigan law now differentiates between plaintiffs and defendants in similar circumstances: plaintiffs may file an independent action at law for the fraudulent inducement of a settlement while defendants may not. I, like Justice Griffin, find that the "proposed distinction between fraud committed by a plaintiff and fraud committed by a defendant in an underlying tort action is an artificial one.” Post at 207. The decision in this case should not hinge upon which party is pursuing the fraud claim. No authority exists for such a distinction.5
*183While the authorities cited by Justice Boyle and Justice Griffin are extensive, none wrestles with the lack of necessity for a separate common-law action because of the introduction of new court rules and statutes that address the issue. Thus, continued adherence to Kordis is misguided. Kor-dis is the only significant Michigan authority that permits an action at law for the fraudulent inducement of a settlement. Although Kordis may have been an appropriate common-law remedy in decades past, the more recent advent of sanctions and MCR 2.612(C), created specifically to address this issue, obviate any need for a separate action at law for either party.6 Thus, MCR 2.612(C), combined with sanctions authorized by statute and the court rules, provides the best-reasoned approach for resolution of the issue in the instant case.
Levin, J.
(separate opinion). The question presented is whether a judgment entered pursuant to a settlement of a personal injury claim precludes an action for damages asserting that one of the defendants, in the action settled, committed perjury when she failed to mention that, less than thirty days before the accident that gave rise to the earlier action, she was treated by a physician for an injury that preceded the accident.
The circuit court dismissed, stating that the complaint did not state a cause of action because it alleged "intrinsic fraud.” The Court of Appeals reversed.1
I join in reversal of the decision of the Court of *184Appeals on the authority of Columbia Casualty Co v Klettke, 259 Mich 564; 244 NW 164 (1932), and Fawcett v Atherton, 298 Mich 362; 299 NW 108 (1941).
In Columbia Casualty and Fawcett, this Court held that an equitable action cannot be maintained to enjoin or set aside a workers’ compensation award, or a judgment thereon, on the ground that the award was based on the perjury of the person to whom the award was made.
In Columbia Casualty, this Court said:
Perjury is not uncommon in courts. In almost every case there are disputed facts. Courts, juries, and administrative tribunals are constantly called upon to weigh testimony, pass upon the credibility of witnesses, and determine, in legal controversies, who has told the truth. [Id. at 565.]
The Court continued that although the authorities were not in full agreement, "this State is committed to the rule” stated in Pomeroy’s treatises2 that such an action cannot be maintained, and quoted the following therefrom:
"The courts hold that perjury is intrinsic fraud and that therefore it is not ground for equitable relief against a judgment resulting from it. We have seen that the fraud which warrants equity in interfering with such a solemn thing as a judgment must be fraud in obtaining the judgment, and must be such as prevents the losing party from having an adversary trial of the issue. Perjury is a fraud in obtaining the judgment, but it does not prevent an adversary trial. The losing party is before the court and is well able to make his defense. His opponent does nothing to prevent *185it. This rule seems harsh, for often a party will lose valuable rights because of the perjury of his adversary; However, public policy seems to demand that there be an end to litigation. If perjury were accepted as a ground for relief, litigation might be endless; the same issues would have to be tried repeatedly. As stated in a leading case, 'the wrong, in such case, is of course a most grievous one, and no doubt the legislature and the courts would be glad to redress it if a rule could be devised that would remedy the evil without producing mischiefs far worse than the evil to be remedied. Endless litigation, in which nothing was ever finally determined, would be worse than occasional miscarriages of justice; and so the rule is, that a final judgment cannot be annulled merely because it can be shown to have been based on perjured testimony; for if this could be done once, it could be done again and again ad infinitum.’ And to use the language of an eminent court, 'the maxim that fraud vitiates every proceeding must be taken, like other general maxims, to apply to cases where proof of fraud is admissible. But where the same matter has been actually tried, or so in issue that it might have been tried, it is not again admissible; the party is estopped to set up such fraud, because the judgment is the highest evidence and cannot be contradicted.’
"In accordance with the principles laid down above, it is held, by the weight of authority, that neither perjury nor forgery is sufficient ground for equitable interference.” [Id. at 565-567.]
The Court continued that the principle set forth in Pomeroy had been approved by this Court in earlier cases.3
In Fawcett, the Court quoted at length from Columbia Casualty, and stated that the rule there stated was in harmony with a decision of the *186United States Supreme Court,4 and is the rule followed in a majority of the states and England.5 The Court said that it was mindful of the "criticisms that have been directed at the harshness of this rule and the reasons advanced in its support,” but concluded that "[o]n the record in the case at bar we are not disposed to deviate from the rule long established in Michigan as stated in Columbia Casualty Co v Klettke, supra.” Id. at 366-367.
Columbia Casualty and Fawcett might be distinguished on the ground that the actions there sounded in equity and the action here is in law, or on the ground that in those cases the awards were entered following an adjudication of the disputed factual issues, while here the judgment was entered pursuant to a settlement. The reasoning set forth in Columbia Casualty and Fawcett, however, is as applicable in an action at law as an action in equity, and does not depend on whether the parties in the earlier action decided to settle the controversy.
This is not a case in which the plaintiff was persuaded to settle a substantial claim because of misrepresentation by an insurer or its representative concerning policy limits.6 Nor is this a case in which a spouse concealed assets before entering into a separation agreement.7 Different policy considerations might, depending on all the circumstances, justify a different rule in such cases.
Before changing the rule set forth in Columbia Casualty and Fawcett, we should seek the views of lawyers who frequently represent plaintiffs and *187who frequently represent defendants in personal injury actions. They might agree with the view expressed, in one of the cases quoted by Pomeroy, that although the wrong is "a most grievous one,” and the courts would be happy to provide a remedy, they have been stymied from doing so by inability to devise a rule "that would remedy the evil without producing mischiefs far worse than the evil to be remedied.”8

 MCR 2.612(C) provides:
(1) On motion and on just terms, the court may relieve a party or the legal representative of a party from a final judgment, order, or proceeding on the following grounds:
*180(c) Fraud (intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.
(2) The motion must be made within a reasonable time, and, for the grounds stated in subrule[] [(C)(1)(c)], within one year after the judgment, order, or proceeding was entered or taken. A motion under this subrule does not affect the finality of a judgment or suspend its operation.
(3) This subrule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding; to grant relief to a defendant not actually personally notified as provided in subrule (B); or to set aside a judgment for fraud on the court.

 The sanctions for frivolous discovery motions, MCR 2.302(G)(4), and pleadings are identical. MCR 2.114(E).

 Post at 207.

 Furthermore, the Michigan Rules of Professional Conduct obligate an attorney to practice by only the highest ethical standards. Thus, an attorney is prohibited from filing frivolous actions or motions, MRPC 3.1; knowingly making false statements of material facts to assist a client in a criminal or fraudulent act and knowingly omitting disclosure of a material fact which is necessary to prevent assistance to a client in a criminal or fraudulent act; MRPC 3.3, and knowingly making a false statement of material fact to a third person during the representation of a client. MRPC 4.1. In fact, an attorney may not engage in any conduct "involving dishonesty, fraud, deceit, misrepresentation, or violation of the criminal law, where such conduct reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer [or] prejudicial to the administration of justice . . . .” MRPC 8.4. A violation of the standards of professional conduct may lead to disciplinary action by the Attorney Grievance Commission, which may include admonishment, suspension from practice, as well as disbarment. Although rules of ethical conduct existed at the time of this Court’s decision in Kordis v Auto Owners Ins Co, 311 Mich 247; 18 NW2d 811 (1945), their combination with the more recent sanctions authorized by court rule and statute vindicate the interests of a defrauded party.

 Furthermore, the anomaly created by the inconsistent rulings of Kordis and Justice Boyle may violate the Equal Protection Clauses of both the United States and Michigan Constitutions. US Const, Am XIV, § 1 ("nor shall any State . . . deny to any person within its jurisdiction the equal protection of the laws”); Const 1963, art 1, § 2 ("[n]o person shall be denied equal protection of the laws”).

 Similarly, Justice Griffin’s reliance upon DiSabatino v United States Fidelity & Guaranty Co, 635 F Supp 350 (D Del, 1986), is also unwarranted. As a federad district court decision, DiSabatino is not binding on this Court; nor is it persuasive. The decision does not envision the Michigan framework of statutes and court rules carefully crafted in the instant case.

 194 Mich App 335; 486 NW2d 146 (1992).

 Pomeroy’s Equitable Remedies (2d ed), § 656, published as Pomeroy’s Equity Jurisprudence (4th ed), § 2077 .... [Id. at 565.]

 The Court cited Gray v Barton, 62 Mich 186; 28 NW 813 (1886); Codde v Mahiat, 109 Mich 186; 66 NW 1093 (1896); Steele v Culver, 157 Mich 344; 122 NW 95 (1909).

 United States v Throckmorton, 98 US 61, 68; 25 L Ed 93 (1878).

 The Court cited anno: Perjury as ground of attack on judgment or order of court, 126 ALR 390, 392.

 Such cases are discussed in the lead and dissenting opinions.

 See Courtney v Feldstein, 147 Mich App 70; 382 NW2d 734 (1985), relied on by the Court of Appeals in the instant case.

 Because this action does not seek relief from judgment pursuant to MCR 2.612(C)(1)(c), there is no need to consider to what extent the rule stated in Columbia Casualty and Fawcett has been superseded by MCR 2.612(C)(1)(c), providing that where the action is commenced within one year the court may relieve a party from a final judgment on the ground of "[f]raud (intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.”
MCR 2.612(C)(3) provides that a court may entertain an independent action to relieve a party from a judgment, to grant relief to a defendant not actually personally notified, or to set aside a judgment “for fraud on the court.”