Court Opinion

ID: 2963736
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:14:27.709533+00
Date Added: 2024-06-11T11:42:45.248117
License: Public Domain

USCA1 Opinion

	

          December 13, 1995 UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ____________________

          No. 95-1552

                             GEO. P. REINTJES, CO., INC.,

                                Plaintiff, Appellant,

                                          v.

                              RILEY STOKER CORPORATION,

                                 Defendant, Appellee.

                                 ____________________

                                     ERRATA SHEET
                                     ERRATA SHEET

               The opinion of  this Court  issued on December  7, 1995,  is
          amended as follows:

               On page 2,  first paragraph, line 12,  change "Reintjes'" to
          "Riley Stoker's."

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                                 ____________________

        No. 95-1552

                             GEO. P. REINTJES CO., INC.,

                                Plaintiff, Appellant,

                                          v.

                              RILEY STOKER CORPORATION,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________

                      Aldrich and Coffin, Senior Circuit Judges.
                                          _____________________

                                 ____________________

            Duane J. Fox with whom  Gregory S. Gertstner,  Seigfreid, Bingham,
            ____________            ____________________   ___________________
        Levy, Selzer  & Gee, Edmund C.  Case, Roger Lane and  Testa, Hurwitz &
        ___________________  _______________  __________      ________________
        Thibeault were on brief for appellant.
        _________
            David P. Grossi with whom  Barry A. Bachrach and  Bowditch & Dewey
            _______________            _________________      ________________
        were on brief for appellee.

                                 ____________________

                                   December 7, 1995
                                 ____________________

                      ALDRICH,  Senior  Circuit Judge.   This  is another
                                _____________________

            case  seeking, inter  alia, to  attribute  to M.G.L.  c. 93A,
                           ___________

               2(a)  and 11 (1988 ed.), the universal capacity of a Swiss

            army jack-knife.   Briefly,  plaintiff Geo. P.  Reintjes Co.,

            Inc.  of Kansas  City, Missouri,  and defendant  Riley Stoker

            Corp.  of Worcester,  Massachusetts,  found themselves  faced

            with  the  question of  who  must  bear  a loss  due  to  the

            inappropriateness  of  A.P.  Green  furnace  lining material,

            obtained  and installed  by Reintjes  in boilers  supplied by

            Riley  Stoker to  a  third party.    The answer  depended  on

            whether Reintjes'  warranty  to  Riley  Stoker  included  the

            material's design.   The parties resorted  to arbitration and

            the  arbitrator  credited   Riley  Stoker's  employees,   who

            testified,  in its  favor, that  it was  so understood.   The

            arbitrator's  findings  were confirmed  by the  United States

            District Court  for the  District of Massachusetts  and Riley

            Stoker  obtained a judgment in  the amount of  $989,119.  The

            parties agreed  to settle the judgment for $950,000 which, in

            due course, was done.

                      Some two years later  Reintjes learned, through the

            accident of its counsel in the arbitration case being engaged

            in entirely independent  litigation with  Riley Stoker,  that

            Riley  Stoker employees  may  have committed  perjury in  the

            Reintjes arbitration  proceeding.  Reintjes  then filed  this

            action  claiming  Riley  Stoker's  failure  to  disclose  the

                                         -3-

            alleged  fraud  during settlement  negotiations, that  led to

            Reintjes paying a  substantial sum, amounted to a  common law

            misrepresentation and, more, was  an "unfair or deceptive act

            . . . in the conduct of . . . trade or commerce" under M.G.L.

            c. 93A,   2(a), entitling Reintjes  to damages.  According to

            Reintjes, its present suit rests not on the original cause of

            action,  but  on  the  independent  allegation  of  fraud  in

            procurement of the settlement agreement.

                      The district  court  initially took  the view  that

            Reintjes' claims  arising from procurement  of the settlement

            agreement  were cognizable independently of the judgment, but

            later,  on Riley  Stoker's motion,  undertook  to reconsider.

            Reintjes  thereupon  moved  for  leave  to  file  an  amended

            complaint to set aside the judgment.   This was denied on the

            grounds that Reintjes did  not state a claim for  relief from

            the judgment in  the absence of a showing that fraud upon the

            court  had occurred.   The court then  granted Riley Stoker's

            motion  to  dismiss Reintjes'  common  law  and state  claims

            because  they  could not  lie  unless relief  from  the prior

            judgment was obtained.  We affirm.

                                          I.
                                          __

                      Reintjes  first  asserts that  the  court  erred in

            ruling its fraud and  chapter 93A claims barred by  the prior

            judgment.  Reintjes states that "failure to disclose any fact

            which   would  influence  a  person   not  to  enter  into  a

                                         -4-

            transaction is a violation of chapter 93A;" that this statute

            therefore "imposed  upon  Riley Stoker  an  affirmative  duty
                                                        _________________

            (sic)  to  disclose,  during  procurement  of  the settlement

            agreement, that  the  award  was  obtained  through  perjured

            testimony," and that Reintjes relied on the non-disclosure in

            entering into the settlement agreement.

                      Our  assent to such a  contention would amount to a

            rule,  in  Massachusetts at  least,  that  attached to  every

            federal judgment affecting commercial matters is  an inherent

            condition that it  must be  proved correct, or  it cannot  be

            relied upon, for  there is an "affirmative duty"  to disclose

            if  it is  faulty.   Reintjes concludes  that Rule  60, which

            prescribes the  exclusive methods by which  federal judgments

            may be  attacked, "cannot curtail"  its state and  common law

            claims,  citing  28 U.S.C.A.    2072(b)  to  the effect  that

            Federal Rules of Civil  Procedure "shall not abridge, enlarge

            or  modify any substantive right."   With due  respect, it is

            inconceivable  that the  finality of otherwise  valid federal

            judgments is  dependent upon their validity  under state law.

            Reintjes  cites  no  authority.    We  summarily  affirm  the

            district court's  ruling that Reintjes' only  route to relief

            from  the  settlement  and  underlying  judgment  is  through

            application of  Federal Rule  of Civil Procedure  Rule 60(b).

            To this we turn.

                                         II.
                                         ___

                                         -5-

                      Reintjes claims  the court erred in  ruling that it

            was  unable to state a claim for relief from judgment because

            its allegations did not amount to a fraud upon the court, or,

            alternatively, that Rule  60(b) does not  require it to  show

            fraud  upon  the  court  and that  its  allegations  state  a

            cognizable  basis for  relief  under the  Rule.   It contends

            Riley's witnesses  engaged in  a concerted effort  to present

            perjured  testimony during the  arbitration hearing regarding

            the central issue in  the case, namely, whether Reintjes  had

            assumed  design  warranty  for  the boiler  linings.    These

            charges stem  from Reintjes' discovery, some  two years after

            entry  of  judgment  against  it,  of  materials1  indicating

            Riley's witnesses may have perjured themselves.

                      Rule 60(b) permits relief  from final judgment for,

            inter alia,
            __________

                      (2)  newly  discovered evidence  which by
                      due   diligence   could  not   have  been
                      discovered  in time  to  move for  a  new
                      trial under Rule 59(b);

                      (3) fraud (whether heretofore denominated
                      intrinsic          or         extrinsic),
                      misrepresentation, or other misconduct of
                      an adverse party . . .

            Fed.R.Civ.P. 60(b).  The  Rule requires that motions pursuant

            to the above grounds "shall be made within a reasonable time,

            and . . . not more  than one year after the  judgment, order,

                                
            ____________________

            1.  Letters  and  notes of  a  third-party  participant in  a
            pivotal  meeting between  the parties,  about which  both had
            testified.

                                         -6-

            or proceeding was entered or taken."  Id.  At  the same time,
                                                  ___

            the Rule

                      does not  limit the  power of a  court to
                      entertain   an   independent  action   to
                      relieve a party  from a judgment,  order,
                      or  proceeding, . . . or  to set  aside a
                      judgment for fraud upon the court.

            Id.
            ___

                      Our initial reaction is  that, despite the apparent

            openness  of this final provision, where the body of the Rule

            contains an  explicit  time limitation  for motions  invoking

            specified grounds for relief, it would make no sense to apply

            the  final general provision, containing no limit of time, so

            broadly as to cover all the grounds for which  the time limit

            is expressly stated.  Since Reintjes' claims would appear  to

            fall  exactly under  sections (2)  and (3)  of the  Rule, but

            materialized too late  to file  in a motion  to the  judgment

            court,2 it should not now be  able to elect to proceed  under

            the  unlimited  clause  without  some  additional  ground  or

            reason.   Historically,  however,  this may  be  too easy  an

            answer.  In view  of the curtness of the Rule's final clause,

            and  a  modicum of  disagreement  in  the  circuits, we  will

            examine its origins.

                                
            ____________________

            2.  Reintjes did file  such a  motion to  the judgment  court
            (Young,  J.), however,  it was  summarily denied,  presumably
            because  it was filed more  than one year  after entry of the
            judgment.  Fed.R.Civ.P. 60(b)(3).  No appeal was filed.

                                         -7-

                      Prior to the adoption of the Federal Rules of Civil

            Procedure the  general rule  was that application  for relief

            from  judgment on  account  of fraud  could  be made  to  the

            presiding court before expiration of the term in which  final

            judgment was entered.  Bronson v. Schulten, 104 U.S. 410, 415
                                   _______    ________

            (1882).  See also Glass, et al.  v. Excelsior Foundry Co., 56
                     ___ ____ _____________     _____________________

            F.3d 844, 848 (7th  Cir. 1995).  However, efforts  to balance

            the value of finality against aversion to  condoning abuse of

            the  judicial  apparatus  led  courts sitting  in  equity  to

            recognize  an  exception  for  a  narrow  category  of  fraud

            "extrinsic," or collateral,  to the original action.   On the

            other hand, intrinsic  fraud, such as perjury  relating to an

            issue actually decided, could not form the basis for untimely

            relief.   United States v.  Throckmorton, 98 U.S.  61, 66, 68
                      _____________     ____________

            (1878)  (judgment  confirming certain  land  claims  based on

            falsified land grant could not be set aside 18 years later on

            claim  of  fraud  because  validity of  grant  was  the issue

            tried).

                      The  Throckmorton rule  that fraud  claimed  in the
                           ____________

            matter  tried cannot form  the basis for  an untimely request

            for  relief from  final judgment  was refined  in Hazel-Atlas
                                                              ___________

            Glass Co. v. Hartford-Empire  Co., 322 U.S. 238 (1944).3   An
            _________    ____________________

                                
            ____________________

            3.  This  case avoided  the extrinsic/intrinsic  labels. Some
            have long found the  distinction dubious, dubbing it "clouded
            and confused," 11 Wright, Miller & Kane, Federal Practice and
                                                     ____________________
            Procedure,   2868, p.  401 (1995 ed.), and "at times  . . . a
            _________
            journey into futility."   Moore & Rogers, Federal Relief from

                                         -8-

            attorney for Hartford had  contrived to have an  encomium for

            its patent claim published  in a trade journal under  the by-

            line of a  disinterested expert, which was  then presented in

            evidence.  Hartford lost at trial, but its attorneys  paraded

            the article before  a panel  of the court  of appeals,  which

            then  reversed  and  entered judgment  in  Hartford's  favor,

            supporting  its  opinion  with quotation  from  the  spurious

            publication.   Id. at  240-42.  Nine  years later Hazel-Atlas
                           ___

            instigated an  action to  undo the  judgment  based on  newly

            obtained  evidence of  Hartford's caper.   The  Supreme Court

            directed  that judgment  for Hartford  be  set aside  and the

            district court's original order denying relief to Hartford be

            reinstated.   Id.  at  251.   The  Court emphasized  the  old
                          ___

            English rule that, "under certain circumstances, one of which

            is  after-discovered  fraud, relief  will be  granted against

            judgments regardless of the term of their entry," id. at 244,
                                                              ___

            was  to  be  applied   cautiously,  i.e.,  only  "in  certain

            instances   . . .  deemed  sufficiently  gross  to  demand  a

            departure  from rigid adherence" to finality.  Id.  The Court
                                                           ___

            justified   its   application   in   Hazel-Atlas   Glass   by
                                                 ___________________

            distinguishing  this  situation  from  a  case  where  after-

            discovered evidence indicates merely  that a witness may have

            perjured  himself, id.  at  245, from  cases concerning  only
                               ___

            private  parties, id.  at  246, and  from cases  resulting in
                              ___

                                
            ____________________

            Civil Judgments, 55 Yale L.J. 623, 658 (1946).

                                         -9-

            injury merely to a single litigant (deeming fraud perpetrated

            to  obtain a  favorable patent  ruling  "a wrong  against the

            institutions set  up to  protect and safeguard  the public").

            Id.    And,  Hartford's   was  "a  deliberately  planned  and
            ___

            carefully  executed scheme"  by an  attorney "to  defraud not

            only the  Patent Office but  the Circuit  Court of  Appeals."

            Id. at 245-46.   In fact, it reached  all persons affected by
            ___

            the patent.

                      Hazel-Atlas  Glass thus expanded  the range  of the
                      __________________

            fraud exception  for untimely requests  for relief delineated

            in Throckmorton  to include  fraud committed by  "officers of
               ____________

            the  court."  See Moore, 7  Federal Practice,   60.33, p. 60-
                          ___           ________________

            359  (1995).     It  carries  forward   the  well-established

            understanding  that  this  exception  never  included garden-

            variety fraud:

                      This is  not simply a case  of a judgment
                      obtained with  the aid of a  witness who,
                      on   the    basis   of   after-discovered
                      evidence,  is  believed possibly  to have
                      been guilty of perjury.

            Hazel-Atlas Glass, 322 U.S. at 245.
            _________________

                      In  1946 Congress  adopted the  current version  of

            Rule  60(b)   which  specifies  fraud,   "whether  heretofore

            denominated extrinsic or  intrinsic," Fed.R.Civ.P.  60(b)(3),

            as  an explicit ground for  a motion for  relief and subjects

            it,  like several  other  grounds specified,  to  a one  year

            limitation.    The Rule  preserves  judicial  power to  grant

                                         -10-

            relief  in  an  independent  action "insofar  as  established

            doctrine permits,"4  and "expressly does not  limit the power

            of the court,  when fraud  has been perpetrated  upon it,  to

            give relief under the saving clause."  Fed.R.Civ.P. 60, Notes

            of  Advisory  Committee on  Rules,  1946  Amendment, Note  to

            Subdivision (b) (hereinafter "Advisory Committee Notes").

                      Other  than specifying  "fraud  upon  the  court,"5

            however,  the Rule "makes no  attempt to state  the bases for

            the  independent  action."    Moore, 7  Federal  Practice,   
                                                    _________________

            60.37[2].   Rather, it leaves  this substantive determination

            to established principles,  id., "which have  heretofore been
                                        ___

            applied in such an  action."  Advisory Committee Notes.   See
                                                                      ___

            Indian  Head Nat. Bank of  Nashua v. Brunelle,  689 F.2d 245,
            _________________________________    ________

            248-49 (1st Cir. 1982) (as Advisory Committee Notes indicate,

            "the Rule expressly  preserves independent equitable actions"

            available "prior  to the  Rule's enactment").   We find  that

            Congress  incorporated into Rule  60(b) pre-existing judicial

            principles governing  untimely requests for  equitable relief

                                
            ____________________

            4.  The Rule as originally adopted did not specify fraud as a
            ground  for relief, but did contain a saving clause that left
            courts free to  continue to exercise their inherent  power to
            grant   relief  from  judgments  where  established  doctrine
            warranted.   Fed.R.Civ.P. 60(b) (1937), 28  U.S.C.A.   723(c)
            (West 1941).  See, e.g., Central Hanover Bank & Trust Co.  v.
                          ___  ____  ________________________________
            Wardman Real Est. Prop., 31 F. Supp. 685 (D.D.C. 1940).
            _______________________

            5.  In this Circuit we have held  such fraud to consist of an
            "unconscionable  scheme  calculated  to  interfere  with  the
            judicial system's ability impartially to adjudicate a matter"
            involving an officer of the court.  Aoude v. Mobil Oil Corp.,
                                                _____    _______________
            892 F.2d 1115, 1118 (1st Cir. 1989).

                                         -11-

            from fraudulent  judgments.  See Hazel-Atlas  Glass, 322 U.S.
                                         ___ __________________

            238.

                      While "fraud  upon the court" is  therefore not the

            only  permissible basis  for  an independent  action, as  the
            ____

            district  court held,  and therefore  Reintjes need  not make

            such  a  showing,  there  is  also  little  doubt that  fraud

            cognizable to maintain an  untimely independent attack upon a

            valid and final judgment has long been  regarded as requiring

            more than common  law fraud.   Throckmorton, 98  U.S. at  66;
                                           ____________

            Hazel-Atlas  Glass,  322 U.S.  at  244-45  (untimely bid  for
            __________________

            relief justified only where  enforcement of judgment would be

            "manifestly  unconscionable")  (quoting Pickford  v. Talbott,
                                                    ________     _______

            225 U.S. 651, 657 (1912)).  See also, Chicago, R.I.  & P. Ry.
                                        ___ ____  _______________________

            v. Callicotte, 267 F. 799, 810 (8th Cir. 1920), cert. denied,
               __________                                   ____________

            255 U.S. 570  (1921) ("indispensable" element of  independent

            attack  on judgment for fraud is that it prevented party from

            presenting his case); Aetna Casualty & Surety  Co. v. Abbott,
                                  ____________________________    ______

            130 F.2d 40, 43-44 (4th Cir. 1942) ("it is well settled  that

            [a conspiracy between plaintiff  and his witnesses to present

            perjured testimony]  constitutes no ground" upon  which court

            could  deny   enforcement  of  judgment  in   an  independent

            proceeding).   The  great  majority of  cases addressing  the

            scope  of fraud  necessary to  sustain an  independent action

            under the  modern Rule 60(b)  has adhered to  this principle.

            See,  e.g., Gleason v. Jandrucko, 860 F.2d 556, 558 (2nd Cir.
            ___   ____  _______    _________

                                         -12-

            1988)  (fraud  necessary  to  sustain independent  action  is

            narrower  than that which  is sufficient to  obtain relief by

            timely  motion); Travelers  Indemnity Co.  v. Gore,  761 F.2d
                             ________________________     ____

            1549 (11th Cir. 1985) (allegations of perjury insufficient to

            entitle plaintiff  to relief from judgment  in an independent

            action  under Rule  60(b));  Great Coastal  Express v.  Int'l
                                         ______________________     _____

            Brotherhood  of  Teamsters, 675  F.2d  1349,  1358 (4th  Cir.
            __________________________

            1982), cert. denied, 459 U.S. 1128 (1983);  Robinson, 56 F.3d
                   ____________                         ________

            at  1274 n.6 (10th  Cir. 1995).   But see,  Averbach v. Rival
                                              _______   ________    _____

            Manufacturing Co.,  809 F.2d 1016, 1022-23  (3rd Cir.), cert.
            _________________                                       _____

            denied, 482 U.S. 915,  and cert. denied, 484 U.S.  822 (1987)
            ______                     ____________

            ("[T]he  elements of  a cause  of action  for [relief  from a

            judgment on the ground of fraud] in an independent action are

            not different from those elements  in a Rule 60(b)(3) motion,

            and . . . the  time limit on such a motion does  not apply to

            an independent action.").

                      In   sum,  perjury  alone,   absent  allegation  of

            involvement by an officer of the court (Reintjes makes none),

            has  never  been sufficient.   Throckmorton,  98 U.S.  at 66;
                                           ____________

            Hazel-Atlas Glass, 322 U.S.  at 245.  See also,  Gleason, 860
            _________________                     ________   _______

            F.2d  at 559  (2nd Cir.);  Travelers Indemnity,  761 F.2d  at
                                       ___________________

            1551-52 (11th Cir.); Wood  v. McEwen, 644 F.2d 797  (9th Cir.
                                 ____     ______

            1981), cert. denied, 455 U.S. 942 (1982).  The possibility of
                   ____________

            perjury, even concerted, is a common hazard of  the adversary

            process  with which  litigants are  equipped to  deal through

                                         -13-

            discovery and cross-examination, and, where warranted, motion

            for   relief   from   judgment   to   the  presiding   court.

            Fed.R.Civ.P.  60(b)(3).    Were  mere  perjury  sufficient to

            override   the  considerable  value  of  finality  after  the

            statutory time  period for  motions on  account of  fraud has

            expired,  it would  upend  the Rule's  careful balance.   See
                                                                      ___

            Great  Coastal Express, 675 F.2d at 1354-55 (Rule 60(b) is an
            ______________________

            effort to  balance competing judicial values  of finality and

            equity, with  equitable considerations favored for  up to one

            year from entry of judgment, and finality thereafter).

                      Reintjes   points  to  no  reason  why  this  newly

            discovered evidence might justify relief from judgment beyond

            the statutory  time frame.   Discrediting witnesses  does not

            generally  justify  an  "extraordinary"  second  opportunity.

            Xerox  Financial Services Life Ins. Co.  v. High Plains Ltd.,
            _______________________________________     ________________

            44 F.3d 1033,  1038-39 (1st Cir. 1995).  See Moore, 7 Federal
                                                     ___          _______

            Practice,   60.37  (Rule 60(b)  does not license  a party  to
            ________

            relitigate, whether  via motion  or  independent action,  any

            "issues  that were made or  open to litigation  in the former

            action where he had a  fair opportunity to make his claim  or

            defense").  See, also, Travellers Indemnity, 761 F.2d at 1552
                        ___  ____  ____________________

            (11th Cir.); Comptex, S.A.  v. LaBow, 783 F.2d 333,  335 (2nd
                         _____________     _____

            Cir.  1986); Carter  v. Dolce,  741 F.2d  758, 760  (5th Cir.
                         ______     _____

            1984).   Reintjes' claims amount, at  best, to ordinary fraud

            which,  as  we  have  said,  cannot  form  the  basis  of  an

                                         -14-

            independent  action  under the  Rule's saving  provision when

            they would certainly be barred if presented as a motion under

            section  (3).6  See Wallace  v. United States,  142 F.2d 240,
                            ___ _______     _____________

            244   (2nd  Cir.),   cert.  denied,   323  U.S.   712  (1944)
                                 _____________

            ("[o]bviously it cannot  have been intended that  what may be

            done  within six months, pursuant  to the body  of Rule 60(b)

            may also be done thereafter, under the exception contained in

            its  last  sentence") (referring  to  predecessor  to current

            Rule).   See  also, Moore,  7 Federal  Practice,    60.33 (if
                     _________            _________________

            fraud  that may form basis of independent action "is not kept

            within proper  limits  but is  ballooned  to include  all  or

            substantially all  species of fraud within  60(b)(3) then the

            time limitation upon 60(b)(3) motions will be meaningless").

                      Finally, while the notion that it would be "against

            conscience" to  let a particular  judgment stand may  in some

            instances serve to tip what would otherwise be ordinary fraud

            into the special category that can invoke  a court's inherent

            powers  to breach finality, see  Marshall v. Holmes, 141 U.S.
                                        ___  ________    ______

            589,  595  (1891), Hazel-Atlas  Glass,  322  U.S. at  244-45,
                               __________________

            Reintjes  has failed to  so move us  here.   There is nothing

            particularly offensive about  the circumstances  surrounding,

            or  the  result of,  Reintjes'  warranty  dispute with  Riley

            Stoker.  See id. at  244.  If Reintjes should have  won, then
                     ___ ___

                                
            ____________________

            6.  See note 2, supra.
                ___         _____

                                         -15-

            the most  that can be said  is that it lost  in large measure

            due to its own lack of diligence.

                      The judgment of the district court is affirmed.
                                                            ________

                                         -16-