BRYNER, Chief Justice.
Hershell Murray appeals a decision by the Alaska superior court that refused to enforce an Idaho judgment against Katherine Ledbetter because, in the court's view, the judgment had been obtained by fraud on the Idaho court and had thereby deprived Katherine of an opportunity to be heard. But the trial court did not find an intentional fraud or a reckless misrepresentation. Moreover, Murray was not involved in the misrepresentation. And the record shows that Katherine's failure to appear and defend in the Idaho action largely resulted from her own conscious decision not to participate in the case. Given these circumstances, we find that the alleged misrepresentation amounted, at most, to a wrong committed between the parties and was not sufficiently egregious to qualify as a fraud directed against the court. Accordingly, we reverse the superior court's judgment.
The dispute in this case traces its origins to the 1980s, when Rodney and Katherine Ledbetter, who were married at the time, participated in some business ventures with Hershell Murray. By the late 1980s their ventures went sour. In 1989 the Ledbetters applied for bankruptcy in the United States Bankruptcy Court for the District of Nevada. Murray filed a claim in the bankruptcy action, alleging that the Ledbetters owed him money that they had gained by engaging in fraud. The Ledbetters eventually settled the fraud claim with Murray, stipulating to give him notes that jointly and severally obliged them to pay Murray $500,000, plus interest, over five years. As part of the settlement, the Ledbetters also agreed to sign a confession of judgment acknowledging their liability to Murray for the amounts due under the note. The settlement agreement expressly provided that, if the Ledbetters defaulted on their obligation, Murray could sue for a judgment on their confession in any state where either Rodney or Katherine owned property or resided. The bankruptcy court approved the stipulation in 1990 and incorporated its terms in the order confirming the Ledbetters' reorganization plan.
The following year Katherine and Rodney divorced in the Idaho district court. Katherine was represented by a law firm from Ketchum, Idaho; Rodney was represented by another attorney from Ketchum, Roger Crist. In April 1991 the Idaho court issued a decree of divorce. The decree ordered Rodney to assume liability for most marital debts, and to hold Katherine harmless from any claims connected with those debts, including debts of the parties and claims relating to those debts listed in their 1989 bankruptcy proceedings.
In February 1992 Murray sued Rodney and Katherine in the Idaho district court, alleging that they had defaulted on their 1990 settlement agreement and seeking entry of a
Upon receiving this response from Andrews, Katherine stopped by the office of Rodney's attorney, Roger Crist. Although she evidently did not meet with Crist, Katherine gave Crist's receptionist all the paperwork she had received concerning the recently filed lawsuit, including the original summons and complaint that had been served on her by the sheriff; her copy of the March 5 letter she had sent to Murray's attorney, Andrews; and the original letter that Andrews had sent Katherine in response, together with its attached copy of the earlier letter to Rodney.
According to Crist, he had been contacted by Rodney, who had asked Crist to file an appearance on Rodney and Katherine's behalf. Rodney had indicated that he wanted to delay the lawsuit and work out a compromise judgment. Rodney had also said that Katherine was willing to go along with this approach. Based on his conversations with Rodney and the documents he received from Katherine, Crist thought that he had authority to represent Katherine. On March 23, he filed a notice of appearance in the lawsuit on behalf of both Rodney and Katherine.
In May 1993 Crist and Andrews agreed on a settlement. Under the settlement's terms, Rodney and Katherine would allow the Idaho court to enter judgment for Murray in the amount of the unpaid principal on their original obligation, as well as accrued interest, costs, and attorney's fees; they would also agree to a schedule for paying the judgment. In return, Murray would sign a covenant not to execute on the judgment as long as Rodney and Katherine stayed current on their payments. On June 9, 1993, in accordance with the settlement's terms, the Idaho court entered judgment against Rodney and Katherine, jointly and severally, for $650,064.82. Crist purported to represent both Rodney and Katherine in the settlement.
Meanwhile, after dropping the paperwork off at Crist's office in March 1992, Katherine had shown no further interest in Murray's suit: she made no attempt to participate in the litigation, never inquired about its status, and had no other contact with the court or the parties' counsel.
Katherine relocated to Anchorage in the summer of 1992. She remarried there and took the family name of Schlotfeldt in 1995. In June 1998 the Idaho district court renewed and extended the judgment against Rodney and Katherine for an additional five years. The judgment evidently remained unpaid.
In 2001 Murray filed the Idaho judgment with the superior court in Anchorage and served notice on Katherine that he sought to enforce it against her as an Alaska judgment. Katherine contested the judgment, alleging that it was unenforceable because she had never authorized Crist to represent her in the Idaho litigation.
The superior court held a hearing on Katherine's claim. At the hearing, Katherine initially seemed to question the validity of the original Nevada confession of judgment, asserting
In opposition to Katherine's testimony, Murray presented deposition testimony given by Crist. While Crist readily acknowledged that he had never personally spoken with Katherine about Murray's suit, he insisted that he had firmly believed, based on assurances given to him by Rodney and the paperwork Katherine had left at his office, that Katherine had wanted him to handle her case and was willing to agree to the settlement he ultimately negotiated for her and Rodney.
During closing arguments at the end of the hearing, Katherine's attorney argued that the Idaho judgment was the product of fraud on the court because Crist had entered into the stipulation without Katherine's consent after falsely leading the Idaho court to believe that he represented Katherine. This "critical lie," Katherine's counsel asserted, had led to the Idaho judgment. Insisting that the validity of the earlier Nevada judgment was not at issue, Katherine's attorney maintained that the key to the fraud was that Crist did not have authority to represent Katherine—regardless of whether he believed that he actually did.
Responding on Murray's behalf, Murray's counsel relied on Katherine's self-contradictory testimony and Crist's relatively straightforward account to argue that Katherine had actually authorized Crist to handle her case, or at least that Crist could have reasonably believed that she had consented. At worst, Murray's counsel alternatively argued, Crist's conduct did not amount to a fraud on the court. Emphasizing that Katherine had offered no evidence to prove that she did not actually owe Murray the amounts claimed in the Idaho judgment, Murray's counsel contended that the evidence failed to support a finding that Crist had acted with intent to defraud or that his conduct had caused any actual prejudice to Katherine. If Crist had done nothing on Katherine's behalf, Murray's counsel pointed out, the Idaho court would have entered a default judgment against her and no further notice to her would have been required under Idaho law.
After considering the evidence and the parties' arguments, Superior Court Judge Sen K. Tan issued a written decision concluding that the Idaho judgment was unenforceable because it had been obtained by a fraud on the Idaho court. Before reaching this conclusion, the judge made a number of specific findings adopting Murray's view as to many of the disputed facts. Specifically, the judge found that Katherine had been personally served with the Idaho summons and complaint and had thus received notice of the Idaho lawsuit. While noting that Katherine had been honestly mistaken in believing that she was not required to participate in the Idaho proceedings, the judge also found that she had no reason to expect that either Andrews or Crist would inform her of her misconception. And the judge further emphasized that the letter Katherine received from Andrews "did not in any way suggest that Ms. Schlotfeldt did not have to respond to the complaint." Moreover, the judge accepted Crist's testimony that, based on his conversations with Rodney and the documents he received from Katherine, he actually believed that he was authorized to represent Katherine. Finally, Judge Tan flatly rejected the notion that Murray might have been involved in any fraudulent conduct.
In challenging the superior court's ruling, Murray argues that the record fails to support the superior court's conclusion that Crist represented Katherine without authorization. He further contends that, in any event, Crist's actions on behalf of Katherine caused her no harm and did not amount to fraud on the court under prevailing standards in either Idaho or Alaska. Given these circumstances, Murray insists that the superior court was required to give full faith and credit to the Idaho judgment.
Katherine responds that the policy against enforcing a judgment obtained by fraud on the court is universally recognized and was correctly applied here. Emphasizing that Alaska cases dealing with fraud on the court have not required a finding of specific intent to defraud, Katherine maintains that the superior court properly found that Crist committed a fraud on the Idaho court by recklessly disregarding his professional duty to unambiguously secure her consent to be represented. Katherine further maintains that it is simply irrelevant to speculate as to what the Idaho court might have done in the absence of Crist's unauthorized actions.
The threshold question raised by these arguments is what law should apply in determining whether Crist's conduct amounted to a fraud on the court—Idaho's or Alaska's? Murray filed his superior court action against Katherine under Alaska's version of the Uniform Enforcement of Foreign Judgments Act.
Although the parties' briefing conflicts on this choice-of-law issue—Murray advancing Idaho law and Katherine citing Alaska law— we need not resolve the conflict, for we are
As the United States Supreme Court observed in Hazel-Atlas Glass Company v. Hartford-Empire Company, the equitable doctrine of fraud on the court is a distinguishing feature of our common-law tradition:
After recognizing that this common-law rule allowed relief when "after-discovered fraud" made "enforcement of the judgment . . . `manifestly unconscionable,'"
In the sixty-plus years since the Supreme Court decided Hazel-Atlas, its description of the traditional equity rule has become broadly accepted as a definitive statement of the current form of the rule. The rule is now codified as part of Federal Rule of Civil Procedure 60(b), which spells out a limited number of grounds that parties may raise in seeking relief from a final judgment. Rule 60(b) includes a savings clause declaring that this list "does not limit the power of a court to entertain an independent action . . . to set aside a judgment for fraud upon the court."
Idaho cases applying Idaho Civil Rule 60(b) espouse Hazel-Atlas's strict definition of the elements necessary to prove fraud on the court. In Campbell v. Kildew, the Idaho Supreme Court recently identified "Idaho's principal case interpreting Rule 60(b)"
In keeping with Hazel-Atlas, then, Idaho's view of Rule 60(b), as explained in Compton, requires fraud on the court to be based on clear and convincing proof of a fraudulent scheme directed against the court. Katherine cites no authority suggesting that Idaho takes a more expansive view of Rule 60(b)'s savings clause. Thus, under the superior court's findings in this case, Katherine's claim of fraud on the court would appear to be destined to fail under Idaho law. Here, the superior court declined to rule that Crist had engaged in a scheme to defraud Katherine or anyone else, expressly finding that he acted in the actual belief that he was authorized to represent Katherine. We think that Crist's good-faith, albeit unauthorized, efforts to represent Katherine could hardly be seen as "tampering" directed at the Idaho court, except perhaps in the attenuated sense that it involves simply a misrepresentation of facts "to establish the court's jurisdiction"—conduct that Idaho courts regard as ordinary fraud and refuse to treat as a fraud on the court.
Katherine nonetheless argues that Crist's conduct amounted to a fraud on the courts under Alaska standards. Although we agree
Admittedly, we have previously noted that specific attempts "to define `fraud on the court' are not particularly helpful."
Of course, as Katherine correctly points out, we have also declined to hold that an intent to defraud must invariably be proved to establish a fraud on the court. On two separate occasions, we have ruled that a fraud on the court was shown even though the evidence did not prove a specific intent to defraud. In Mallonee v. Grow, we held that a judgment debtor and his attorney had perpetrated a fraud on the court by applying for an ex parte writ of execution that "grossly overstated" the amount that was actually owed, by using the writ to levy on property not owned by the judgment debtor, and by then failing to serve notice of the motion to confirm the property's sale.
In Higgins v. Municipality of Anchorage (Higgins II), despite acknowledging our earlier rulings in Village of Chefornak v. Hooper Bay Construction and Allen v. Bussell, which "emphasiz[ed] how exceptional conduct must be to find fraud on the court,"
Higgins had filed a wrongful discharge action in the superior court after the municipality terminated his employment; the superior
In Higgins II, we upheld the superior court's finding that Higgins had not exercised due diligence in discovering the new evidence.
Katherine insists that Mallonee and Higgins II support a finding of fraud on the court in her case because "[t]here can be no question that Mr. Crist acted in reckless disregard to the procedural safeguards that govern attorney client relationships and the integrity of the judicial process." Yet significant differences exist between Katherine's case, on the one hand, and Mallonee and Higgins II, on the other.
First, in both Mallonee and Higgins II we dealt with conduct that we expressly found to be reckless misrepresentation if not outright intentional fraud.
Katherine seems to posit that Crist's conduct amounted to a reckless misrepresentation as a matter of law, for purposes of invoking Rule 60(b)'s savings clause, even if he actually believed that he was authorized to represent Katherine, and even though the court made no express finding of reckless
Second, both Mallonee and Higgins II involved circumstances in which it was undisputed that the misrepresentation at issue had actually misled the court by causing it to issue a judgment that could not have been properly reached if the true facts had been known.
Although Crist obviously misled the Idaho court concerning his actual authority to represent Katherine, it is far from clear that this misrepresentation caused the court to issue a judgment that it otherwise could not have issued. By the time Crist entered his appearance on Katherine's behalf, Katherine had been served with a summons and complaint in the case. Instead of entering an appearance herself and either answering the complaint or moving for dismissal, Katherine had simply written to Murray's lawyers, demanding that they dismiss her from the case. Her letter mistakenly asserted that, because her divorce settlement made Rodney solely responsible for the debt, Murray had no recourse against her and could only proceed against Rodney.
Under these circumstances, even assuming that Crist had not entered his unauthorized appearance, Murray would have been entitled to obtain a default judgment against Katherine.
And in any event, Katherine has failed to meet her burden of showing any appreciable likelihood that she might have received an Idaho court judgment more favorable than the one the court actually entered. In the proceedings before the superior court, Katherine offered no evidence challenging the validity of the original Nevada bankruptcy judgment or the confession of judgment that Katherine executed as part of the settlement agreement incorporated in that judgment. Nor did Katherine dispute that the settlement agreement was in default when Murray filed his complaint in Idaho. So the record offers no basis for assuming that Katherine could have avoided being held jointly and severally liable for the unpaid debt due under the Nevada confession if she had appeared and contested the Idaho case.
If Katherine had appeared and defended, then, she presumably would have faced the possibility of a judgment allowing immediate execution against her for the amount of the unpaid debt, plus updated interest and Murray's attorney's fees. Compared to that outcome, Crist's negotiated settlement did markedly better: it left Katherine liable for the amount of the unpaid debt, plus interest and Murray's fees, but it buffered Katherine against immediate execution by giving her around three more months to make good on the payments (or to force Rodney to make good on the payments), due to the covenant not to execute on the judgment if she complied with this schedule.
The third important point of distinction between the circumstances in Mallonee and Higgins II and those at issue here is that in both of the earlier cases the party who committed the misrepresentation (or the party represented by the attorney committing the misrepresentation) sought to enforce the judgment procured by the misrepresentation to the obvious detriment of the party against whom the judgment was issued. Thus, in effect, the offending party affirmatively used the power of the court to secure an unfair advantage over an innocent opponent. In Mallonee, the judgment creditor not only obtained an inflated judgment for execution, he then used that judgment to execute against the judgment creditor in a blatantly improper way.
It is this aspect of Mallonee and Higgins II—the misrepresenting party's affirmative use of the improperly secured judgment against the party damaged by the misrepresentation—that elevated the conduct in each case from a matter of ordinary fraud between the parties, a private concern, to a fraud directed against the court itself. Granting relief became necessary as a matter of equity to avoid the "manifestly unconscionable" result of allowing the defrauding party to use the court as an instrument of power against an opponent.
Here, by contrast, the misrepresentation was committed by Crist, who was not a party to the Idaho action. Nor was he an attorney who represented the party who is seeking to enforce the Idaho judgment. Crist represented Rodney in that action. But it is Murray, not Crist or Rodney, who now seeks to enforce the Idaho judgment against Katherine.
Katherine has neither alleged nor established that Murray played any role in Crist's misrepresentation. And she makes no attempt on appeal to explain how equity would be served by shifting the consequences of Crist's actions from her to Murray—a party who, unlike Katherine, apparently pursued his case by diligently complying with all applicable procedural rules. On appeal, Katherine insists that such equitable considerations are simply irrelevant; according to Katherine, they should play no role in determining whether Crist's conduct amounted to a fraud on the court.
Yet Katherine's argument disregards the source of the court's power to grant relief from a judgment obtained by fraud on the court: it is a power born from common law traditions of equity; it is an equity rule "developed and fashioned to fulfill a universally recognized need for correcting injustices . . . deemed sufficiently gross to demand a departure from rigid adherence to the term rule" in those rare situations "where enforcement of the judgment is `manifestly unconscionable.'"
As the party claiming fraud on the court, Katherine bore the burden of proving by clear and convincing evidence that an order relieving her from the Idaho judgment—a judgment resulting from Katherine's own knowing decision not to contest the Idaho action—would avoid saddling Murray with a manifestly inequitable result by depriving Murray of his settled right to rely on the Idaho judgment. Katherine has failed to meet this burden.
We recognize that the superior court's decision to grant relief from judgment on the ground that Crist committed a fraud on the court is reviewable only for abuse of discretion.
Considering the totality of these circumstances, we think that this case falls squarely within the ambit of earlier cases in which we have concluded that "nondisclosure by a party or his attorney has not been enough"
Because Katherine advances no other ground for relief from the Idaho judgment,
EASTAUGH, Justice, not participating.