United Marketing Solutions v. Angie Fowler ( 2013 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1132
UNITED MARKETING SOLUTIONS, INC.,
Plaintiff - Appellee,
v.
ANGIE M. FOWLER; TIMOTHY P. FOWLER,
Defendants - Appellants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:09-cv-01392-GBL-TCB)
Argued: January 30, 2013 Decided: February 27, 2013
Before NIEMEYER, SHEDD, and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Nancy D. Greene, ACKERMAN BROWN, Washington, D.C., for
Appellants. Patrick James McDonald, CAMERON MCEVOY, PLLC,
Fairfax, Virginia, for Appellee. ON BRIEF: John Patrick Sherry,
CAMERON MCEVOY, PLLC, Fairfax, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Angie and Timothy Fowler (“the Fowlers”) appeal the
district court's denial of their Federal Rule of Civil Procedure
60(b) motion seeking relief from a final judgment against them
and in favor of United Marketing Solutions, Inc. (“United”).
For the reasons set forth below, we affirm the district court's
judgment denying relief.
I.
For several years, the Fowlers operated a United direct
mail coupon franchise in Greensboro, North Carolina. Following
the Fowlers' termination of their contract with United, United
obtained a final judgment in the amount of $106,076.82 against
the Fowlers (“the Fowler Judgment”) in the Eastern District of
Virginia. 1 The Fowlers voluntarily dismissed their appeal of
that judgment, and this case presents no issue as to the
appropriateness or finality of the original judgment.
Rees Associates, Inc. (“Rees”), is an Iowa corporation that
possesses an outstanding judgment, rendered in Iowa state court,
against United in the amount of $172,194.94 (“the Rees
1
Federal jurisdiction existed by way of diversity, as
United is a Virginia corporation and the Fowlers reside in North
Carolina, and the amount in controversy exceeded $75,000. See
28 U.S.C. § 1332.
2
Judgment”). In the fall of 2011, after United obtained the
Fowler Judgment, Rees properly domesticated the Rees Judgment in
Fairfax County, Virginia Circuit Court, and initiated
garnishment proceedings there naming the Fowlers as garnishees.
After receiving the garnishment summons, the Fowlers and
Rees entered into a “Settlement and Release Agreement” (“the
Agreement”), which called for the Fowlers to pay Rees “the sum
of $ ___ upon execution of this Agreement in full and complete
satisfaction of the Garnishment. In return for this payment,
Rees will credit the Rees Judgment for [$111,766.92] resulting
in full satisfaction of the Fowler Judgment.” (J.A. 234.) Rees
and the Fowlers signed the Agreement on November 9, 2011, and a
few days later the Fowlers paid an unknown sum to Rees with the
memo of the check noting “For: Satisfaction in full of [United]
judgments against Tim Fowler & Angie Fowler.” 2 (J.A. 238.) Rees
subsequently filed a notice of partial satisfaction of the Rees
Judgment in Iowa state court showing $111,766.92 as credited
toward the judgment amount.
When United refused to mark the Fowler Judgment as having
been satisfied in light of the Agreement and partial
2
The amount paid has been marked out on the record copies
of the Agreement and the check. The amount is not an issue in
the case, but the Fowlers aver they paid Rees $10,000, and
United does not contest this point. The district court used
this $10,000 sum in ruling on the Fowlers’ Rule 60(b) motion.
3
satisfaction of the Rees Judgment, the Fowlers filed the
underlying Rule 60(b) motion for relief from final judgment in
the district court. They argued that relief was appropriate
under subsection (5) or (6) because the Fowler Judgment had been
satisfied or discharged, and other equitable considerations
favored relief.
The district court denied the motion. From the bench, the
court explained that the Fowlers had failed to demonstrate the
Fowler Judgment had been satisfied, released, or discharged
because the Agreement did not have any legal effect on United’s
right to enforce that judgment. In addition, the district court
held that equitable considerations did not weigh in favor of
relief given that United in no way influenced the Fowlers or
Rees to enter into the Agreement. Nonetheless, the district
court permitted a $10,000 equitable offset be applied to the
Fowler Judgment based on the actual amount the Fowlers claimed
they had paid Rees under the Agreement. 3
The Fowlers noted a timely appeal, and we have jurisdiction
under 28 U.S.C. § 1291.
3
United did not file a cross-appeal as to the $10,000
offset and does not otherwise contest that amount in this
appeal.
4
II.
We review the denial of a Rule 60(b) motion for abuse of
discretion. MLC Auto., LLC v. Town of S. Pines, 532 F.3d 269,
277 (4th Cir. 2008). Our review is limited to the propriety of
Rule 60(b) relief, and does not extend to the underlying
judgment. Id.III.
The Fowlers contend the district court erred in denying
Rule 60(b) relief because such relief was appropriate under
either subsection (5) or (6). 4 They assert that the Agreement
constituted a satisfaction or discharge of the Fowler Judgment
that entitles them to relief under Rule 60(b)(5) because the
Fowlers “purchased” a portion of the Rees Judgment and “used
this property to satisfy the Fowler Judgment[] by offset.”
(Opening Br. 9, 14.) As such, they contend it does not matter
how much they paid Rees for the offset, or what terms were
negotiated between them and Rees. Instead, they claim that all
that matters for purposes of reviewing the propriety of Rule
4
The opinion follows the parties’ lead in focusing on the
requirements specifically required for relief under Rule
60(b)(5) and (6) as opposed to the additional requirements for
relief from a judgment under Rule 60. Because we conclude that
the Fowlers have not satisfied the former, we need not consider
the latter.
5
60(b) relief is that as a result of the Agreement, the Fowlers
“owned” a portion of the Rees Judgment that was of greater
monetary value than the entirety of the Fowler Judgment.
Consequently, they contend the Fowler Judgment has been
effectively paid in full and they are entitled to relief under
Rule 60(b)(5).
Rule 60(b)(5) authorizes, in relevant part, relief where
“the judgment has been satisfied, released[,] or discharged.”
While the Fowlers are correct that they could lawfully purchase
a portion of the Rees Judgment from Rees, the record shows that
is not what they did. Looking to the plain language of the
Agreement, it is clear that neither Rees nor the Fowlers were
negotiating a sale of the Rees Judgment to the Fowlers at a
reduced rate. Instead, the Agreement arose solely in the
context of a “Settlement and Release” of the garnishment
proceedings Rees initiated against the Fowlers with respect to
the Fowler Judgment. 5 In order to “settle[] . . . the
Garnishment,” the Fowlers paid Rees a sum “in full and complete
satisfaction of the Garnishment,” in return for which Rees
5
Beyond the title of the agreement—which refers to it being
a settlement of the garnishment proceeding and release of any
claims arising therefrom, the Agreement repeatedly refers to the
garnishment proceedings, noting that the Agreement arose out of
the parties’ “desire to settle[,] resolve[,] and voluntarily
compromise . . . all claims or disputes arising out of or
related to the garnishment.” (J.A. 233.)
6
agreed to “credit the Rees Judgment for $111,766.92 resulting in
full satisfaction of the Fowler Judgment.” (J.A. 234.) This
language does not reflect a partial sale and purchase of the
Rees Judgment, as the Fowlers now contend the transaction in
effect was.
Rees and the Fowlers’ behavior immediately following
entering into the Agreement further supports this conclusion.
Rees independently and voluntarily entered a partial notice of
satisfaction of the Rees Judgment. The Fowlers, in turn, filed
an answer in the garnishment proceedings indicating that the
“funds due” to United had been tendered to Rees “pursuant to a
settlement agreement with [Rees] related to this garnishment.”
(J.A. 244.) Even the check the Fowlers wrote to Rees stated
that it was in “[s]atisfaction in full of” the Fowler Judgment,
as opposed to the purchase of a portion of the Rees Judgment.
(J.A. 238.) Simply put, the Agreement was not a contract to
sell a portion of the Rees Judgment to the Fowlers. The Fowlers
ask the Court to ignore the Agreement’s plain terms in favor of
an after-the-fact alternate construction that would fix the
mistakes of law and fact that they and Rees were operating under
at the time of entering into the Agreement. We cannot do so.
See Comtois v. Rogers, 715 S.E.2d 1, 4 (Va. 2011) (stating that
contracts are to be construed according to their “plain meaning”
where the terms are “clear and unambiguous”).
7
Moreover, the Agreement did not satisfy or discharge the
Fowler Judgment even though Rees and the Fowlers stated that it
should have that effect. The Fowlers and Rees appear to have
entered into the Agreement fundamentally misunderstanding the
nature of garnishment proceedings in Virginia, as well as each
entity’s rights and responsibilities in such a proceeding. At
bottom, the garnishment did not permit Rees and the Fowlers to
contract around United’s right to enforce the Fowler Judgment, a
judgment owned and controlled solely by United. In Marcus,
Santoro & Kozak, P.C. v. Wu, 652 S.E.2d 777 (2007), the Supreme
Court of Virginia ably described garnishment proceedings in the
Commonwealth:
Garnishment is the process by which a judgment
creditor may enforce the lien of his writ of fieri
facias against any debt or property due his judgment
debtor that is held by a third party, the garnishee.
The creditor can assert no greater rights against the
garnishee than the judgment debtor, himself,
possesses.
Id. at 782 (internal citation omitted). “The summons issued in
a garnishment proceeding ‘warns’ the garnishee not to pay the
judgment debtor’s money to the judgment debtor, with the
sanction that if the garnishee were to do so, it would become
personally liable for the amount paid.” Id. at 783 (quotation
marks omitted). “[T]he judgment creditor does not ‘step into
the shoes’ of the judgment debtor and become a party to the
contract, but merely has the right to hold the garnishee liable
8
for the value of that contract right.’” Network Solutions, Inc.
v. Umbro Int’l, Inc., 529 S.E. 2d 80, 88 (Va. 2000) (quoting
United States v. Harkins Builders, Inc., 45 F.3d 830, 833 (4th
Cir. 1995)).
The Fowlers had several options upon receiving the
garnishment summons. See Harkins Builders, 45 F.3d at 833 (“The
garnishee is required to respond to the garnishment summons by
confessing the amount owed to the judgment debtor or by denying
it has any property of the judgment debtor. It may also pay
such monies into court as it confesses.”) (internal citation
omitted); see also Va. Code. Ann. § 8.01-512.3. Rees’
garnishment merely allowed Rees to hold the Fowlers “liable for
the value of” the Fowler Judgment; i.e., it was effectively an
attachment of assets. See Harkins Builders, 45 F.3d at 833.
The garnishment did not cause Rees to “become a party to the
contract” such that Rees could negotiate on behalf of either
United or the Fowlers with respect to settling, discharging, or
otherwise altering the Fowler Judgment itself. See id. The
Fowlers and Rees could not, under the guise of settling the
garnishment, enter into separate negotiations and agree to the
direct payment of money from the Fowlers (the garnishee) to Rees
(the judgment creditor) as “payment” of the Fowler Judgment
owned by United. The Agreement thus had no legal effect on
United’s ability to enforce the Fowler Judgment. Consequently,
9
the district court did not abuse its discretion in denying
relief pursuant to Rule 60(b)(5).
The Fowlers also assert that they are entitled to relief
under Rule 60(b)(6), which permits relief from judgment on “any
other reason that justifies relief.” This is so, they maintain,
because failing to enforce the Agreement against United in the
manner the Fowlers and Rees intended causes United to be
unjustly enriched. Put another way, the Fowlers contend that
because United received the “benefit” of partial satisfaction of
the Rees Judgment, it would be inequitable for them to also
retain the “benefit” of enforcing the Fowler Judgment. As such,
they submit the district court abused its discretion in denying
relief under Rule 60(b)(6).
We disagree. Although Rule 60(b)(6) is a “catchall”
provision, it has limited applicability. “While [subsection
(6)] includes few textual limitations, its context requires that
it may be invoked in only ‘extraordinary circumstances’ when the
reason for relief from judgment does not fall within the list of
enumerated reasons given in Rule 60(b)(1)-(5).” Aikens v.
Ingram, 652 F.3d 496, 500 (4th Cir. 2011) (en banc). This is so
because “giv[ing] Rule 60(b)(6) broad application would
undermine numerous other rules that favor the finality of
judgments.” Id. at 501.
10
In considering whether the district court abused its
discretion in denying relief under Rule 60(b)(6), we look to
whether relief is appropriate “to accomplish justice” as between
the Fowlers and United. Cf. Klapprott v. United States, 335
U.S. 601, 615 (1949). Neither the Rees Judgment nor the
Agreement altered the relationship between the Fowlers and
United in any way. Under the terms of the Agreement, the
Fowlers gave Rees $10,000, and in exchange Rees gave United a
benefit with respect to the Rees Judgment. But that transaction
did not change anything with respect to the relative positions
of the Fowlers and United; more importantly, and as discussed
above, the Agreement in no way altered United’s right to enforce
the Fowler Judgment. That is as true in equity as it is in law.
To hold otherwise would permit a judgment debtor and third party
to contract around a judgment creditor’s right to enforce its
judgment without the judgment creditor’s participation or
consent. The district court did not abuse its discretion in
concluding that this scenario did not constitute an
“extraordinary circumstance” allowing for relief under Rule
60(b)(6). 6
6
The Fowler also challenge an alternative rationale the
district court provided regarding the priority of an attorney’s
lien over the Agreement. In light of our conclusion that the
district court did not abuse its discretion on its primary ratio
decidendi, we need not address that argument.
11
IV.
For the aforementioned reasons, we affirm the district
court’s judgment.
AFFIRMED
12