Preferred Properties, Inc. v. Indian River Estates, Inc. ( 2007 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0049n.06
Filed: January 22, 2007
No. 05-3207 AND 05-3485
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
PREFERRED PROPERTIES, INC.,
Plaintiff-Appellee,
On Appeal from the
v. United States District Court for
the Northern District of Ohio,
Western Division
INDIAN RIVER ESTATES, INC.
AND
DUANE J. TILLIMON ,
Defendants-Appellants.
______________________________
Before: KENNEDY, MOORE, and COLE, Circuit Judges
KENNEDY, J. Defendants-Appellants Indian River Estates and Duane Tillimon
(collectively hereinafter “defendants”) seek review of the district court’s orders (1) denying their
motion for relief from judgment pursuant to Federal Rule of Civil Procedure 60(b); (2) limiting
discovery related to the 60(b) motion (Appeal No. 05-3485); and (3) granting Plaintiff-Appellee
Preferred Properties, Inc. (hereinafter “plaintiff”) attorney fees for expenses incurred in the first
appeal before this court and in enforcing the judgment (Appeal No. 05-3207).1 We AFFIRM the
district court’s orders in their entirety for the reasons explained below.2
1
These two appeals pertain to common facts and proceedings, thus they have been
consolidated for the purposes of the decision.
2
Defendants’ briefs raise several issues that are not properly before this court for various
reasons, among them that the claims were not raised in defendants’ notices of appeal. Therefore, we
do not address them further.
BACKGROUND
The underlying dispute between the plaintiff and defendants arose over an option contract
to purchase undeveloped residential property for the construction of rental housing for persons with
disabilities. On March 2, 2000, a jury returned a verdict for Preferred Properties, finding that
defendants had violated the Fair Housing Act and Ohio’s Civil Rights Act, as well as breached the
option contract. The district court denied defendants’ motion for a new trial and for judgment as a
matter of law, granting Preferred Properties’s motion for a permanent injunction and specific
performance. This court affirmed the district court’s denial of defendant’s motions for judgment as
a matter of law and a new trial on the ground that the defendants did violate the Fair Housing Act.
Preferred Props., Inc. v. Indian River Estates, Inc., 276 F.3d 790 (6th Cir. 2002). Additionally, this
court affirmed the district court’s grant of summary judgment on defendant’s counterclaim. Id.Because defendants failed to comply with the district court’s earlier orders, the district court ordered
that the property at issue be vested in the name of Preferred Properties.
On September 20, 2004, defendants filed a Rule 60(b) motion for relief from the judgment,
alleging that Preferred Properties committed fraud on the court. Defendants based this motion on
allegations that Lewis Ellis, Preferred Properties’s Executive Director, perjured himself when he
testified at trial that funds were available for the purchase of defendants’ properties. The district
court denied this motion for relief from the judgment, finding that “[t]here is by no stretch of the
legal imagination facts before the Court which could justify [the] conclusion” that the alleged perjury
would constitute sufficient grounds for fraud on the court. The district court also issued an order
awarding Preferred Properties legal fees and expenses.
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In addition to the joint notice of appeal, defendants filed a 60(b) motion requesting that the
district court vacate both its denial of defendants’ prior 60(b) motion and its award of attorney fees
and expenses to Preferred Properties. Defendants also moved for leave to take the deposition of a
representative from the Department of Housing and Urban Development (hereinafter “HUD”). The
district court denied both of these motions, and defendants now appeal these denials.
ANALYSIS
I. First, defendants assert that the district judge erred in denying their 60(b) motion, which was
based upon allegations of fraud upon the court. A denial of a 60(b) motion is reviewed for abuse of
discretion. Doe v. Lexington-Fayette Urban County Gov’t, 407 F.3d 755, 760 (6th Cir. 2005). An
abuse of discretion exists only when this court has a “‘definite and firm conviction that the trial court
committed a clear error of judgment.’” Id. at 760 (quoting Davis v. Jellico Comm. Hosp., Inc., 912
F.2d 129, 133 (6th Cir. 1990)). “Relief under 60(b), moreover, is ‘circumscribed by public policy
favoring finality of judgments and termination of litigation.’” Id. (quoting Waifersong, Ltd. v. Classic
Music Vending, 976 F.2d 290, 292 (6th Cir. 1992)).
In support of their motion, defendants point to statements that Lewis Ellis, a chief witness
for Preferred Properties, made at trial to indicate that Preferred Properties already possessed the
money from HUD necessary to purchase the lots. In actuality, HUD had approved funding for the
project at issue but, according to the department’s standard practice, would not make the funds
available until after the purchase of the property to reimburse the recipient for the purchase price.
Meanwhile, Preferred Properties asserts that Ellis’s statements indicate an arrangement of private
financing and allude to its anticipation of receipt of HUD moneys.
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This court need not resolve this conflict to decide the case because, regardless, a motion
based on fraud must be made “not more than one year after the judgment, order, or proceeding was
entered or taken.” Fed. R. Civ. P. 60(b)(3). In this case, although the jury returned its verdict on
March 2, 2000, defendants failed to file a motion for relief from the judgment until September 20,
2004, far beyond the rule’s explicit one-year bar.
Thus, defendants must fashion their argument as a claim of fraud on the court, which is not
constrained by the one-year time limit. However, this, too, cannot succeed because an allegation of
the perjury of a witness does not suffice to constitute “fraud upon the court.” H. K. Porter Co., v.
Goodyear Tire & Rubber Co., 536 F.2d 1115, 1118 (6th Cir. 1976). Rather, “an officer of the court”
must commit fraudulent conduct for a fraud-on-the-court claim to be legally cognizable. Demjanjuk
v. Petrovsky, 10 F.3d 338, 348 (6th Cir. 1994).
As a result, the critical issue in this case is whether plaintiff’s attorney at the time, Stephen
Dane, knowingly made a false statement in the proceedings or knowingly suborned perjury,
providing grounds for a claim for fraud on the court. The evidence that defendants have offered is
not sufficient to prove that that is the case. Defendant Tillimon’s Supplemental Reply to Plaintiff’s
Opposition to Defendants’ 60(b) Motion, filed October 21, 2004, asserts that Dane made a false
statement in his opening argument, indicating that Preferred Properties had the HUD money to
purchase the lots in hand. However, this is insufficient to prove the fraud-on-the-court claim, as it
does not provide evidence that these alleged false statements were made knowingly. Tillimon
reiterates this assertion in his memorandum in support of his 60(b) motion, filed in January 2005,
indicating that Dane made a false statement to the jury in his opening statement. That memorandum
also states that Dane’s admissions contained in Plaintiff’s Objection to Defendants’ 60(b) Motion
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contradict what he told the jury, as the motion explains that Preferred Properties had to purchase the
lots first and then request reimbursement from HUD.
Tillimon claims that he sought information from HUD as to whether plaintiff had the money
to purchase the property after “hear[ing] Dane casually state that his client did not know where it was
going to get the money to purchase the Defendant’s property” in the course of his oral argument.
However, it is unclear to which oral argument Tillimon is referring, and the timing of Dane’s
knowledge of the alleged unavailability of the funds is crucial to the fraud-on-the-court claim.
In other correspondence, Tillimon accuses Dane of suborning perjury but does not allege that
Dane himself knowingly made false statements to the court. In a letter to the district court dated
January 23, 2004, Tillimon asserted that Dane suborned Ellis’s perjury when he failed to fulfill his
obligation to notify the judge of Ellis’s false statement. Tillimon’s Reply to Plaintiff’s Opposition
to Defendants’60(b) Motion also accuses Dane of “suborn[ing] perjury by not ‘correcting statements
he knew to be false’ as required by law.” In view of the dearth of evidence that any officer of the
court knowingly engaged in wrongful conduct, the district court’s denial of defendants’ Rule 60(b)
motion was not an abuse of discretion.
II. Defendants also take issue with the district court’s refusal to grant him leave to take the
deposition of a HUD representative. This court reviews a district court’s decision to limit discovery
for “‘an abuse of discretion resulting in substantial prejudice.’” Doe, 407 F.3d at 765 (quoting Hahn
v. Star Bank, 190 F.3d 708, 719 (6th Cir. 1999)). In H. K. Porter Co., this court explained especial
reasons to defer to the trial judge’s refusal of a discovery request when the judge receives the request
in conjunction with a 60(b) motion:
When two parties have opposed each other in a protracted lawsuit tried to judgment,
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and the losing party’s motion for relief under Rule 60(b) does not indicate to the
Judge who presided at the trial that his Court has been victimized by the fraud of the
winning party, it is well within his discretion to require the moving party to make a
showing in support of its allegations before requiring the prevailing party to submit
a second time to extensive discovery to protect his judgment.
536 F.2d at 1119. Here, the parties had some discovery and an evidentiary hearing, and defendants
still failed to make a convincing showing that a fraud had been perpetrated upon the court. We
cannot find error in the judge’s decision to limit discovery in this way.
III. Defendants also allege that the district court awarded excessive fees and expenses. The Fair
Housing Act provides that “the court, in its discretion, may allow the prevailing party . . . a
reasonable attorney’s fee and costs.” 42 U.S.C. § 3613(c)(2). Abuse of discretion is the standard
for reviewing an award of attorney fees under the Fair Housing Act. See Stewart v. Crosson, 774
F.2d 158, 159 (6th Cir. 1985). In the present case, the district court, “[h]aving reviewed the hourly
rates charged by attorneys, paralegals and others and the expenses,” awarded Preferred Properties
$82,489.98. The district court calculated that that amount would reimburse Preferred Properties for
$25,000 in legal fees plus expenses of $1,983.35 related to defending the judgment on appeal, in
addition to $50,000 in legal fees and $5,506.63 in expenses related to enforcing the judgment. The
district court did not abuse its discretion in doing so.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s orders.
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