Carrie Baker v. Michael Baker (mem. dec.) ( 2017 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case. FILED
Jun 27 2017, 8:50 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Colby A. Barkes Robert A. Plantz
Duane W. Hartman Robert A. Plantz & Associates,
Blachly, Tabor, Bozik & Hartman LLC LLC
Valparaiso, Indiana Merrillville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Carrie Baker, June 27, 2017
Appellant-Respondent, Court of Appeals Case No.
64A03-1702-DR-219
v. Appeal from the Porter Superior
Court
Michael Baker, The Honorable Roger E. Bradford,
Appellee-Petitioner. Judge
The Honorable Katherine R.
Forbes, Magistrate/Special Judge
Trial Court Cause No.
64D01-0904-DR-3345
Bradford, Judge.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 1 of 15
Case Summary
[1] On or about April 7, 2009, Appellee-Petitioner Michael Baker (“Husband”)
initiated proceedings to dissolve his marriage to Appellant-Respondent Carrie
Baker (“Wife”). On April 21, 2009, the parties filed a Mutual Waiver of Final
Hearing and Marital Settlement Agreement (“Settlement Agreement”). The
trial court accepted the parties’ Settlement Agreement and thereafter entered an
order dissolving the parties’ marriage on June 25, 2009.
[2] Approximately six years later, on April 22, 2015, Wife filed a verified motion
seeking to re-open the parties’ property settlement proceedings (“Wife’s
Motion”), claiming that she had discovered that Husband had committed fraud
by previously failing to disclose certain assets. On July 7, 2015, Husband filed a
Motion to Strike and Dismiss (“Husband’s Motion”) Wife’s Motion. That
same day, without giving Wife an opportunity to respond and without a
hearing, the court granted Husband’s Motion. Wife appealed.
[3] On appeal, we concluded that the Porter County Local Rules required that the
trial court conduct a hearing on Husband’s Motion before ruling on the motion.
Accordingly, we reversed the trial court’s order granting Husband’s Motion and
remanded for further proceedings. On remand, the trial court conducted a
hearing on Husband’s Motion at which Husband appeared in person and was
represented by counsel and Wife was represented by counsel. Following the
hearing, the trial court granted Husband’s Motion. This second appeal follows.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 2 of 15
[4] Wife contends on appeal that the trial court abused its discretion in granting
Husband’s motion. Because we conclude otherwise, we affirm.
Facts and Procedural History
[5] This is the second appeal stemming from the underlying cause. The facts, as set
forth in our prior opinion in this matter, provide as follows:
On April 21, 2009, Husband and Wife executed a [Settlement
Agreement], which was finalized on June 25, 2009, when they
were granted a Decree of Dissolution of Marriage. During the
divorce proceedings, Wife was not represented by counsel, and
she relied on Husband, Husband’s counsel, and the Dissolution
Decree regarding the truthfulness of the parties’ marital assets.
Wife was aware of Husband’s deferred income that is listed in
the [ ] Settlement Agreement, but she was not aware of any
additional deferred income, i.e., assets of the marriage that
Husband was to receive at a later time after the dissolution, that
had not been listed in that agreement. Also, the [ ] Settlement
Agreement contained the following provisions, among others:
1. Equal Division of Property
The Husband and the Wife intend to settle forever
and completely their interests and obligations in all
property, both real and personal, between themselves
and on behalf of their heirs and assigns, and
regardless of whether the property was acquired by
either or both of them, before or during their
marriage, or whether it was acquired by way of gift or
inheritance. The parties intend to effect a division in
a fair, just and equal manner.
2. Itemization of Property Division
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 3 of 15
*****
The parties shall each maintain or receive title to and
interest as indicated in the following financial
accounts or financial interests. Title to and interest in
these accounts/interests shall be exclusive as to the
party indicated, and the party with or receiving
ownership will hold the other party harmless as to
liabilities of the owned account/interest. The parties
acknowledge that they have not appraised each
other’s assets or financial accounts and waive any
right to do so and acknowledge that one party may
receive a larger share than the other. The parties
have also agreed to waive the requirement of
exchanging financial declaration forms.
*****
5. Mutual Releases
Both parties expressly and mutually release and
forever discharge the other from any and all claims,
demands, obligations, debts, and cause of action, at
law or in equity or otherwise, which either of them
ever had or now has or hereafter may have against
the other up to the date of the execution of this
Agreement.
6. Representation by Counsel
Husband acknowledges that this agreement has been
fully explained to him by his attorney. Wife
acknowledges that she has the right to and has had
the opportunity to obtain legal counsel pertaining to
this action and to explain the consequences of this
agreement. Wife has been informed that Husband’s
attorney in no way represents Wife’s interests in this
matter and has been advised of her right to seek
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 4 of 15
independent counsel to represent her or review this
agreement and is completely aware, not only of its
contents, but also its legal effects. The parties
acknowledge that each is satisfied with the
preparation and contents of this agreement.
7. Entire Agreement
Each party acknowledges that no representations of
any kind have been made to him or her as an
inducement to enter into this Agreement, other than
the representations set forth herein, and that this
Agreement constitutes all of the terms of the contract
between them.
Appellant’s Appendix at 28, 35-36, 42-43 (bold in original).[1]
In November 2014, Wife discovered that there were additional
assets of the marital estate in excess of $1,000,000, and on April
22, 2015, she filed [Wife’s Motion], in which she alleged fraud by
Husband by not disclosing the deferred income despite the fact
that he had an affirmative duty to disclose and that the [ ]
Settlement Agreement stated that she “shall receive an ‘equal
division of property’.”[2] Id. at 46. [Wife’s Motion] did not cite
to a specific rule to open the proceedings. On July 7, 2015,
Husband filed [Husband’s Motion]. That same day, without
giving Wife an opportunity to respond and without a hearing, the
court granted Husband’s [M]otion (the “July 7th Order”). The
court’s July 7th Order stated:
1
The record reveals that as part of the parties’ original division of property, Wife received $140,000.00 from
the parties’ joint checking account and was guaranteed child support payments, which would be paid from
the deferred income which Husband was entitled to receive until 2013, in the amount of $1,167,609.00.
2
Husband disputes Wife’s unsupported assertion that the allegedly non-disclosed assets exist.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 5 of 15
1. The Divorce Decree was entered 6/25/2009. An
agreed Modification Order was entered on
8/24/2010, while [Wife] was represented by counsel.
2. The Court is prohibited from revoking or
modifying a written settlement agreement or agreed
or [sic], except in the case of fraud. I.C. § 31-15-2-
17(c).
3. [Wife’s Motion] alleges “fraud,” but Trial Rule
60(B)(3) allows for relief from the judgment or order
on the grounds of fraud, but the motion shall be filed
... not more than one (1) year after the judgment or
order.
4. [Wife’s Motion] was [filed] well after the one (1)
year deadlines and, moreover, the Court is prohibited
by I.C. § 31-15-2-17(c) from modifying the order. For
these reasons, [Husband’s Motion] is GRANTED
and [Wife’s Motion] is hereby ordered Stricken from
the Record and Dismissed.
Id. at 47.
On August 5, 2015, Wife filed a motion to correct errors and to
reconsider, and the court denied her motion the same day
without a hearing.
Baker v. Baker, 50 N.E.3d 401, 402-03 (Ind. Ct. App. 2016) (footnote omitted).
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 6 of 15
[6] Upon review, we noted that Porter County Civil Rule 3300.20 requires that “all
motions shall be set for a hearing”3 and stated that
[a]lthough use of the savings clause is limited, it is within the
court’s discretion to construe a motion to set aside as either an
independent action for fraud or as a pleading to grant relief for
fraud on the court. [Jahangirizadeh v. Pazouki, 27 N.E.3d 1178,
1182 (Ind. Ct. App. 2015)]. We therefore conclude that it would
be premature to examine substantive precedent and make such a
judgment prior to a hearing required by Porter County Civil Rule
3300.20.
Id. at 406. We further concluded that the trial court improperly granted
Husband’s Motion “when it did so without [first] scheduling and holding a
hearing.” Id.
[7] On remand, Wife requested a change of judge, which was granted. Wife also
filed a response to Husband’s Motion. In this response, Wife asserted that
Husband’s Motion should be dismissed because she had sufficiently alleged
fraud and lack of disclosure. Wife does not point to any specific fraudulent acts
which she claims Husband committed, claiming only that “[t]he hiding of in
excess of $1,000,000.00 of deferred income, and possibly another $1,000,000.00
from the Citadel Partners Equity Participant fund, is certainly evidence of ‘an
unconscionable plan or scheme used to improperly influence the Court’s
decision.’” Appellant’s App. Vol. II, p. 60.
3
Porter County Civil Rule 3300.20 provides for limited exceptions to this rule, none of which apply here.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 7 of 15
[8] On November 30, 2016, the trial court conducted a hearing on Husband’s
Motion. Wife did not appear for this hearing but was represented by counsel.
During this hearing, both sides presented argument relating to (1) the language
contained in the Settlement Agreement. With respect to the parties’ financial
accounts, the Settlement Agreement, which again was filed within thirty days of
the dissolution petition and was included by reference in Wife’s Motion,
explicitly provided as follows:
[t]he parties acknowledge that they have not appraised each
other’s assets or financial accounts and waive any right to do so
and acknowledge that one party may receive a larger share than
the other. The parties have also agreed to waive the requirement
of exchanging financial declaration forms.
Appellant’s App. p. 25. Thus, Husband asserts that pursuant to the terms of the
Settlement Agreement, there was no duty to disclose and that “if there’s no
duty to disclose, there can’t be any fraud based upon a non-disclosure.” Tr. p.
6. Wife’s counsel argued that the Settlement Agreement demonstrated that the
parties intended to have an equal division of the marital estate. Wife’s counsel
did not present any specific argument or evidence during the hearing relating to
Wife’s claims of fraud merely relying on the fact that Wife generally alleged
fraud by Husband. After taking the matter under advisement, on January 9,
2017, the trial court issued an order granting Husband’s Motion.
Discussion and Decision
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 8 of 15
[9] Wife contends on appeal that the trial court abused its discretion in granting
Husband’s Motion.
Generally, we will review the denial of a Trial Rule 60 motion
for an abuse of discretion. Wisner v. Laney, 984 N.E.2d 1201,
1205 (Ind. 2012). However, if a trial court’s ruling is strictly
based upon a paper record, we will review the ruling de novo
because we are in as good a position as the trial court to
determine the force and effect of the evidence. In re Adoption of
C.B.M., 992 N.E.2d 687, 691 (Ind. 2013). The trial court here
ruled solely upon a paper record, and so our review is de novo.
Indiana Trial Rule 60(B)(3) provides that a judgment may be set
aside for “fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation, or other misconduct of an adverse
party....” Additionally, a motion for relief from judgment under
Trial Rule 60(B)(3) must be filed not more than one year after the
judgment was entered. However, Trial Rule 60(B) contains a
“savings clause” which provides, “This 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 for fraud upon the
court.”
In Stonger v. Sorrell, 776 N.E.2d 353 (Ind. 2002), our supreme
court addressed the three ways that a motion to set aside a
judgment for fraud can be raised, adopting analysis used by
federal courts for Federal Rule of Civil Procedure 60(b)(3), which
is nearly identical to Trial Rule 60(B)(3). First is a motion filed
under subsection (3) of the Rule, which “may be based on any
kind of fraud (intrinsic, extrinsic, or fraud on the court) so long as
it is chargeable to an adverse party and has an adverse effect on
the moving party.” Stonger, 776 N.E.2d at 356. A motion under
this Rule also must be filed in the court that issued the judgment,
and it must be made within one year of the judgment. Id.
Second, a party may file an independent action for fraud
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 9 of 15
pursuant to traditional equitable principles. Id. “Independent
actions are usually reserved for situations that do not meet the
requirements for a motion made under” Rule 60(B)(3). Id. Such
cases include ones where “(i) the fraud is not chargeable to an
adverse party; (ii) the movant seeks relief from a court other than
the rendering court; or, most often, (iii) the one-year time limit
for Rule 60(b)(3) motions has expired.” Id. An independent
action for fraud is subject to the doctrine of laches and is
available only in extremely limited circumstances. Id.
Third, a party may invoke the inherent power of a court to set
aside its judgment if procured by fraud on the court. Id. at 356-
57. Also, a court may sua sponte set aside a judgment for fraud
on the court. Id. at 357. There is no time limit for a fraud on the
court proceeding. Id.
Regardless of which procedural avenue a party selects to assert a
claim of fraud, “the party must establish that an unconscionable
plan or scheme was used to improperly influence the court’s
decision and that such acts prevented the losing party from fully
and fairly presenting its case or defense.” Id. If it is unclear
which procedural avenue a party intended to use to set aside a
judgment and more than one year has passed, a court may
construe a motion to set aside as either an independent action for
fraud or as a pleading to grant relief for fraud on the court. Id.;
see also United States v. Buck, 281 F.3d 1336, 1342 (10th Cir. 2002)
(“The substance of the plea should control, not the label.”). To
establish fraud warranting relief from judgment, a party must
show more than a possibility that the trial court was misled;
rather, “there must be a showing that the trial court’s decision
was actually influenced.” Stonger, 776 N.E.2d at 358.
Jahangirizadeh, 27 N.E.3d at 1181-82.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 10 of 15
[10] Wife’s Motion did not specify whether her claims were being raised as a claim
for relief from judgment under Trial Rule 60(b)(3) or as a claim under Indiana
Code section 31-15-7-9.1, which provides as follows:
(a) The orders concerning property disposition entered under this
chapter (or IC 31-1-11.5-9 before its repeal) may not be revoked
or modified, except in case of fraud.
(b) If fraud is alleged, the fraud must be asserted not later than six
(6) years after the order is entered.
As such, like in Jahangirizadeh, “we will proceed to consider whether the motion
stated a possible independent action for fraud or invoked the trial court’s
authority to set aside the judgment for fraud on the court.” 27 N.E.3d at 1182.
[11] In Jahangirizadeh, we considered the difference between the various types of
“fraud.” In doing so, we noted that Jahangirizadeh’s motion to set aside
adequately alleged that the trial court’s property division decision was actually
influenced by Pazouki’s alleged falsification of her assets. Id. However, we
further noted the following:
We do not believe that is enough, however, to establish a possible
case for an independent action for fraud or fraud on the court. A
number of federal court opinions and authorities have gone into
significantly greater detail than Stonger regarding the differences
between “ordinary” fraud, an independent action for fraud, and
fraud on the court. Given the Stonger opinion’s adoption of
federal authorities, we will look to those authorities as well to
further delineate the differences among the three types of fraud.
In the Buck opinion, heavily relied upon by Stonger, the 10th
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 11 of 15
Circuit addressed a motion to set aside a quiet title judgment in
favor of the United States filed four years after judgment was
entered; the movant alleged that government attorneys had
committed fraud by failing to disclose evidence that could have
altered the original judgment. Because the motion was filed past
the one-year deadline of Civil Procedure Rule 60(b)(3), the court
addressed whether an independent action for fraud or fraud on
the court had been proven. The court held that it had not.
In particular, the court explained that the type of egregious fraud
required to prove fraud on the court or an independent fraud
action “‘is fraud which is directed to the judicial machinery itself
and is not fraud between the parties or fraudulent documents,
false statements or perjury.... [A]llegations of nondisclosure in
pretrial discovery will not support an action for fraud on the
court.’” Buck, 281 F.3d at 1342 (quoting Bulloch v. United States,
763 F.2d 1115, 1121 (10th Cir. 1985), cert. denied). Such fraud
also may include “‘only the most egregious conduct, such as
bribery of a judge or members of a jury, or the fabrication of
evidence by a party in which an attorney is implicated....’” Id.
(quoting Weese v. Schukman, 98 F.3d 542, 552-53 (10th Cir.
1996)). “‘[N]ondisclosure of facts allegedly pertinent to the
matter before [the court] ... will not ordinarily rise to the level of
fraud on the court.’” Id. Fraud on the court also requires a
showing of intentional misconduct or intent to deceive or defraud
the court. Id. (citing Robinson v. Audi Aktiengesellschaft, 56 F.3d
1259, 1267 (10th Cir. 1995), cert. denied).
Additionally, fraud on the court does not exist “in cases in which
the wrong, if wrong there was, was only between the parties in
the case and involved no direct assault on the integrity of the
judicial process. Nondisclosure by a party or the party’s attorney
has not been enough.” 11 Fed. Prac. & Proc. Civ. § 2870, Fraud
on the Court (3rd ed. 2014). The mere possibility of a witness
testifying falsely is an ordinary risk of the judicial process and is
not fraud on the court, unless possibly an attorney or other officer
of the court has been involved in perjury or the falsification of
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 12 of 15
evidence. Id. (citing Lockwood v. Bowles, 46 F.R.D. 625, 632–33
(D.D.C.1969)).
Similarly, the United States Supreme Court has held that a
party’s failure to furnish relevant information to an opposing
party in a lawsuit does not support an independent action for
fraud to set aside a judgment. United States v. Beggerly, 524 U.S.
38, 46, 118 S. Ct. 1862, 1867, 141 L. Ed. 2d 32 (1998). Rather, the
Court held that such conduct is of the type intended to be
covered by Civil Procedure Rule 60(b)(3), and that expanding the
definition of an independent action for fraud to include such
conduct would eviscerate the strict one-year time limit for
motions under that Rule. Id. It also has been said that an
independent action for fraud “is available only to prevent a grave
miscarriage of justice.” 11 Fed. Prac. & Proc. Civ. § 2868,
Independent Action for Relief (citing Beggerly, 524 U.S. at 46, 118
S.Ct. at 1867).
Id. at 1182-84.
[12] We concluded that Jahangirizadeh’s allegations against Pazouki amounted “to
a clear example of ‘ordinary’ fraud noted in the federal authorities, involving
Pazouki’s alleged nondisclosure of assets to Jahangirizadeh in order to not have
them subject to division by the trial court in the dissolution decree and her
alleged general unreliability as a witness.” Id. at 1184. In reaching this
conclusion, we noted the following:
[t]here are no allegations that Pazouki’s attorneys were involved
in any intentionally fraudulent conduct. There are no allegations
of any egregious conduct infringing upon the integrity of the
judiciary. The only person negatively impacted by Pazouki’s
allegedly fraudulent conduct is Jahangirizadeh; the public at
large is not affected by the parties’ marital property division.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 13 of 15
Id. As such, we further concluded that
[t]o the extent Pazouki may have been less-than-forthright
regarding her assets—assuming Jahangirizadeh’s allegations to
be true—this is the type of “ordinary” fraud that must be subject
to the one-year time limit of Trial Rule 60(B)(3). Otherwise, the
Rule’s time limit could be rendered a nullity in a much wider
range of cases of supposed “fraud” than was intended to be
covered by the Rule. Jahangirizadeh’s motion to set aside, as
well as his motions to reconsider and to correct error, fail to give
support to an independent action for fraud or a claim for fraud on
the court. As such, the motion to set aside is barred by the one-
year time limit of Trial Rule 60(B)(3).
Id.
[13] Similarly, we conclude that Wife’s allegations against Husband amounted to
“ordinary” fraud as Wife raised no allegation that Husband or his attorneys
were involved in any intentionally fraudulent conduct which infringed upon the
integrity of the judiciary. Like in Jahangirizadeh, the only person who was
negatively impacted by Husband’s alleged fraudulent conduct is Wife as the
public at large is not affected by the parties’ marital property division.
Consequently, Husband’s alleged fraudulent acts—assuming Wife’s allegations
to be true—constituted the type of “ordinary” fraud that is subject to the one-
year time limit set forth in Trial Rule 60(B)(3). See id. It is undisputed that
Wife’s Motion was not filed within this one-year time limit. As such, we
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 14 of 15
conclude that the trial court did not abuse its discretion in granting Husband’s
Motion.4
[14] The judgment of the trial court is affirmed.
Mathias, J., and Altice, J., concur.
4
To the extent that Wife intended to raise her claims under Indiana Code section 31-15-7-9.1, Wife has
failed to fully develop this claim. Furthermore, Wife’s summary allegations—even if assumed to be true—
cannot amount to fraud given the terms of the parties’ Settlement Agreement. The terms of the Settlement
Agreement, which again was incorporated into Wife’s Motion by reference, explicitly provide that although
the parties’ generally intended to have an equal distribution of the marital estate, the parties waived the right
to request a financial declaration and acknowledged that the Settlement Agreement might actually result in
an unequal distribution. Under these terms, Husband cannot be found to have committed fraud merely for
failing to disclose assets to Wife and Wife has presented no specific claims or arguments relating to any
fraudulent acts allegedly committed by Husband.
Court of Appeals of Indiana | Memorandum Decision 64A03-1702-DR-219 | June 27, 2017 Page 15 of 15