Ohio Casualty Insurance v. Pulliam

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a1010n.06
Filed: December 22, 2005
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UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
OHIO CASUALTY INSURANCE )
COMPANY, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR THE
) WESTERN DISTRICT OF KENTUCKY
WARREN L. PULLIAM, )
)
Defendant-Appellant.
Before: DAUGHTREY and COLE, Circuit Judges, and BARZILAY,* Judge.
PER CURIAM. The defendant, Warren Pulliam, appeals the district court’s denial
of his motion, filed pursuant to Federal Rule of Civil Procedure 60(b), to vacate a judgment
entered against Pulliam by the district court in 1992. In affirming the judgment, we trust
that our order will end the seemingly endless round of litigation in this diversity action that
grew out of events dating back some 20 years.
In a previous stage of the litigation, we described its protracted procedural
history as follows:
*
The Hon. Judith M. Barzilay, Judge of the United States Court of International Trade, sitting by
designation.
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Ohio Causualty Insurance Co. v. Pulliam
Pulliam was a principal owner and President of Peoples State Bank.
On December 17, 1986, Pulliam agreed to indemnify Peoples State Bank for
losses arising from his wrongful issuance of certified checks. Peoples State
Bank assigned its rights under this restitution agreement to Ohio Casualty.
On February 1, 1988, Barnett Bank sued Peoples State Bank to
recover funds wrongfully paid to Peoples State Bank. Ohio Casualty, acting
on behalf of Peoples State Bank, paid Barnett Bank approximately $200,000
to settle the action. Because Pulliam’s mismanagement of bank funds
caused the loss, Ohio Casualty filed this action in district court on May 25,
1990, seeking indemnity and contribution from Pulliam under the terms of the
restitution agreement.
On July 8, 1992, the jury returned a verdict for Ohio Casualty in the
amount of $200,000. On July 20, 1992, Pulliam filed a motion for a new trial,
to alter or amend the judgment, or for judgment notwithstanding the verdict.
On October 21, 1992, the district court denied Pulliam’s motions. Pulliam did
not appeal the district court’s October 1992 decision. Instead, Pulliam filed
a motion – pursuant to Federal Rule of Civil Procedure 60(b) -- to set aside
the jury’s 1992 verdict on October 17, 1995. The district court denied
Pulliam’s untimely motion. . . .
Ohio Cas. Ins. Co. v. Pulliam, No. 96-6522, 1999 WL 455336 at *1 (6th Cir. June 23, 1999).
We affirmed the district court’s denial of the Rule 60(b) motion, and the United
States Supreme Court ultimately denied the defendant’s subsequent petition for a writ of
certiorari in early 2000. More than four years later, on March 5, 2004, Pulliam filed a
second Rule 60(b) motion seeking to vacate the original 1992 judgment. In that motion,
the defendant raised claims of fraud, conspiracy, and collusion, as well as a claim of fraud
on the court. The district judge denied the request for relief, ruling that “it is crystal clear
that Pulliam’s motion comes far too late.” The defendant now appeals that determination.
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Ohio Causualty Insurance Co. v. Pulliam
As we noted in our 1999 opinion examining the propriety of the district court’s denial
of Pulliam’s 1995 Rule 60(b) motion, such a denial is reviewed by an appellate court only
“for an abuse of discretion . . . [and] does not bring up for review the underlying judgment.”
Id. at *2 (citing Windsor v. United States Dep’t of Justice, 740 F.2d 6, 7 (6th Cir. 1984)).
An “[a]buse of discretion is defined as a definite and firm conviction that the trial court
committed a clear error of judgment.” Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir.
1996) (quoting Logan v. Dayton Hudson Corp., 865 F.2d 789, 790 (6th Cir. 1989)).
Recognizing that the interests of justice sometimes demand that a judgment not be
enforced against a particular party, Rule 60(b) of the Federal Rules of Civil Procedure
provides for such relief for certain familiar, designated reasons. Specifically, a party may
be relieved of a judgment entered against it on grounds of:
(1) mistake, inadvertence, surprise, or excusable neglect; (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; (4) the judgment is void; (5) the judgment has been
satisfied, released, or discharged, or a prior judgment upon which it is based
has been reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (6) any other reason
justifying relief from the operation of the judgment.
FED. R. CIV. P. 60(b). Any motion seeking relief under grounds (1), (2), or (3) must be filed
with the district court “not more than one year after the judgment, order, or proceeding was
entered or taken.” Id. Motions pursuant to grounds (4), (5), or (6) “shall be made within a
reasonable time.” Id.-3-
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Ohio Causualty Insurance Co. v. Pulliam
In his latest attempt to extricate himself from the burdens of the judgment entered
against him in 1992, Pulliam asserts that he “was the victim of fraud, conspiracy and
collusion.” Correctly equating that allegation with the grounds for relief enumerated in
subsection (3) of Rule 60(b), Ohio Casualty now echoes the ruling of the district court and
argues that the defendant’s motion was filed long after the expiration of the one-year
deadline envisioned by the drafters of the rule. To the extent that the defendant himself
was the victim of such fraud, Ohio Casualty is correct and is entitled to dismissal of
Pulliam’s motion.1 In his 2004 filing, however, the defendant also alleges that fraud was
committed not only upon him, but also upon the district court and two Kentucky state courts
during the course of this litigation. Because Rule 60(b) explicitly states that the “rule does
not limit the power of a court . . . to set aside a judgment for fraud upon the court,” the one-
year restriction on alleging grounds for relief from judgment does not apply to the extent
that Pulliam can establish such “fraud upon the court.”
In Demjanjuk v. Petrovsky, 10 F.3d 338, 348 (6th Cir. 1993) we noted that “fraud
upon the court,” unlike other fraud, consists of conduct:
1. On the part of an officer of the court;
2. That is directed to the “judicial machinery” itself;
1
Before this court, Pulliam intimates that the Kentucky Supreme Court decision in Terwilliger v.
Terwilliger, 64 S.W.3d 816, 818 (Ky. 2002), which, for purposes of Kentucky law, equated “fraud on a party”
with “fraud affecting the proceedings,” eliminates any distinctions between the two manifestations of fraud.
Regardless of the merit or lack of merit of the Kentucky position, the justices of the Kentucky Supreme Court
cannot alter the framework of Federal Rule of Civil Procedure 60(b) that is to be applied in federal court
proceedings.
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Ohio Causualty Insurance Co. v. Pulliam
3. That is intentionally false, wilfully blind to the truth, or is in reckless
disregard for the truth;
4. That is a positive averment or is concealment when one is under a duty
to disclose;
5. That deceives the court.
In an effort to establish “fraud upon the court,” Pulliam submits that he can now prove, as
described in his brief:
(1) that the Complaint which Barnett Bank filed in the underlying Jefferson
Circuit Court action overstated the amount of Barnett Bank’s loss by
$201,500.00; (2) that Ohio Casualty, contrary to the declarations which it
made to the court below and to Nelson Circuit Court, actively participated in
the settlement of the underlying action; (3) that Ohio Casualty knew that
Barnett Bank’s complaint contained a false statement of material fact, and
failed to advise Jefferson Circuit Court, the trial court, or this Court of that
fact; (4) that Ohio Casualty overstated the amount of damages in paragraph
19 of the instant Complaint; (5) that Ohio Casualty attached an Exhibit to the
Complaint which it filed in the instant case which overstated the amount of
Barnett’s loss by $201,500.00, although it well knew that the amount set out
therein was erroneous; and (6) that Ohio Casualty also . . . elicited untrue
testimony from Peoples Bank’s counsel at the trial of the instant action; and
after having done so, failed to advise the court below that erroneous
testimony had been given.
Boiled down to its essence, Pulliam’s assertion of “fraud upon the court” stems from
the fact that Barnett Bank’s complaint against Peoples Bank sought recovery of
approximately $835,000 paid by Peoples by certified checks “without sufficient funds on
deposit to cover those checks.” According to the defendant, however, the parties knew the
actual loss to Barnett Bank was only $633,500, or $201,500 less than the parties led the
courts to believe. But Demjanjuk requires that, in order to establish fraud upon the court,
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any misstatements by an officer of the court actually deceive the court. See Demjanjuk,
10 F.3d at 348. Because the banks, with or without the assistance of Ohio Casualty,
eventually settled the disagreement between them for $200,000, the courts could not have
been deceived by the failure of the parties to correct any inaccuracies contained in
pleadings or testimony that asserted that a much higher amount of money was at issue.
Pulliam has thus failed to establish fraud upon the court by this simple discrepancy.
Pulliam further asserts that the plaintiff helped perpetuate a fraud upon the court by
failing to divulge the fact that Barnett Bank had received partial compensation for its loss
from another entity not a party to this appeal. In his brief to this court, however, the
defendant concedes that the “secret” recovery paid only $282,500 of Barnett Bank’s loss
that was caused by Pulliam’s misdeeds. Thus, Ohio Casualty, by contract, would still have
been responsible for repaying $351,000 ($633,500 less $282,500) of Peoples Bank’s
liability. Again, because the ultimate $200,000 judgment rendered against Pulliam was
significantly less than the amount for which the defendant was still responsible, the court
and the judicial process were not prejudicially deceived by any actions alleged by the
defendant. Consequently, the district court did not abuse its discretion in denying the
defendant’s Rule 60(b) motion.
We therefore AFFIRM the district court’s order denying the Rule 60(b) motion,
although for a reason different from that relied upon by the district court.
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