
USCA1 Opinion

	




          December 13, 1995 UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 95-1552                             GEO. P. REINTJES, CO., INC.,                                Plaintiff, Appellant,                                          v.                              RILEY STOKER CORPORATION,                                 Defendant, Appellee.                                 ____________________                                     ERRATA SHEET                                     ERRATA SHEET               The opinion of  this Court  issued on December  7, 1995,  is          amended as follows:               On page 2,  first paragraph, line 12,  change "Reintjes'" to          "Riley Stoker's."                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 95-1552                             GEO. P. REINTJES CO., INC.,                                Plaintiff, Appellant,                                          v.                              RILEY STOKER CORPORATION,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                      Aldrich and Coffin, Senior Circuit Judges.                                          _____________________                                 ____________________            Duane J. Fox with whom  Gregory S. Gertstner,  Seigfreid, Bingham,            ____________            ____________________   ___________________        Levy, Selzer  & Gee, Edmund C.  Case, Roger Lane and  Testa, Hurwitz &        ___________________  _______________  __________      ________________        Thibeault were on brief for appellant.        _________            David P. Grossi with whom  Barry A. Bachrach and  Bowditch & Dewey            _______________            _________________      ________________        were on brief for appellee.                                 ____________________                                   December 7, 1995                                 ____________________                      ALDRICH,  Senior  Circuit Judge.   This  is another                                _____________________            case  seeking, inter  alia, to  attribute  to M.G.L.  c. 93A,                           ___________               2(a)  and 11 (1988 ed.), the universal capacity of a Swiss            army jack-knife.   Briefly,  plaintiff Geo. P.  Reintjes Co.,            Inc.  of Kansas  City, Missouri,  and defendant  Riley Stoker            Corp.  of Worcester,  Massachusetts,  found themselves  faced            with  the  question of  who  must  bear  a loss  due  to  the            inappropriateness  of  A.P.  Green  furnace  lining material,            obtained  and installed  by Reintjes  in boilers  supplied by            Riley  Stoker to  a  third party.    The answer  depended  on            whether Reintjes'  warranty  to  Riley  Stoker  included  the            material's design.   The parties resorted  to arbitration and            the  arbitrator  credited   Riley  Stoker's  employees,   who            testified,  in its  favor, that  it was  so understood.   The            arbitrator's  findings  were confirmed  by the  United States            District Court  for the  District of Massachusetts  and Riley            Stoker  obtained a judgment in  the amount of  $989,119.  The            parties agreed  to settle the judgment for $950,000 which, in            due course, was done.                      Some two years later  Reintjes learned, through the            accident of its counsel in the arbitration case being engaged            in entirely independent  litigation with  Riley Stoker,  that            Riley  Stoker employees  may  have committed  perjury in  the            Reintjes arbitration  proceeding.  Reintjes  then filed  this            action  claiming  Riley  Stoker's  failure  to  disclose  the                                         -3-            alleged  fraud  during settlement  negotiations, that  led to            Reintjes paying a  substantial sum, amounted to a  common law            misrepresentation and, more, was  an "unfair or deceptive act            . . . in the conduct of . . . trade or commerce" under M.G.L.            c. 93A,   2(a), entitling Reintjes  to damages.  According to            Reintjes, its present suit rests not on the original cause of            action,  but  on  the  independent  allegation  of  fraud  in            procurement of the settlement agreement.                      The district  court  initially took  the view  that            Reintjes' claims  arising from procurement  of the settlement            agreement  were cognizable independently of the judgment, but            later,  on Riley  Stoker's motion,  undertook  to reconsider.            Reintjes  thereupon  moved  for  leave  to  file  an  amended            complaint to set aside the judgment.   This was denied on the            grounds that Reintjes did  not state a claim for  relief from            the judgment in  the absence of a showing that fraud upon the            court  had occurred.   The court then  granted Riley Stoker's            motion  to  dismiss Reintjes'  common  law  and state  claims            because  they  could not  lie  unless relief  from  the prior            judgment was obtained.  We affirm.                                          I.                                          __                      Reintjes  first  asserts that  the  court  erred in            ruling its fraud and  chapter 93A claims barred by  the prior            judgment.  Reintjes states that "failure to disclose any fact            which   would  influence  a  person   not  to  enter  into  a                                         -4-            transaction is a violation of chapter 93A;" that this statute            therefore "imposed  upon  Riley Stoker  an  affirmative  duty                                                        _________________            (sic)  to  disclose,  during  procurement  of  the settlement            agreement, that  the  award  was  obtained  through  perjured            testimony," and that Reintjes relied on the non-disclosure in            entering into the settlement agreement.                      Our  assent to such a  contention would amount to a            rule,  in  Massachusetts at  least,  that  attached to  every            federal judgment affecting commercial matters is  an inherent            condition that it  must be  proved correct, or  it cannot  be            relied upon, for  there is an "affirmative duty"  to disclose            if  it is  faulty.   Reintjes concludes  that Rule  60, which            prescribes the  exclusive methods by which  federal judgments            may be  attacked, "cannot curtail"  its state and  common law            claims,  citing  28 U.S.C.A.    2072(b)  to  the effect  that            Federal Rules of Civil  Procedure "shall not abridge, enlarge            or  modify any substantive right."   With due  respect, it is            inconceivable  that the  finality of otherwise  valid federal            judgments is  dependent upon their validity  under state law.            Reintjes  cites  no  authority.    We  summarily  affirm  the            district court's  ruling that Reintjes' only  route to relief            from  the  settlement  and  underlying  judgment  is  through            application of  Federal Rule  of Civil Procedure  Rule 60(b).            To this we turn.                                         II.                                         ___                                         -5-                      Reintjes claims  the court erred in  ruling that it            was  unable to state a claim for relief from judgment because            its allegations did not amount to a fraud upon the court, or,            alternatively, that Rule  60(b) does not  require it to  show            fraud  upon  the  court  and that  its  allegations  state  a            cognizable  basis for  relief  under the  Rule.   It contends            Riley's witnesses  engaged in  a concerted effort  to present            perjured  testimony during the  arbitration hearing regarding            the central issue in  the case, namely, whether Reintjes  had            assumed  design  warranty  for  the boiler  linings.    These            charges stem  from Reintjes' discovery, some  two years after            entry  of  judgment  against  it,  of  materials1  indicating            Riley's witnesses may have perjured themselves.                      Rule 60(b) permits relief  from final judgment for,            inter alia,            __________                      (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 . . .            Fed.R.Civ.P. 60(b).  The  Rule requires that motions pursuant            to the above grounds "shall be made within a reasonable time,            and . . . not more  than one year after the  judgment, order,                                            ____________________            1.  Letters  and  notes of  a  third-party  participant in  a            pivotal  meeting between  the parties,  about which  both had            testified.                                         -6-            or proceeding was entered or taken."  Id.  At  the same time,                                                  ___            the 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  to set  aside a                      judgment for fraud upon the court.            Id.            ___                      Our initial reaction is  that, despite the apparent            openness  of this final provision, where the body of the Rule            contains an  explicit  time limitation  for motions  invoking            specified grounds for relief, it would make no sense to apply            the  final general provision, containing no limit of time, so            broadly as to cover all the grounds for which  the time limit            is expressly stated.  Since Reintjes' claims would appear  to            fall  exactly under  sections (2)  and (3)  of the  Rule, but            materialized too late  to file  in a motion  to the  judgment            court,2 it should not now be  able to elect to proceed  under            the  unlimited  clause  without  some  additional  ground  or            reason.   Historically,  however,  this may  be  too easy  an            answer.  In view  of the curtness of the Rule's final clause,            and  a  modicum of  disagreement  in  the  circuits, we  will            examine its origins.                                            ____________________            2.  Reintjes did file  such a  motion to  the judgment  court            (Young,  J.), however,  it was  summarily denied,  presumably            because  it was filed more  than one year  after entry of the            judgment.  Fed.R.Civ.P. 60(b)(3).  No appeal was filed.                                         -7-                      Prior to the adoption of the Federal Rules of Civil            Procedure the  general rule  was that application  for relief            from  judgment on  account  of fraud  could  be made  to  the            presiding court before expiration of the term in which  final            judgment was entered.  Bronson v. Schulten, 104 U.S. 410, 415                                   _______    ________            (1882).  See also Glass, et al.  v. Excelsior Foundry Co., 56                     ___ ____ _____________     _____________________            F.3d 844, 848 (7th  Cir. 1995).  However, efforts  to balance            the value of finality against aversion to  condoning abuse of            the  judicial  apparatus  led  courts sitting  in  equity  to            recognize  an  exception  for  a  narrow  category  of  fraud            "extrinsic," or collateral,  to the original action.   On the            other hand, intrinsic  fraud, such as perjury  relating to an            issue actually decided, could not form the basis for untimely            relief.   United States v.  Throckmorton, 98 U.S.  61, 66, 68                      _____________     ____________            (1878)  (judgment  confirming certain  land  claims  based on            falsified land grant could not be set aside 18 years later on            claim  of  fraud  because  validity of  grant  was  the issue            tried).                      The  Throckmorton rule  that fraud  claimed  in the                           ____________            matter  tried cannot form  the basis for  an untimely request            for  relief from  final judgment  was refined  in Hazel-Atlas                                                              ___________            Glass Co. v. Hartford-Empire  Co., 322 U.S. 238 (1944).3   An            _________    ____________________                                            ____________________            3.  This  case avoided  the extrinsic/intrinsic  labels. Some            have long found the  distinction dubious, dubbing it "clouded            and confused," 11 Wright, Miller & Kane, Federal Practice and                                                     ____________________            Procedure,   2868, p.  401 (1995 ed.), and "at times  . . . a            _________            journey into futility."   Moore & Rogers, Federal Relief from                                         -8-            attorney for Hartford had  contrived to have an  encomium for            its patent claim published  in a trade journal under  the by-            line of a  disinterested expert, which was  then presented in            evidence.  Hartford lost at trial, but its attorneys  paraded            the article before  a panel  of the court  of appeals,  which            then  reversed  and  entered judgment  in  Hartford's  favor,            supporting  its  opinion  with quotation  from  the  spurious            publication.   Id. at  240-42.  Nine  years later Hazel-Atlas                           ___            instigated an  action to  undo the  judgment  based on  newly            obtained  evidence of  Hartford's caper.   The  Supreme Court            directed  that judgment  for Hartford  be  set aside  and the            district court's original order denying relief to Hartford be            reinstated.   Id.  at  251.   The  Court emphasized  the  old                          ___            English rule that, "under certain circumstances, one of which            is  after-discovered  fraud, relief  will be  granted against            judgments regardless of the term of their entry," id. at 244,                                                              ___            was  to  be  applied   cautiously,  i.e.,  only  "in  certain            instances   . . .  deemed  sufficiently  gross  to  demand  a            departure  from rigid adherence" to finality.  Id.  The Court                                                           ___            justified   its   application   in   Hazel-Atlas   Glass   by                                                 ___________________            distinguishing  this  situation  from  a  case  where  after-            discovered evidence indicates merely  that a witness may have            perjured  himself, id.  at  245, from  cases concerning  only                               ___            private  parties, id.  at  246, and  from cases  resulting in                              ___                                            ____________________            Civil Judgments, 55 Yale L.J. 623, 658 (1946).                                         -9-            injury merely to a single litigant (deeming fraud perpetrated            to  obtain a  favorable patent  ruling  "a wrong  against the            institutions set  up to  protect and safeguard  the public").            Id.    And,  Hartford's   was  "a  deliberately  planned  and            ___            carefully  executed scheme"  by an  attorney "to  defraud not            only the  Patent Office but  the Circuit  Court of  Appeals."            Id. at 245-46.   In fact, it reached  all persons affected by            ___            the patent.                      Hazel-Atlas  Glass thus expanded  the range  of the                      __________________            fraud exception  for untimely requests  for relief delineated            in Throckmorton  to include  fraud committed by  "officers of               ____________            the  court."  See Moore, 7  Federal Practice,   60.33, p. 60-                          ___           ________________            359  (1995).     It  carries  forward   the  well-established            understanding  that  this  exception  never  included garden-            variety fraud:                      This is  not simply a case  of a judgment                      obtained with  the aid of a  witness who,                      on   the    basis   of   after-discovered                      evidence,  is  believed possibly  to have                      been guilty of perjury.            Hazel-Atlas Glass, 322 U.S. at 245.            _________________                      In  1946 Congress  adopted the  current version  of            Rule  60(b)   which  specifies  fraud,   "whether  heretofore            denominated extrinsic or  intrinsic," Fed.R.Civ.P.  60(b)(3),            as  an explicit ground for  a motion for  relief and subjects            it,  like several  other  grounds specified,  to  a one  year            limitation.    The Rule  preserves  judicial  power to  grant                                         -10-            relief  in  an  independent  action "insofar  as  established            doctrine permits,"4  and "expressly does not  limit the power            of the court,  when fraud  has been perpetrated  upon it,  to            give relief under the saving clause."  Fed.R.Civ.P. 60, Notes            of  Advisory  Committee on  Rules,  1946  Amendment, Note  to            Subdivision (b) (hereinafter "Advisory Committee Notes").                      Other  than specifying  "fraud  upon  the  court,"5            however,  the Rule "makes no  attempt to state  the bases for            the  independent  action."    Moore, 7  Federal  Practice,                                                       _________________            60.37[2].   Rather, it leaves  this substantive determination            to established principles,  id., "which have  heretofore been                                        ___            applied in such an  action."  Advisory Committee Notes.   See                                                                      ___            Indian  Head Nat. Bank of  Nashua v. Brunelle,  689 F.2d 245,            _________________________________    ________            248-49 (1st Cir. 1982) (as Advisory Committee Notes indicate,            "the Rule expressly  preserves independent equitable actions"            available "prior  to the  Rule's enactment").   We find  that            Congress  incorporated into Rule  60(b) pre-existing judicial            principles governing  untimely requests for  equitable relief                                            ____________________            4.  The Rule as originally adopted did not specify fraud as a            ground  for relief, but did contain a saving clause that left            courts free to  continue to exercise their inherent  power to            grant   relief  from  judgments  where  established  doctrine            warranted.   Fed.R.Civ.P. 60(b) (1937), 28  U.S.C.A.   723(c)            (West 1941).  See, e.g., Central Hanover Bank & Trust Co.  v.                          ___  ____  ________________________________            Wardman Real Est. Prop., 31 F.Supp. 685 (D.D.C. 1940).            _______________________            5.  In this Circuit we have held  such fraud to consist of an            "unconscionable  scheme  calculated  to  interfere  with  the            judicial system's ability impartially to adjudicate a matter"            involving an officer of the court.  Aoude v. Mobil Oil Corp.,                                                _____    _______________            892 F.2d 1115, 1118 (1st Cir. 1989).                                         -11-            from fraudulent  judgments.  See Hazel-Atlas  Glass, 322 U.S.                                         ___ __________________            238.                      While "fraud  upon the court" is  therefore not the            only  permissible basis  for  an independent  action, as  the            ____            district  court held,  and therefore  Reintjes need  not make            such  a  showing,  there  is  also  little  doubt that  fraud            cognizable to maintain an  untimely independent attack upon a            valid and final judgment has long been  regarded as requiring            more than common  law fraud.   Throckmorton, 98  U.S. at  66;                                           ____________            Hazel-Atlas  Glass,  322 U.S.  at  244-45  (untimely bid  for            __________________            relief justified only where  enforcement of judgment would be            "manifestly  unconscionable")  (quoting Pickford  v. Talbott,                                                    ________     _______            225 U.S. 651, 657 (1912)).  See also, Chicago, R.I.  & P. Ry.                                        ___ ____  _______________________            v. Callicotte, 267 F. 799, 810 (8th Cir. 1920), cert. denied,               __________                                   ____________            255 U.S. 570  (1921) ("indispensable" element of  independent            attack  on judgment for fraud is that it prevented party from            presenting his case); Aetna Casualty & Surety  Co. v. Abbott,                                  ____________________________    ______            130 F.2d 40, 43-44 (4th Cir. 1942) ("it is well settled  that            [a conspiracy between plaintiff  and his witnesses to present            perjured testimony]  constitutes no ground" upon  which court            could  deny   enforcement  of  judgment  in   an  independent            proceeding).   The  great  majority of  cases addressing  the            scope  of fraud  necessary to  sustain an  independent action            under the  modern Rule 60(b)  has adhered to  this principle.            See,  e.g., Gleason v. Jandrucko, 860 F.2d 556, 558 (2nd Cir.            ___   ____  _______    _________                                         -12-            1988)  (fraud  necessary  to  sustain independent  action  is            narrower  than that which  is sufficient to  obtain relief by            timely  motion); Travelers  Indemnity Co.  v. Gore,  761 F.2d                             ________________________     ____            1549 (11th Cir. 1985) (allegations of perjury insufficient to            entitle plaintiff  to relief from judgment  in an independent            action  under Rule  60(b));  Great Coastal  Express v.  Int'l                                         ______________________     _____            Brotherhood  of  Teamsters, 675  F.2d  1349,  1358 (4th  Cir.            __________________________            1982), cert. denied, 459 U.S. 1128 (1983);  Robinson, 56 F.3d                   ____________                         ________            at  1274 n.6 (10th  Cir. 1995).   But see,  Averbach v. Rival                                              _______   ________    _____            Manufacturing Co.,  809 F.2d 1016, 1022-23  (3rd Cir.), cert.            _________________                                       _____            denied, 482 U.S. 915,  and cert. denied, 484 U.S.  822 (1987)            ______                     ____________            ("[T]he  elements of  a cause  of action  for [relief  from a            judgment on the ground of fraud] in an independent action are            not different from those elements  in a Rule 60(b)(3) motion,            and . . . the  time limit on such a motion does  not apply to            an independent action.").                      In   sum,  perjury  alone,   absent  allegation  of            involvement by an officer of the court (Reintjes makes none),            has  never  been sufficient.   Throckmorton,  98 U.S.  at 66;                                           ____________            Hazel-Atlas Glass, 322 U.S.  at 245.  See also,  Gleason, 860            _________________                     ________   _______            F.2d  at 559  (2nd Cir.);  Travelers Indemnity,  761 F.2d  at                                       ___________________            1551-52 (11th Cir.); Wood  v. McEwen, 644 F.2d 797  (9th Cir.                                 ____     ______            1981), cert. denied, 455 U.S. 942 (1982).  The possibility of                   ____________            perjury, even concerted, is a common hazard of  the adversary            process  with which  litigants are  equipped to  deal through                                         -13-            discovery and cross-examination, and, where warranted, motion            for   relief   from   judgment   to   the  presiding   court.            Fed.R.Civ.P.  60(b)(3).    Were  mere  perjury  sufficient to            override   the  considerable  value  of  finality  after  the            statutory time  period for  motions on  account of  fraud has            expired,  it would  upend  the Rule's  careful balance.   See                                                                      ___            Great  Coastal Express, 675 F.2d at 1354-55 (Rule 60(b) is an            ______________________            effort to  balance competing judicial values  of finality and            equity, with  equitable considerations favored for  up to one            year from entry of judgment, and finality thereafter).                      Reintjes   points  to  no  reason  why  this  newly            discovered evidence might justify relief from judgment beyond            the statutory  time frame.   Discrediting witnesses  does not            generally  justify  an  "extraordinary"  second  opportunity.            Xerox  Financial Services Life Ins. Co.  v. High Plains Ltd.,            _______________________________________     ________________            44 F.3d 1033,  1038-39 (1st Cir. 1995).  See Moore, 7 Federal                                                     ___          _______            Practice,   60.37  (Rule 60(b)  does not license  a party  to            ________            relitigate, whether  via motion  or  independent action,  any            "issues  that were made or  open to litigation  in the former            action where he had a  fair opportunity to make his claim  or            defense").  See, also, Travellers Indemnity, 761 F.2d at 1552                        ___  ____  ____________________            (11th Cir.); Comptex, S.A.  v. LaBow, 783 F.2d 333,  335 (2nd                         _____________     _____            Cir.  1986); Carter  v. Dolce,  741 F.2d  758, 760  (5th Cir.                         ______     _____            1984).   Reintjes' claims amount, at  best, to ordinary fraud            which,  as  we  have  said,  cannot  form  the  basis  of  an                                         -14-            independent  action  under the  Rule's saving  provision when            they would certainly be barred if presented as a motion under            section  (3).6  See Wallace  v. United States,  142 F.2d 240,                            ___ _______     _____________            244   (2nd  Cir.),   cert.  denied,   323  U.S.   712  (1944)                                 _____________            ("[o]bviously it cannot  have been intended that  what may be            done  within six months, pursuant  to the body  of Rule 60(b)            may also be done thereafter, under the exception contained in            its  last  sentence") (referring  to  predecessor  to current            Rule).   See  also, Moore,  7 Federal  Practice,    60.33 (if                     _________            _________________            fraud  that may form basis of independent action "is not kept            within proper  limits  but is  ballooned  to include  all  or            substantially all  species of fraud within  60(b)(3) then the            time limitation upon 60(b)(3) motions will be meaningless").                      Finally, while the notion that it would be "against            conscience" to  let a particular  judgment stand may  in some            instances serve to tip what would otherwise be ordinary fraud            into the special category that can invoke  a court's inherent            powers  to breach finality, see  Marshall v. Holmes, 141 U.S.                                        ___  ________    ______            589,  595  (1891), Hazel-Atlas  Glass,  322  U.S. at  244-45,                               __________________            Reintjes  has failed to  so move us  here.   There is nothing            particularly offensive about  the circumstances  surrounding,            or  the  result of,  Reintjes'  warranty  dispute with  Riley            Stoker.  See id. at  244.  If Reintjes should have  won, then                     ___ ___                                            ____________________            6.  See note 2, supra.                ___         _____                                         -15-            the most  that can be said  is that it lost  in large measure            due to its own lack of diligence.                      The judgment of the district court is affirmed.                                                            ________                                         -16-
