Monday, August 21, 2006

9th Circuit Holds that Attorney’s Alleged Misconduct Does Not Suffice as “Fraud of an Adverse Party” in Denying Relief from Judgment

Per Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097 (9th Cir. July 6, 2006):

Rule 60(b)(3) permits relief "from a final judgment ... for ... fraud ... or other misconduct of an adverse party." Citing subsection (b)(3), Latshaw contends that Nygaard committed two fraudulent acts sufficient to warrant Rule 60(b) relief: (1) Nygaard misinformed Latshaw that she could be liable for the defendants' legal fees, and (2) Nygaard misinformed Latshaw that Harrison intended to resign. Latshaw argues that Nygaard's fraud, in part, induced Latshaw to sign the Rule 68 offer. The district court again denied Latshaw's requested relief, noting that Latshaw "expressly instructed her counsel to file the acceptance," a situation "clearly" not among those meriting relief as fraud.

We agree. Even if it is true that Nygaard committed fraud, the district court did not abuse its discretion in concluding that the circumstances failed to warrant Rule 60(b)(3) relief. Subsection (b)(3) permits relief only when the fraud was committed by "an adverse party." See In re Grantham Bros., 922 F.2d 1438, 1442-43 (9th Cir.1991) (declining to apply Rule 60(b)(3) where fraud was committed by the appellant's clients in part because the rule "is aimed at fraud perpetrated by an adverse party"). Thus, in order to prevail on a Rule 60(b)(3) motion, the defendants must have committed the fraud at issue. Here, however, Nygaard represented Latshaw herself, not an adverse party. Meanwhile, the defendants were innocent bystanders. Since Nygaard's alleged fraud adversely affected only her own client, Latshaw cannot satisfy the express "adverse party" requirement of Rule 60(b)(3).

[The Court also rejected plaintiff’s arguments based on Rule 60(b)(1) and (b)(6).]


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