Friday, July 13, 2012

Olly Olly Oxen Free



Olio v. Olio, 2012 VT 44.

We forget in the midst of the hyperbole of modern life that there are some arguments, some tools, some procedures that are off-limits to everyday use. 

For all the talk of “nuclear options” that float around in our rhetoric, it would seem that few of us appreciate the idea that some power is only to be used in case of emergency. 

The law, however, has many such tools entrenched in its case law and procedural rules.  The phrase “extraordinary relief” means just that—remedies in case of emergency. 


This term the SCOV has made several rulings in this vein that have highlighted, not the merits of the parties’ case, but the procedural limitation in bringing a claim.

Today’s case is cut from the same cloth and further illustrates both the limits of Rule 60 relief and the severe limitations on parties to bring claims. 

In July 2006, husband and wife signed a stipulated final divorce decree that separated them and allocated their assets.  The stipulated divorce settlement was premised on the financial disclosures each side provided the other.

Several months later, wife filed a Rule 60(b) motion to set aside the final divorce order because she had learned that husband had a bank account that he did not reveal to her.  The trial court denied the motion because it was relatively minor amount and did not constitute a substantial breach of the stipulation since both parties had opened bank accounts after their initial separation, which were not included in the financial disclosures.

Flash forward four years, and husband is back in court trying to modify his spousal maintenance obligations due to an unanticipated decline in his income.  At that time, husband reveals to wife’s attorney that he had a secret bank account in his sister’s name that was really his.  Cue needle being dragged across the record

The trial court ordered an additional hearing in August 2010 on this account and ordered husband to produce statements.  At that hearing, husband’s sister testified that the account was held by her, that she had kept it empty, and that her brother had started using it after the divorce.  Husband’s testimony concurred.  No big deal here your honor.  Just an honest mistake . . . ha, ha, ha . . . let’s move along . . . Please?

Only the documents produced show a different story.  Husband was actually added onto the account in March 2006—three months before the final stipulation.  At the time he was added to the account, it had over $24,000.  By the time the parties signed their stipulation to the divorce, the account had over $56,000. 

You can see where this is going.  After the August hearing, wife filed a motion for contempt and enforcement, a request to order husband to disclose information relating back to the inception of the account, subpoenas on the bank for documents relating to the history of the account and her husband’s contributions, and a motion to reopen the 2006 divorce.

What happens next, however, illustrates the limitations that the courts follow in such cases.  The trial court, in November, upon husband’s motion quashed the bank subpoenas pending its decision on wife’s motions to enforce the contempt order and to reopen the divorce.  It did seem to ask husband to trace the account back to zero.

In December, the trial court ordered husband to provide statements showing the balance of the account when he was joined in March 2006.  Wife sought to clarify this order since the March documents had actually already been produced and the trial court had previously raised a question about the origin of the money in the account prior to March 2006.  Husband responded with an affidavit stating that any money in the account prior to March 2006 had been a loan from family members that he was obligated to re-pay. 

The trial court did not return to this case until August 2011 when it ruled on the outstanding motions.  On the motion for contempt and enforcement, it denied wife’s motion.  Husband had produced what the court requested, ergo, no contempt. 

The trial court also denied wife’s Rule 60(b) motion because she was outside of the one-year time limit for Rule 60(b)(3) (fraud) and was not eligible for Rule 60(b)(6) (any other reason justifying relief).  The trial court denied a hearing on the matter and ruled that wife had not established the elements of fraud. 

On appeal, wife challenges the trial court’s Rule 60 (b) motion.  The essence of her argument is that husband lied, and if she cannot reopen the divorce proceedings, he will have gotten away with it. 

Unlike the trial court, the SCOV is more responsive to wife’s position.  From the evidence, it does appear that husband engaged in some highly questionable actions and may very well have committed fraud.  The problem is that wife did not discover the fraud until four years after the judgment was entered.  This puts her outside of the one-year window of relief under Rule 60(b)(3).  Therefore, no matter how clear the fraud is, the law will not allow wife to re-open the settled judgment.

This forces wife to argue that this is an extraordinary event and warrants the catch-all relief of Rule 60(b)(6) for what she contends is a fraud-on-the-court.  The SCOV does not agree.  In the final analysis, Husband’s fraud is merely a common fraud.  Those of us raised under the catechism recognize it as the sin of omission.  While a serious wrong, it does not rise the extraordinary levels of fraud that permit Rule 60(b)(6) relief. 

To illustrate the SCOV discusses prior cases of fraud that have met the standard for Rule 60(b)(6) relief.  These cases are primarily affirmative frauds, usually committed by attorneys, upon the court and the judicial institutions themselves.  For example, such relief was granted when an attorney fabricated an article and used it to obtain a favorable judgment before an appellate court on a patent issue.  Thus, the SCOV concludes, the fraud-on-the-court use of Rule 60(b)(6) is narrow and used only in special cases of fraud. 

Since husband’s fraud is really against the wife and not the court and does not rise to the higher level of an affirmative fraud-on-the-court, it does not merit Rule 60(b)(6) relief.  Without the larger timeframe, wife’s claims are DOA, and the SCOV affirms the trial court’s dismissal and refusal to disturb the 2006 judgment. 

It is clear that the SCOV recognizes the difficulty of wife’s position (how can you find fraud when its whole purpose is to conceal), but it refuses to grant relief merely because wife’s situation may be sympathetic and merit some recognition on an emotional level. 

The reason as the SCOV indicates that some relief is reserved for only extreme situations.  Granting relief here lowers the threshold and permits this relief to flow more freely than it was intended.  Restraint in this instance preserves the standards for the whole.  Not a warm thought, but it is one that like most conservative judicial impulses preserves the institution and its larger purpose. 

For wife, it no doubt feels like, “Tag, you’re it!”

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