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Docket Number

Docket No. 171247.

Attorney(S)

Foley Stearns, P.C. (by John R. Foley), for the plaintiff. Bruce S. Menken, for the defendant.

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Smart Summary

Kiefer v. Kiefer (Mich. Ct. App., July 18, 1995) — Opinion Summary

Factual and Procedural Background

Plaintiff and defendant were divorced in January 1980. The original divorce judgment awarded plaintiff alimony of $75 per week until July 12, 1981, and $100 per week thereafter. In December 1988 defendant moved to modify alimony, alleging reduced income because of retirement. The parties entered a consent order in November 1989 modifying alimony: defendant would pay $50 per week for 104 weeks and plaintiff would be forever barred from future alimony. In August 1993 plaintiff moved to set aside that consent order and reinstate the original permanent alimony, alleging that defendant had misrepresented his retirement and in fact continued to be employed. In December 1993 the trial court set aside the November 1989 consent order and reinstated the original judgment nunc pro tunc to November 1989, ordered defendant to pay $15,000 in alimony arrearage, and granted a wage assignment of $300 per week from defendant's earnings at Pioneer Engineering. The trial court denied a stay. Defendant appealed as of right.

Legal Issues Presented

Whether the trial court abused its discretion by setting aside the consent order and reinstating the original alimony award without first conducting an evidentiary hearing on plaintiff's allegation of fraud on the court.
Whether a motion under MCR 2.612(C)(1)(c) alleging fraud on the court is subject to the one-year time limitation of MCR 2.612(C)(2), or whether the exception in MCR 2.612(C)(3) removes that time constraint for such motions (i.e., whether an independent action is required to avoid the one-year limit).
Whether a consent order can be the subject of a claim of fraud on the court (i.e., whether consent orders preclude a finding of fraud on the court).
Whether remand should be to the same judge or to a different judge given indications of the trial judge's predisposition.

Arguments of the Parties

Plaintiff's Arguments

Plaintiff alleged that defendant made false representations in his motion to modify alimony (claiming retirement) while he continued employment, and that this amounted to fraud on the court sufficient to set aside the consent order.
Plaintiff moved to reinstate the original permanent alimony and to set aside the November 1989 consent order on grounds of that alleged fraud.

Defendant's Arguments

Defendant argued that the reinstatement motion was time-barred under MCR 2.612(C)(2) because the one-year limitation applied to motions for relief from judgment.
Defendant contended that a consent order cannot give rise to fraud on the court because no judicial adjudication is involved in entering a consent order.
Defendant also pointed to procedural matters (including an asserted right to a friend of the court hearing and preservation of other claims), and challenged the trial court's factual findings and demeanor.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Rapaport v. Rapaport, 185 Mich. App. 12; 460 N.W.2d 588 (1990)	Where fraud on the court is alleged, it is generally an abuse of discretion to decide a motion without first conducting an evidentiary hearing; motions under MCR 2.612(C)(1)(c) are subject to the one-year time constraint of MCR 2.612(C)(2) but not to the strict pleading requirements of MCR 2.112(B)(1).	Used to support the proposition that an evidentiary hearing is required before setting aside a judgment on grounds of fraud alleged to have been perpetrated on the court and to explain the time/pleading distinctions between motions and independent actions.
Parlove v. Klein, 37 Mich. App. 537; 195 N.W.2d 3 (1972)	The proof required to set aside a judgment for fraud is "of the highest order;" conflicting allegations/affidavits regarding fraud require an evidentiary hearing; suggested that the one-year limitation may not apply where there is fraud on the court.	Invoked to emphasize the high standard of proof and the necessity of an evidentiary hearing when fraud is alleged; cited as part of the conflicting authority on whether the one-year limitation applies to motions alleging fraud on the court.
Sands v. Sands, 442 Mich. 30; 497 N.W.2d 493 (1993)	Concealment of assets is one of many relevant considerations in determining relief and does not automatically result in forfeiture.	Applied to caution that even if fraud or concealment were proven, the trial court must weigh such conduct among other relevant considerations and should not impose automatic forfeiture without a hearing.
MacArthur v. Miltich, 110 Mich. App. 389; 313 N.W.2d 297 (1981)	Holds that where a party seeks relief from a final judgment rendered several years earlier, an independent action alleging fraud upon the court is required (i.e., MCR 2.612(C)(3) applies to independent actions).	Referenced as one side of the split of authority on whether MCR 2.612(C)(3) removes the one-year limitation for motions; the Court of Appeals relied on this view in concluding the one-year limit applies to motions (absent an independent action).
United States Fidelity Guaranty Co. v. Amerisure Ins. Co., 195 Mich. App. 1; 489 N.W.2d 115 (1992)	Interpreted MCR 2.612(C)(3) as referring to independent actions rather than extending the time for motions alleging fraud on the court.	Used to support the Court's reading that C(3) exempts independent actions from the one-year limit, but does not extend the time within which a motion under C(1)(c) may be filed.
Aoude v. Mobil Oil Corp., 892 F.2d 1115 (1st Cir. 1989)	Defines fraud on the court as conduct that sets in motion an "unconscionable scheme calculated to interfere" with impartial adjudication.	Quoted to reject defendant's contention that a consent order cannot be the subject of fraud on the court; the Court held that alleged material misrepresentations made to the trial court to interfere with adjudication can constitute fraud on the court even when a consent order is involved.

Court's Reasoning and Analysis

The Court of Appeals examined both procedural and substantive aspects of plaintiff's motion to set aside the consent order. It began with the procedural principle that MCR 2.612(C)(1)(c) permits relief from judgment for fraud, but motions under that subrule are governed by the one-year filing requirement of MCR 2.612(C)(2) unless the movant brings an independent action as contemplated by MCR 2.612(C)(3).

The court explained that there is conflicting precedent regarding whether the C(3) exception eliminates the one-year limitation for motions alleging fraud on the court. MacArthur stands for the proposition that C(3) applies to independent actions and not to motions; Parlove is read to suggest the one-year limit does not apply when fraud on the court is involved. Because both of those cases predated Administrative Order No. 1990-6, they were not controlling authority. The Court adopted the view that C(3) is properly read as exempting independent actions from the time constraints but does not extend the one-year period for motions; consequently, the one-year limit applies to motions unless the movant files an independent action.

On the question of the evidentiary hearing, the court relied on Rapaport and Parlove to hold that when fraud on the court is alleged the trial court should not make determinations without first conducting an evidentiary hearing. The opinion emphasized that fraud allegations require proof "of the highest order" and that conflicting allegations or affidavits require the court to hear evidence to determine whether fraud has been perpetrated on the court.

The court also noted the substantive limitation that even if fraud or concealment is proven, such conduct is one consideration among many (citing Sands) and does not automatically produce forfeiture of rights or obligations without a fair weighing at an evidentiary hearing, including a factual determination of the amount of alimony owed according to changed circumstances.

The Court rejected defendant's argument that a consent order cannot be the subject of fraud on the court, citing Aoude's definition of fraud on the court as conduct that sets in motion an unconscionable scheme to interfere with impartial adjudication; the court accepted that alleged material misrepresentations made to obtain a consent order could amount to fraud on the court.

Finally, the Court found that the trial judge's handling of the motion hearing suggested a settled predisposition against defendant or his attorney, and therefore remand should be to a different judge under MCR 2.003(B)(2). Because the trial court made credibility findings and factual conclusions without an evidentiary hearing, the Court concluded the trial court abused its discretion and that a remand for an evidentiary hearing before a different judge was required.

Holding and Implications

Holding: The Court of Appeals REVERSED the trial court's order reinstating permanent alimony and awarding $15,000 in arrearages, and REMANDED the matter for further proceedings, specifically for an evidentiary hearing before a different judge.

Direct consequences:

The trial court's December 1993 order setting aside the November 1989 consent order and reinstating the original alimony award (and related wage assignment and arrearage determination) was vacated by this Court's reversal pending further proceedings.
On remand the trial court is to conduct an evidentiary hearing to determine whether fraud on the court occurred and, if so, to assess the proper relief and the correct alimony arrearage amount considering all relevant factors (including the principles in Sands).
The remand must be to a different judge because the appellate court concluded the record suggests the trial judge had a settled predisposition unfavorable to defendant.
The Court concluded plaintiff's motion to set aside the judgment modifying alimony was time-barred under MCR 2.612(C)(2) insofar as it was a motion rather than an independent action; the opinion notes that, had the time-bar issue been raised below, plaintiff would have been required to file an independent action alleging fraud on the court. The court anticipated that defendant might move to amend his answer on remand to raise this issue below.

The Court declined to address defendant's separate claim that the trial court's order contradicted statements made by the trial court, because of the disposition on the above issues.

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KIEFER v KIEFER

CONNOR, P.J.

Defendant appeals as of right from the trial court's order reinstating permanent alimony in favor of plaintiff and ordering defendant to pay $15,000 in alimony arrearage. The order granted plaintiff a wage assignment of $300 a week against defendant's earned income from Pioneer Engineering. The trial court issued its order after determining that defendant previously had deceived the court regarding a change in circumstances. Defendant appeals as of right. We reverse and remand for a hearing before a different judge.

In January 1980, plaintiff and defendant were divorced and plaintiff was awarded alimony in the amount of $75 a week until July 12, 1981. After that date, the alimony was to be $100 a week. Defendant sought modification of the alimony award in December 1988, citing a reduction in income due to his retirement. The parties entered into a consent order modifying the alimony order in November 1989. The consent order provided that defendant would pay plaintiff $50 a week for 104 weeks and that plaintiff thereafter would be forever barred future alimony.

Plaintiff moved to reinstate permanent alimony and set aside the consent order in August 1993. Plaintiff alleged that defendant had made false representations in his motion to modify the alimony award because he continued to be employed after he stated he was retiring. In December 1993, the trial court set aside the November 1989 consent order and reinstated the alimony terms of the original divorce judgment nunc pro tunc to November 1989. Defendant's motion for a stay pending appeal of the trial court's order was denied.

We find the trial court abused its discretion in granting plaintiff's motion without first holding an evidentiary hearing.

A trial court may relieve a party from a final judgment, order, or proceeding on grounds of fraud, misrepresentation, or other misconduct of the adverse party pursuant to MCR 2.612(C)(1)(c). Where a party has alleged that a fraud has been committed on the court, it is generally an abuse of discretion for the court to decide the motion without first conducting an evidentiary hearing regarding the allegations. Rapaport v Rapaport, 185 Mich. App. 12, 16; 460 N.W.2d 588 (1990). An evidentiary hearing is necessary where fraud has been alleged because the proof required to sustain a motion to set aside a judgment because of fraud is "of the highest order." Parlove v Klein, 37 Mich. App. 537, 544; 195 N.W.2d 3 (1972). The Parlove Court ruled that where there are conflicting allegations and affidavits with respect to the question whether there has been a fraud perpetrated upon the court, the trial court is required to conduct an evidentiary hearing in order to ascertain if the fraud existed. Id. at 545-546.

In the present case, the trial court abused its discretion in making a credibility determination in favor of plaintiff without holding an evidentiary hearing in which defendant would have the opportunity to respond to plaintiff's allegations. Even if the trial court properly determined that defendant had perpetrated a fraud on the court, the trial court should have held an evidentiary hearing in order to make an informed and meaningful determination of the amount of alimony defendant should have paid according to his changed circumstances. See Sands v Sands, 442 Mich. 30, 36-37; 497 N.W.2d 493 (1993), in which the Supreme Court ruled that a party's attempt to conceal assets is only one of many relevant considerations that the trial court must weigh and that such an attempt does not give rise to an automatic forfeiture.

Plaintiff's claim that defendant rejected an opportunity to refer the matter to a friend of the court referee is not persuasive. The record reveals that, while defendant did not request a friend of the court hearing, he did not object to having the hearing either. It appears that defense counsel did not wish to waive any right his client might have by agreeing to a friend of the court hearing, but he did not waive the hearing.

Defendant also claims that plaintiff's motion to reinstate the original alimony payment obligation was time-barred. While defendant failed to preserve this issue below, MCR 2.111(F)(3)(a), because we have found it necessary to remand we will address the merits of the claim. We find plaintiff's motion to set aside the judgment modifying alimony was time-barred.

We note that had this issue been addressed below, plaintiff would have been required to file an independent action alleging fraud on the court. In light of this opinion, we anticipate that defendant may move to amend his answer to raise the issue below.

Pursuant to MCR 2.612(C), when a motion for relief from judgment is based on fraud or misrepresentation, the movant must bring the motion not later than one year following entry of the judgment. The parties dispute the interpretation of subparagraph 3 of the court rule, which provides for an exception when fraud has been perpetrated on the court.

MCR 2.612(C) provides in part:

(1) On motion and on just terms, the court may relieve a party or the legal representative of a party from a final judgment, order, or proceeding on the following grounds:

* * *

(c) Fraud (intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.

* * *

(2) The motion must be made within a reasonable time, and, for the grounds stated in subrules (C)(1)(a), (b), and (c), within one year after the judgment, order, or proceeding was entered or taken. A motion under this subrule does not affect the finality of a judgment or suspend its operation.

(3) This subrule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding; to grant relief to a defendant not actually personally notified as provided in subrule (B); or to set aside a judgment for fraud on the court.

In Rapaport, supra, this Court discussed the distinction between an independent action alleging fraud and a motion seeking relief from judgment. The Rapaport Court noted that a motion brought pursuant to MCR 2.612(C)(1)(c) is subject to the time constraints of MCR 2.612(C)(2), but is not subject to the strict pleading requirements of MCR 2.112(B)(1). Rapaport, supra at 16. Presumably, an independent action is exempted by subparagraph 3 from the time constraints delineated in subparagraph 2 because the strict pleading requirements provide an adequate guard against abuse.

Case law interpreting MCR 2.612(C)(3) is not consistent. For example, MacArthur v Miltich, 110 Mich. App. 389, 390-391; 313 N.W.2d 297 (1981), held that because the plaintiff was seeking relief from a final judgment rendered almost five years earlier, she was required to bring an independent action alleging fraud upon the court. Parlove, supra at 543-544, however, held that "[w]hile generally a motion to relieve a party from a final judgment based upon an allegation of fraud must be brought within one year after the judg[m]ent was entered, that temporal limitation does not apply when `fraud upon the court' is involved." In short, MacArthur ruled that MCR 2.612(C)(3) applies to independent actions only, and not to motions for relief, whereas Parlove held that the time limit of one year did not apply to motions. Parlove and MacArthur thus appear to offer conflicting authority. Because the two opinions were released before November 1, 1990, neither is controlling authority. Administrative Order No. 1990-6.

The language of MCR 2.612(C)(3) makes reference only to independent actions, not motions. We believe that a fair reading of subrule C(3) leads to the construction that the subrule does not extend the time to file a motion where fraud on the court is alleged, but, rather, provides that the time constraints of the rule do not apply to independent actions. See United States Fidelity Guaranty Co v Amerisure Ins Co, 195 Mich. App. 1, 6; 489 N.W.2d 115 (1992). In other words, the one-year time limit applies except when the plaintiff brings an independent action that claims either the plaintiff did not have actual notice or there was a fraud on the court. MacArthur, supra. Inasmuch as there is an apparent split of authority, we believe the better reasoning is that the one-year period of limitation applies unless the claim is based on an independent action.

Turning to the other issues raised by defendant, we find a consent order does not preclude the possibility of fraud on the court. Defendant's claim, that there can be no fraud on the court where a consent order is concerned because no judicial adjudication is involved in a consent order, is without merit. Case law cited by defendant provides that a fraud on the court occurs when a party has set in motion "some unconscionable scheme calculated to interfere" with impartial adjudication. Aoude v Mobil Oil Corp, 892 F.2d 1115, 1118 (CA 1, 1989). According to plaintiff's allegations, defendant made a material misrepresentation to the trial court in order to interfere with the trial court's adjudication of the matter. As such, defendant's claim is unsupported by the authority he cited.

In the absence of an evidentiary hearing, we are unable to determine whether sufficient evidence of fraud exists. As we have already noted, the trial court made findings of fact without reviewing all the evidence, and, on remand, the court should hold an evidentiary hearing to ascertain whether any fraudulent acts occurred. Because we believe the transcript of the motion hearing suggests the trial judge has a settled predisposition to the detriment of defendant or his attorney, we remand for further proceedings before a different judge. MCR 2.003(B)(2).

In light of our disposition, we decline to address defendant's claim that the trial court's order was contrary to statements made by the court.

Reversed and remanded.

KIEFER v. KIEFER