SAVAGE v. SALZMANN

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Docket Number

No. 6672

Attorney(S)

Byron K. Meredith and Samuel B. Francovich, of Reno, for Appellant. Laub, Clark, Puzey Lane and Dennis R. Haney, of Reno, for Respondents.

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Smart Summary

Factual and Procedural Background

Respondents Salzmann and Givens, as co-administratrices of the Estate of Bernard Henry Teuscher, obtained a default judgment against appellant Dorothy Savage in a prior action on January 22, 1969. Subsequently, on May 19, 1970, appellant filed a separate suit seeking to set aside that default judgment pursuant to NRCP 60(b), alleging an oral agreement existed before the judgment which, if honored, would have prevented the judgment. Appellant contended that this agreement caused her to remain inactive, thereby giving respondents an unconscionable advantage. The respondents moved to dismiss on grounds of res judicata and appellant's failure to act within six months of the original judgment. The lower court dismissed appellant's suit with prejudice. The appeal challenges whether the dismissal with prejudice was proper.

Legal Issues Presented

Whether the lower court erred in dismissing appellant's action with prejudice for failure to state a claim under NRCP 60(b) regarding relief from a default judgment based on alleged fraud.
Whether the six-month limitation under NRCP 60(b) applies to an independent action to set aside a judgment for extrinsic fraud.
The sufficiency of appellant’s pleading of fraud, particularly whether the oral agreement was alleged with the particularity required under NRCP 9(b).

Arguments of the Parties

Appellant's Arguments

Appellant alleged an oral agreement existed prior to the default judgment which, if fulfilled, would have prevented the judgment.
She claimed reliance on this agreement lulled her into inactivity, constituting extrinsic fraud under NRCP 60(b), justifying relief from the judgment.
Appellant invoked NRCP 60(b)’s provision allowing an independent action to set aside a judgment for fraud upon the court, arguing the six-month limitation does not apply to extrinsic fraud.

Respondents' Arguments

Respondents asserted that the default judgment operated as res judicata, barring appellant's claims.
They contended appellant was estopped from raising her contentions due to failure to act within six months of the original judgment.
Respondents denied the existence of any oral agreement, challenging the sufficiency of appellant’s allegations.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Manville v. Manville, 79 Nev. 487, 387 P.2d 661 (1963)	Clarifies that NRCP 60(b) allows independent actions to set aside judgments for fraud upon the court, and that the six-month limitation does not apply to extrinsic fraud.	Used to explain that relief from extrinsic fraud is not limited by the six-month rule under NRCP 60(b).
Villalon v. Bowen, 70 Nev. 456, 273 P.2d 409 (1954)	Defines extrinsic fraud as fraud preventing a real contest or trial on the merits.	Applied to determine the nature of extrinsic fraud relevant to appellant's allegations.
United States v. Throckmorton, 98 U.S. 61 (1878)	Foundational definition of extrinsic fraud preventing adversary trial or decision.	Quoted to support the legal standard for extrinsic fraud in Nevada jurisprudence.
Murphy v. Murphy, 65 Nev. 264, 193 P.2d 850 (1948)	Describes extrinsic fraud as acts preventing a party from knowing rights or having a fair opportunity to present defenses.	Used to illustrate the type of fraud warranting relief under NRCP 60(b).
Colby v. Colby, 78 Nev. 150, 369 P.2d 1019 (1962)	Approves the definition and application of extrinsic fraud as per Murphy.	Supports the court's understanding of extrinsic fraud in this case.
Garteiz v. Garteiz, 70 Nev. 77, 254 P.2d 804 (1953)	Requires particularity in pleading fraud under NRCP 9(b).	Applied to conclude appellant's complaint lacked sufficient particularity regarding the alleged oral agreement.
Mazour v. Mazour, 64 Nev. 245, 180 P.2d 103 (1947)	Reinforces the requirement of particularity in fraud allegations.	Supported the dismissal of the complaint due to insufficient factual detail.

Court's Reasoning and Analysis

The court began by recognizing that NRCP 60(b) explicitly allows independent actions to set aside judgments for fraud upon the court, and that the usual six-month limitation does not apply to claims of extrinsic fraud. The court defined extrinsic fraud as conduct preventing a real trial or decision on the merits, such as false promises or acts that keep a party from presenting defenses. Appellant’s complaint alleged an oral agreement that prevented contesting the default judgment, which if proven, would constitute extrinsic fraud.

However, the court found appellant failed to comply with NRCP 9(b)’s requirement that fraud allegations be pleaded with particularity. The complaint did not specify the terms or circumstances of the alleged oral agreement, and respondents denied its existence. Without detailed factual allegations or supporting evidence, the complaint was insufficient to survive a motion to dismiss.

Despite affirming the dismissal was warranted on these grounds, the court held that dismissal with prejudice was improper. The respondents’ motion did not inform appellant that failure to state a claim was a basis for dismissal, thereby denying appellant an opportunity to amend the complaint. The court emphasized that insufficient particularity in pleading fraud should not result in dismissal with prejudice, allowing appellant the chance to replead.

Holding and Implications

The court reversed the judgment of dismissal with prejudice and remanded the case to the district court with instructions to permit appellant to amend her complaint to plead the circumstances constituting the alleged fraud with sufficient particularity.

The direct effect is that appellant is afforded the opportunity to properly allege extrinsic fraud as a basis to set aside the default judgment. The court did not establish new precedent but reinforced existing standards regarding pleading requirements and the treatment of fraud allegations under NRCP 60(b) and 9(b).

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DOROTHY SAVAGE, AKA DOROTHY REINDERS AND DOROTHY MECUM, APPELLANT, v. ALBERTA M. SALZMANN AND ELSIE K. GIVENS, CO-ADMINISTRATRICES OF THE ESTATE OF BERNARD HENRY TEUSCHER, DECEASED, RESPONDENTS.

OPINION

Per Curiam:

On January 22, 1969, respondents Salzmann and Givens, co-administratrices of the Estate of Bernard Henry Teuscher, obtained a default judgment in a separate action against appellant Savage. On May 19, 1970, appellant filed suit to set aside that default judgment. Her complaint alleged that it was filed pursuant to NRCP 60(b) which provides that an independent action may be brought to set aside a judgment for fraud upon the court. The complaint further alleges that "prior to the entry of said default judgment the parties hereto had entered into an oral agreement which, if observed, would have obviated the judgment." It was also alleged that the oral agreement had operated to lull the plaintiff into inactivity so that some unconscionable advantage would be gained by respondents. No particular facts were pleaded.

Respondents moved to dismiss the complaint on the grounds that the default judgment obtained in the prior action operated as res judicata and that plaintiff was estopped from raising her contentions since she had failed to act within six months following the entry of the original default judgment. The lower court entered judgment dismissing appellant's action with prejudice. The sole issue raised on appeal is whether the lower court erred in rendering its judgment of dismissal with prejudice.

NRCP 60(b) expressly states that it 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." The purpose of this part of the rule is to afford relief upon proof of extrinsic fraud, and the normal six month limitation of Rule 60(b) has no application. Manville v. Manville, 79 Nev. 487, 387 P.2d 661 (1963). Relief from intrinsic fraud, under NRCP 60(b), must be sought not later than six months after the decree was entered.

Extrinsic fraud is defined as fraud by reason of which "there was, in fact, no adversary trial or decision of the issue in the case; where there has never been a real contest in the trial or hearing of the case." Villalon v. Bowen, 70 Nev. 456, 469, 273 P.2d 409 (1954), citing United States v. Throckmorton, 98 U.S. 61 (1878). "Extrinsic fraud has been held to exist when the unsuccessful party is kept away from the court by a false promise of compromise, or such conduct as prevents a real trial upon the issues involved, or any other act or omission which procures the absence of the unsuccessful party at trial. Further, it consists of fraud by the other party to the suit, which prevents the losing party either from knowing about his rights or defenses, or from having a fair opportunity of presenting them upon the trial." Murphy v. Murphy, 65 Nev. 264, 271, 193 P.2d 850 (1948), quoted with approval in Colby v. Colby, 78 Nev. 150, 369 P.2d 1019 (1962).

In this case, appellant's complaint alleged that the parties had entered into a prior agreement which would have obviated the default judgment and that she had relied upon this agreement. Hence, appellant has alleged facts which if proved would support a finding of extrinsic fraud. However, appellant has failed to comply with NRCP 9(b) which provides that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Appellant has, without evidence or affidavit, merely contended that an oral agreement existed between herself and the respondents prior to the default judgment. In the absence of a showing of the oral agreement, including its terms, and because respondents have categorically denied the existence of the agreement, such a contention is not sufficient against a motion to dismiss. Garteiz v. Garteiz, 70 Nev. 77, 254 P.2d 804 (1953); Mazour v. Mazour, 64 Nev. 245, 180 P.2d 103 (1947).

Even if the district court was correct in granting the motion to dismiss, the action should not have been dismissed with prejudice. Respondents' motion to dismiss did not apprise appellant of the fact that her complaint was subject to dismissal for failure to state a cause of action. If it had, appellant could have requested leave to amend her complaint. A failure to plead with sufficient particularity does not warrant a dismissal of the action with prejudice.

Accordingly, the judgment of dismissal is reversed, and the action is remanded to the district court with instructions to afford appellant the opportunity to plead with sufficient particularity the circumstances constituting the alleged fraud.