By Virginia Lawyers Weekly: The Week’s Opinions
U.S. Court of Appeals
Where plaintiff, while claiming that he was a bona fide purchaser of certain bank notes guaranteed by defendant, actually received the money to purchase the notes from defendants two partners through the partnership account, and defendant discovered the true nature of the transaction between plaintiff and his partners only after the hearing on the cross-motion for summary judgment in plaintiff’s suit to enforce the guaranty, the trial court erred in denying defendant’s motion for relief from judgment under Rule 60(b)3.
“[Defendant’s] lawyer received, as part of discovery, the letter outlining the arrangement between [plaintiff] and [defendant’s partners] only on the morning the motion for summary judgment was being argued (he received the material after arriving in the courtroom and did not read the papers until after the hearing); he then examined [one of the partners] in a deposition and discovered the true nature and extent of the transaction. Until [defendant] obtained the letter outlining the actual agreement between plaintiff and defendant’s partners, [defendant] had no way of knowing that the money used to ‘purchase’ the notes from the banks was actually money supplied by [his partners]. And, until [defendant’s] attorney questioned [a partner] in a deposition, he had no way of knowing that the money used was first put into the partnership bank account in order to retire the notes and was then withdrawn… .
“It is patently obvious from the record that the misrepresentations in [plaintiff’s] pleadings and the fact that [defendant] received the Dec. 14 letter the morning of the summary judgment hearing combined to prevent [defendant] from presenting the meritorious defense of payment to the district court in a timely fashion… .”
“Faced with the clear and uncontroverted record, we are forced to conclude that the district courts finding that no fraud was present was clearly erroneous, and that the district court abused its discretion in denying [defendant] relief under Fed. R. Civ. P. 60(b) (3). [Plaintiff’s] failure to disclose the true nature of the transaction between himself and [defendant’s] partners and the banks holding the notes ‘struck at the very heart of the fact finding process’ that is entrusted to the district court.’
“Accordingly, the district court’s order is vacated and the case is remanded with instructions to enter summary judgment for defendant.”
Green v. Foley (Lawyers Weekly B2258-20pp.) (Murnaghan, J.) No. 87-2639; USDC at Alexandria, Bryan, J.; John Raymond Hartnett for appellant; Lawrence Eliot Freedman for appellee.
Reprinted from Virginia Lawyers Weekly, September 26, 1988.