888 F.3d 847
7th Cir.2018Background
- Creditor John Gleason sued debtor Christopher Jansen in Jansen’s Chapter 7 adversary proceeding seeking a nondischargeability ruling under 11 U.S.C. § 523(a)(2)(A) based on an alleged phony investment and an unpaid Massachusetts default judgment (~$400,000).
- At bankruptcy trial, evidence showed Gleason paid $141,000 to Jansen’s company (Baytree/Talcott) for closing costs; where funds went was unclear. Jansen had later criminal convictions for unrelated frauds involving a Talcott Financial account.
- The bankruptcy court credited Jansen’s testimony that the Talcott account in the criminal case was a different entity/account and found Gleason failed to prove intentional fraud; it therefore held the debt dischargeable.
- Gleason invoked the Fifth Amendment repeatedly at the bankruptcy trial; the court warned that could trigger adverse inferences but nonetheless made factual findings for dischargeability.
- After trial Gleason discovered bank-record materials in a separate docket (Fetla’s Trading Post) he argued were newly discovered evidence showing Jansen’s personal use of account 100-177-5, and moved under Bankruptcy Rule 9024 (Fed. R. Civ. P. 60) to reopen the case; the bankruptcy court denied the motion as untimely and not newly discovered.
- Gleason appealed to the district court, but the district court dismissed the underlying merits appeal (treating it as duplicative) and proceeded only on the Rule 60 appeal; the district court affirmed the denial of Rule 60 relief, and Gleason appealed to this Court.
Issues
| Issue | Plaintiff's Argument (Gleason) | Defendant's Argument (Jansen) | Held |
|---|---|---|---|
| Whether the district court still had jurisdiction to review the underlying bankruptcy judgment | Gleason contended the merits could be considered because the district court said the cases/issues overlapped and he relied on that | Jansen argued the merits appeal was dismissed and only the Rule 60 issue remained; timeliness rules bar a late appeal | Held: The merits appeal is final and untimely; only the Rule 60(b) denial is before the courts (appeal of Rule 60 denial does not review underlying judgment) |
| Whether Fetla’s Trading Post materials constitute "newly discovered" evidence under Rule 60(b)(2) | The materials were newly discovered and would have undermined Jansen’s trial testimony about account identity/ownership | The evidence was publicly available on PACER and was discoverable earlier; Gleason had ample time to find it | Held: Not newly discovered; bankruptcy court did not abuse discretion denying Rule 60(b)(2) relief |
| Whether alleged perjury/discovery failures amount to fraud or misconduct under Rule 60(b)(3) | The undisclosed bank records show fraud/misconduct that prevented fair presentation at trial | Jansen denied fraud that would bar a fair trial; any discovery lapse is not the kind of fraud that warrants relief | Held: Court did not abuse discretion; evidence would not have necessarily changed outcome so Rule 60(b)(3) relief improper |
| Whether the conduct amounts to fraud on the court or warrants relief under Rule 60(d)(3) or Rule 60(b)(6) | Gleason argued alleged perjury corrupted the process and merits extraordinary relief | Jansen’s alleged lies did not amount to the extraordinary corruption of the judicial process needed for fraud on the court; Rule 60(b)(6) cannot be used to circumvent (1)-(3) | Held: No fraud on the court; relief under Rule 60(d)(3) or 60(b)(6) not warranted |
Key Cases Cited
- Bell v. McAdory, 820 F.3d 880 (7th Cir.) (appeal from Rule 60(b) denial cannot revisit underlying judgment)
- Browder v. Dir., Dep’t of Corr., 434 U.S. 257 (U.S. 1978) (appeal from denial of Rule 60(b) relief does not bring up underlying judgment)
- Bowles v. Russell, 551 U.S. 205 (U.S. 2007) (timely filing of civil notice of appeal is jurisdictional; courts cannot create equitable exceptions)
- Czarniecki v. City of Chicago, 633 F.3d 545 (7th Cir.) (dismissal "without prejudice" may be treated as final if court is finished with the case)
- Perry v. Sheet Metal Workers’ Local No. 73 Pension Fund, 585 F.3d 358 (7th Cir.) (timing rules when separate Rule 58 judgment is not entered)
- Kunik v. Racine Cnty., 106 F.3d 168 (7th Cir.) (late record searches are not the type of excusable neglect Rule 60 addresses)
- Wickens v. Shell Oil Co., 620 F.3d 747 (7th Cir.) (standard for Rule 60(b)(3): fraud must have prevented fair presentation at trial)
- Citizens for Appropriate Rural Rds. v. Foxx, 815 F.3d 1068 (7th Cir.) (fraud on the court requires extraordinary, process-corrupting conduct)
- Arrieta v. Battaglia, 461 F.3d 861 (7th Cir.) (Rule 60(b)(6) is not a catch-all to evade subsections (1)–(3))