Respondent Timothy O’Meara (O’Meara) appeals the order of the Superior Court {Wageling, J.) granting summary judgment against him and his law firm, O’Meara Newborn, PLLC, in this action brought by the petitioners, James and Anita Conant, for the equitable recovery of fees paid to O’Meara. Respondent O’Meara Newborn, PLLC did not appeal. We affirm in part and reverse in part.
Many of the facts underlying this action are recited in our previous decision disbarring O’Meara for ethical violations committed in the course of representing the Conants.
See O’Meara’s Case,
On May 19, 2005, Anita Conant was severely injured in an automobile accident in Pennsylvania. Id. at 172. She was rear-ended by a paving truck while stopped at a red light and, as a result of the spinal cord injury she suffered, she was rendered a ventilator-dependent quadriplegic. Id.
James Conant, Anita Conant’s husband, retained O’Meara to represent the Conants in a personal injury suit arising out of the accident. He executed a contingent fee agreement providing, in part, “that O’Meara would be paid 33.33% of the gross amount recovered.” Id. at 173 (quotation omitted). Approximately ten days after being retained by the Conants, O’Meara learned that the paving company whose truck was involved in the accident was insured for a total of $11 million. Id.
O’Meara filed suit on November 3, 2005, and, on December 1, was informed by opposing counsel that the insurer did not contest liability. Id. Approximately eight days later, O’Meara informed opposing counsel that he believed the suit was “a policy limits case” and had been instructed “to proceed to trial” if the policy limits were not paid. Id. (quotation omitted). At the time, O’Meara knew he lacked authority to settle the case for the policy limits. Id. A certified life planner later estimated that Anita Conant, who was forty-seven years old at the time of the accident, would need more than $23 million to sustain her for the rest of her life. Id. at 172, 174.
After expressing concern over O’Meara’s unauthorized demand to settle, James Conant suggested that O’Meara reduce his fee.
Id.
at 174. O’Meara agreed to consider it, and thereafter proposed a $166,000 reduction.
Id.
Tension over O’Meara’s fee persisted.
Id.
At a meeting on February 25, the parties discussed what O’Meara’s fee should be if the case settled for the policy limits.
Id.
O’Meara offered to reduce his potential fee from $3.67 million to $3.17 million, which angered James Conant.
Id.
James Conant’s brother stated “he had been informed that a $2 million fee was reasonable in a ease such as this one,” but “[n]one of the other Conants responded.”
Id.
Instead, “[t]he exchange . . . became heated,”
id.,
and O’Meara was asked what would happen if the Conant family fired him.
Id.
at 175. “O’Meara responded that litigation ‘gets ugly’ ” and
The dispute over fees continued, and ultimately, on the day of a scheduled mediation in federal court in Pennsylvania, O’Meara informed the Conants at the courthouse “that he would not proceed with the mediation unless he received at least a $2 million fee.” Id. James Conant felt he had no choice but to sign a memorandum agreeing to that fee. Id.
O’Meara negotiated an $11.5 million settlement subject to certain contingencies. After the mediation, the Conants dismissed O’Meara and the case settled for $11.5 million. Id. Subsequently, “the Conants and O’Meara agreed that the Conants would pay O’Meara an undisputed fee of $750,000, place $1,250,000 in escrow, and arbitrate the issue of how this amount should be divided.” Id. At the arbitration, “O’Meara testified that, before he left the Conants’ home on February 25, the Conants had agreed to pay him $2 million in fees.” Id. at 176. In March 2009, the arbitration panel reached a decision awarding O’Meara $837,000 of the escrow fund and the Conants the remaining $413,000. See Id. at 176. One arbitrator dissented.
On February 6, 2007, counsel for the Conants filed a grievance with the Attorney Discipline Office (ADO) alleging ethical violations by O’Meara. The ensuing disciplinary proceeding culminated in our September 18,2012 order disbarring him. See id. at 182. In that order, we concluded that “O’Meara lied under oath when he testified at the arbitration that the Conants agreed to his $2 million fee at the February 25 meeting.” Id. at 181. By petition dated October 17,2012, the Conants commenced this case as an independent action in equity against O’Meara and his firm to disgorge all fees the Conants have paid them.
Ruling on cross-motions for summary judgment, the trial court set aside the arbitration judgment and ordered O’Meara “to return $837,000 to the Conants.” The court also found that “at the time the Conants paid O’Meara an ‘undisputed’ fee amount, O’Meara had already violated his fiduciary duties, making his retention of the fee amount inequitable.” Accordingly, it ordered O’Meara to disgorge the $750,000 the Conants paid him prior to arbitration. O’Meara appealed. *
On appeal, O’Meara argues that the trial court erred in: (1) permitting the petitioners to relitigate matters determined in the prior arbitration; (2) failing to find the petitioners’ action barred by the statute of limitations; and (3) ordering fee forfeiture.
We review the trial court’s rulings on cross-motions for summary judgment under the following standard: “[W]e consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law.”
O’Meara first contends that the Conants’ claims are barred by res judicata and that the trial court erred in concluding otherwise. Specifically, O’Meara argues that the trial court erred in finding “that the issue of forfeiture was not presented in the arbitration.” He asserts that the Conants’ pleadings before the arbitrators raised the issue of forfeiture by asking for the return of all legal fees paid.
As the Conants point out, however, O’Meara fails to challenge on appeal the trial court’s alternative ruling on the res judicata issue; namely, that “the arbitrators’ decisions cannot stand because they were procured by fraud, so it is irrelevant that they had considered the appropriateness of part of O’Meara’s fee.” In other words, because the arbitrators’ judgment was set aside by the trial court, that judgment cannot have preclusive effect.
Cf. No East-West Highway Committee, Inc. v. Chandler,
O’Meara next argues that the Conants’ claims are barred by the statute of limitations. He asserts that there are several limitations deadlines that may be applicable to this case and that the Conants have missed all of them by several years. First is the deadline set forth in the parties’ agreement to submit to arbitration their claims to the disputed portion of the fee. In that agreement the Conants and O’Meara waived their rights under RSA
The second limitations period cited by O’Meara is set forth in New Hampshire’s arbitration statute, which provides, in part:
At any time within one yearaffcer the award is made any party to the arbitration may apply to the superior court for an order confirming the award, correcting or modifying the award for plain mistake, or vacating the award for fraud, corruption, or misconduct by the parties or by the arbitrators, or on the ground that the arbitrators have exceeded their powers.
RSA 542:8 (2007). O’Meara contends that this statutory period expired in 2008.
The third limitations period O’Meara cites is New Hampshire’s general three-year statute of limitations for personal actions. RSA 508:4 (2010). O’Meara argues “that period expired in 2009 or 2010.”
The first two limitations periods, by their terms, apply only to the Conants’ claim to vacate the arbitrators’ award. The trial court ruled that “despite the running of the statute of limitations on an independent action to set aside the judgment or to review the arbitration award, the arbitration judgment awarding O’Meara $887,000 must be set aside because it was procured by fraud.” The court reached this result under the rule described in
Hazel-Atlas Co. v. Hartford Co.,
Hazel-Atlas
addressed the power of a federal court to set aside a judgment obtained by fraud despite the untimeliness of the action brought for that purpose.
Hazel-Atlas,
From the beginning there has existed alongside the term rule a rule of equity to the effect that under certain circumstances, one of which is after-discovered fraud, relief will be granted against judgments regardless of the term of their entry. This equity rule, which was firmly established in English practice long before the foundation of our Republic, the courts have developed and fashioned to fulfill a universally recognized need for correcting injustices which, in certain instances, are deemed sufficiently gross to demand a departure from rigid adherence to the term rule .... [I]n cases where courts have exercised the power, the relief granted has taken several forms: setting aside the judgment to permit a new trial, altering the terms of the judgment, or restraining the beneficiaries of the judgment from taking any benefit whatever from it. But whatever form the relief has taken in particular cases, the net result in every case has been the same: where the situation has required, the court has, in some manner, devitalized the judgment even though the term at which it was entered had long since passedaway.
Id. at 244-45 (citations and footnote omitted).
New Hampshire common law has similarly recognized that “[f]raud will vitiate a judgment, and a court of equity may declare it a nullity.”
Wingate v. Haywood,
It has been noted that the “fraud exception for untimely requests” recognized in
Hazel-Atlas
“never included garden-variety fraud” claims such as suspected perjury by a witness.
Geo. P. Reintjes Co., Inc. v. Riley Stoker Corp.,
This type of fraud is typically called “fraud on the court” and, in federal courts, may be brought as an independent action permitted under the savings clause in Federal Rule of Civil Procedure 60(d)(3). FED. R. ClY. P. 60(d)(3). It has been described as “only that species of fraud which does or attempts to, defile the court itself,
or is a fraud perpetrated by officers of the court
so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases.”
Hadges v. Yonkers Racing Corp.,
The treatment of perjured testimony in our cases is less clear. Perjury by a witness may constitute grounds for a new trial under the statute providing that a new trial may be granted when, due to accident, mistake or misfortune, justice has not been done.
See Rasquin v. Cohen,
We have not explicitly addressed whether, or under what circumstances, a judgment may be set aside or a new trial granted, on grounds of perjury, long after the original judgment was rendered. In cases where perjury has been used to vitiate a judgment, the action, however it was brought, would seem to have been, under any measure, timely.
See Craft v. Thompson,
We need not now decide all conditions under which a judgment or award may be set aside on an untimely request, whether by motion or independent action. We hold only that fraud on the court, as recognized in Hazel-Atlas and found by the trial court in this case — in particular, perjury by an officer of the court — constitutes sufficient grounds under New Hampshire law to set aside a judgment or award.
O’Meara argues that the Hazel-Atlas doctrine does not apply on five separate grounds: (1) his “belief about events was not ‘after-discovered,’ but was known and discernible during his arbitration testimony”; (2) no record evidence suggests that his “rendition was ‘deliberately planned’ or ‘carefully executed’ (3) “the record is clear that the judgment was not ‘obtained with the aid’ of [his] testimony”; (4) he was “at most” a witness; and (5) his testimony “was not believed and therefore did not attack the integrity of the judicial system itself.” O’Meara’s arguments attempt to exploit every factual difference between this case and Hazel-Atlas. Not all, however, are relevant here. For instance, the fraud on the court doctrine we recognized above, based on our ease law and the guidance of Hazel-Atlas, does not require deliberate planning or careful execution. Accordingly, we find O’Meara’s second argument unpersuasive.
Similarly, O’Meara’s first argument contends that his “arbitration testimony was intrinsic evidence, known at the time and not after-discovered, and subject to lengthy cross-examination.” Under our case law, however, the “after-discovered” factor, if required at all, does not mean that the party seeking to set aside the judgment cannot have suspected fraud during the prior proceeding. In
Craft,
the plaintiff alleged that the defendant testified falsely at an arbitration hearing and that the plaintiff “was then and there unable to furnish definite and positive evidence to contradict the statement of the [defendant], though he did then and there deny the correctness thereof.”
Craft,
O’Meara’s third and fifth arguments both rest upon the premise that his testimony was not believed by the arbitrators. The trial court found, however, that “[t]he arbitrators clearly relied on O’Meara’s testimony to [a certain] extent, and in this way, O’Meara’s perjury was material to their judgment.” The trial court made its finding as a matter of law on the basis that it was interpreting the arbitrators’ decision.
Cf. Appeal of Langenfeld,
During the arbitration hearing, O’Meara testified that the Conants agreed to his $2 million fee at the February 25 meeting.
O’Meara’s Case,
The general acquiescence on February 25th of James and Anita Conant to the concept that a $2 million dollar fee on an $11 million dollar recovery was fair, followed by James Conant’s actual agreement in writing to a fee in that amount, while not conclusive in establishing that the $2 million dollar fee was not excessive, is compelling evidence of the belief of the parties.
Finally, they found that “[b]oth parties . . . agreed that a $2.0 million, or 13.8% fee on... a [$14.5 million] recovery would be fair,” and calculated the award by applying that percentage to the actual settlement amount. Given these findings, we cannot agree with O’Meara that the arbitrators’ award “was not ‘obtained with the aid’ of [his] testimony.”
Although it is not clear how much, if any, reliance on the perjured testimony by the tribunal is required under
Hazel-Atlas
or our cases, we conclude that the reliance evident here is sufficient.
See Hazel-Atlas,
O’Meara nevertheless asserts that the dissenting arbitrator found his testimony unpersuasive and “emphasized that the majority did not believe it either.” O’Meara misstates the record. The dissenting arbitrator said that the majority made no finding that the parties agreed to a $2 million fee and that he (the dissenting arbitrator) found O’Meara’s testimony that the parties had so agreed “not persuasive.” Nor did we, contrary to O’Meara’s assertion, note in
O’Meara’s Case
that “ ‘the arbitration panel likely concluded that O’Meara testified falsely.’ ” (Quoting
O’Meara’s Case,
O’Meara’s fourth argument challenges the trial court’s finding that “when O’Meara lied to the arbitrators, he did so in his capacity as an officer of the court.” He contends that although he was a lawyer, he “was not acting in a representative capacity” and “was not acting as an officer of the court when he testified as a fact witness.” We implicitly found to the contrary, however, when we found O’Meara’s arbitration testimony to be grounds for disbarment notwithstanding that he “no longer represented the Conants when he lied to the arbitration panel.” Id. at 181. We noted that “[a]s officers of the court, attorneys are prohibited from making false statements of material fact to a tribunal.” Id. (quotation omitted). Accordingly, we reject O’Meara’s contention that he was not an officer of the court when he testified before the arbitrators.
O’Meara nevertheless contends that the doctrine embodied in
Craft
in 1872 has been “superseded by New Hampshire’s arbitration statute.”
See
RSA 542:8. We disagree. As noted by the Supreme Court of Montana, “[t]he power of the court to set aside a judgment on the basis of fraud upon the court is inherent and independent of statute.”
Salway v. Arkava,
We conclude that because O’Meara committed perjury before the arbitrators, as an officer of the court, the trial court permissibly vacated the arbitrator’s award under the fraud-on-the-court doctrine. We also conclude that the court sustainably exercised its discretion in ordering O’Meara to disgorge the $837,000 awarded by the arbitrators. In perjuring himself before the arbitration panel in an attempt to secure his own fee, O’Meara placed his own interests above those owed to his clients. We held, in
In re Estate of McCool,
However, the fraud on the tribunal doctrine does not apply to the Conants’ claim for forfeiture of the $750,000 they paid O’Meara prior to arbitration. The Conants contend that the trial court properly applied equitable principles under Hazel-Atlas and New Hampshire common law to avoid the statute of limitations on not only their claim to vacate the arbitrators’ award but also to disgorge fees. To the extent the trial court did so, it erred. As the trial court found, the arbitrators “were only tasked with considering whether O’Meara was entitled to a disputed portion of fees.” We fail to see how fraud on a tribunal can justify avoiding the time-bar of a claim not before that tribunal.
We therefore address separately whether that claim is barred by the statute of limitations. “Statutes of limitation place a limit on the time in which a plaintiff may bring suit after a cause of action accrues.”
Beane v. Dana S. Beane & Co.,
We apply the general three-year limitations period for personal actions notwithstanding that the Conants brought their petition in equity.
See
RSA 508:4;
Wentworth v. Wentworth,
In the 2007 arbitrators’ decision, the dissenting arbitrator noted that “[a] significant focus of the Conant[s’] presentation sought to establish that ■Mr. O’Meara’s conduct during the period of representation violated fiduciary duties owed to his clients.” The dissent also noted that the Conants argued that these breaches of fiduciary duty supported the return of all fees already paid to O’Meara. Thus, by the time of arbitration, the Conants were aware of their claim for forfeiture or disgorgement of fees. In any event, they should have reasonably become aware of that claim no later than when the arbitration decision was rendered. The dissenting arbitrator devoted fourteen pages of his opinion to explaining why O’Meara’s fiduciary breaches “justif[ied] forfeiture of most, if not all, óf the fees in dispute.”
The Conants argue that
“Terzis [v. Estate of Whalen,
Affirmed in part; and reversed in part.
Notes
The record is not clear how, or whether, provision for costs and expenses was made by the parties, the arbitrators, or the trial court. O’Meara mentions costs only briefly, contending that even when fees are disgorged, “costs advanced on behalf of the client do not get given back.” He then observes that “[t]he arbitration dissent estimated this amount was ‘approximately $37,000.’ ” Given the inadequacy of the record and briefing on this issue, and our ruling regarding the $750,000 paid prior to arbitration, we decline to consider the issue of costs.