Can a party ask for Rule 60 relief on its own agreed judgment?

Yesterday, the Tennessee Court of Appeals issued an opinion on whether a party can ask that their own “agreed” judgment be set aside under Rule 60 of the Tennessee Rules of Civil Procedure. It’s an interesting factual scenario, and the opinion provides a good recap of the law regarding Rule 60.02 relief.

The case is City of Memphis, Tenn. v. Beale Street Development Corporation, No. W2020-00523-COA-R3-CV (Tenn. Ct. Apps., Sept. 21, 2021). In short, the defendant’s lawyer executed an agreed judgment that fully resolved the dispute, but, then, 364 days later, the defendant filed a Motion for Relief under Rule 60.02, arguing that its board never, in fact, properly approved the settlement agreement. As such, the lawyer should never have signed the judgment and the trial court should not have entered it.

In considering a party’s motion to set aside an agreed judgment that the attorney expressly agreed to, the Court spent some time with Rule 60.02, including on the following points.

A Rule 60.02 motion is reviewed under an “abuse of discretion standard.” Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012). This means that the appellate court will consider whether “the trial court applied incorrect legal standards, reached an illogical conclusion, based its decision on a clearly erroneous assessment of the evidence, or employed reasoning that cause[d] an injustice to the complaining party.” Id. The “trial court’s ruling ‘will be upheld as long as reasonable minds can disagree as to [the] propriety of the decision made.” Id.

That’s a pretty high standard, so much so that Rule 60.02 relief is called “an exceptional remedy.”

One of the bases to set aside a judgment under Tenn. R. Civ. P. 60.02 is for “fraud . . . , misrepresentation, or other misconduct of an adverse party.” This generally means that the other party or its counsel committed some fraud–like lying about the court date or forging a signature. But, the Court of Appeals says, this conduct must be committed by an adverse party (just like Rule 60 says). Action by a party’s own attorney will not support relief under Rule 60.02.

Finally, the Court noted that the motion was not timely. Of course, the rule expressly one year as an outer limit, but, here, the facts dictate that the defendants should have brought this motion sooner (maybe in response to the article on the front page of the Memphis newspaper the day after the settlement was announced).

“Rule 60.02 does not ‘permit a litigant to slumber on [its] claims and then belatedly attempt to relitigate issues long since laid to rest.’” Furlough v. Spherion Atl. Workforce, LLC, 397 S.W.3d 114, 127 (Tenn. 2013).

Motions brought under this rule are a hassle for the judgment creditor for obvious reasons: Who wants their hard work to be challenged years later? But, Tennessee Courts don’t look favorably on these motions and rarely grant them and, when they do, Rule 60.02 is strictly enforced on its terms.

Keep this case handy the next time you receive one of these motions.

Remember, Rule 60 Motions Must be Filed Within One Year

This new opinion from the Tennessee Court of Appeals sets up a nightmare scenario for a prevailing party.

In that case (Reliant Bank v. Kelly D. Bush, No. M2018-00510-COA-R3-CV,  Tenn. Ct. App. Dec. 28, 2018), the Bank won a post-foreclosure deficiency judgment in 2014, after  competing experts testified about the fair market value of the property under Tenn. Code Ann. § 35-5-118. The former homeowners appealed the ruling, which was affirmed in 2016, and remanded. But, on remand, a new Chancery Court Judge was on the bench, and the new Chancellor had a different analysis and partially aside the judgment under Rule 60.02.

On the second appeal, the Judgment was upheld, but talk about snatching victory from the jaws of defeat (or vice versa).

Aside from being a great lesson about the uncertainty and risks of litigation, the 2018 opinion provides some good reminders about Rule 60.02. The Court noted, in part, the following:

Relief under Rule 60.02 is “an exceptional remedy.” Nails v. Aetna Ins. Co., 834
S.W.2d 289, 294 (Tenn. 1992). The rule is intended “to alleviate the effect of an
oppressive or onerous final judgment.” Spence v. Helton, No. M2005-02527-COA-R3-CV, 2007 WL 1202407, at *3 (Tenn. Ct. App. Apr. 23, 2007). It “acts as an escape valve from possible inequity that might otherwise arise from the unrelenting imposition of the principal of finality embedded in our procedural rules.” Thompson v. Firemen’s Fund Ins. Co., 798 S.W.2d 235, 238 (Tenn. 1990). The movant has the burden of proving the grounds for relief. Spence, 2007 WL 1202407 at *3.

Under Rule 60.02(1), the court may set aside a final judgment for reasons of “mistake, inadvertence, surprise or excusable neglect.” Tenn. R. Civ. P. 60.02. Under Rule 60.02(2), additional reasons for a court to set aside a final judgment are “fraud … misrepresentation, or other misconduct of an adverse party.” Id. But motions based on Rule 60.02(1) or (2) must be filed within a reasonable time, not more than one year after the order was entered. Id.

Ultimately, the Court of Appeals found the new Motion to be untimely.

Because the motion was untimely, the chancery court should not have entertained it. See Furlough v. Spherion Atl. Workforce, LLC, 397 S.W.3d 114, 131 (Tenn. 2013) (concluding that “relief [wa]s not available under Rule 60.02(1)” because the petition seeking relief “was not timely filed”); cf. Rogers v. Estate of Russell, 50 S.W.3d 441, 445 (Tenn. Ct. App. 2001) (“[M]otions under Rule 60.02(1) and (2) must be filed both within a reasonable time and within one year after the judgment or order was entered.”).