Ballew vs. US Dept of Justice, (5th Cir. 2000)

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* Pursuant to 5 T H C IR . R. 47.5, the Court has determined that th i s opinion s h ould not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR .

R. 47.5.4. UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 99-11308 Robert C. Ballew, Plaintiff-Appellant, versus United States Department of Justice and United States Coast Guard, Defendants-Appellees. Appeal from the United States District Court for the Northern District of Texas Civil Docket #4:99-CV-406-Y December 15, 2000 Before JOLLY, JONES, and SMITH, Circuit Judges.

EDITH H. JONES, Circuit Judge: * Robert C. Ballew (“Ballew”) appeals from the district court’s grant of a motion to dismiss for failure to state a claim on his Federal Rule of Civil Procedure 60(b) independent equitable action for relief from a final judgment. Because Ballew did not plead the s ort of “grave miscarriage of justice” required to sustain a Rule 60(b) independent equitable action for relief from a final judgment, we now affirm the district court’s dismissal of his claim.

In 1988 Ballew filed a qui tam lawsuit under the Federal False Claims Act against his then-employer, Aerospatiale Helicopter Corporation (“AHC”) and the Textron Lycoming Division of AVCO Corporation (“AVCO”). These two defense contractors were engaged in the production and maintenance of the HH65-A “Dolphin” helicopter for the Coast Guard. Ballew’s qui tam action revealed that the engines made by AVCO for use in the AHC-manufactured helicopter were defective. As relator of an action brought on behalf of the government, Ballew was entitled to receive a share of any recovery obtained by the government. The Department of Justice ultimately intervened in Ballew’s qui tam acti on and settled the case on July 10, 1990.

As part of the settlement, the Government agreed to give Ballew, in his c apacity as relator, a 15% share of the cash recovery, or a total payment of $2,685,861.90. In return for this large cash payment, Ballew consented to the dismissal of his qui tam lawsuit against AVCO and AHC. The district court approved the proposed settlement, stating that “the Settlement Agreement between the Parties provides fair, adequate and reasonable resolution of this case under all the circumstances.” Ballew received his nearly $2.7 million payment shortly after the July 10, 1990 settlement was reached, and the matter was considered closed. However in June 1999, nearly nine years later, Ballew returned to federal court, asserting that he received a sum far below that to which he was entitled. In the instant case, Ballew asserts that the Government fraudulently concealed critical elements of the settlement agreement with AVCO and AHC, disguising the fact that the Government actually received some $327,940,130 in valuable consideration . Ballew therefore contends that he is entitled to 15% of $327,940,130, rather than the 15% of $17.9 million that he actually received.

Ballew arrived at this much larger settleme nt figure based on several documents he obtained via the Freedom of Information Act between 1996 and 1998. Ballew claims that the q ui tam settlement to which he agreed in 1990 failed to give him his 15% cut of (1) the new engine maintenan ce (“Power by the Hour”) contract entered into between AVCO and the Government as part of the settlement and (2) the settlement of certain administrative claims between the Coast Guard and AHC, which settled several weeks after his own underlying qui tam action.

The district court granted the Government’s motion to dismiss Ballew’s Rule 60(b) independent action for failure to state a claim. The district court ruled that Ballew had failed to plead the sort of “grave miscarriage of justice” required to sustain an independent equitable action under the “Savings Clause” of Rule 60(b) and that any motion allowed under Rule 60(b) was untimely.

Ballew now appeals the dismissal of his Rule 60(b) claim.

This CourtÂ’s review of the district courtÂ’s grant of the GovernmentÂ’s motion to dismiss for failure to state a claim is de novo . Holt Civic Club v. City of Tuscaloos a , 439 U.S. 60, 66 (1978); Fontana v. Barham , 707 F.2d 221, 227 (5th Cir. 1983). The Government has argued tha t we should review the district courtÂ’s decision in this case for abuse of discretion. The GovernmentÂ’s argument is premised on the rule that dismissal of Rule 60(b) motions seeking relief from final judgment is subject only to abuse of discretion review. The GovernmentÂ’s argument is correct as far as it goes: Rule 60(b)(1)-(6) motions are directed to the sound discretion of the district court. See e.g. Behringer v. Johnson , 75 F.3d 189, 190 (5th Cir. 1996), cert. denied 516 U.S. 1182 (1996); Bertrand v. Sullivan , 976 F.2d 977, 980 (5th Cir. 1992).

However, the instant action does not concern a Rule 60(b) motion but rather an independent action pursuant to the § 2868 (2d ed. 1986). An action pursuant to the “Saving Clause” is a free-standing claim in equity, not a mere motion, and is thus subject to de novo review on appeal when dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).

The “Saving Clause” reads in relevant part that “[t]his rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment [or] order.” Fed. R. Civ. Pro. 60(b). This independent action sounds in equity and is subject to the standard equitable defenses, including laches.

The Supreme Court has recently un derscored the special nature of the Rule 60(b) independent equitable action as a means of relief from a judgment, concluding that the rem edy is available only where there has been “grave miscarriage of justice.” United States v. Beggerly , 524 U.S. 38, 46, 118 S.Ct. 1862, 1868 (1998).

The Supreme Court emphasized that the level of fraud or misconduct necessary to su stain an independent action under the “Saving Clause” of Rule 60(b) must be several notches of severity above that required for a 60(b)(3) motion: If relief may be obtained through an independent action in a c ase such as this, where the most that may be c harged against the government is a failure to furnish relevant information that would at best form the basis for a Rule 60(b)(3) motion, the strict 1-year time limit on such motions would be set at naught. Independent actions must, if Rule 60(b) is to be interpreted as a coherent whole, be reserved for those cases of “injustices which, in certain instances, are deemed sufficie ntly gross to demand a departure” from rigid adherence to the doctrine of res judicata.

Beggerly , 524 U.S. at 46, 118 S.Ct. at 1867 (quoting Hazel-Atlas Glass Co. v. HartfordEmpire Co. , 322 U.S. 238, 244, 64 S.Ct 997, 1000 ( 1944)). 1 Thus, the bar has been set high for Ballew’s Rule 60(b) independent action: it must work a “grave miscarriage of justice” to allow the settlement in the original qui tam action to stand.

In his attempt show the requisite “grave miscarriage of justice” Ballew focuses on the failure of the government to give him a share, in his capacity as relator, of the estimated value of the l ater-settled “Power by the Hour” maintenance contract or of the resolu tion of the administrative claims between AHC and the Coast Guard. Ballew’s brief implies that this exclusion was motivated by malice, misrepresentations and fraudulent concealment on the part of the Department of Justice and/ or the Coast Guard; but the q ui tam award that he did receive was, at the time, the l argest-ever. It is also undisputed that he was aware of the government’s negotiations over the Power by the H our contract at the time of the settlement, and he was vigorously represented by counsel during settlement negotiations. Put together, these circumstances do not rise to the level of a grave miscarriage of justice even if the government was not fully forthcoming to Ballew.

Ballew also attempts to satisfy the grave miscarriage of justice standard by claiming that he is the victim of fraud by the Government, which allegedly made misrepresentations and withheld information during the settlement negotiations in 1990. Accepting these allegations as true, Ballew has st ill not made out a claim there has been the sort grave miscarriage of justice contemplated by the Supreme Court. Even prior to B eggerly it was establi shed that § 2870 at 416 (2d. ed. 1987).

Stated another way, fraud on the court requires a “scheme by which the integrity of the judicial process h as been fraudulently subverted by a deliberately planne d scheme in a manner involving ‘far more than an injury to a single litigant.’” Addington v. Farmer’s Elevator Mutual Ins urance , 650 F.2d 663, 668 (5th Cir. 1981) (quoting Hazel-Atlas Glass , 322 U.S. 238, 245-46, 64 S.Ct. 997, 1002 (1944)).

Ballew asserts that the fraud on the court in the instant case occurred when “the DOJ attorneys conspired with the USCG (and the defendants in the underlying Qui Tam ) to mislead the court as to the true nature, extent an d value of the underlying Q ui Tam settlement proceeds.” Taking all of these assertions as true, Ballew has onl y established that the Government committed fraud against him as an individual . Ballew has shown injury to himself in his capacity as a “single litigant” but this alone is not sufficient to constitute fraud on the court. Ballew has failed to allege an attack on the integrity of the judicial process itself.

By failing to plead fraud on the court, Ballew has thereby failed to assert that a grave miscarriage of justice exists. Ballew has failed to plead any grave miscarriage of justice. In the absence of a grave miscarriage of justice, a Rule 60(b) independent action can not be sustained. The district courtÂ’s dismissal of BallewÂ’s action for failure to state a claim is therefore AFFIRMED .

1 As Beggerly suggests, Rule 60(b)(3) would be directly applicable to Ball e w’s alleged situation, permitting relief “from a final judgment . . . [because of] fraud . . . misrepresentation, or other misconduct of an adverse party,” but by waiting over nine years to assert that the Government committed fraud in entering into the underlying qui tam settlement, Ballew lost the option of bringing a 60(b)(3) motion. Similarly, to the extent Ballew’s allegations might have supported relief based on Rule 60 (b)(1) (“mistake, inadvertence, surprise, or excusable neglect”), or Rule 60(b)(2) (newly discovered evidence), they are also time-barred

DRAFT April 29, 2004 (4:39am)

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