McNeil v. Hoskyns

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

In re the Marriage of:

NANCY SAILORS McNEIL, Petitioner/Appellant,

v.

ROBERT NICHOLAS HOSKYNS, Respondent/Appellee.

No. 1 CA-CV 12-0685
FILED 09-30-2014

Appeal from the Superior Court in Maricopa County
No. FC2005-052833, FC2005-092137
The Honorable Gerald Porter, Judge

AFFIRMED

COUNSEL

Hymson, Goldstein & Pantiliat, PLLC, Scottsdale
By Yvette D. Ansel
Counsel for Petitioner/Appellant

Gillespie, Shields & Durrant, Mesa
By Mark A. Shields, DeeAn Gillespie Strub
Counsel for Respondent/Appellee
 McNEIL v. HOSKYNS
Opinion of the Court

OPINION

Chief Judge Diane M. Johnsen delivered the opinion of the Court, in
which Acting Presiding Judge Patricia K. Norris and Judge Kenton D.
Jones joined.

J O H N S E N, Judge:

¶1 By statute, the superior court lacks jurisdiction to modify a
dissolution decree approving the parties’ agreement that spousal support
may not be modified. We hold in this appeal that the statute does not
apply to a non-modifiable spousal support order that is the product of a
fraud on the court.

FACTS AND PROCEDURAL HISTORY

¶2 Nancy S. McNeil ("Wife") and Robert Hoskyns ("Husband")
married in 1985.1 In 2005, Wife petitioned for dissolution, and the parties
signed an agreement, which the court adopted, by which Husband agreed
to pay Wife $5,000 a month in temporary child and spousal support,
commencing January 2006. Husband is a dentist. Through an oversight,
he and someone else at his dental office each arranged for automatic
withdrawals of his monthly support payment from his office account. As
a result, for the next 17 months, double payments were withdrawn from
Husband's account and forwarded to Wife. Wife knew she was receiving
double payments, but did not alert Husband, who did not know of the
overpayments.

¶3 At the trial on their dissolution in May 2007, the parties
orally affirmed an agreement their lawyers put on the record, consistent
with Arizona Rule of Family Law Procedure 69, that Husband would pay
Wife $5,000 each month in spousal support for an additional six years,
commencing June 2007. The agreement also provided that spousal
support would be non-modifiable and non-terminable. The superior court

1 We view the facts in the light most favorable to upholding the
superior court's ruling on spousal support and will affirm the judgment if
reasonable evidence supports it. Boyle v. Boyle, 231 Ariz. 63, 65, ¶ 8, 290
P.3d 456, 458 (App. 2012).

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Opinion of the Court

questioned both parties about any spousal support payments still owing
under their prior agreement. Husband responded that he still owed
$2,500. Wife did not disclose that as of that date, Husband unwittingly
had paid $85,000 more than was due. In October 2007, the court approved
the agreement and repeated its terms in the dissolution decree. After
entry of the decree, Wife continued to receive some double spousal
support payments, but still did not notify Husband of the mix-up.

¶4 In October 2009, Wife filed a Petition to Enforce Spousal
Maintenance, claiming Husband owed more than $14,000 in arrears. At
the time, she knew that even though Husband had missed some post-
decree payments, overall, he had overpaid her by tens of thousands of
dollars since the start of the dissolution proceedings. After reviewing a
court-ordered accounting that revealed the overpayments, Husband filed
a response and counter-petition asking the court for relief from provisions
in the decree waiving all pendente lite claims and establishing the non-
modifiable spousal support obligation. Husband attached an email from
Wife in which she had threatened to notify the dental licensing board of
his alleged nonpayment in order to have his dental license revoked.

¶5 Wife filed a response to Husband's counter-petition and a
separate petition to hold him in contempt, claiming he owed $49,102 in
arrearages. She eventually withdrew her contempt petition, but not
before Husband was arrested and briefly jailed. After a hearing on Wife's
petition to enforce, the superior court found in October 2010 that Husband
was entitled to interest of $3,147 on overpayments made between June
2007 and July 2009, but that he still owed spousal support payments
totaling $59,100 through July 2010. Postponing consideration of
Husband's contention that any post-decree arrearages should be reduced
by the sum of the pre-decree overpayments, the court awarded Wife
$59,100 in past-due spousal support, along with attorney's fees and costs,
less the accrued interest due Husband.

¶6 At an evidentiary hearing in August 2011, the superior court
heard Husband's petition to set aside spousal maintenance. Wife testified
she had known she was receiving overpayments and that the pre-decree
overpayments totaled about $85,000. Husband testified he was unaware
of the overpayments until November 2009.

¶7 The superior court found Wife had committed three
instances of fraud on the court that authorized it to modify the non-
modifiable spousal maintenance term of the decree pursuant to In re
Marriage of Waldren, 217 Ariz. 173, 175 n.3, ¶ 10, 171 P.3d 1214, 1216 n.3

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Opinion of the Court

(2007). The court vacated the prior order requiring Husband to pay post-
decree arrearages, terminated Husband's spousal maintenance obligation
effective May 1, 2010, and imposed a $5,000 sanction pursuant to Arizona
Revised Statutes ("A.R.S.") section 12-349 (2014) against Wife for her
"repeated fraud and misrepresentations to the Court which resulted in
numerous, unnecessary hearings."2 The court also awarded Husband his
attorney's fees and costs.

¶8 We have jurisdiction of Wife's timely appeal pursuant to
Article 6, Section 9, of the Arizona Constitution, and A.R.S. § 12-2101(A)(2)
(2014).

DISCUSSION

¶9 Wife argues that pursuant to A.R.S. § 25-317(G) (2014), the
superior court lacked jurisdiction to modify the agreed non-modifiable
spousal support provision of the dissolution decree. We review de novo
the court's jurisdiction to modify the award. Waldren, 217 Ariz. at 175, ¶ 6,
171 P.3d at 1216.

¶10 Dissolution proceedings are statutory actions, and "the trial
court has only such jurisdiction as is granted by statute." Weaver v.
Weaver, 131 Ariz. 586, 587, 643 P.2d 499, 500 (1982) (citations omitted). In
the ordinary course, the superior court maintains "continuing jurisdiction"
over spousal maintenance, and it may modify a support award if the
parties' circumstances substantially change. See Waldren, 217 Ariz. at 175,
¶ 8, 171 P.3d at 1216.

¶11 By statute, however, "[i]f both parties agree, the maintenance
order and a decree of dissolution of marriage or of legal separation may
state that its maintenance terms shall not be modified." A.R.S. § 25-319(C)
(2014). Moreover, "entry of a decree that sets forth or incorporates by
reference a separation agreement that provides that its maintenance terms
shall not be modified prevents the court from exercising jurisdiction to
modify the decree and the separation agreement regarding maintenance . .
. ." A.R.S. § 25-317(G) (2014). Waldren held that even in the face of
substantially changed circumstances that otherwise might permit
modification of spousal maintenance, if the parties have agreed that

2 Absent material revision after the date of the events at issue, we cite
a statute's current version.

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Opinion of the Court

maintenance may not be modified and the decree so orders, § 25-317(G)
divests the court of jurisdiction to consider a subsequent petition to
modify. 217 Ariz. at 175, ¶¶ 9-10, 171 P.3d at 1216.

¶12 Waldren left open, however, whether fraud by one of the
parties may render the statutory bar ineffective. There were no allegations
of fraud in that case, and the supreme court noted, "We do not address
whether fraud or duress in the making of a non-modification agreement
may render such a provision void." Id. at 175 n.3, ¶ 10, 171 P.3d at 1216
n.3; see also Ariz. R. Fam. Law P. 85(C)(3) (time limits applying to motion
to set aside judgment do "not limit the power of a court . . . to set aside a
judgment for fraud upon the court").

¶13 The superior court in this case found Wife committed fraud
on the court that voided the parties' agreement that spousal maintenance
could not be modified. We will affirm a finding of fact by the superior
court unless it is clearly erroneous. Ariz. R. Fam. Law P. 82(A); see also
Valley Med. Specialists v. Farber, 194 Ariz. 363, 366, ¶ 9, 982 P.2d 1277, 1280
(1999). Factual findings are not clearly erroneous if substantial evidence
supports them, even if there is substantial conflicting evidence. Kocher v.
Dep't of Revenue of State of Ariz., 206 Ariz. 480, 482, ¶ 9, 80 P.3d 287, 289
(App. 2003).

¶14 Fraud on the court is a variety of extrinsic fraud. See, e.g.,
Dockery v. Cent. Ariz. Power & Light Co., 45 Ariz. 434, 450-51, 45 P.2d 656,
662-63 (1935). The doctrine may allow relief when, by fraud, a party has
prevented "a real contest before the court of the subject matter of the suit,"
id., or, put differently, has committed "some intentional act or conduct . . .
[that] has prevented the unsuccessful party from having a fair submission
of the controversy," Bates v. Bates, 1 Ariz. App. 165, 169, 400 P.2d 593, 597
(1965). The court has the power to set aside a judgment "[w]hen a party
obtains a judgment by concealing material facts and suppressing the truth
with the intent to mislead the court." Cypress on Sunland Homeowners
Ass'n v. Orlandini, 227 Ariz. 288, 299, ¶ 42, 257 P.3d 1168, 1179 (App. 2011)
(complaint contained false statements and material omissions, and
counsel made false statements in ex parte hearing); see also Gordon v.
Gordon, 35 Ariz. 357, 364-65, 278 P. 375, 377-78 (1929) (wife lied in affidavit
about where husband lived to excuse her failure to provide notice).

¶15 A judgment resulting from a fraud on the court may be set
aside by motion or by an independent action. Cypress, 227 Ariz. at 299, ¶
42, 257 P.3d at 1179. More specifically, we have held that a party may be
entitled to equitable relief from a provision of a dissolution decree that is

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Opinion of the Court

"procured by extrinsic fraud." Bates, 1 Ariz. App. at 168, 400 P.2d at 596
(when judgment is the product of extrinsic fraud, "equity will act to
prevent a failure of justice, for fraud is the arch enemy of equity").

¶16 Consistent with these cases, we hold that A.R.S. § 25-317(G)
does not divest the superior court of jurisdiction to modify a decree
imposing spousal support that the parties have agreed may not be
modified when the decree is the product of a fraud on the court. In such a
case, the party's fraud has damaged the "integrity of the judicial process"
and is a "wrong against the institutions set up to protect and safeguard the
public." Hazel–Atlas Glass Co. v. Hartford–Empire Co., 322 U.S. 238, 246
(1944), abrogated on other grounds, Standard Oil of Cal. v. United States, 429
U.S. 17 (1976); see also Cleveland Demolition Co., Inc. v. Azcon Scrap Corp.,
827 F.2d 984, 986 (4th Cir. 1987) (fraud on the court is a "corruption of the
judicial process itself") (quoting In re Whitney-Forbes, 770 F.2d 692, 698 (7th
Cir. 1985)). When such fraud prevents the court from considering the
fairness of an agreement that spousal support may not be modified, § 25-
317(G) will not preclude relief.

¶17 The superior court found Wife committed fraud on the court
when she entered in the Rule 69 agreement and submitted it for approval
in May 2007, and knew but did not disclose in response to the court's
question about the status of Husband's then-current obligations that he
had overpaid her roughly $85,000 in pre-decree support payments. The
court found that because of Wife's failure to disclose the overpayments,
the parties' spousal support agreement "was shrouded in fraud and
misrepresentation at the time of the entry of the Decree."

¶18 The record supports the superior court's findings. So far as
Husband and the court were aware, the status of Husband's support
payments was not a matter in dispute at the time of the dissolution trial in
2007, and Husband's response to the court's query, uncorrected by Wife,
constituted the premise of the court's decision to accept as fair the parties'
agreement concerning his post-decree support obligations. When Wife
failed to disclose the overpayments to the court, she permitted the court to
proceed on the misunderstanding that Husband actually owed $2,500 in
pre-decree payments when in reality he had overpaid by more than
$85,000.

¶19 Wife argues fraudulent concealment cannot constitute a
fraud on the court justifying relief from a judgment. To the contrary,
"concealment of material facts may form the basis of an action in equity
for extrinsic fraud." Bates, 1 Ariz. App. at 168, 400 P.2d at 596. By failing

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Opinion of the Court

to disclose when she and Husband presented their spousal support
agreement to the court that she had received thousands of dollars in
double payments drawn from Husband's account, Wife effectively
prevented a fair adjudication of the amount Husband should be ordered
to pay in post-decree spousal maintenance. See A.R.S. § 25-317(B), (C)
(court may decline to adopt a spousal maintenance agreement it concludes
is unfair).

¶20 Wife also argues that fraud on the court may be committed
only by an officer of the court, not by a party. We do not accept that
contention. See Gordon, 35 Ariz. at 365-66, 278 P. at 378 (plaintiff
committed fraud on the court by affidavit falsely representing she did not
know where defendant lived); Bates, 1 Ariz. App. at 168-69, 400 P.2d at
597-98 (husband concealed real property during divorce decree
proceedings); Mt. Ivy Press, LP v. Defonseca, 937 N.E.2d 501, 509 (Mass.
App. 2010) ("Although fraud on the court typically involves officers of the
court, we are unprepared to say that pro se litigants are in all
circumstances insulated from committing fraud on the court."); Ray v. Ray,
647 S.E.2d 237, 241 (S.C. 2007) (wife committed fraud on court by
misrepresenting existence of marital assets in court-ordered accounting).
The fact that the false statements and concealments the superior court
found were made by Wife, rather than by her lawyer, does not invalidate
its finding.

¶21 Wife finally argues Husband could have discovered the
overpayments and called them to the court’s attention at the 2007
dissolution trial. Although Husband's diligence, or lack of it, would be
relevant to a claim of common-law fraud, no such defense applies to a
claim of fraud on the court. See, e.g., Hazel-Atlas Glass, 322 U.S. at 246, 250;
see also Robinson v. Audi Aktiengesellschaft, 56 F.3d 1259, 1262 n.2 (10th Cir.
1995). As the Supreme Court explained in Hazel-Atlas Glass, fraud on the
court "involves far more than an injury to a single litigant. It is a wrong
against the institutions set up to protect and safeguard the public . . . ."
322 U.S. at 246. For that reason, the Court held, "preservation of the
integrity of the judicial process" must not always "wait upon the diligence
of litigants." Id. Although Hazel-Atlas Glass involved a patent, the same
rule has been applied in a purely private dispute. Pumphrey v. K.W.
Thompson Tool Co., 62 F.3d 1128, 1133 (9th Cir. 1995) ("even assuming [the
plaintiff] was not diligent in uncovering the fraud, the district court was
still empowered to set aside the verdict, as the court itself was a victim of
the fraud.").

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Opinion of the Court

¶22 We affirm the superior court’s finding that the 2007 order
adopting the parties' spousal support agreement was the product of a
fraud on the court. Wife’s fraud authorized the superior court to exercise
its equitable power in 2011 to grant Husband's petition to modify the
support obligation and to grant any appropriate associated relief. See
Ariz. R. Fam. Law P. 85(C)(3); see also Cypress, 227 Ariz. at 299, ¶ 42, 257
P.3d at 1179.3

¶23 The superior court also found Wife committed fraud when
she failed to disclose Husband’s overpayments in her subsequent petitions
for contempt and for enforcement. On those occasions, unlike in the
dissolution trial, the amount Husband had paid in support, and any
cumulative arrearages due, were directly before the court for resolution.
A false statement to the court about a matter in dispute rarely will
constitute a fraud on the court. See Dockery, 45 Ariz. at 454, 45 P.2d at 664
(collateral attack on judgment not allowed by complaint presenting issue
decided in the judgment); George P. Reintjes Co., Inc. v. Riley Stoker Corp., 71
F.3d 44, 49 (1st Cir. 1995) (perjury is "hazard of the adversary process with
which litigants are equipped to deal through discovery and cross-
examination").4

¶24 Although misrepresentations and concealments in Wife’s
post-decree filings did not constitute extrinsic fraud, a false statement
under oath about a matter in dispute may subject that party to sanctions.

3 Wife argues only that the superior court lacked jurisdiction to
modify the agreed-upon spousal support obligation. She does not argue
that, if the court had jurisdiction, it abused its discretion by deciding to
terminate Husband’s spousal support payments as of 2010.

4 As the Supreme Court explained in Hazel-Atlas Glass Co., 322 U.S. at
261, n.18:

The classical example of intrinsic as contrasted with extrinsic
fraud is the commission of perjury by a witness. While
perjury is a fraud upon the court, the credibility of witnesses
is in issue, for it is one of the matters on which the trier of
fact must pass in order to reach a final judgment. An
allegation that a witness perjured himself is insufficient [to
justify relief as extrinsic fraud] because the materiality of the
testimony, and opportunity to attack it, was open at the trial.

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Opinion of the Court

See A.R.S. § 12-349; Ariz. R. Fam. Law P. 31. Having found Wife’s post-
decree filings contained false statements and fraudulent concealment, the
superior court was authorized to impose appropriate penalties, including
the $5,000 sanction and Husband’s attorney’s fees and costs. Id.

¶25 Both parties ask for their attorney's fees on appeal pursuant
to A.R.S. § 25-324 (2014) (court may grant fees after considering parties'
financial resources and the reasonableness of their positions). Because we
are unaware of the parties' current financial resources, we deny the
requests without prejudice to renewal in the superior court. We grant
Husband his costs on appeal contingent on compliance with Arizona Rule
of Civil Appellate Procedure 21.

CONCLUSION

¶26 For the foregoing reasons, we affirm the relief the superior
court granted Husband in its orders issued September 19, 2011, and
February 10, 2012.

:gsh

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