THE STATE OF
In The Supreme Court
Don Allyn Ray, Appellant,
Melinda Hodges Ray, Respondent.
Kellum W. Allen, Family Court Judge
Opinion No. 26343
Heard January 30, 2007 - Filed June 25, 2007
REVERSED AND REMANDED
Jean Perrin Derrick, of
Lexington, for Appellant.
W. Joseph Isaacs, of Isaacs & Alley, of
Columbia, for Respondent.
JUSTICE BURNETT: Don Allyn Ray (Appellant) brought this action to set aside the judgment of the family court pursuant to Rule 60(b), SCRCP. The family court granted Melinda Hodges Rays (Respondent) motion to dismiss pursuant to Rule 12(b)(6), SCRCP. We reverse.
Appellant and Respondent were divorced in 2000. In 2001, the family court issued a decree approving the settlement reached by Appellant and Respondent concerning the equitable division of their marital estate. In 2005, Appellant initiated the instant action, alleging an action for fraud upon the court and an independent action in equity arising from Respondents deliberate concealment of $130,000 until after the marital property had been divided.
Prior to the divorce, Respondent entered an agreement to sell a pharmacy she owned jointly with her husband. At the same time, Respondent entered into a separate agreement not to compete with CVS, the purchaser of the pharmacy, for which she received $130,000 in consideration. Respondent made arrangements with CVS to receive payment after the divorce was finalized. Further, she deliberately concealed the aforementioned agreement in response to discovery requests and during depositions.
The family court addressed the issue of whether Appellants allegations against Respondent rose to the level of extrinsic fraud or were simply intrinsic fraud. Respondent argued that her acts constituted only intrinsic fraud, res judicata applied, Appellant failed to exercise due diligence in discovering the fraud, and the complaint failed to state facts sufficient to constitute a cause of action. Thereafter, Respondent filed a motion to dismiss pursuant to Rule 12(b)(6), SCRCP.
The family court, citing Chewning v. Ford Motor Company, 354 S.C. 72, 579 S.E.2d 605 (2003), held Appellants allegations did not rise to the level of extrinsic fraud because there were no allegations of extraordinary, collateral matters which would justify the relitigation of issues concluded by judicial decree years ago. The family court granted Respondents motion to dismiss. This appeal followed.
Does deliberate concealment of a marital asset constitute extrinsic fraud when the concealment is part of a deliberate scheme to defraud, involving an unknown third party not subject to discovery?
STANDARD OF REVIEW
In appeals from the family court, this Court has the authority to find facts in accordance with its view of the preponderance of the evidence. E.D.M. v. T.A.M., 307 S.C. 471, 473, 415 S.E.2d 812, 814 (1992). However, this broad scope of review does not require this Court to disregard the findings of the family court who saw and heard the parties, and is in a better position to evaluate their credibility. Stevenson v. Stevenson, 276 S.C. 475, 477, 279 S.E.2d 616, 617 (1981); Cherry v. Thomasson, 276 S.C. 524, 525, 280 S.E.2d 541, 541 (1981).
Appellant argues Respondents deliberate concealment of $130,000 in proceeds generated from the sale of the couples pharmacy constitutes extrinsic fraud based on this Courts opinion in Chewning v. Ford Motor Company, 354 S.C. 72, 579 S.E.2d 605. Appellant argues the family court erred in limiting extrinsic fraud, as defined in Chewning, to misconduct perpetrated by attorneys. We agree.
In Chewning, we noted:
Generally speaking, only the most egregious misconduct, such as bribery of a judge or members of a jury, or the fabrication of evidence by a party in which an attorney is implicated will constitute fraud on the court. Less egregious misconduct, such as nondisclosure to the court of facts allegedly pertinent to the matter before it, will not ordinarily rise to the level of fraud on the court.
The essential distinction between intrinsic and extrinsic fraud is the ability to discover the fraud. Equitable relief from a judgment is granted for extrinsic fraud on the theory that because the fraud prevented a party from fully exhibiting and trying his case, there has never been a real contest before the court on the subject matter of the action.
In Chewning, we held the subornation of perjury by an attorney and/or the intentional concealment of documents by an attorney are actions which constitute extrinsic fraud.
In Evans, the former husband brought an action for relief from judgment under Rule 60(b), SCRCP, when he discovered his former wife had induced him to sign an affidavit waiving his right to plead or appear for the divorce action when he was extremely intoxicated. We noted that while the former wifes perjury would fall in the intrinsic fraud category, her actions in inducing Evans to sign such a waiver form, denying him his opportunity to be heard were such as could be considered extrinsic fraud under Rule 60(b).
In the instant case, Respondent misrepresented the existence of the marital assets when ordered by the court to produce an accounting. This was intrinsic fraud. See Chewning, 354 S.C. at 81, 579 S.E.2d at 610 (the failure to disclose to an adversary or court matters which would defeat ones own claim is intrinsic fraud) (quoting Hilton Head Ctr., 294 S.C. at 11, 362 S.E.2d at 177). However, in this case, as in Evans, there was a showing that one has acted with an intent to deceive or defraud the court. Chewning, 354 S.C. at 78, 579 S.E.2d at 608 (it [is] essential that there be a showing of conscious wrongdoing - what can properly be characterized as a deliberate scheme to defraud - before relief from a final judgment is appropriate.). In delaying the payment by CVS until after the divorce, Respondent engaged in a deliberately planned and carefully executed scheme to defraud.
Respondents actions rose to the level of extrinsic fraud when she engaged in a fraudulent scheme to hide assets from the court and, in doing so, utilized an unknown third party, CVS, not subject to discovery during the litigation. Accordingly, we reverse the family courts dismissal of this action and remand for further proceedings consistent with this opinion.
TOAL, C.J., and MOORE, J., concur. PLEICONES, J., dissenting in a separate opinion in which WALLER, J., concurs.
JUSTICE PLEICONES: I respectfully dissent. In my opinion, appellants complaint alleges a classic instance of intrinsic fraud which the family court properly dismissed. I would affirm.
A party may bring a suit in equity to set aside a judgment at law allegedly procured by fraud as appellant has, or may move to set the judgment aside under Rule 60(b), SCRCP. While there are certain procedural differences depending on the form of the action, the legal principles are identical: relief is available where the earlier judgment was procured by extrinsic fraud, but a judgment obtained through the use of intrinsic fraud is not subject to collateral attack. The majority and I agree on this point, as we do on the basic definition of intrinsic fraud: a fraud that goes to the merits of the earlier action, that is, to an issue of which the party had both notice and an opportunity to litigate in that prior suit. E.g., Mr. G. v. Mrs. G., 320 S.C. 305, 465 S.E.2d 101 (Ct. App. 1995).
Appellant alleges that respondent deliberately concealed a marital asset as part of a scheme to defraud appellant of his rightful share of the equitable division of marital property in the parties divorce action. Appellant was undeniably aware that the identity and valuation of assets was at issue in that suit, and had the opportunity to litigate equitable distribution. Accordingly, appellants present complaint alleges only intrinsic fraud. The policy reason underlying the bar to intrinsic fraud claims is predicated on the theory that an issue which has been tried and passed upon in the original action should not be retried in an action for equitable relief against the judgment, and that otherwise litigation would be interminable.
The fraud alleged by appellant here is classic intrinsic fraud. The majoritys reliance on a federal case decided under Rule 60(b), FRCP, and a
The majoritys attempt to limit its new rule to situations where a partys perjury or concealment is intended to defraud the court does nothing more than restate the current definition of intrinsic fraud. As the
For the reasons given above, I would affirm the trial courts dismissal of this suit.
WALLER, J., concurs.
 See generally In re Marriage of Melton, 33 Cal. Rptr. 2d 761 (Cal. Ct. App. 1994) (no extrinsic fraud found where husband misrepresented value of pension benefits with the assistance of the benefit plan administrator where the plan was a party to the action and wifes counsel could have discovered the concealed information through discovery); Bankston v. Bankston, 251 S.W.2d 768 (Tex. Civ. App. 1952) (holding wife could not have judgment set aside on ground of fraudulent representations made to her concerning the market value of assets when wife was represented by able counsel and charged with the duty to make a full and careful investigation, yet neglected to exercise ordinary prudence and fully avail herself of the discovery process).
 Furthermore, we take this opportunity to remind the Bar that parties must avail themselves of the discovery process and be attentive to the warning signs of fraud.
It is the policy of the courts not only to discourage fraud, but also to discourage negligence and inattention to ones own interests. Courts do not sit for the purpose of relieving parties who refuse to exercise reasonable diligence or discretion to protect their own interests. A party must avail himself of the knowledge or means of knowledge open to him. The court will not protect the person who, with full opportunity to do so, will not protect himself.
King v. Oxford, 282 S.C. 307, 312, 318 S.E.2d 125, 128 (Ct. App. 1984) (internal citations omitted).
 Rozier v. Ford Motor Co., 573 F.2d 1332 (5th Cir. 1978).
 Rahmell v. Morrison, 732 S.W.2d 5 (
 A month after stating in its written response to plaintiffs interrogatory that it could locate no such report, an in-house attorney for [defendant] involved in this case discovered [the report] but failed to disclose it or to amend its inaccurate response to [the] interrogatory. Rozier at 1341-1342.
 Rahmell at 14.