2/6/25
By: Donald Patrick Eckler and Joshua W. Zhao
In Automotive Finance Corp v. Liu., No. 2025 WL 274071, the Indiana Supreme Court held that the trial court could not use Trial Rule 60(B)(3) to grant relief on grounds that the challenged judgment was procured by fraud based upon facts that were available and which could have been raised in a Trial Rule 59 motion to correct error. Further, the court held that a party must show that the alleged fraud prejudiced presentation of its case for relief under Trial Rule 60(B)(3).
In March 2018, Automotive Finance Corporation (AFC) extended a $100,000 loan to Monmars Automotive Group. Monmars’ members, Meng Liu, Ning Ao, and Xiaoqiao Yang guaranteed repayment to AFC. In 2020, AFC sued Liu, Ao, and Yang after Monmars defaulted. Liu, who spoke little English and represented herself, and Ao both filed unsworn letters denying Liu and Yang’s involvement in the agreement. In March 2022, AFC moved for partial summary judgment. In response, Liu filed an unsworn letter stating that she and Yang were not aware of Ao’s loan from AFC and a letter from Ao that purportedly said that he had helped Liu and Yang sign the agreement but had not explained it. Liu further attached a December 2020 divorce agreement that assigned the debt to Ao. AFC’s motion was granted.
After the motion was granted, Liu and Ao both argued that Liu and Yang’s signatures had been forged by Ao. Liu’s appeal was dismissed after Liu failed to timely file a brief.
After six months since judgment was entered, Liu requested an evidentiary hearing where Ao testified that he had arranged for Liu and Yang’s signatures to be forged and Liu testified that Ao told her of the fraud during divorce proceedings. Liu and Yang moved for relief under Trial Rule 60(B)(3) arguing Ao’s testimony was newly discovered evidence of fraud. Liu and Yang’s motions were granted. AFC appealed. The appellate court upheld the trial court’s decision for Liu but reversed Yang, finding that Yang had not shown that fraud prejudiced her ability to present her case while Liu had. AFC moved for transfer in Liu’s case to the Indiana Supreme Court, which was granted to resolve the split precedent between the outcomes for Liu and Yang.
The Indiana Supreme Court reversed Liu and held that the thirty-day period for considering new evidence on summary judgment had long expired by the time of Ao’s testimony, Further, Ao and Liu had gotten divorced in 2020 and Liu had the opportunity to designate evidence from the divorce in support of her fraud claim so Liu failed to show how the alleged fraud prejudiced her ability to present her case as required by Trial Rule 60(B)(3). As a result, Liu was not entitled to relief under Trial Rule 60(B)(3).
The dissent argued that the outcome of the trial court and court of appeals was correct, as Liu could have believed at the time of the summary judgment proceeding that she had signed the agreement without understanding it and had not been aware of the forgery by Ao. Further, due to Liu’s circumstances and the dismissal of her appeal on procedural grounds, the dissent argued that the reversal was unjust and that the trial court had the power to modify an inequitable judgment and did not abuse its discretion as finality does not take priority above fairness.
This result demonstrates the need to present all available arguments to challenge a judgment within the 30 days for a Trial Rule 59 motion to correct the error and that the failure to do so, even when the judgment was the product of fraud, can prevent it from being vacated.
For more information, please contact Donald Patrick Eckler at patrick.eckler@fmglaw.com, Joshua W. Zhao at josh.zhao@fmglaw.com, or your local FMG attorney.
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