Jerry Wayne Cole v. Alexander Allen Wutzke , 884 N.W.2d 634 ( 2016 )

STATE OF MINNESOTA
IN SUPREME COURT
A15-0060
Court of Appeals
Gildea, C.J.
Jerry Wayne Cole,
Respondent,
vs. Filed: August 31, 2016
Office of Appellate Courts
Alexander Allen Wutzke,
Appellant.
________________________
Kay Nord Hunt, Lommen Abdo, P.A., Minneapolis, Minnesota; and
Michael J. Fay, Fay & Associates, LLC, Minneapolis, Minnesota, for respondent.
Paula Duggan Vraa, Stephanie L. Chandler, Larson • King, LLP, Saint Paul, Minnesota,
for appellant.
Charles F. Webber, Faegre Baker Daniels LLP, Minneapolis, Minnesota; and
Daniel J. Cragg, Eckland & Blando LLP, Minneapolis, Minnesota, for amicus curiae
Minnesota State Bar Association.
________________________
SYLLABUS
The district court abused its discretion in conducting its analysis under Minn. R.
Civ. P. 60.02(a), because it failed to consider all four requirements from Finden v. Klaas,
268 Minn. 268, 128 N.W.2d 748 (1964), in light of the surrounding circumstances.
Affirmed as modified.
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OPINION
GILDEA, Chief Justice.
The question presented in this case is whether counsel’s mistake about the
applicability of a procedural rule is sufficient, by itself, to deny relief under Minn. R. Civ.
P. 60.02. The district court denied respondent Jerry Wayne Cole’s Rule 60.02 motion
concluding that Cole’s counsel’s admitted “ignorance of the law” could not constitute
“excusable neglect” under the rule. The court of appeals reversed and concluded that Cole
was entitled to relief under Rule 60.02. Cole v. Wutzke, 868 N.W.2d 925, 928-30 (Minn.
App. 2015). Because we conclude that the district court abused its discretion by failing to
consider all four requirements from Finden v. Klaas, 268 Minn. 268, 128 N.W.2d 748
(1964), in light of the surrounding circumstances, we affirm as modified but remand to the
district court for reconsideration of Cole’s Rule 60.02 motion.
This case arises from an automobile collision that occurred on April 25, 2012,
involving Cole and Wutzke. On June 5, 2013, Cole commenced the present suit against
Wutzke by service of a summons and complaint. See Minn. R. Civ. P. 3.01(a). From July
2013 through March 2014, the parties actively litigated the case, exchanging various
discovery requests and responses. On July 8, 2014, Cole’s attorney contacted Wutzke
about the possibility of settlement. Rather than discuss settlement, however, Wutzke sent
a letter dated July 22, 2014, indicating that he would be closing his file if he did not receive
proof of a timely filing pursuant to Minn. R. Civ. P. 5.04(a). Cole’s attorney was aware of
the Rule 5.04(a) amendment, but had admittedly failed to understand that Rule 5.04(a)
applied to cases pending before its effective date. See generally Gams v. Houghton,
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No. A14-1747, slip op. at 7-8 (Minn. filed Aug. 31, 2016) (discussing Rule 5.04(a) and
holding that Rule 60.02 applies to dismissals under Rule 5.04(a)).
On July 23, 2014, Cole transmitted the summons, complaint, and affidavit of service
to the district court. The court administrator accepted the filing on July 25, 2014. On
August 13, 2014, Wutzke filed his answer and a motion to dismiss, citing Cole’s failure to
file by July 1, 2014, as required by Rule 5.04(a). On August 29, 2014, Cole countered with
a Rule 60.02(a) motion to vacate, recognizing that Wutzke’s motion “st[ood] to be
automatically granted by the Court with no opportunity for Plaintiff to be heard.” The
court scheduled a joint hearing on the motions for November 26, 2014.1
At the hearing, Cole argued that his counsel’s neglect was “excusable” because the
online version of the rules, on which his counsel relied, did not state that Rule 5.04(a)
applied to actions pending before its effective date. Cole contends that because the mistake
was solely counsel’s, Cole should not be made to suffer the ultimate consequence of
dismissal, especially because the case was progressing.
The district court dismissed the action and denied Cole’s motion to vacate. The
court concluded that Rule 5.04(a) mandated dismissal and that “ignorance of the law” by
Cole’s counsel was not “excusable neglect” under Rule 60.02(a). Such an exception, the
court reasoned, “would swallow the rule.”
1
A motion to dismiss is not required under the plain language of Rule 5.04(a). Gams,
No. A14-1747, slip op. at 9. See also Final Report and Recommendations of the Minnesota
Supreme Court Civil Justice Reform Task Force, No. ADM10-8051, at 23 (Dec. 23, 2011)
(noting that new rule “does not require a motion” for the case to be deemed dismissed).
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The court of appeals reversed and remanded, concluding that the district court
abused its discretion by denying Cole’s motion to vacate. Cole, 868 N.W.2d at 930.
Specifically, the court of appeals rejected the district court’s excusable-neglect analysis,
reasoning that Minnesota courts have long relieved unwitting clients, such as Cole, of the
consequences of their attorney’s unilateral errors. Id. at 929. Accordingly, the court of
appeals held that Cole was entitled to relief under Rule 60.02 and remanded for further
proceedings on the merits of the claims Cole alleged in his complaint. Id. at 930. We
granted Wutzke’s petition for review.
I.
Wutzke argues on appeal that the district court did not abuse its discretion in
concluding that “ignorance of the law” cannot constitute “excusable neglect” under Rule
60.02(a). The decision whether relief is warranted under Rule 60.02 is committed to the
sound discretion of the district court and is based upon all the surrounding circumstances
of each case. Gams, No. A14-1747, slip op. at 14. We will reverse the decision of a district
court only when there has been a clear abuse of discretion. Id.
Rule 60.02(a) provides relief from a “final judgment . . . , order, or proceeding” for,
among other reasons, “excusable neglect.”2 We have long stated that relief should be
granted where the movant affirmatively satisfies four requirements: (1) a “reasonable
2
Unlike in Gams, No. A14-1747, slip op. at 9, the Rule 5.04(a) “deemed” dismissal
did not result in a court order. That dismissal, however, still falls within the language of
Rule 60.02 because it is a “proceeding.” See id.; see also State v. Hohenwald, 815 N.W.2d
823, 830 (Minn. 2012) (“The word ‘proceeding[]’ generally refers to ‘the course of
procedure in a judicial action or in a suit in litigation.’ ”).
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defense on the merits” or, as relevant here, a “debatably meritorious claim”; (2) a
reasonable excuse for his or her failure or neglect to act; (3) that he or she “ ‘acted with
due diligence’ ” after learning of the error or omission; and (4) that “ ‘no substantial
prejudice will result to the other party.’ ” Charson v. Temple Israel, 419 N.W.2d 488,
491-92 (Minn. 1988) (quoting Finden, 268 Minn. at 271, 128 N.W.2d at 750). Although
some showings may be stronger than others, see Taylor v. Steinke, 295 Minn. 244, 246,
203 N.W.2d 859, 860 (1973), the moving party must establish all four requirements for
relief to be warranted. Gams, No. A14-1767, slip op. at 14. If the district court, in its
sound discretion, determines that the movant has satisfied these four requirements, relief
should be granted. Finden, 268 Minn. at 271, 128 N.W.2d at 750; see also Charson,
419 N.W.2d at 492 (holding that the district court abused its discretion by denying relief
under Rule 60.02(a) when a movant had “met the burden of clearly demonstrating the
existence of the four elements of the Finden analysis”).
At the threshold, Wutzke asserts that Rule 5.04(a) is akin to a statute of limitations,
and that we should alter our consideration of the Finden requirements accordingly for this
appeal. Specifically, Wutzke argues that we should narrowly construe the factors with his
expectation of “finality” in mind. We disagree.
We have recognized that there is a meaningful distinction “between non-
jurisdictional procedural rules designed for the orderly transaction of business and
jurisdictional time limits” set forth by statute. In re Civil Commitment of Giem,
742 N.W.2d 422, 427 n.6 (Minn. 2007); see also Schacht v. United States, 398 U.S. 58, 64
(1970) (explaining that “procedural rules adopted by the Court for the orderly transaction
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of its business are not jurisdictional and can be relaxed by the Court in the exercise of its
discretion when the ends of justice so require”). Rule 5.04(a) falls into the former category.
It is not a legislatively enacted statute of limitations designed to provide repose to a
defendant. Dalton v. Dow Chem. Co., 280 Minn. 147, 153 n.2, 158 N.W.2d 580, 584 n.2
(1968). Instead, Rule 5.04(a) is a procedural tool we promulgated to aid the orderly and
efficient administration of justice. We therefore reject Wutzke’s attempt to analogize
Rule 5.04(a) to a statute of limitations and instead hold that the analysis of the Finden
requirements is the same under a Rule 5.04(a) dismissal as it is for other dismissals
considered under Rule 60.02.
Under the Finden analysis, a debatably meritorious claim is one that, if established
at trial, presents a cognizable claim for relief. See Finden, 268 Minn. at 271, 128 N.W.2d
at 750 (explaining that self-defense is a “reasonable defense” because, “if it is established,”
it is a complete defense on the merits). To satisfy this factor, the movant generally must
provide “specific information” that clearly demonstrates the existence of the debatably
meritorious claim.3 Charson, 419 N.W.2d at 492. Conclusory allegations in moving
papers are ordinarily insufficient. Id. at 491; In re Welfare of Children of Coats,
633 N.W.2d 505, 511 (Minn. 2001) (reasoning that the district court properly concluded
3
We have not yet decided whether a plaintiff seeking Rule 60.02 relief may rely
entirely on the well-pleaded facts of the complaint in establishing a debatably meritorious
claim, or whether an affidavit outside of the pleadings is needed. See Charson,
419 N.W.2d at 492. We need not decide this issue in this case, as Wutzke conceded that
the first requirement is satisfied here.
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that the movant’s proffered defense was deficient because it was supported “by no more
than conclusory statements”).
As to “reasonable excuse,” we have long said that mistakes of law, as well as
mistakes of fact, “may afford ground[s] for relief.” E.g., Baxter v. Chute, 50 Minn. 164,
166, 52 N.W. 379, 380 (1892). Additionally, our case law generally “reflects a strong
policy favoring the granting of relief when judgment is entered through no fault of the
client.” Nguyen v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 487, 491 (Minn. 1997).
More specifically, we have held that “even in those cases where a court has held the neglect
of a client’s attorney to be inexcusable, if such neglect has been purely that of counsel,
ordinarily courts are loath to ‘punish’ the innocent client for the counsel’s neglect.”
Charson, 419 N.W.2d at 491.4
We have cautioned, however, that not “all mistakes, whether of fact or of law, and
whether committed by a party to an action or by his attorney, are . . . subject to relief.”
Baxter, 50 Minn. at 167, 52 N.W. at 380. Indeed, the right to vacatur is “not absolute”;
rather, it is a matter “largely within the discretion of the trial court.” E.g., Kosloski v. Jones,
295 Minn. 177, 180, 203 N.W.2d 401, 403 (1973). As such, it is generally for the district
court to determine whether the excuse offered by the movant is true and reasonable under
the circumstances. Standard Oil Co. v. King, 238 Minn. 81, 83, 55 N.W.2d 710, 712
4
In re Bonley, 213 Minn. 214, 216, 6 N.W.2d 245, 246 (1942), concluded that, in an
action to register title to land, a district court did not abuse its discretion in denying vacatur
where the attorney was ignorant of a statute requiring the deposit of overdue taxes, a
“mandatory” statutory duty. Our later cases, Finden, Nguyen, and Charson, decided after
the Rules of Civil Procedure became effective, did not cite Bonley.
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(1952); see also In re J.R., Jr., 655 N.W.2d 1, 4 n.3 (Minn. 2003) (explaining that the
district court is in the best position to “evaluate the reasonableness of the excuse, the
prejudice to the other party, and whether the party has a reasonable” claim or defense).
Accordingly, there are no per se rules of law requiring either the grant or denial of a
Rule 60.02(a) motion under the “reasonable excuse” requirement. Instead, the decision is
fact intensive. See Gams, No. A14-1747, slip op. at 14-15.
Next, “due diligence” is assessed from the time that the movant learns of his or her
error or omission. See, e.g., Nguyen, 558 N.W.2d at 491 (“Defendant acted with diligence
upon learning of the oversight.”); Charson, 419 N.W.2d at 491 (“Charson moved with ‘due
diligence’ after receiving notice of the dismissal.”); Conley v. Downing, 321 N.W.2d 36,
41 (Minn. 1982) (“[Client] hired another attorney a short time after discovering that
nothing had been done and that judgment had been entered against her.”); Coller v.
Guardian Angels Roman Catholic Church of Chaska, 294 N.W.2d 712, 715 (Minn. 1980)
(“[D]efendants’ attorney acted with due diligence once he became aware of his failure to
serve an answer.”).
Finally, we have stated that prejudice to the other party “ ‘should not be presumed
nor inferred from the mere fact of delay’ ”; instead, there must be some “ ‘particular
prejudice of such a character that some substantial right or advantage will be lost or
endangered’ ” if relief is granted. Beal v. Reinertson, 298 Minn. 542, 544, 215 N.W.2d 57,
58 (1974) (quoting Firoved v. Gen. Motors Corp., 277 Minn. 278, 283-84, 152 N.W.2d
364, 368 (1967)); see also Finden, 268 Minn. at 272, 128 N.W.2d at 751 (noting that mere
delay and added expense do not constitute substantial prejudice). Accordingly, the movant
8
bears the burden of demonstrating that the delay resulting from his or her error or omission
has not resulted in a real and particular harm to the other party, such as the loss of witnesses
or evidence, and that the other party has not otherwise detrimentally relied on the resulting
dismissal or judgment. Nelson v. Siebert, 428 N.W.2d 394, 395 (Minn. 1988) (reiterating
that the burden remains on the movant to establish that no substantial prejudice will result
to the other party if relief is granted).
Based on the foregoing, we conclude that the district court abused its discretion by
failing to properly apply the Finden test in this case. In its order, the district court made
findings only on the reasonable-excuse requirement, concluding that it could not “find that
ignorance of the law constitutes excusable neglect.” The district court’s apparent reliance
on this per se rule, in conjunction with its failure to consider the other factors in light of
the particular facts of the case, was an abuse of discretion. See Charson, 419 N.W.2d at
491 (concluding that the district court failed to properly employ the Finden analysis
because its ruling considered only the reasonableness of Charson’s excuse). Accordingly,
we hold that the district court abused its discretion in failing to consider all four Finden
requirements, in light of the surrounding circumstances of the case, and remand for
reconsideration of its Rule 60.02(a) ruling in light of this opinion.
Affirmed as modified.
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