Opinion
No. C3-99-250.
Filed August 3, 1999.
Appeal from the District Court, Washington County, File No. C0-93-1452.
Kevin K. Shoeberg, (for appellant)
Barry W. McKee, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
In an action for replevin and specific performance, appellant challenges the district court's dismissal and subsequent denial of his motion to vacate the dismissal of his case. Because neither the district court nor respondent suffered prejudice from appellant's delay, we reverse and remand to the district court to calculate the issue of damages.
FACTS
This appeal concerns purely procedural issues and does not involve a review of the merits of the action. This case dates to 1993, when appellant Harvey Berg filed suit against respondent Leland Gohlike for specific performance and replevin. Respondent counterclaimed for breach of contract. In 1996, the district court ruled in favor of both parties' claims. On appeal, we affirmed the breach of contract ruling, but reversed and remanded on the amount of damages for appellant's replevin claim, noting that the district court had undervalued appellant's chattel. Berg v. Gohlike , No. C8-96-2092, 1997 WL 328024, at *2-3 (Minn.App. June 17, 1997).
On remand, the district court closed its damages hearing by ordering the parties to submit written proposed findings on the damages issue. Appellant agreed to submit a proposal within 10 days of the hearing. However, appellant failed to comply. During the next three months, the district court contacted appellant on three occasions regarding the missing submission. After 90 days, the court issued an order dismissing appellant's claim without explanation. The court similarly denied appellant's motion to vacate the dismissal.
DECISION
The district court combined the dismissal and denial to vacate into its final judgment. Appellant challenges both issues on appeal. See Carlson v. Panuska , 555 N.W.2d 745, 746 (Minn. 1996) (order denying motion to vacate is not appealable until final judgment is entered).
Dismissal
The district court dismissed appellant's claim without explanation, only noting that appellant had failed to submit the written proposed findings. This court reviews the dismissal of a claim under an abuse of discretion standard. Dvoracek v. Lovely , 366 N.W.2d 391, 393 (Minn.App. 1985). The record is reviewed in a light most favorable to the trial court. Id.
Before reviewing the district court's order and judgment, we must infer the legal justification for dismissal. Under the Minnesota Rules of Civil Procedure, courts have discretion to dismiss a claim under particular circumstances:
The court may upon its own initiative
* * *
and upon such notice as it may prescribe, dismiss an action or claim for failure to prosecute or to comply with these rules or any order of the court.
Minn.R.Civ.P. 41.02(a). Because the court did not otherwise specify, the court's dismissal under this rule results in an adjudication upon the merits. Id. at 41.02(c).
The supreme court has adopted a two-part test for rule 41.02 dismissal, requiring a demonstration (1) that the delay prejudiced the defendant, and (2) the delay was unreasonable and inexcusable. See Scherer v. Hanson , 270 N.W.2d 23, 24 (Minn. 1978) (applying test to failure to prosecute); Bonhiver v. Fugelso, Porter, Simich and Whiteman, Inc. , 355 N.W.2d 138, 144 (Minn. 1984) (applying Scherer test to involuntary dismissal).
First, appellant has demonstrated that respondent has not suffered prejudice. This court has explained that prejudice must be "more than the ordinary expense and inconvenience of trial preparation and should not be presumed or inferred from the mere fact of delay." Ed H. Anderson Co. v. A.P.I., Inc. , 411 N.W.2d 254, 256 (Minn.App. 1987) (citation omitted), review denied (Minn. Oct. 30, 1987). Respondent has not offered rebuttal evidence which rises above the Anderson standard. This case has continued unabated since 1993. The 90-day delay, in light of over five years of litigation, does not rise to the level of prejudice.
Second, appellant's delay was neither unreasonable nor inexcusable. Unreasonable time has generally been calculated in terms of years, not months. See Scherer , 270 N.W.2d at 24 (eight-year delay before motion to dismiss); Zuleski v. Pippella , 309 Minn. 585, 586, 245 N.W.2d 586, 586 (1976) (over three-year delay to motion to reinstate matter on general term calendar); Dvoracek , 366 N.W.2d at 394 (eight-year delay in prosecuting). Appellant's 90-day delay does not meet the standard set by these decisions.
Moreover, the court's dismissal serves to "unjustly enrich" respondent. See Peters v. Waters Instruments, Inc. , 312 Minn. 152, 156, 251 N.W.2d 114, 117 (1977) (cautioning against such dismissal). Similar to Peters , the district court dismissed despite previous rulings affirming respondent's liability to appellant for at least $75,000 in replevin or specific performance. Dismissal at this stage of the proceedings results in a reward for respondent's bad acts.
The decision to dismiss depends on those
`circumstances particular to each case,' justice and equity to each party, and `considered with reference to just, speedy, and inexpensive disposition of the case and the policy underlying the dismissal rules of preventing harassment and unreasonable delays in litigation.'
Zuleski , 309 Minn. at 586-87, 245 N.W.2d at 587 (quoting Firoved v. General Motors Corp. , 277 Minn. 278, 283, 152 N.W.2d 364, 368 (1967)). The extreme remedy of involuntary dismissal is a remedy of last resort. Bonhiver , 355 N.W.2d at 144. See also Firoved , 277 Minn. at 284, 152 N.W.2d at 369 (explaining that "policy which seeks to dispose of litigation on the merits rather than procedural grounds is, except in extraordinary circumstances, of overriding importance). While inaction by counsel was disturbing and inexcusable, the remedy was overly drastic, and amounts to an abuse of discretion.
B. Denial of Motion to Vacate
After dismissal, appellant moved to vacate the district court's order. The district court denied appellant's motion. This court reviews a district court's denial of a motion to vacate dismissal under an abuse of discretion standard. See, e.g., Hellerstedt v. MacGibbon , 489 N.W.2d 247, 249 (Minn.App. 1992).
Appellant had moved to vacate under Minn.R.Civ.P. 60.02(f). Rule 60.02(f) is a residual clause to cover unforeseen contingencies and allows a court to vacate an order for "[a]ny other reason justifying relief from the operation of the judgment." See also Anderson v. Anderson , 288 Minn. 514, 518, 179 N.W.2d 718, 722 (1970) (noting exclusivity of rule 60.02(f), in contrast to the specificity of 60.02(a)-(d)).
A party seeking relief under rule 60.02 must show:
(1) a reasonable claim on the merits;
(2) a reasonable excuse for its failure or neglect to act;
(3) that it has acted with due diligence after notice of entry of judgment; and
(4) that no substantial prejudice will result to the opponent.
See, e.g., Bentonize, Inc. v. Green , 431 N.W.2d 579, 582 (Minn.App. 1988). We consider each element in turn.
First, it is hard to dispute that appellant has a reasonable claim on the merits. This court has reaffirmed that "`the existence of a meritorious claim must ordinarily be demonstrated by more than conclusory allegations in moving papers." Id. at 583 (quoting Charson v. Temple Israel , 419 N.W.2d 488, 491 (Minn. 1988)). Both the district court and this court have previously recognized that appellant has a reasonable claim on the merits, worth damages totaling at least $75,000.
Second, while only a feeble excuse for the delay was offered, appellant does not deserve the severe penalty of the judgment dismissing the case and the subsequent denial of the motion to vacate. Previously, we have reversed such denials when a party is penalized primarily as a result of an attorney's mistakes or neglect. Nelson v. Siebert , 411 N.W.2d 229, 231 (Minn.App. 1987). Yet, we balanced such reasoning against the substantial prejudice to be suffered by the adversary. Id. The penalty for dismissal here far outweighs the prejudice of delay.
Third, appellant argues that it acted with due diligence when it took immediate action after learning of the order to dismiss. The district court dismissed on August 21, 1998. Filing records leave unclear whether appellant filed a motion to vacate on September 8 or October 2, 1998. Despite this, even if appellant's motion were not filed until October 2, he acted with due diligence in responding to the court's order to dismiss.
Fourth, appellant argues that respondent is not prejudiced by the delay, arguing that respondent in fact benefits from the time extension to formulate its written findings. Appellant carries the burden of proof as to lack of prejudice. Hellerstedt , 489 N.W.2d at 251. Drawing from our dismissal analysis, appellant has demonstrated that respondent has not suffered "more than the ordinary expense and inconvenience of trial preparation." Ed H. Anderson Co. , 411 N.W.2d at 256.
The ultimate basis for the motion to vacate is found in the undisputed fact that appellant deserves damages, with all but the amount left to be determined. This court has noted that a weak showing on one of the factors may be offset by a strong showing on the others. Hellerstedt , 489 N.W.2d at 250. While both the court and respondent have suffered minor prejudice in delay, appellant will suffer major prejudice in the loss of damages for respondent's wrongful possession of appellant's chattels if the dismissal is affirmed.