Opinion
No. C3-02-728.
Filed December 3, 2002.
Appeal from the District Court, Dakota County, File No. C8012568.
Basil G. Joseph, (pro se respondent)
Thomas H. Gunther, Gunther Law Office, P.A., (for appellant)
Considered and decided by Minge, Presiding Judge, Toussaint, Chief Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant claims that the district court abused its discretion by denying appellant's motion to vacate a default judgment without applying the four-part test set forth in Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964). Because we conclude that the district court abused its discretion by denying the motion without applying the Finden factors, we reverse and remand.
FACTS
Appellant Aztec Roofing and Construction Company, Inc., installed a new roof on respondent Basil G. Joseph's home. The roof leaked, and Joseph sued Aztec in conciliation court in early 2001, alleging that it had failed to honor the applicable warranty. When Aztec did not appear at the scheduled hearing, the court ordered judgment for Joseph. Aztec subsequently moved to vacate the judgment and to remove the matter to district court for a trial de novo. Aztec alleged that defective service prevented it from receiving notice of the conciliation court complaint. The district court granted Aztec's motion and set a trial date in August 2001.
Aztec hired new counsel in June 2001. Aztec's new counsel failed to appear for trial on August 30, 2001, informing the court later that day that, as a result of a computer problem, the trial did not appear on his calendar. The district court set a new trial date in October 2001 and ordered Aztec's counsel to pay Joseph $300 within ten days for his "inconvenience." Aztec's counsel mailed a check for $300 to Joseph on September 28, 2001, and the check was returned two weeks later because of an error in the address. Aztec's counsel corrected the error and re-sent the check on October 9, 2001. Based on Aztec's counsel's untimely payment to Joseph, the district court ordered a default judgment against Aztec on the underlying claim.
Aztec, through its original counsel, moved three weeks later to vacate the order. In support of its motion, Aztec submitted an employee's affidavit alleging that Aztec attempted to investigate Joseph's complaints but that Joseph denied Aztec access to his property. Aztec further alleged that its substituted counsel had advised that Aztec need not appear on the August and October trial dates and that Aztec had no knowledge of substituted counsel's failure to appear for the August trial date, the resulting sanction, or substituted counsel's failure to pay it. According to the affidavit, Aztec first learned of the default judgment on January 9, 2002, whereupon Aztec notified its original counsel.
In response to Aztec's motion, Joseph submitted an affidavit alleging that Aztec ignored his repeated requests to honor the warranty. Joseph denied that he ever refused Aztec access to his property.
Citing Aztec's "ample opportunity" either to appear for trial or to pay Joseph for his inconvenience, the district court denied Aztec's motion. This appeal follows.
DECISION
In reviewing the denial of a motion to vacate a default judgment, this court determines whether the district court abused its discretion. See Foerster v. Folland, 498 N.W.2d 459, 460 (Minn. 1993). The rules of civil procedure provide for relief from a final judgment for, among other reasons, "[m]istake, inadvertence, surprise, or excusable neglect[.]" Minn.R.Civ.P. 60.02(a). To obtain relief from a default judgment, a party must show that (1) it has a reasonable defense on the merits; (2) it has a reasonable excuse for failure or neglect to answer; (3) it has acted with due diligence after notice of the entry of judgment; and (4) no substantial prejudice will result to the other party. Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964). Where the district court has failed to apply the Finden test, an appellate court may apply the test de novo. Carter v. Anderson, 554 N.W.2d 110, 115 (Minn.App. 1996), review denied (Minn. Dec. 23, 1996). Default judgments are to be "liberally" reopened to promote resolution of cases on the merits. Galatovich v. Watson, 412 N.W.2d 758, 760 (Minn.App. 1987) (citation omitted). We also note, although the issue was not raised by the parties, that the district court never gave notice that failure to make timely payment of the sanction would result in a default judgment. See Uselman v. Uselman, 464 N.W.2d 130, 143 (Minn. 1990) (holding that parties "must have fair notice of both the possibility of a sanction and the reason for its proposed imposition").
Aztec argues that the district court's failure to apply the Finden test was an abuse of discretion and that it satisfies each of the four Finden factors. Joseph does not address Finden. Aztec argues that Joseph's denial of access to his property to investigate and address Joseph's complaints about his roof constitutes a reasonable defense on the merits to the claim giving rise to the default judgment. But Joseph's affidavit alleges that he made repeated requests that Aztec repair his roof and that he never denied Aztec access to his property. Because the district court did not resolve this factual dispute, we are unable to apply the first Finden factor de novo. And because we cannot determine whether Aztec has a reasonable defense on the merits, we decline to attempt to apply the other Finden factors.
The district court abused its discretion when it failed to apply the Finden factors, and we are without sufficient facts to make a de novo application. The dissent would have us engage in fact-finding, which is not within the province of appellate courts. See Kucera v. Kucera, 275 Minn. 252, 254, 146 N.W.2d 181, 183 (1966). Consequently, the district court's denial of Aztec's motion to vacate the default judgment is reversed and the case is remanded for application of the Finden factors and any further proceedings.
Reversed and remanded.
I respectfully dissent. At the outset I note my agreement with the majority that the district court failed to apply the four-part test to evaluate whether appellant should be granted relief. Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964). The absence of this analysis by the trial court makes it very difficult for this court to dispose of this proceeding on appeal.
However, failure of the trial court to make the Finden findings does not preclude this court from examining the record to determine whether there is a basis for concluding that the trial court's order was in fact correct. Carter v. Anderson, 554 N.W.2d 110, 115 (Minn.App. 1996), review denied (Dec. 23, 1996) (noting appellate courts must apply the Finden test if the district court failed to do so). In so reviewing the record, we should do so in a light most favorable to the district court's order. Bentonize, Inc. v. Green, 431 N.W.2d 579, 582 (Minn.App. 1988). There are facts in this case to support the district court's denial of relief.
The first part of the Finden test is defense on the merits. The respondent stiffly disputes appellant's defense on the merits. The respondent supplied several letters to indicate that he had substantial loss and inconvenience from failure of the roof and that his efforts to obtain satisfaction from appellant were largely ignored. Respondent also supplied the information indicating that appellant's defense of respondent's refusal to allow inspection of repairs was not credible. Indeed, appellant may have confused the complaint from the respondent with that from another customer. The district court would be justified in concluding that there is little likelihood of success.
The second part of the Finden test is the reasonableness of appellant's excuse. I agree with the majority that the errors in calendaring the date for the retrial and the failure to timely pay the $300 penalty were apparently the fault of appellant's former attorney. Were these errors the only ones that had occurred in the proceeding, it would be difficult to visit the entire liability from such attorney error on an innocent client. But, the failure of the appellant to appear at the initial conciliation court proceeding, the apparent unanswered letters of complaint about poor workmanship, and having to twice use Rule 60.02 in this action to obtain relief from judgment support the conclusion that the appellant is haunted with communication problems. The delays in this proceeding make it unfair to force the respondent to go through yet further litigation to seek redress for his complaint. He has waited one and one-half years for a hearing on the merits for what started out as a conciliation court matter. This is not a situation where only attorney malfeasance has caused appellant's problems. In any event, a party is not totally able to use Rule 60.02 as a shield against attorney problems. See Soderling v. Hickok, 409 N.W.2d 73, 75 (Minn.App. 1987), review denied (Minn. Sept. 23, 1987) ("an attorney's neglect is chargeable to the client. * * * [but] a party may be relieved of the attorney's neglect if the party satisfie[d] the four-part test for relief").
The third part of the Finden test is diligence after notice of entry of judgment. I agree with the majority that the original counsel acted promptly. However, the other attorney appears to have tried to hide the problem. Whether that attorney conduct should be attributed to the appellant is similar to the reasonable-excuse test just discussed.
The last part of the Finden test is the question of prejudice to the nonmoving party. Certainly, the appellant should not be denied relief if the only prejudice was for the respondent to appear a second time to present his case. However, in this proceeding, the respondent is being asked to appear multiple times. If indeed he is entitled to relief, that relief is being delayed for a period which will stretch to over two years. The delay, the work and disruption of having to prepare for trial multiple times, the expense of financing repairs to one's home, the frustration and tension of not having finality in a legal proceeding, and the continuing pendancy of such a proceeding are burdensome. We should not disregard these circumstances.
Based on the foregoing considerations, I believe there is sufficient evidence in the record to support the district court's decision.