Opinion
No. C6-97-979.
Filed January 13, 1998.
Appeal from the District Court, Ramsey County, File No. F480512002.
John P. Van Valkenburg, Gerten Van Valkenburg, P.A., (for respondent).
Martha A. Eaves, Southern Minnesota Regional Legal Services, (for appellant).
Considered and decided by Kalitowski, Presiding Judge, Short, Judge, and Peterson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
An administrative law judge (ALJ) denied appellant Bruce Hein's motion to modify child support, and judgment was entered accordingly. This appeal is from the order denying Hein's motion to reconsider the order denying modification of child support. We affirm the ALJ's decision and we grant in part and deny in part respondent Rebecca Meyer's motion to dismiss this appeal.
FACTS
Hein is the father of Meyer's minor child, and his monthly child support obligation is $332. In February 1996, Hein requested that Ramsey County child support and collection review his child support obligation and modify it, if appropriate. Hein disagreed with the county's proposed order and requested an administrative conference to discuss the matter. In June 1996, Hein appeared at and participated in the administrative conference. The parties were unable to resolve the matter at the conference, and both requested an administrative hearing.
The hearing was initially scheduled for August 1, 1996. Hein requested a continuance, and the hearing was rescheduled for August 22, 1996. In August 1996, Hein began receiving $1,027 in monthly social security disability benefits. He also received a retroactive, lump-sum payment of $10,218. Hein did not appear at the August 22 administrative hearing.
By order dated September 17, 1996, the ALJ denied Hein's motion to modify child support. The ALJ found that Hein's net monthly income was $1,027; he had reasonable monthly expenses of $590 for a household of two adults; Meyer's net monthly income was $2,468.30; her reasonable monthly expenses for herself and the child were $2,911; and Hein had the ability to pay $332 per month in child support. The ALJ also ordered Hein to pay the entire cost, $130 per month, of dependent health care insurance; awarded Meyer $11,579 in child support and medical support arrearages; and granted Meyer's motion to sequester any remaining proceeds of Hein's retroactive social security payment and other personal assets.
Meyer, on September 20, 1996, and the county, on September 24, 1996, served written notices of the order on Hein. Judgment was entered pursuant to the order on October 2, 1996. On October 17, 1996, Hein filed a motion in the district court for reconsideration of the ALJ's September 17, 1996 order.
In support of his motion for reconsideration, Hein alleged that he failed to appear at the August 22, 1996 hearing because of health problems. Regarding the merits of his request for modification of child support, Hein presented evidence that when he began receiving social security benefits, the child began receiving social security benefits of $513 per month and also received a lump-sum payment of $5,617. Hein also claims that the $590 in monthly expenses he claimed on his financial statement were unreasonably low because they were based on his limited income from general assistance. He submitted an affidavit claiming monthly expenses of $1,375.98.
The ALJ treated Hein's motion for reconsideration as a motion to vacate a judgment based on excusable neglect. On April 28, 1997, the ALJ issued an order denying Hein's motion. The ALJ found that physical health problems did not prevent Hein from appearing at the August 22 hearing. The ALJ also found that Hein's mental health problems did not prevent him from appearing at the hearing:
5. [Hein] stated in his affidavit dated 2/21/97 that he intended to go to the 8/22/96 hearing but forgot. [Hein] provided a statement from a therapist indicating he suffers from post traumatic stress syndrome and major depression. He asserts that these mental impairments caused him to forget the hearing scheduled for 8/22/96. While the evidence supports the claim of mental disabilities, it does not supply the causal connection. [Hein] has been suffering from post traumatic stress and depression for at least a year but has been able to apply for public assistance, apply for social security disability, request modification of his support order, appear at a conference and obtain a hearing date, and obtain a continuance of the hearing date.
6. [Hein's] behavior around the time of the hearing does not support his claim that he was unable to remember his hearing date. Upon receipt of his social security retro check, he was capable of remembering and repaying debts he had incurred throughout the past year, of finding and purchasing a car and car insurance, of paying for his wife's trip to Idaho and of organizing five or six trips to the casino in Hinkley.
DECISION
1. Hein seeks review of the April 28, 1997, order denying his motion to reconsider the September 17, 1996, order that denied modification of his child support obligation. Meyer moved to dismiss on the ground that the time to appeal the underlying September 17, 1996, order had expired and the April 28, 1997, order was not independently appealable. By order on August 26, 1997, the special term panel denied the motion on the grounds that the proper appeal was from the October 2, 1996, judgment entered pursuant to the September 17, 1996, order, and that Meyer had not shown that the time to appeal the October 2, 1996, judgment expired before this appeal was filed. The special term panel did not reach the issue of whether the April 28, 1997, order is independently appealable.
Meyer brought a second motion to dismiss, arguing that she served an effective notice of filing of the October 2, 1996, judgment on December 18, 1996. See Angelos v. Angelos , 367 N.W.2d 518, 520 (Minn. 1985) (motions to modify child support are "special proceedings"); Minn.R.Civ.App.P. 104.03 (generally, appeals in special proceedings must be taken within the time to appeal an order); Minn.R.Civ.App.P. 104.01 (generally, orders must be appealed within 30 days of service, by the adverse party, of written notice of filing). Meyer's notice indicates that judgment on the September 17, 1996, order was entered on October 2, 1996, and Meyer provided a copy of the October 2, 1996, judgment with the notice. Meyer's notice and attachments, construed as a whole, were effective to limit the time to appeal from the October 2, 1996, judgment. See In re Establishment of County Ditch No. 11 (Bevens Creek) County of Carver , 511 N.W.2d 54, 57 (Minn.App. 1994) (service of notice of entry of order with copy of resulting judgment limited time to appeal judgment), review denied (Minn. Mar. 31, 1994). Hein does not dispute that Meyer served an effective notice of filing of the October 2, 1996, judgment.
Hein argues that his motion for reconsideration extended the appeal time under Minn.R.Civ.App.P. 104.04, subd. 2. Because the underlying action is a paternity proceeding, not a marital dissolution action, Minn.R.Civ.App.P. 104.04 does not apply. See Steeves v. Campbell , 508 N.W.2d 817, 818 n. 1 (Minn.App. 1993) (Minn.R.Civ.App.P. 104.04 applies only to marital dissolution actions). Even if rule 104.04 did apply and Hein's motion is construed to be a motion for amended findings, the motion did not extend the appeal period because it was untimely. See Doty v. Doty , 533 N.W.2d 72, 74 (Minn.App. 1995) (untimely motion to amend findings does not extend appeal period under Minn.R.Civ.App.P. 104.04).
The rules of civil procedure do not authorize a motion for "reconsideration." Carter v. Anderson , 554 N.W.2d 110, 113 (Minn.App. 1996), review denied (Minn. Dec. 23, 1996). But the April 28, 1997, order treats Hein's motion as a timely motion to vacate on the ground of excusable neglect under Minn.R.Civ.P. 60.02(a). An order denying a motion to vacate is appealable when defendant did not participate in the original action so that an appeal from the default judgment would not also raise the propriety of its vacation. Spicer v. Carefree Vacations, Inc. , 370 N.W.2d 424, 425 (Minn. 1985). The denial of a motion to vacate a default judgment is not appealable when the appealing party appeared and participated in the underlying action. Carlson v. Panuska , 555 N.W.2d 745, 747 (Minn. 1996), rehearing denied (Jan. 10, 1996). In this case, appellant did not appear at the contested administrative hearing, and a direct appeal from the October 2, 1996, judgment would not raise the issue of whether the judgment should be vacated due to appellant's excusable neglect. We therefore conclude that there is a jurisdictional basis for appeal of the April 28, 1997, order and deny Meyer's motion to dismiss the part of the appeal from the April 28, 1997, order.
We lack jurisdiction to review the October 2, 1996, judgment, because the time to appeal the judgment expired before this appeal was filed. See Minn.R.Civ.App.P. 126.02 (time to file notice of appeal may not be extended); Township of Honner v. Redwood County , 518 N.W.2d 639, 641 (Minn.App. 1994) (court of appeals lacks jurisdiction to consider untimely appeal), review denied (Minn. Sept. 16, 1994). We dismiss as untimely the part of the appeal from the October 2, 1996, judgment.
2. The district court may relieve a party from a final judgment based on "[m]istake, inadvertence, surprise, or excusable neglect." Minn.R.Civ.P. 60.02. The district court has discretion to decide a motion to vacate a default judgment, and its decision will not be reversed absent an abuse of discretion. Foerster v. Folland , 498 N.W.2d 459, 460 (Minn. 1993). The same standard of review applies when reviewing an ALJ's decision. See Rouland v. Thorson , 542 N.W.2d 681, 683 (Minn.App. 1996) (applying standard of review of district court decision to ALJ's order increasing child support) (citing Minn. Stat. § 518.5511, subd. 4(h) (1994) (decision of ALJ "is appealable to the court of appeals in the same manner as a decision of the district court")).
A party seeking relief from a default judgment must demonstrate (1) reasonable [claim] on the merits; (2) that there exists a reasonable excuse for failure or neglect to act; (3) that the party acted with due diligence after notice of the entry of judgment; and (4) that no substantial prejudice will result if the action is reopened.
Foerster , 498 N.W.2d at 460 (citing Hinz v. Northland Milk Ice Cream Co. , 237 Minn. 28, 30, 53 N.W.2d 454-55 (1952)); see Armstrong v. Heckman , 409 N.W.2d 27, 29 (Minn.App. 1987) (reasonable claim on the merits), review denied (Minn. Sept. 18, 1997).
Reasonable claim on the merits
A reasonable claim on the merits exists when a party presents sufficient facts to support a decision in his favor. See Charson v. Temple Israel , 419 N.W.2d 488, 492 (Minn. 1988) (party established meritorious claim by demonstrating existence of fact issue as to whether employment contract had been terminated by defendant's breach of contract or plaintiff's resignation); Armstrong , 409 N.W.2d at 29 (reasonable claim on the merits existed when complaint alleged facts that would allow the trier of fact to determine whether appellant's injuries resulted from respondent's negligence).
A child support award may be modified upon a showing of a substantial change in circumstances that makes the terms of the existing support order unreasonable or unfair. Minn. Stat. § 518.64, subd. 2(a) (1996). A substantial change in circumstances is presumed and the terms of a current support order shall be rebuttably presumed to be unreasonable and unfair if the application of the child support guidelines in section 518.551, subdivision 5, to the current circumstances of the parties results in a calculated court order that is at least 20 percent and at least $50 per month higher or lower than the current support order.
Id.
Hein's existing monthly child support obligation initially was $332. Application of the child support guidelines to Hein's current income of $1,027 results in a child support amount of $256.75 per month. See Minn. Stat. 518.551, subd. 5 (1996) (child support guidelines). That amount is more than 20% and $50 per month lower than $332, so there is sufficient evidence to establish the rebuttable presumption that the existing child support order was unreasonable and unfair, although the ALJ found that the rebuttable presumption had not been established.
In support of his motion for reconsideration, Hein presented evidence that when his social security application was approved, the child began receiving $513 per month in social security benefits and also received a retroactive, lump-sum payment of $5,617. Social security benefits paid to a child do not constitute child support payments but are considered in determining the need for support. Green v. Green , 402 N.W.2d 248, 250 n. 2 (Minn.App. 1987). Hein also alleged that the $590 in expenses he claimed in his February 1996 financial statement were unreasonably low because he was only receiving $260 per month for income; he submitted an itemized list of current monthly expenses totaling $1,375.98. Finally, Hein cited the loss of health insurance through his employer as a reason supporting modification. See Minn. Stat. § 518.171, subd. 1(d) (1996) (if court finds obligee is not receiving public assistance for the child and has the ability to contribute to the cost of medical expenses for the child, including the cost of insurance, the court shall order the obligor and obligee to each assume a portion of these expenses based on their proportionate share of their total net income).
Paying $332 for child support, $130 for dependent health insurance, and $100 for arrearages leaves Hein with only $465 per month to meet his expenses. Meyer's net monthly income of $2,468.30 plus the $513 per month received by the child total $2981.30, which is more than the monthly expenses of $2,911 for Meyer and the child. Considering the decrease in Hein's income since the child support obligation was established, together with Meyer's income and the social security benefits received by the child, Hein presented a strong claim for modification of child support.
Hein also contends that he presented a claim for forgiveness of arrearages that accrued before he requested a modification of child support in February 1996. A modification of child support may be made retroactive beyond the date when the motion for modification is served on the opposing party if the court finds that the moving party was precluded from serving a motion because of a significant physical or mental disability. Minn. Stat. § 518.64, subd. 2(c) (Supp. 1997). Although the ALJ did not explicitly address the period before February 1996, she did so by implication. The findings in the April 28, 1997, order indicate the ALJ found incredible the evidence presented by Hein that health problems prevented him from participating in court proceedings.
Reasonable excuse for failure to act
Neglect of a party that leads to the entry of judgment against it is inexcusable neglect. Thayer v. American Fin. Advisers, Inc. 322 N.W.2d 599, 602 (Minn. 1982). Hein argues that his failure to appear at the August 22, 1996 hearing was excusable neglect because it resulted from physical and mental health problems. But the ALJ found that Hein's failure to appear did not result from his physical or mental health problems. The evidence about Hein's physical health problems did not indicate that he was physically unable to appear at the hearing. The ALJ found that Hein had suffered from post traumatic stress syndrome and major depression for at least one year. Despite those problems, Hein requested review of his support obligation in February 1996 and participated in the support modification proceeding through the administrative conference on June 12, 1996. The evidence supports the ALJ's finding that Hein's failure to appear at the August 22 hearing did not result from health problems.
Acting with due diligence
A motion to vacate must be made within a reasonable time, and not more than one year after the judgment or order. Minn.R.Civ.P. 60.02. What constitutes a reasonable time varies with the circumstances of each case and is determined by the district court in the exercise of its discretionary power. Hovelson v. U.S. Swim Fitness, Inc. , 450 N.W.2d 137, 142 (Minn.App. 1990), review denied (Minn. Mar. 16, 1990).
Hein filed his motion for reconsideration about three weeks after receiving notice of the September 17, 1996 order. Although the ALJ did not make a specific finding on this factor, it is implicit in the ALJ's findings that Hein was acting for the purpose of delay and not with due diligence. In denying Hein's request for modification of child support, the ALJ awarded Meyer attorney fees based on her finding that Hein "did unreasonably contribute to the length of the proceedings in an apparent attempt to hide assets." Meyer presented evidence that (1) when Hein participated in the administrative conference in June 1996, he had notice that a hearing would be conducted on his social security application later during the month and (2) he failed to disclose that information and instead indicated that nothing was going on with his social security application. As of August 1996, Hein began receiving monthly social security benefits. He also received a retroactive, lump-sum payment of $10,218. Hein then failed to appear at the August 22, 1996 hearing. The evidence supports the finding that Hein was acting for the purpose of delay and not with due diligence. See id. at 142 (given defendant's "seemingly purposeful failure to respond to notices of the suit," the district court did not abuse its discretion by considering defendant's "entire course of delay" in determining that acting within nine days after entry of the judgment was not acting with due diligence).
Substantial prejudice
A party seeking relief under Minn.R.Civ.P. 60.02(a) must show that no substantial prejudice will result to the opponent. Hinz , 237 Minn. at 31, 53 N.W.2d at 456. "Substantial prejudice" refers to additional prejudice imposed by reopening the judgment, not merely the passage of time and expense implicit in defending against the initial action. Lysholm v. Karlos , 414 N.W.2d 773, 776 (Minn.App. 1987). Here, prejudice could be prevented by disallowing any retroactive reduction in child support.
Hein argues that the ALJ erred in considering only whether Hein had a reasonable excuse for his failure to appear at the August 22, 1996 hearing and failing to address the other three Hinz factors. "[T]he relative weakness of one factor should be balanced against a strong showing on the other three." Valley View, Inc. v. Schutte , 399 N.W.2d 182, 185 (Minn.App. 1987), review denied (Minn. Mar. 18, 1987). Although the ALJ did not make a specific finding on the due diligence factor, it is implicit in the ALJ's findings that Hein was acting for the purpose of delay in an effort to hide assets. The ALJ did not make findings on the other two factors.
Specific findings by the ALJ on each of the Hinz factors would have been helpful for review. Nonetheless, Hein made a strong showing on only two factors, a reasonable claim on the merits and no substantial prejudice, not three. The strength of Hein's showing of a reasonable claim on the merits is undercut by the fact that Hein could have presented at the August 22 hearing all of the evidence that he now seeks to present in support of his claim. Cf. Vikse v. Flaby , 316 N.W.2d 276, 284 (Minn. 1982) (under Minn.R.Civ.P. 60.02, newly discovered evidence is evidence that a party, by exercising due diligence, could not have discovered before trial). Hein's showings on the reasonable claim and no substantial prejudice factors were insufficient to overcome his weak showings on the reasonable excuse and due diligence factors. The ALJ did not abuse its discretion in denying Hein's motion for reconsideration.