Jerry Wayne Cole v. Alexander Allen Wutzke

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.

1

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).

3

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.’ ”).

4

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.

7

(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.

9