This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
d/b/a Anderson Construction,
John Westberg, et. al.,
Marshall County District Court
File No. C4-03-15
Thomas V. Omdahl, 424 Demers Avenue, Grand Forks, ND 58201 (for appellant)
Brian K. Rokke, 107 West Johnson Avenue, Warren, MN 56762 (for respondent)
Considered and decided by, Hudson, Presiding Judge, Randall, Judge, and Peterson, Judge.
U N P U B L I S H E D O P I N I O N
On appeal from the district court’s order denying appellants’ motion to vacate a judgment entered against them, appellants contend the district court abused its discretion in failing to grant the motion to vacate because appellants (a) had a reasonable claim on the merits; (b) had a reasonable excuse for failing to act because they did not have an attorney until after default judgment and they did not receive the interrogatories; and (c) moved to vacate two months after judgment; and (d) respondent could not show substantial prejudice if the judgment was vacated. The district court’s sanction was too severe in light of alternative sanctions for appellants’ late discovery. We reverse and remand.
In June 2002, respondent, Ron Anderson, brought suit against appellants to recover for the provision of materials and labor for the installation of drain tiles around appellants’ house. In response to the lawsuit, appellants sent respondent a letter contesting the claim. But, appellants then failed to provide answers to interrogatories or comply with discovery requests. A few months later, respondent moved to compel discovery, and the district court granted respondent’s motion. Appellants neglected to answer, and eventually the district court entered a default judgment against appellants for the disputed amount. Shortly thereafter, appellants moved to vacate the judgment, alleging that they never received the interrogatories. Appellants also provided answers to interrogatories along with their motion. The district court denied the motion. This appeal followed.
The record provided by the two parties in district court is sparse. In addition, the appellate briefs do not shed much light on what is already murky. At one point, appellants claim that they had paid respondent $19,319. This is interesting because respondent sued for only $14,090!?
Appellants’ attorneys explained at oral argument that there had been a previous written contract for $19,319, that the work was performed on that contract, and that respondent was paid in full. Appellants’ attorney says that respondent’s lawsuit for $14,090 is for additional work that had been completed but not paid for. Appellants’ attorney acknowledged that respondent was not paid for the additional work and that his client owes something to respondent, but argues that part of the $14,090 billing is for work that was previously done under the earlier $19,319 contract (the one fully paid), and his client should have the right, in equity, to dispute the amount claimed.
A district court’s decision regarding a motion to vacate will not be overturned absent a clear abuse of discretion. Johnson v. Hunter, 447 N.W.2d 871, 873 (Minn. 1989). A court may relieve a party from a final judgment for “[m]istake, inadvertence, surprise or excusable neglect” or “any other reason justifying relief from the operation of the judgment.” Minn. R. Civ. P. 60.02. A party seeking to vacate a judgment on these grounds must show (1) a reasonable claim on the merits, (2) a reasonable excuse for failure or neglect to act, (3) due diligence after notice of entry of judgment, and (4) that no substantial prejudice will result to the opponent. Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 30, 53 N.W.2d 454, 456 (1952).
Appellants argue that the district court’s denial of the motion to vacate the judgment should be reversed because the elements set forth in Hinz are satisfied. We agree. The first element is satisfied because appellants have a reasonable claim on the merits. Appellants’ counsel stated at oral arguments that there had been an older written contract for $19,319 worth of work, and that work was completed and paid for. He then said the present dispute is over an oral contract for some additional work and respondent completed that too. But, when respondent billed appellant for another $14,090, appellants balked at paying it because they felt that part of the $14,090 bill was for work that was covered by their $19,319 payment. This dispute presents a reasonable claim on the merits.
The second element could go either way. Appellants claim they did not receive a copy of the interrogatories. Respondents claim they were sent. As to the third element, appellants did act with due diligence in filing a motion to vacate the judgment two months after the judgment was entered.
Finally, respondent will not suffer substantial prejudice if the district court’s decision is reversed and remanded. Respondent did not start the case with expectations that he would get a verdict for the entire amount sued for just because the other side was slow with discovery. Appellants’ attorney admits that money is owed to respondent, but simply argues his client wants a chance to prove they may have made partial payment.
The harshness of the district court’s sanction is troubling. The district court entered judgment against appellants, not as a classic default for failure to answer a summons and complaint, but rather as a sanction against appellants for failing to comply with a discovery order. The Minnesota Rules of Civil Procedure provide that the district court may render a judgment by default against any party who fails to obey an order to provide or permit discovery. Minn. R. Civ. P. 37.02(b)(3) (2002). But, “the goal of all litigation is to bring about judgments after trials on the merits and for this reason courts should be liberal in opening default judgments.” Taylor v. Steinke, 295 Minn. 244, 246, 203 N.W.2d 859, 860 (1973). Because a default judgment is the most severe possible sanction, courts should act cautiously in imposing it; even if there is prejudice, the proper sanction must not be more severe than is necessary to prevent that prejudice. Chicago Greatwestern Office Condominium Ass’n v. Brooks, 427 N.W.2d 728, 731 (Minn. App. 1988) (citing Wilson v. Volkswagon of Am., Inc., 561 F.2d 494, 503-04 (4th Cir. 1977), cert. denied (434 U.S. 1020 (1978)).
Here, the district court cannot be faulted for considering sanctions against appellants based on the uncertain and vague allegations made by appellants surrounding their claimed payments to respondent for services rendered, and appellants’ slowness to respond to respondent’s legitimate discovery requests. However, the court had plenty of alternatives available such as granting attorney fees and/or setting other reasonable conditions and compelling appellants to respond to discovery. In light of the alternatives available, and the severity of the sanction, we conclude that the district court’s action was premature. We reverse and remand for a trial on the merits. We note that this reversal and remand should not be construed as a comment on the merits of either party’s case.
 Respondent’s attorney notified the court that he and his client waived his appearance and we could proceed on his record and his brief.