This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Northland Homes and Realty, Inc.,



Jerome D. Clark,


Filed December 30, 1997

Vacated and remanded

Huspeni, Judge

Cass County District Court

File No. C3-96-592

John F. Bonner III, Gerald C. Robinson, Leona E. Lewis, Malkerson Gilliland Martin, LLP, 1500 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402 (for appellant)

Robert M. Wallner, Kief, Fuller, Baer & Wallner, Ltd., 514 America Avenue, P. O. Box 880, Bemidji, MN 56619-0880 (for respondent)

Considered and decided by Schumacher, Presiding Judge, Huspeni, Judge, and Forsberg, Judge.[*]



Northland Homes and Realty, Inc. appeals from a default judgment for $12,000, and an award of attorney fees and costs, arguing that the judgment was not justified by respondent's counterclaim; that respondent waived objection to Northland's untimely response; and that attorney fees were unwarranted. Respondent seeks appellate attorney fees. We vacate the default judgment and attorney fee award and remand.


Respondent Jerome D. Clark entered into a purchase agreement to buy a mobile home from appellant Northland Homes and Realty, Inc. (Northland). The agreement provided that Clark would make periodic payments; the parties also agreed that Clark would make various improvements on the mobile home. In July 1996, Northland served Clark with a complaint in replevin seeking to regain possession of the mobile home, claiming that Clark had not made proper payments. Clark answered, denying Northland's claims, counterclaiming that he had paid in full and that Northland had failed to provide title to the home, and claiming that Northland had been unjustly enriched $10,000 by his labor on the mobile home. Clark demanded title to the home or, in the alternative, $10,000 in addition to attorney fees and costs.

At an August 12, 1996, hearing, the primary issue was posting of a bond by the party that would have possession of the mobile home while the action was pending. Clark indicated he was not able to post a bond. The district court therefore orally directed Northland to post a bond for $21,000 before taking possession of the mobile home, but did not issue a written order requiring Northland to post a bond. After the hearing, Clark removed the mobile home from its pad and placed it on the ground outside the mobile home park. Northland claims that by doing so Clark abandoned the mobile home, and Northland therefore had no choice but to take possession of it. Clark claims that he moved the mobile home according to his attorney's instructions in order to facilitate carrying out the district court's directives.

When Clark learned that Northland had taken possession of the mobile home, he moved that Northland be required to post a bond. The district court ordered Northland's president to appear personally on October 8, 1996, and explain why he should not be held in constructive civil contempt of court for failing to post a bond prior to retaking possession of the mobile home. Northland's president attended the October 8 hearing but Northland's counsel did not.[1] At the hearing, the court expressed its displeasure at Northland's failure to post a bond. The court stated:

[Northland's attorney] informed me that wherever it is that he practices, they sign the orders first and you get a bond later. I informed him in the county in which I practice, we get the bond and then we do the order. But, I didn't care how they did it where he was but it was going to be that way here.

I still have not issued the order. What I had done is I had signed the order actually with a notation not to issue the order until the bond was filed. It has never been filed and the order has never been issued, except it was issued in open court.

The relationship between the court and Northland's president and attorney continued to deteriorate. When no bond had been posted by November 21, 1996, the court ordered Northland's president to post a $21,000 bond within four days, and to pay Clark's attorney fees and costs. The court also ordered Northland's attorney to appear on December 9, 1996, to show cause why he should not be held in constructive civil contempt of court for advising his client to seize the mobile home without posting a bond and for failing to appear at the October 8 hearing. Northland's attorney did not appear on December 9 because of a conflict; he also argued that he was not properly served. The court then issued an order directing Northland's attorney to appear on December 24 and to pay attorney fees and costs for his failure to give notice of his intent to not appear on December 9. Northland's president was ordered to appear on December 24 as a representative of Northland. However the Hennepin County Deputy Sheriff reported that "[Northland's attorney] managed to successfully avoid service. Several calls and stops at his office were not returned." The December 24 hearing was not held.

On January 24, 1997, Clark served and filed a motion for a default judgment; on February 7, 1997, Northland served and filed an answer to Clark's August counterclaim. A motion hearing was set for February 10, 1997. Northland's attorney notified Clark's attorney that a trial commitment prevented attendance on that day. The hearing was held nonetheless on February 10 and on March 6, 1997, the district court ordered default judgment for Clark, awarding him $12,000 on his counterclaim, $2,375 in attorney fees, and $530.60 in costs.

During the pendency of this appeal, Clark moved to strike Northland's reply brief, arguing that it raises issues not raised before the district court, in Northland's principal brief, or in Clark's brief. We will address this motion in the context of our decision on the merits.


A denial of a motion to vacate a default judgment will not be reversed unless the district court abused its discretion. See Foerster v. Folland, 498 N.W.2d 459, 460 (Minn. 1993). The factors for determining whether to grant a default judgment are substantially similar to those for determining whether to vacate a default judgment. Guillaume & Assocs., Inc. v. Don-John Co., 371 N.W.2d 15, 18 (Minn. App. 1985). Therefore, the same standard of review applies. A default judgment may be granted if "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend within the time allowed therefor by these rules or by statute, and that fact is made to appear by affidavit." Minn. R. Civ. P. 55.01.

Northland's failure to appear at the February 10 motion hearing is not dispositive of Clark's right to a default judgment. Northland's nonappearance resulted from the unfortunate breakdown in communications between the court and Northland's president and attorney, and between the attorneys themselves. Questions concerning the activities occurring immediately after the August 12, 1996, hearing remain unanswered, making it difficult for this court to find either party at fault. Clark indicates that upon advice of counsel he removed the trailer from its pad and placed it in a location where Northland could retake possession. In contrast, Northland states that after observing the condition and location of the trailer, it concluded that the trailer had been abandoned. Similarly, questions concerning the posting of the bond, particularly whether a bond could have been obtained without a written order, remain unanswered. The communications breakdown resulted in Northland receiving an adverse default judgment and Northland's attorney and president being subject to an order to show cause. On the record before us, we believe that neither result is sustainable.

We question whether there was a default upon which judgment could have been entered. Northland commenced this action by seeking replevin of the trailer; Clark answered and counterclaimed; Northland then answered Clark's counterclaim. Although Northland's response was late, Clark appears to have made no formal objection to that response. See Bentley v. Kral, 223 Minn. 248, 251, 26 N.W.2d 532, 533 (1947) (acceptance of answer may waive right to default judgment).

Even assuming arguendo that a default did occur does not resolve the matter because appellant was represented by counsel throughout these proceedings. Courts are reluctant to punish a client for acts that were not the client's own. See Minn. R. Civ. P. 60.02 (court may relieve party of final judgment for mistake, inadvertence, surprise, or excusable neglect); see, e.g., Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964). Minnesota has established that a client should be relieved of the consequences of his or her attorney's neglect where the client

(a) is possessed of a reasonable defense on the merits, (b) has a reasonable excuse for his failure or neglect to answer, (c) has acted with due diligence after notice of the entry of judgment, and (d) shows that no substantial prejudice will result to the other party.

Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 30, 53 N.W.2d 454, 456 (1952), quoted in Finden, 268 Minn. at 271, 128 N.W.2d at 750; Kosloski v. Jones, 295 Minn. 177, 179-80, 203 N.W.2d 401, 403 (1973).

The unfortunate and continuing miscommunications among the participants in this matter make full inquiry difficult. We believe, however, that the four Hinz factors are present, and we are reluctant, on the record before us, to deprive Northland of the relief anticipated by existing case law on the basis of its president's conduct. Thus, assuming without finding that there was negligence in allowing this matter to proceed to default judgment, we believe that Northland should not bear the consequences of that negligence.

We recognize that this matter is before us on direct appeal from the default judgment and that the district court, had it been given the opportunity to consider a motion to vacate, might have granted the relief this court now grants. We therefore vacate the default judgment and remand for trial on the merits of the claims of both Northland and Clark. We also reverse the district court's award of Minn. Stat. § 549.21 (1996) attorney fees to Clark.[2]

Finally, we grant in part Clark's motion to strike Northland's reply brief. The reply brief formally raises one new issue, subject matter jurisdiction. Although subject matter jurisdiction may be raised for the first time on appeal, we decline to address it when raised for the first time in a reply brief. See Minn. R. Civ. App. P. 128.02, subd. 3 ("The reply brief must be confined to new matter raised in the brief of the respondent."). The remainder of the reply brief is essentially a restatement of issues presented in Northland's principal brief, and we deny Clark's motion as to those issues.

Vacated and remanded.

[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] We note that corporations must be represented by counsel in court proceedings. Contemporary Sys. Design v. Commissioner of Jobs and Training, 431 N.W.2d 133, 134 (Minn. App. 1988).

[2] Both Northland's president and its attorney were subject to orders to show cause, although service upon the attorney is questionable. No hearing on the orders to show cause was ever held; the record reflects no further court action on these orders. Because a corporation may appear in court proceedings only through counsel, the district court's reliance on directives given to Northland's president is at best questionable and at worst misplaced. The questions on the repossession of the trailer and the posting of the bond also preclude an award of section 549.21 attorney fees. Finally, vacation of the default judgment should not be deemed by the parties or the court to revive any contempt matters. Ideally, the parties will resolve this protracted litigation through settlement. If it proceeds to trial on the merits, enabling a factfinder to resolve the unanswered questions will require the cooperation and appropriate communication of all involved.