may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
Daniel S. Vener,
Rodney A. Vener, et al.,
File No. C5968315
Sandra M. Kensy, 510 Marquette Avenue South, Suite 200, Minneapolis, MN 55402 (for appellants)
Considered and decided by Crippen, Presiding Judge, Lansing, Judge, and Peterson, Judge.
U N P U B L I S H E D O P I N I O N
This appeal is from a district court order denying appellants' motion to vacate a default judgment. We affirm.
Televentures Inc. and Rodney A. Vener Personal, owe Daniel G. Vener a total amount of (thirty eight thousand nine hundred twenty dollars.) $38,920.00 as of January 1, 1993. This is payment in full for all loans Daniel G. Vener has borrowed to Televentures Inc. and Rodney A. Vener in the past five years. This note supersedes any and all other notes signed by Rodney A. Vener or Daniel G. Vener.
The record shows that the earlier loans were made to Rodney Vener and a corporation, Global Publications Inc. Respondent stated that except for a $1,000 personal loan to Rodney Vener for travel, the earlier loans were made to Global Publications for business purposes.
Respondent began this action by serving the summons and complaint on April 3, 1996. The affidavit of service states that service was made on Rodney Vener personally. Appellants served their answer on respondent's attorney on April 24, 1996, which was one day late. See Minn. R. Civ. P. 12.01 (answer must be served within 20 days after service of summons). Rodney Vener claims that he believed he had been served with the summons and complaint on April 4, 1996, and therefore advised his attorneys that the date of service was April 4.
Appellants' attorneys stated that Rodney Vener met with them on April 24, 1996, to discuss the answer and that they conducted settlement negotiations with respondent's attorney after service of the answer and before the default judgment was entered. Respondent's attorney, however, denied conducting settlement negotiations before the entry of judgment. Respondent's attorney stated that upon receiving the answer by mail on April 26, 1996, he advised appellants' attorney that the answer was untimely and that he intended to obtain a default judgment.
In late July 1996, respondent's attorney submitted an affidavit of no answer requesting entry of a default judgment based on appellants' failure to file a timely answer or request an extension of the time to answer. Respondent's counsel claims to have notified appellants' attorney of the submission. A default judgment was entered for respondent, and a notice of entry of judgment was sent to appellants in August 1996. The parties conducted settlement negotiations following the entry of judgment but were unable to reach a settlement.
On December 20, 1996, appellants filed a motion to vacate the default judgment. The referee found that (a) appellants had not offered a reasonable excuse for their untimely answer, (b) appellants did not act diligently in moving to vacate the default judgment, (c) the defenses asserted had little merit, and (d) respondents would not be prejudiced if the judgment were vacated. The referee denied the motion to vacate, and the district court adopted the referee's findings and order.
D E C I S I O N
A party seeking relief from a default judgment
must demonstrate (1) reasonable defense 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 v. Folland, 498 N.W.2d 459, 460 (Minn. 1993) (citing Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 30, 53 N.W.2d 454, 455-56 (1952)). A strong showing on three of the four factors can outweigh a weak showing on one. Valley View, Inc. v. Schutte, 399 N.W.2d 182, 185-86 (Minn. App. 1987), review denied (Minn. Mar. 18, 1987).
Reasonable defense on the merits
A party presents a reasonable defense on the merits by raising a triable issue. In re Estate of McCue, 449 N.W.2d 509, 512 (Minn. App. 1990). A party cannot rely on conclusory allegations but must establish the existence of a defense by affidavit or other proof. Id.
Appellants argue that they established a usury defense. The record shows that except for a $1,000 personal loan, the loans at issue were made to Rodney Vener and a corporation for business purposes. Appellants failed to present evidence supporting their contention that the loans were made to Rodney Vener for personal purposes.
Under Minn. Stat. § 334.011, subd. 1 (1996),
a person may, in the case of a contract for the loan or forbearance of money, goods, or other things in action in an amount of less than $100,000 for business or agricultural purposes, charge interest at a rate of not more than 4-1/2 percent in excess of the discount rate on 90 day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district encompassing Minnesota.
Appellants did not present evidence of the discount rate on 90-day commercial paper in effect when the loans were made. Therefore, the district court did not err in finding that appellants failed to establish the defense of usury.
Appellants also argue that they established the existence of defenses showing that the amount owed was less than the amount of the judgment. Appellants contend that respondent failed to account for some payments, including bartered goods, allegedly made by appellants. But the allegations of payments are not supported by any evidence. Moreover, appellants' calculations do not include any interest charges.
Appellants claim that the January 18, 1993, note is ambiguous because it does not specify an interest rate. But Rodney Vener's affidavit states that $6,120 was charged in interest each year after the 1993 note was signed, and appellants do not claim that the parties intended a different interest rate to apply.
Finally, appellants contend that the defense of failure of consideration applies as to Televentures because Televentures was not a party to the earlier loan agreements. However, appellants do not cite any authority or make any argument in support of this contention. Cf. Schoepke v. Alexander Smith & Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971)("assignment of error based on mere assertion and not supported by any argument or authorities in appellant's brief is waived and will not be considered on appeal unless prejudicial error is obvious on mere inspection"(citations omitted)). The fact that Televentures was not a party to the earlier loan agreements does not, by itself, demonstrate that there was no consideration for the agreement to pay the earlier loans.
The evidence supports the district court's finding that the defenses asserted by appellants lacked merit and were not reasonable. Appellants failed to establish a usury defense and made only a weak showing in support of their allegations that they owed less than the amount calculated by respondent and reduced to judgment.
Reasonable excuse for failure to act
Neglect of the parties themselves that leads to entry of default judgment is inexcusable neglect, and * * * such neglect is a proper ground for refusing to open a judgment.
Thayer v. American Fin. Advisers, Inc., 322 N.W.2d 599, 602 (Minn. 1982).
Appellants' attorney stated that Rodney Vener met with him concerning the answer on April 24, 1996, one day after the answer was due. The record does not show that appellants presented the summons and complaint to their attorneys before that meeting. Rodney Vener stated that he believed that he had been served with the summons and complaint on April 4, 1996. But respondent's attorney stated that appellants did not claim any mistake as to the date of service until after the entry of judgment. Appellants initially claimed that the untimely answer occurred because someone other than Rodney Vener received service and that person delayed in conveying the summons and complaint to Rodney Vener. The affidavit of service, however, indicates that the summons and complaint were served on Rodney Vener personally. The evidence supports the district court's finding that appellants failed to establish a reasonable excuse for filing their answer late.
Appellants argue that their untimely answer should be excused because if respondent had notified appellants that he would seek a default judgment, appellants could have obtained an extension of the time to answer before judgment was entered. But the record indicates that respondent's attorney notified appellant's attorney on April 26, 1996, that he would seek a default judgment and that he notified appellant's attorney when he submitted the request for default judgment to the court in July 1996. Appellants also argue that they should not be charged with their attorney's neglect in failing to request an extension of the time to answer. See Kemmerer v. State Farm Ins. Co., 513 N.W.2d 838, 841 (Minn. App. 1994) (when client is unaware of attorney's neglect and not personally negligent, courts will grant relief from judgment if Hinz test met), review denied (Minn. June 2, 1994). In this case, however, the record indicates that Rodney Vener's neglect led to the untimely answer, so appellants were not free from personal negligence.
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).
Evidence in the record indicates that appellants have repeatedly caused delays in resolving respondent's claims. They failed to pay their debt to respondent in a timely manner. When respondent initially attempted to serve the summons and complaint in November 1995, appellants failed to acknowledge service. After Rodney Vener was served personally in April 1996, appellants failed to file and serve a timely answer. Appellants then failed to seek relief from the judgment for four months. The district court did not err in concluding that appellants did not act with due diligence in moving to vacate.
Appellants made a weak showing on three of the four Hinz factors. The district court's denial of appellants' motion to vacate was not an abuse of discretion.
 In calculating the interest rate to be 42%, appellants failed to take into account interest charged on unpaid interest. See Minn. Stat. § 334.01 (1996) (interest may be charged on overdue interest).