This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C7-00-825
C6-00-1304

 

Home Gallery, Inc.,

Appellant,

 

vs.

 

TCF Mortgage Corp.,

Respondent,

 

Teachers Federal Credit Union,

Respondent,

 

Stock Lumber, Inc.,

Respondent,

 

James R. Haussner, Jr.,

Defendant,

 

Tristam O. Hage, et al.,

defendants and third-party plaintiffs,

Respondents,

 

Cheryl Kempenich, et al.,

third-party defendants,

Appellants.

 

Filed January 30, 2001

Reversed and remanded
Klaphake, Judge

 

Hennepin County District Court

File No. LN974723

 

Barbara J. May, 4105 North Lexington Avenue, Suite 310, Arden Hills, MN  55126 (for appellants)

 

Douglas L. Young, 801 Marquette Avenue, Minneapolis, MN  55403 (for respondent TCF Mortgage)

 

Timothy W.J. Dunn, 1616 Firstar Center, 101 East Fifth Street, St. Paul, MN 55101-1808 (for respondent Teachers Federal Credit Union)

 

Michael Dupont, 2650 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondent Stock Lumber)

 

Glenn P. Bruder, 4005 West 65th Street, Suite 200, Edina, MN 55435 (for respondents Hage)

 

            Considered and decided by Harten, Presiding Judge, Klaphake, Judge, and Anderson, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

Appellants Home Gallery, Inc. and its owners, Cheryl and Randy Kempenich, brought a mechanics’ lien action against respondents Tristam and Sandra Hage to recover $20,665 for labor and materials furnished in connection with a remodeling project of the Hage residence.  Respondents counterclaimed and sought damages for breach of contract and misrepresentation.  When appellants failed to appear at trial, the district court granted respondents’ default motion and entered judgment discharging Home Gallery’s mechanics’ lien and awarding respondents $40,346 in damages against Home Gallery and the Kempenichs individually.  The district court subsequently denied appellants’ motion to vacate, and this appeal followed.

            At oral arguments before this court, appellants’ attorney indicated that she only represented the Kempenichs individually and that she did not represent the corporation.  We therefore construe this appeal as having been taken by the Kempenichs and not by the corporation.  The district court’s discharge of the corporation’s mechanic’s lien and its entry of judgment against the corporation therefore stands.

Because appellants, the Kempenichs, have shown a reasonable defense on the merits, due diligence, and minimal prejudice to respondents, we reverse the district court’s denial of appellants’ motion to vacate and remand for further proceedings consistent with this opinion.

D E C I S I O N

I.

            Appellants challenge the district court’s decision to proceed with a default hearing, claiming that they were never notified of the trial date either by the court or by their former attorneys.  They assert that when no one appeared to represent them on the morning of trial, the court should have attempted to contact them before granting respondents’ request for default judgment.

            A December 9, 1998 scheduling order notified appellants of the May 17, 1999 trial date and warned them that failure to appear could result in sanctions, including dismissal or entry of default judgment.  These sanctions are authorized by the rules.  See Minn. R. Civ. P. 41.02(a) (“The court may upon its own initiative, or upon motion of a party, and upon such notice as it may prescribe, dismiss an action or claim for failure to prosecute or to comply with these rules or any order of the court.”); Minn. R. Civ. P. 55.01 (default judgment may be entered against party from whom judgment for affirmative relief is sought, when that party “has failed to plead or otherwise defend within the time allowed” by law). 

            Appellants admit that they discharged their third attorney in January 1999, months before trial, and that they were proceeding pro se.  Appellants further acknowledge that the scheduling order was in their file but that they did not notice it. The district court appears to have continued to send trial notices and orders to appellants’ first attorney, because the attorneys had failed to file written notices of withdrawal as required by Minn. R. Gen. Pract. 105.  Under these facts, appellants’ failure to be apprised of proceedings in their case was attributable to their decision to proceed pro se.  See Gruenhagen v. Larson, 310 Minn. 454, 460, 246 N.W.2d 565, 569 (1976) (litigant who chooses to proceed pro se should not necessarily be relieved of consequences of that decision).  We therefore conclude that the district court’s entry of default judgment was a proper sanction under the rules for appellants’ failure to appear.

II.

            A party may be relieved from a default judgment for “[m]istake, inadvertence, surprise, or excusable neglect.”  Minn. R. Civ. P. 60.02(a).  Relief should be liberally granted so that disputes can be resolved on the merits.  Taylor v. Steinke, 295 Minn. 244, 246, 203 N.W.2d 859, 860 (1973); Petrich v. Dyke, 419 N.W.2d 833, 835 (Minn. App. 1988).  Absent an abuse of discretion on the part of the district court, however, a reviewing court will uphold a lower court’s decision to grant or deny a rule 60.02 motion.  Charson v. Temple Israel, 419 N.W.2d 488, 490 (Minn. 1988).

            The party seeking relief from a judgment must show (1) it possessed a reasonable excuse for failing to appear; (2) it acted with due diligence after notice of the default proceedings; (3) it has a meritorious claim or defense; and (4) no substantial prejudice will result to the other party if the judgment is vacated.  Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964).  Although the party must establish all four elements, a relative weakness on one factor may be balanced by a strong showing on any other factor.  Valley View, Inc. v. Schutte, 399 N.W.2d 182, 185 (Minn. App. 1987), review denied (Minn. Mar. 18, 1987).

            Reasonable Excuse

            Appellants claim attorney error prevented them from appearing at trial.  Cases allowing vacation of a default judgment for attorney error generally allow relief when the attorneys provide reasonable explanations for their mistakes.  See, e.g., Nguyen v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 487, 491 (Minn. 1997) (attorney’s legal assistant inadvertently failed to file request for trial de novo with court, even though she properly served request on opposing party); Pearce v. Lindstrom, 443 N.W.2d 857, 858-60 (Minn. App. 1989) (attorney’s failure to file for trial de novo due to miscommunication with client, interruption of holiday season, and clients’ out-of-state residence).

            Not surprisingly, appellants’ former attorneys have refused to explain their failure to effectively withdraw and provide notice of withdrawal under rule 105.  In any event, where a party itself is “guilty of neglect, the neglect is inexcusable regardless of whether his representative is also negligent.”  Weithoff v. Williams, 413 N.W.2d 533, 536 (Minn. App. 1987) (citations omitted).  As noted, appellants discharged their attorneys, chose to represent themselves pro se, and admit that they had a copy of the scheduling order in their files but did not read it or notice it.  Thus, appellants’ showing on this factor is weak.

            Due Diligence

            Once appellants learned that they had missed the May 17, 1999 trial date and that a default judgment was going to be entered against them, they quickly retained an attorney.  By June 1999, they moved to vacate and for a new trial.  Respondents concede that appellants acted with due diligence.

            Meritorious Defense

            With respect to respondents’ misrepresentation counterclaim, appellants note that Tristam Hage is an experienced attorney and that this weighs against his claim that he was induced into entering the contract with them.  See Boubelik v. Liberty State Bank, 553 N.W.2d 393, 400 (Minn. 1996) (fraud must be proved with reference to intelligence and experience of aggrieved party).  Appellants further presented some evidence that many of the delays in the project were caused or created by respondents themselves, which may be a defense to respondents’ breach of contract claim and their claim that appellants misrepresented that they had experience in these types of projects and would be able to complete the project in a timely manner.  Appellants finally point to their prior success before the arbitrator in this case.^[1]  We must presume that the arbitrator considered both the mechanic’s lien and respondents’ counterclaims in making his award, and possibly offset one against the other.  Thus, we conclude that appellants have shown that they have a reasonable defense on the merits.

            Prejudice to Opposing Party

            Appellants claim that any prejudice to respondents due to the length of time that has passed since the May 1999 trial is attributable to the district court’s inadvertent closing of the file and respondents’ inaction and failure to pursue entry of judgment in this case until June 2000.  Any prejudice to respondents can be minimized at this point by imposition of conditions upon appellants, including security for payment of the judgment pending a new trial.  See Stelflug v. Benson, 385 N.W.2d 892, 894 (Minn. App. 1986); Finden, 268 Minn. at 272-73, 128 N.W.2d at 751.  We therefore remand to the district court to reopen this case and determine the appropriate amount of such a bond.

            Reversed and remanded.