This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-366

 

Randy Wilberg,

as parent and natural guardian of

Randy Wilberg, Jr., a minor,

Appellant,

 

vs.

 

Gary Bekkerus and Loren Bekkerus,

d/b/a D L Ski Resort, Inc., et al.,

Respondents,

 

Lookout Rock Properties,

Respondent.

 

Filed October 26, 2004

Affirmed in part, reversed in part, and remanded
Willis, Judge

Dissenting, Forsberg, Judge*

 

Becker County District Court

File No. C6-02-001912

 

Kevin Miller, Zenas Baer, Zenas Baer and Associates, 331 Sixth Street, P.O. Box 249, Hawley, MN  56549 (for appellant)

 

Tammy L. Merkins, Thorwaldsen, Malmstrom, Sorum, Wilson, LaFlair, & Majors, PLLP, 1105 Highway 10 East, P.O. Box 1599, Detroit Lakes, MN  56502-1599 (for respondents  Bekkerus, et al.)

 

Michael J. Dolan, Thornton, Hegg, Reif, Dolan & Bowen, P.A., 1017 Broadway, P.O. Box 819, Alexandria, MN  56308 (for respondent Lookout Rock Properties) 

 

 

            Considered and decided by Willis, Presiding Judge, Minge, Judge, and Forsberg, Judge.

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

On appeal from an order granting a motion to vacate a default judgment, appellant argues that the district court abused its discretion because respondents willfully defaulted; respondent Gary Bekkerus, a principal of all respondents, attended the default hearing without making an appearance or an objection; and respondents challenged the default judgment only after appellant served a motion seeking a finding of contempt against respondents for failing to respond to post-judgment discovery and seeking to have property sold to satisfy the judgment.  We affirm in part, reverse in part, and remand.

FACTS

On January 11, 2002, Randy Wilberg Jr. sustained injuries while tubing down a hill at Detroit Mountain Ski Resort.  Appellant Randy Wilberg Sr., as parent and guardian of Randy Wilberg Jr., a minor, sued respondents Gary Bekkerus and Loren Bekkerus, d/b/a Detroit Mountain Ski Resort by personal service on Gary Bekkerus on September 14, 2002. 

            On October 14, 2002, one day before the answer to the complaint was due, Gary Bekkerus spoke by phone with one of Wilberg’s attorneys.  During the telephone conversation, Gary Bekkerus told Wilberg’s attorney, Zenas Baer, that Bekkerus did not have insurance to cover the accident and requested a meeting with Baer to discuss Wilberg’s intentions.  On November 12, 2002, Gary Bekkerus and two of Wilberg’s attorneys, Baer and Kevin Miller, met to discuss the case.  Both Baer and Miller advised Gary Bekkerus to consult with an attorney, and Baer also told him that if he did not answer the complaint, Wilberg would seek a default judgment.

            Wilberg subsequently amended his complaint to name D L Ski Resort, Inc. and Lookout Rock Properties as additional defendants.  Wilberg discovered that Gary Bekkerus and Loren Bekkerus own D L Ski Resort, Inc., which operates Detroit Mountain Ski Resort, and that the property on which D L Ski Resort, Inc. operates is owned by Lookout Rock Properties.  Lookout Rock Properties has five general partners, all of whom are siblings, including Gary and Loren Bekkerus, and each owns an undivided one-fifth interest in the property.  The amended complaint was served personally on Gary Bekkerus on December 16, 2002, and on Loren Bekkerus on December 18, 2002.  Gary Bekkerus and Loren Bekkerus both are officers and directors of D L Ski Resort, Inc., and, as noted above, both are general partners of Lookout Rock Properties. 

            Wilberg served a motion for default judgment personally on Gary Bekkerus on March 24, 2003, and on Loren Bekkerus on March 31, 2003.  No written response was received from any of the named defendants.  Gary Bekkerus, however, contacted Baer on May 9, 2003, and asked if there was any way to resolve the matter.  Baer told him that the hearing on the motion for a default judgment would go forward unless the complaint was answered.

            On May 12, 2003, a default hearing was held.  Gary Bekkerus sat in the courtroom during the hearing, but did not make an appearance or an objection.  At this hearing, both Randy Wilberg Sr. and his son submitted affidavits describing the nature of the injuries and life-style changes that the son had experienced as a result of the accident.  Wilberg asserts that he also submitted medical billing, medical reports, and photographs supporting his claim for damages.  The documents themselves are not in the record.  The only mention in the record of this information is in the affidavits submitted by Randy Wilberg Sr., his son, and his attorney, as well as the district court’s subsequent findings of fact and conclusions of law, dated June 17, 2003. 

On June 17, 2003, the district court issued findings of fact, conclusions of law, and an order for judgment, finding for Wilberg and awarding damages in the amount of $436,199.15.  On June 18, 2003, notice of the filing of the order and post-judgment interrogatories were served by mail on Gary Bekkerus and Loren Bekkerus.  By a motion dated October 6, 2003, Wilberg then sought an order finding respondents in contempt for failing to respond to the interrogatories and directing that the property owned by respondent Lookout Rock Properties be sold to satisfy the judgment.   

            On October 31, 2003, respondents served motions to vacate the default judgment, and on November 17, 2003, there was a hearing on the motions.  On December 5, 2003, the district court issued an order granting respondents’ motion to vacate, conditioned on respondents’ payment of Wilberg’s attorney fees and costs incurred to that date.  The condition had to be satisfied by January 15, 2004.  On or about January 12, 2004, respondents paid Wilberg’s attorney fees and costs, and on January 26, 2004, the district court vacated the default judgment.  Wilberg appeals from the January 26 order vacating the default judgment.

D E C I S I O N

I.

In reviewing a decision to grant a motion under Minn. R. Civ. P. 60.02 to vacate a default judgment, we determine whether the district court abused its discretion.  Hovelson v. U.S. Swim & Fitness, Inc., 450 N.W.2d 137, 140 (Minn. App. 1990), review denied (Minn. Mar. 16, 1990).  A court may relieve a party of a final judgment on the basis of mistake, inadvertence, surprise, or excusable neglect.  Minn. R. Civ. P. 60.02(a).

A party seeking to set aside a default judgment for mistake, inadvertence, surprise, or excusable neglect must show (1) a reasonable defense on the merits; (2) a reasonable excuse for the failure or neglect to act; (3) action with 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, 455-56 (1952).

Here, the district court ruled that all respondents satisfied each of the four Hinz factors.  Wilberg argues that the district court abused its discretion by vacating the default judgment because none of the respondents satisfied the Hinz factors.  See Howard v. Frondell, 387 N.W.2d 205, 207-08 (Minn. App. 1986) (reopening a default judgment is discretionary with the district court), review denied (Minn. July 31, 1986).

Wilberg argues that respondents have no reasonable excuse for their failure to answer the complaint.  We agree.  Despite being advised on several occasions by Wilberg’s attorneys to consult with counsel and to answer the complaint, no answer was filed.  Also, despite attending the default hearing, respondent Gary Bekkerus failed to object or to submit any response to the complaint.  Further, it is uncontested that service of the complaint and other documents on Gary Bekkerus and Loren Bekkerus also constituted service on Lookout Rock Properties and D L Ski Resort, Inc.[1]  See Minn. R. Civ. P. 4.03(b), (c). 

Gary Bekkerus and Loren Bekkerus argue that they failed to answer because they thought that the fact that D L Ski Resort, Inc. is a corporation would shield them from personal liability, and, apparently, they were willing to have judgment entered against the corporation.  But their misunderstanding of the law did not absolve them or the other respondents of their obligation to respond to Wilberg’s complaint.  See Fitzgerald v. Fitzgerald, 629 N.W.2d 115, 119 (Minn. App. 2001) (noting that pro se parties are generally held to the same standard as attorneys).  We find no case in which a default judgment has been vacated because a defendant wrongly predicted the outcome of the litigation.  And Gary Bekkerus and Loren Bekkerus’s argument does not address why no answer was interposed on behalf of Lookout Rock Properties.  Given proper service on all respondents, the failure of any respondent to answer the complaint, and the absence of any legally cognizable reason for not answering, none of the respondents has an excuse for not answering the complaint. 

A weak showing on one of the Hinz factors can be outweighed by a strong showing on the other three.  Armstrong v. Heckman, 409 N.W.2d 27, 29 (Minn. App. 1987), review denied (Minn. Sept. 18, 1987).  But we conclude that respondents did not make even a weak showing on the excuse-for-failure-to-respond factor; they failed altogether to satisfy it, and failure to satisfy one of the Hinz factors is fatal to a motion to vacate a default judgment.  See Nguyen v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 487, 490 (Minn. 1997) (stating “[a]ll four of the Finden factors must be satisfied in order to justify relief under the rule”); Imperial Premium Fin., Inc. v. GK Cab Co., 603 N.W.2d 853, 857 (Minn. App. 2000) (stating that the moving party bears the burden of proving allfour elements).

Moreover, respondents failed to satisfy the due-diligence factor; respondent Gary Bekkerus’s numerous contacts with Wilberg’s attorneys and the procedural history in this matter show that respondents were aware of the action from its inception in late 2002, but failed to do anything about it until late 2003, four months after entry of the default judgment and then only when Wilberg moved for a contempt finding and attempted to force the sale of property to collect the judgment.  Because we conclude that the record shows that respondents failed to satisfy two of the Hinz factors, it is not necessary for us to address respondents’ alleged defense on the merits or the question of prejudice to Wilberg. 

We recognize that the prevailing policy in Minnesota is that motions to vacate default judgments should be liberally granted to encourage trials on the merits.  See Hinz, 237 Minn. at 30, 53 N.W.2d at 455-56.  But it is also true that our legal system is designed to provide an orderly process for parties claiming injury to have their claims determined.  We conclude that this record shows an egregious flouting of the legal system by respondents.  This is not a case in which a party has, for example, been served by publication or by substituted service and has learned of a claim only after judgment has been entered against it.  Neither is this a circumstance in which a party has entrusted response to a complaint to an attorney, who then failed to take appropriate action.  Gary Bekkerus and Loren Bekkerus were both served personally.  All respondents were legally on notice of Wilberg’s claim against them no later than December 18, 2002.  Gary Bekkerus had more than one discussion with Wilberg’s attorneys about the claim, beginning with a meeting with Wilberg’s attorneys on November 12, 2002.  On several occasions, Wilberg’s attorneys advised Gary Bekkerus to obtain legal counsel and respond to the complaint; he did not do so, on his own behalf or on behalf of the other respondents, as to all of which he was a principal.  Wilberg’s counsel did all they reasonably could be expected to do to encourage respondents to defend against Wilberg’s claim.

Respondent Gary Bekkerus in fact attended the default hearing in this case, but he did not enter an appearance or an objection.  None of the respondents here responded in any way to Wilberg’s complaints served on respondents Gary and Loren Bekkerus until October 31, 2003, which was more than a year after Wilberg served his complaint, more than ten months after Wilberg served his amended complaint, and more than four months after the default judgment was entered.  Motions to vacate the judgment were served only when Wilberg moved for an order finding respondents in contempt of court for failing to respond to post-judgment interrogatories and for an order directing the sale of the property owned by respondent Lookout Rock Properties to satisfy the judgment.  The record does not support reopening the judgment on the merits under Minn. R. Civ. P. 60.02(a) for mistake, inadvertence, surprise, or excusable neglect.  We therefore find that the district court’s order vacating the judgment on the merits was an abuse of discretion, and we reverse the order as it relates to the merits.

II.

Respondents also argue that the interests of justice favor vacating the default judgment under Minn. R. Civ. P. 60.02(f), because the evidence is insufficient to support the $436,199.15 damage award.  We agree regarding the damage award only.  Relief under the residual clause of rule 60.02(f) is appropriate “where the equities weigh heavily in favor of petitioner and clearly require relief be granted to avoid an unconscionable result.”  Wiethoff v. Williams, 413 N.W.2d 533, 536-37 (Minn. App. 1987) (finding that unforeseen circumstances may require the use of residual rule 60.02(f) to achieve a just result). 

Wilberg had the burden of proving damages by a “fair preponderance of the evidence.”  Wick v. Widell, 276 Minn. 51, 54, 149 N.W.2d 20, 22 (1967); see also Wiethoff, 413 N.W.2d at 536.  The record before this court contains no evidence regarding Wilberg’s claim for his son’s past and future pain and suffering or how damages for pain and suffering were determined.  Although Wilberg states in his brief that documentation was provided to the district court, no such information is in the record.  Therefore, the district court’s damage award is unsupported by the record, and we remand only for the district court to re-determine the amount of damages and create a reviewable record on the issue of damages.  On remand, the district court may reopen the record to address damages. 

 Affirmed in part, reversed in part, and remanded.

 

FORSBERG, Judge (dissenting)

 

            I respectfully dissent.  As stated in the majority opinion, a party seeking to set aside a default judgment for mistake, inadvertence, surprise, or excusable neglect must show (1) a reasonable defense on the merits; (2) a reasonable excuse for the failure or neglect to act; (3) action with 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, 455-56 (1952).  The trial court found that all respondents satisfied each of these factors. 

            The majority found that respondents did not satisfy number 2, the reasonable excuse for failure or neglect to act, or number 3, action with due diligence after notice of entry of judgment.

Respondents argue that Gary and Loren Bekkerus’s failure to respond was not due to an “ill sounded belief of the likely outcome of litigation,” but due to the fact that they misunderstood the pleadings and did not believe they were being sued in their individual capacity.  They believed that because the corporation was being sued, they had no personal liability and that the corporation would shield them and all others from liability.  They also did not understand that service on them constituted service on the corporation or the partnership, Lookout Rock Properties.  Gary Bekkerus was confused by the proceedings.  Ignorance of the law can sometimes be an excuse for failure to act upon being served.  WGSH, Inc. v. Bollinger, 384 N.W.2d 592, 594 (Minn. App. 1986). 

Insofar as number 3 is concerned, respondent Gary Bekkerus, within a week of learning of the default judgment, moved to vacate the default judgment.  In any event, the court, in believing Gary Bekkerus, did not abuse its discretion.