It’s a time of transition. The Twins season is winding down. And the Minnesota Supreme Court is issuing the last of its decisions from the past term.
Two important decisions were just released: Gams and Cole. These cases decide how two rules mesh – rule 5.04(a) and rule 60.02.
Rule 5.04(a) was amended in 2013. It now provides that served complaints that are not filed within one year of service are “deemed dismissed” with prejudice. And rule 60.02 sets out some grounds for vacating judgments, orders and proceedings.
The Gams Court said that rule 60.02 does apply to rule 5.04(a) dismissals. That is true whether the district court formally dismisses the case, or whether the action is deemed dismissed without any court action. (The Gams Court suggested that ordering an express dismissal is the better practice.)
Gams also addressed the showing that must be made to warrant rule 60.02 relief. Rule 60.02 relief depends on four factors – the Finden factors. They are: 1) a reasonable claim on the merits, 2) a reasonable excuse for a party’s failure to act, 3) due diligence after notice, and, 4) the absence of substantial prejudice to the opponent.
Over the years, there has been much confusion about how the Finden factors apply. Must all four factors be shown? Is relief available if two or three factors are shown? The Gams Court answered these questions. All four factors must be shown to win relief.
It may be that a strong showing of one of the Finden factors may balance a weaker showing of another factor. That has been a theme in some of the prior caselaw, but was not expressly addressed in Gams.
The Gams Court did say the Finden factors are not to be applied mechanically but must take into account “the surrounding facts of each specific case.”
The Court said that the district court has broad discretion in deciding rule 60.02 motions, but that discretion is not unlimited. The Court stressed that the district court’s findings must be sufficiently detailed to enable appellate review. The Court found that the findings in Gams were not sufficient, and remanded the case for further review.
The other case just decided – Cole – addressed one of the Finden factors in greater detail: whether there was a “reasonable excuse” for not acting in time. The defendant in the Cole case had argued that he did have a reasonable excuse justifying relief because of his counsel’s error; the attorney had missed the rule 5.04 deadline because he did not know that the rule amendment applied to pending cases. The other side argued that ignorance of the law is not enough and does not establish excusable neglect under rule 60.02. The Cole Court remanded the case, emphasizing that the district court determination must be “fact-intensive,” and “based on all the surrounding circumstances.”
The Court said that there must be some “specific information” showing that the moving party’s position had merit. Conclusory allegations in moving papers are not enough to show that, the Court said.
The Cole Court said that mistakes of law (as well as mistakes of fact) may provide a basis for rule 60.02 relief. This way, the client may not suffer for mistakes of the attorney. But attorneys must beware: not all mistakes of fact or law will justify rule 60.02 relief.
So, with Gams and Cole, the Minnesota Supreme Court opened the door a bit to rule 60.02 challenges and also closed it a bit. Rule 60.02 relief is available for 5.04 dismissals. But all four Finden factors must be shown to obtain relief. The factors are not to be applied mechanically but must take into account all the surrounding circumstances, on a case by case basis.
Minnesota civil litigators all know that amended rule 5.04 – effective June 2013 – says that a served complaint is “deemed dismissed” with prejudice if not filed within one year. (That is true unless the parties stipulate to extend the filing period.)
But what does it mean if an action is “deemed dismissed” under the rule? Can the district court vacate the dismissal under rule 60.02 if the tests under that rule are met? And how? Those questions are posed by two appeals heard by the Minnesota Supreme Court earlier this year: Cole v. Wutzke, and Gams v. Houghton.
In both cases, the district court threw out the served complaint because the complaint was not filed in time. And, in each case, the Minnesota Court of Appeals reversed and remanded for consideration of the rule 60.02 factors.
The two cases have some different procedural backgrounds, and present somewhat different issues. But, boiled down to the basics, the two appeals taken together present two questions:
- Whether rule 60.02 applies at all to rule 5.04 dismissals, and
- Whether, if rule 60.02 applies, an attorney’s failure to comply with rule 5.04 can constitute “excusable neglect” under rule 60.02(a) to justify the vacation of a dismissal.
Some of the arguments made by the parties address: 1) whether or not rule 5.04 creates an expectation of finality, as statutes of limitations do; 2) whether there is a distinction between “ignorance of the law” and misinterpretation or “misapprehension” of it under rule 60.02; and, 3) whether all four of the rule 60.02(a) factors must be shown, or whether a showing of three factors can suffice.
The Supreme Court heard oral argument on both cases in April 2016. A decision could come at any time.