Opinion
No. C3-00-661.
Filed December 5, 2000.
Appeal from the District Court, Anoka County, File No. F0997295
Kathleen M. Picotte Newman, Jon S. Swierzewski, Daniel J. Ballintine, (for respondent)
Thomas L. Steffens, Ann M. Lentner, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant challenges the district court's order denying his motions to vacate a default dissolution judgment, or for amended findings or a new trial. Because the district court did not abuse its discretion in denying appellant's motions, we affirm.
FACTS
Appellant Jesse Patrick Jondahl and respondent Maria Lynn Jondahl married in May 1996. They separated in May 1999. In late August 1999, respondent commenced a dissolution action and informed appellant of a temporary hearing scheduled for November 10, 1999. After the deadline for appellant to answer the petition lapsed, respondent served him with an affidavit of default and non-military status and a default-scheduling request. On October 6, respondent sent appellant an informational statement; item three of the statement, which asked if "[t]he parties are in agreement on all matters and this case will proceed by default," was checked "No." Two days later, respondent served appellant with notice of her intent to proceed by default.
On October 19, 1999, the dissolution came before the Anoka County District Court. Appellant did not appear. After hearing testimony from respondent, the court adopted her proposed findings of fact, conclusions of law, and order for judgment. The court granted respondent's request for dissolution and sole physical and legal custody of the parties' minor child and divided the parties' marital property.
In early November 1999, appellant retained counsel and moved to vacate the judgment or, in the alternative, for amended findings or a new trial. In a supporting affidavit, he asserted that correspondence he received from respondent before the default hearing was confusing, in that it referred to both temporary and default hearings. He also claimed that, in several conversations he had with respondent about the dissolution during August, September, and October of 1999, respondent consistently referred to only the November 10 temporary-hearing date and that even after she filed her notice of intent to proceed by default, she continued to tell him they would deal with the dissolution "in November." He argued that, relying on the correspondence and respondent's statements, he believed the default hearing would not take place. He also asserted that respondent, either purposely or inadvertently, presented the district court with inaccurate values for their marital property, leading to an inequitable distribution. The district court denied appellant's motions to vacate, or for amended findings or a new trial.
DECISION
The district court has discretion to determine whether to reopen a dissolution judgment, and this court will not reverse its determination absent an abuse of discretion. Kornberg v. Kornberg, 542 N.W.2d 379, 386 (Minn. 1996).
I. Mistake, inadvertence, surprise, or excusable neglect
A court may relieve a party from a dissolution judgment because of "mistake, inadvertence, surprise, or excusable neglect." Minn. Stat. § 518.145, subd. 2(1) (1998). Appellant argues that, in applying and interpreting this provision, courts should use standards that have been developed under Minn.R.Civ.P. 60.02(a). In denying appellant's motion to vacate, the district court declined to apply rule 60.02 analysis. By its terms, Minn.R.Civ.P. 60.02 allows for relief from a judgment "other than a marriage dissolution decree." See also Lindsey v. Lindsey, 388 N.W.2d 713, 716 n. 1 (Minn. 1986) (stating that district courts lack jurisdiction under rule 60.02 to consider motions to modify divorce decrees). And the supreme court has noted that the legislature restricted the bases for relief under section 518.145 because of "the importance of finality in dissolution proceedings." Shirk v. Shirk, 561 N.W.2d 519, 522 (Minn. 1997). This emphasis on finality contrasts with rule 60.02 caselaw, which calls on courts to reopen default judgments "liberally." See, e.g., Galatovich v. Watson, 412 N.W.2d 758, 760 (Minn.App. 1987). Because we would affirm even under the rule's more liberal approach, and because the parties structured their arguments around the rule, we apply rule 60.02(a) analysis here without deciding whether, in considering motions brought under Minn. Stat. § 518.145, subd. 2(1), courts should rely on standards developed under Minn.R.Civ.P. 60.02(a).
Minn.R.Civ.P. 60.02(a) provides that a court may relieve a party from a final judgment for "[m]istake, inadvertence, surprise, and neglect."
A party seeking relief under rule 60.02(a) must demonstrate (1) a reasonable case on the merits, (2) a reasonable excuse for his or her failure to act, (3) that he or she acted with due diligence after notice of the entry of judgment, and (4) that there will be no substantial prejudice to the opposing party if the motion to vacate is granted. Finden v. Klass, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964). In its order denying appellant's motions, the district court did not explicitly address the Finden factors, but it did make findings that go to three of the four factors.
The first factor of the Finden test requires the moving party to "establish to the satisfaction of the court that [he] possesses a meritorious claim." Charson v. Temple Israel, 419 N.W.2d 488, 491 (Minn. 1988). Appellant contends that he met this requirement by establishing that the district court significantly overvalued 80 acres of undeveloped land in Princeton, Minnesota, which was the primary asset granted to him in the default judgment, and that this valuation resulted in a disproportionate division of property. In her proposed findings of fact, adopted by the court, respondent valued the Princeton property at $240,000.
It is undisputed that appellant told respondent in the spring of 1999 that he had negotiated a purchase price of $2,000 per acre for this property and that he believed it was worth at least $400,000 because a business associate had purchased similar land nearby for more than $6,000 per acre. He also informed respondent that the purchase was subject to a $160,000 mortgage, leading her to believe that the equity in the property was $240,000. Appellant claims the property was in fact purchased by JC Investment and Development, Inc. ("JC"), in mid-October 1999, just four days before the default hearing. He further alleges that he owns only a 10% interest in JC. Although appellant provided the district court with a copy of a settlement statement purporting to show JC purchased the land, he did not provide any documentation of his interest in JC or of why, if his interest was only 10%, the entire down payment on the property was drawn against the parties' marital checking account during the spring and summer of 1999. In addition, the settlement statement showed that the property supported a $600,000 mortgage, a figure the district court found more consistent with respondent's valuation of the property. Based on these facts, it was not an abuse of discretion for the district court to conclude that appellant did not have a meritorious claim.
Appellant argues that he met the second factor of the Finden test by presenting the district court with a reasonable excuse for his failure to act at the time of the default hearing, that is, the confusion created by correspondence from and conversations with respondent. When a default judgment is caused by the neglect of a party, it is inexcusable and is a proper ground for refusing to reopen a judgment. Howard v. Frondell, 387 N.W.2d 205, 208 (Minn.App. 1986), review denied (Minn. July 31, 1986). Appellant alleges that he was misled by petitioner's informational statement, which stated that the parties were not in agreement on all matters and the case would not proceed by default. But, as the district court noted, appellant was served personally with respondent's notice of intent to proceed by default after he received the informational statement and after the allegedly confusing conversations. The district court rejected appellant's claim of confusion over whether the case would proceed by default, finding his alleged excuse to be "one of convenience" for purposes of his motion. The court also found he had not provided a credible explanation for why, even if he was confused, he did not simply appear at the default hearing. We defer to the district court's credibility determinations. Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App. 2000). The record supports the district court's determination that the excuse offered by appellant was not reasonable.
The district court made no findings on the third Finden factor. But respondent does not contend that appellant failed to act with due diligence after notice of the entry of default judgment against him.
The fourth Finden factor is whether reopening the judgment would substantially prejudice the non-moving party. Appellant asserts that respondent "cannot show" that she would be prejudiced substantially if the court vacated the judgment because the only consequence to her would be additional cost and delay. Ordinarily, added expense and delay alone are not sufficient to show prejudice, but
if it is perceived by the trial court that there is intentional ignoring of process, the additional expense must be viewed in a different light. To force a claimant to go to the expense of a hearing in court, to gather evidence and expert testimony and the concomitant preparation, all either by inexcusable neglect or by intent, colors the prejudice with a deeper hue.
Hovelson v. U.S. Swim Fitness, Inc., 450 N.W.2d 137, 142 (Minn.App. 1990). Here, as the district court noted, appellant failed to participate in the proceedings, and, despite clear notice in the summons that he was required to file an answer, he failed to do so. On the other hand, the court concluded that respondent "went over and above what was required" in her efforts to engage appellant in the proceedings but that her efforts "fell on deaf ears." Furthermore, appellant's assertion that respondent cannot show she would not be prejudiced incorrectly places the burden of proof on her. See Nelson v. Siebert, 428 N.W.2d 394, 395 (Minn. 1988) (stating that burden is on moving party to establish that reopening judgment will not substantially prejudice non-moving party). The district court did not err in concluding that appellant did not meet his burden of establishing lack of prejudice.
The party seeking relief from a default judgment bears the burden of proving all four factors of the Finden test. Nelson, 428 N.W.2d at 395. But several cases suggest that a strong showing on three factors may offset relative weakness on one factor. See, e.g., Armstrong v. Heckman, 409 N.W.2d 27, 29 (Minn.App. 1987), review denied (Minn. Sept. 18, 1987). Applying the Finden analysis here, one factor suggests reversal (that appellant has acted with due diligence) while three suggest affirmance (appellant's failure to demonstrate a meritorious claim, a reasonable excuse, or lack of prejudice to respondent). Because appellant failed to carry his burden on three of the four factors, the trial court's refusal to vacate its judgment or reopen the hearing was not an abuse of discretion.
Appellant also urges us to grant him equitable relief, relying on Schultz v. Schultz, where this court stated that "a default judgment entered in a dissolution action may be vacated when the interests of justice require." Schultz v. Schultz, 495 N.W.2d 463, 465 (Minn.App. 1993). But Schultz was decided before Shirk v. Shirk, in which the supreme court held the statutory grounds in section 518.145, subd. 2 (1998), are the exclusive bases for relief from a dissolution judgment. 561 N.W.2d at 522. That section 518.145 was "carefully crafted by the legislature to provide limited areas of relief to those seeking vacation of judgment and decrees" is underscored by the fact that, although the language of the statute closely parallels rule 60.02, the statute omits a catchall provision in the rule permitting relief for "any other reason" justifying it. Id., n. 3.
II. Fraud
A court may also vacate a dissolution judgment on the basis of "fraud, whether denominated intrinsic or extrinsic, misrepresentation, or other misconduct of an adverse party." Minn. Stat. § 518.145, subd. 2(3). A district court's findings concerning allegations of fraud must not be disturbed unless they are clearly erroneous. Mahoney v. Mahoney, 474 N.W.2d 232, 234 (Minn.App. 1991). The elements of fraud in the context of a marital dissolution are: (1) an intentional course of material misrepresentation or nondisclosure, (2) having the result of misleading the court and opposing counsel, and (3) making the property settlement grossly unfair. Maranda v. Maranda, 449 N.W.2d 158, 165 (Minn. 1989). Here, appellant asserts that respondent committed fraud on the court by misrepresenting the value of the Princeton property in her proposed findings of fact and by misleading appellant about whether there would be a default hearing. For the same reasons that the court found no mistake or reasonable excuse under Minn. Stat. § 518.145, subd. 2(1), it found that respondent had not substantiated his allegations of fraud or misrepresentation. This conclusion is not clearly erroneous.
III. Motion for amended findings or for a new trial
Appellant moved the district court for amended findings or a new trial based on the court's valuation of property and grant of attorney fees to respondent. For the same reasons that we affirm the district court's decision not to vacate the judgment based on the property valuation, we affirm its decision not to amend its findings or grant a new trial on this issue.
In a dissolution proceeding, the court "shall award attorney fees, costs, and disbursements in an amount necessary to enable a party to carry on or contest the proceeding," provided it finds
(1) that the fees are necessary for the good-faith assertion of the party's rights in the proceeding and will not contribute unnecessarily to the length and expense of the proceeding;
(2) that the party from whom fees, costs, and disbursements are sought has the means to pay them; and
(3) that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.
Minn. Stat. § 518.14, subd. 1 (1998). An award of attorney fees rests within the discretion of the district court and will not be disturbed absent a clear abuse of discretion. Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn.App. 1998), review denied (Minn. Feb. 18, 1999).
Appellant asserts that the district court abused its discretion in awarding attorney fees to respondent without making specific findings on each of the statutory factors listed in Minn. Stat. § 518.14. But that section also provides:
Nothing in this section precludes the court from awarding, in its discretion, additional fees, costs, and disbursements against a party who unreasonably contributes to the length or expense of the proceeding.
Minn. Stat. § 518.14, subd. 1. As this court has noted, fee awards under Minn. Stat. § 518.14 "may be based on the impact a party's behavior has had on the costs of litigation regardless of the relative financial resources of the parties." Korf v. Korf, 553 N.W.2d 706, 711 (Minn.App. 1996) (citations and quotation omitted) (upholding attorney fees without specific findings on need). Here, the district court awarded fees based on (1) appellant's refusal to cooperate with respondent's efforts to arrive at a settlement amicably, which resulted in respondent alone bearing the cost of the dissolution proceeding; and (2) the additional costs borne by respondent in responding to appellant's motion to vacate, which was "almost completely devoid of any evidence to support his position." The district court's decision to award attorney fees was not based on the parties' relative financial ability, which would have required specific findings of fact, but rather was based on appellant's conduct. The record supports the attorney-fees award.