Margaret MacCallum and Antimo Veneziale, individually, and as assignees of James S. Poyser and Ashley E. Poyser (Bystrom) v. Spring Bay Floating Lodges, Inc., d/b/a Vermillion Houseboats ( 2017 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).
STATE OF MINNESOTA
IN COURT OF APPEALS
A16-0951
Margaret MacCallum and Antimo Veneziale, individually,
and as assignees of James S. Poyser and Ashley E. Poyser (Bystrom),
Appellants,
vs.
Spring Bay Floating Lodges, Inc.,
d/b/a Vermillion Houseboats, et al.,
Respondents.
Filed January 30, 2017
Affirmed
Reyes, Judge
St. Louis County District Court
File No. 69VI-CV-14-99
Kerry A. Trapp, Morrison Sund, P.L.L.C., Minnetonka, Minnesota (for appellants)
Bryan M. Lindsay, The Trenti Law Firm, Virginia, Minnesota (for respondents)
Considered and decided by Reyes, Presiding Judge; Johnson, Judge; and Smith,
Tracy M., Judge.
UNPUBLISHED OPINION
REYES, Judge
Appellants argue that the district court abused its discretion when it denied their
motion to vacate a judgment of dismissal for failure to prosecute under Minn. R. Civ. P.
60.02. In denying appellants’ motion, the district court determined that appellants did not
establish a debatably meritorious claim, a reasonable excuse for their failure or neglect to
act, or that respondents would not be substantially prejudiced if the judgment were
vacated. We affirm.
FACTS
In 2009, appellants Margaret MacCallum and Antimo Veneziale allegedly loaned
James and Ashley Poyser (the Poysers), appellants’ nephew and his wife, $50,000 with
repayment starting in 2012, pursuant to an oral agreement. Ashley Poyser is the daughter
of respondents Leann and Charles Bystrom. Duane Fuhrman, James Poyser’s uncle, also
allegedly loaned $20,000 to the Poysers. The Poysers transferred $64,000 of the funds
received to respondent Spring Bay Floating Lodges, Inc.1 In 2011, the Poysers assigned
to appellants and Furhman their rights to collect the funds transferred from the Poysers to
Spring Bay, and appellants and Fuhrman released the Poysers from their obligation to
repay the $70,000. Furhman also appointed appellants as his agents for the purpose of
executing the assignment and release agreement.
After appellants did not receive payments in 2012, they retained an attorney and
filed a complaint against Spring Bay in January 2014. Appellants’ attorney did not
appear at the scheduling conference. Appellants’ attorney also failed to appear at the
rescheduled telephone scheduling conference, for which he was to initiate the call.
Despite appellants’ attorney’s absence, the district court scheduled a jury trial for
December 2014.
1
Respondents are collectively referred to as Spring Bay.
2
In August 2014, Spring Bay filed a motion to compel appellants to respond to
discovery requests and requested $999 in attorney fees and costs. No filings were made
in response to the motion to compel, and neither appellants’ attorney nor appellants
appeared at the hearing. The district court granted Spring Bay’s motion, ordering
appellants to respond to the discovery requests within ten days and to pay $999 for
attorney fees and costs incurred by bringing the motion to compel.
Subsequently, Spring Bay sent a letter to the district court requesting a
continuance and a hearing to bring a motion to dismiss for failure to prosecute because
appellants had not complied with the district court’s order compelling discovery. The
motion hearing was scheduled for December 2014 but was later continued to January
because appellants failed to respond to the motion or appear at the December hearing.
Two days prior to the continued hearing date, appellants’ attorney sent Spring Bay a fax
containing various documents, some of which the district court described in its
subsequent order as purported discovery responses. In the subsequent order, the district
court also denied Spring Bay’s motion to dismiss and set a new jury-trial date for June
2015.
Appellants failed to provide the necessary filings indicated in the district court’s
scheduling order. In addition, neither appellants nor their attorney appeared in person on
the jury-trial date. The district court called appellants’ attorney, and he told the court that
he was not prepared for trial and requested to reschedule. Spring Bay then renewed its
motion to dismiss for failure to prosecute. The district court entered an order granting
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Spring Bay’s renewed motion to dismiss for failure to prosecute and dismissed
appellants’ claims with prejudice.
In January 2016, appellants, with new counsel, filed a motion to vacate the
judgment of dismissal pursuant to Minn. R. Civ. P. 60.02. The district court denied
appellants’ motion to vacate the judgment. This appeal follows.
DECISION
Appellants argue that the district court abused its discretion by denying their
motion to vacate the judgment of dismissal. We disagree.
A district court may relieve a party from a final judgment for “[m]istake,
inadvertence, surprise, or excusable neglect” or “[a]ny other reason justifying relief from
the operation of the judgment.” Minn. R. Civ. P. 60.02(a), (f). District courts should be
liberal in reopening judgments because the goal of litigation is to resolve disputes on the
merits. Westfield Ins. Co. v. Wensmann, Inc., 840 N.W.2d 438, 449 (Minn. App. 2013),
review denied (Minn. Feb. 26, 2014). However, to grant relief under rule 60.02, the
district court must consider and expressly find that appellants satisfied all four of the
Finden factors.2 Gams v. Houghton, 884 N.W.2d 611, 620 (Minn. 2016) (quotation
omitted). The four factors are: (1) a “debatably meritorious claim;” (2) “a reasonable
excuse for the failure or neglect” to act; (3) that appellants “acted with due diligence after
notice of entry of judgment;” and (4) “that no substantial prejudice will result to the other
2
These factors have also been referred to as the Hinz factors. Gams v. Houghton, 884
N.W.2d 611, 614 n.1 (Minn. 2016).
4
party.” Charson v. Temple Israel, 419 N.W.2d 488, 491–92 (Minn. 1988) (quoting
Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964)).
This court reviews a district court’s decision to deny a rule 60.02 motion for a
clear abuse of discretion. Northland Temps., Inc. v. Turpin, 744 N.W.2d 398, 402 (Minn.
App. 2008), review denied (Minn. Apr. 29, 2008); Gams, 884 N.W.2d at 620 (quotation
omitted). We afford the district court broad discretion in assessing the Finden factors
because “[t]he decision to grant Rule 60.02 relief is based on all the surrounding facts of
each specific case” and the district court is in the best position to evaluate the
circumstances underlying each factor. Id. A district court abuses its discretion if it “has
acted under a misapprehension of the law,” Sommers v. Thomas, 251 Minn. 461, 469, 88
N.W.2d 191, 196–97 (1958), or if its “reasons are based on facts not supported by the
record.” Northland Temps., 744 N.W.2d at 402–03.
I. Appellants did not establish a debatably meritorious claim.
Appellants assert that they established a meritorious claim through their complaint
and supporting documents. We are not persuaded.
Under rule 60.02, appellants must provide specific information demonstrating a
debatably meritorious claim. Charson, 419 N.W.2d at 491-92. “[A] debatably
meritorious claim is one that, if established at trial, presents a cognizable claim for
relief.” Cole v. Wutzke, 884 N.W.2d 634, 638 (Minn. 2016). Ordinarily, a claim must be
established by more than “conclusory allegations in moving papers.” Charson, 419
N.W.2d at 491. Appellants may establish a debatably meritorious claim “in an affidavit
or by other proof.” Grunke v. Kloskin, 355 N.W.2d 207, 209 (Minn. App. 1984), review
5
denied (Minn. Jan. 2, 1985). However, the Minnesota Supreme Court has not yet
determined whether a party seeking 60.02 relief may rely entirely on the complaint to
establish a debatably meritorious claim. Cole, 884 N.W.2d at 638 n.3.
Appellants rely on Charson to demonstrate that they established a debatably
meritorious claim. In Charson, the supreme court concluded that the district court abused
its discretion in denying Charson’s motion to vacate a dismissal where, in addition to the
complaint, Charson provided the district court with discovery materials that supported the
allegations in the complaint. 419 N.W.2d at 492.
Here, the district court concluded that appellants failed to demonstrate that they
possess a meritorious claim because the record was not sufficiently developed. The
causes of action in appellants’ complaint are based on the existence of a contractual or
investment relationship between appellants and Spring Bay, allegedly entered into in June
2011, or a contractual relationship between the Poysers and Spring Bay. Neither of these
agreements, however, was attached to the complaint. In addition, the record does not
demonstrate that Spring Bay had any obligation to appellants because there is no further
mention of the June 2011 contract.
The 2011 assignment agreement establishes the existence of an arrangement by
which appellants transferred $50,000 to the Poysers and that the Poysers assigned their
rights to collection from Spring Bay to appellants. MacCallum asserts in her deposition
that repayment of the funds was to begin in 2012. However, the assignment agreement
notes that no writing exists detailing the terms or conditions for repayment of either the
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$70,000 that appellants and Fuhrman loaned to the Poysers or the $64,000 the Poysers
transferred to Spring Bay.
The record before this court indicates that, unlike in Charson, appellants did not
provide the district court with specific information outside of the complaint sufficient to
demonstrate a debatably meritorious claim.3 In addition, appellants did not present
sufficient information within the unsupported allegations of the complaint to allow the
district court to reach this conclusion. Thus, the district court did not abuse its broad
discretion when it concluded that appellants failed to establish a debatably meritorious
claim.
The district court considered all four Finden factors and determined that appellants
failed to provide a reasonable excuse for their failure or neglect to act and failed to show
that no substantial prejudice would result to Spring Bay if the judgment were vacated.
However, because appellants failed to satisfy the first Finden factor, we need not address
the remaining factors. Gams, 884 N.W.2d at 619 (concluding that district court must
consider and find that party satisfied all four Finden factors to grant relief under rule
60.02). Accordingly, the district court did not abuse its discretion in denying appellant’s
rule 60.02 motion.
Affirmed.
3
At the rule 60.02 motion hearing, Spring Bay “concede[d] that the case looks good on
the merits;” however, it also noted that there had not been a “full and fair opportunity to
develop all of the different theories and defenses.” Such statements do not establish a
debatably meritorious claim.
7