The Minnesota Supreme Court issues first of two cases addressing interpretation and finality of Rule of Civil Procedure 5.04

Gams v. Houghton
Minnesota Court of Appeals

Gams v. Houghton is the first of a pair of recent cases Minnesota Supreme Court cases interpreting Minnesota Rule of Civil Procedure 5.04, which was newly enacted in July, 2013, and provides that any case not filed with the Court within one-year after service on the first defendant is deemed dismissed with prejudice.  Gams, and its companion case Cole v. Wutzke (summarized here) establish that Rule 60.02 motions to vacate  applies to Rule 5.04 dismissals as well as affirming the constitutionality of a dismissal based upon Rule 60.02.  Gams arose out of a physical altercation between two brothers in law; it was pending on the date that Rule 5.04 became effective which meant its filing deadline was July 1, 2014.  The case was commenced by service on March 22, 2013.  Between April, 2013 through February, 2014, the parties litigated, including exchanging written discovery and responses. In May, 2014, the parties discussed possible mediation.  Id.  On July 17, 2014, plaintiff’s counsel sent a letter requesting an update regarding possible resolution.  In response, defense counsel stated the case was deemed dismissed with prejudice as of July 1, 2014. Plaintiff’s counsel was unaware of the amendment to Rule 5.04.

The case was then filed and the district court dismissed the case pursuant to Rule 5.04 the same day.  The plaintiff moved to vacate the dismissal for a violation of his right to due process and pursuant to Minnesota Rule of Civil Procedure 60.02(a) on the grounds of “excusable neglect.”  The district court denied the motion to vacate, finding that a Rule 60.02 motion for relief from an order did not apply to an automatic dismissal under Rule 5.04.  In addition, the district court found that the plaintiff failed to establish the four Finden factors required to obtain relief under Rule 60.02.  The district court did not address the plaintiff’s due process argument.

On appeal, the Minnesota Court of Appeals reversed and remanded finding that Rule 60.02 does allow a plaintiff to move for relief from an automatic Rule 5.04 dismissal.  In addition, the Court of Appeals reversed because the district court failed to make findings on each of the four Finden factors utilized to determine if a party is entitled to relief pursuant to Rule 60.02(a), mistake, inadvertence, surprise, or excusable neglect; a court analyzing such a motion must determine: (1) whether the moving party has a “debatably meritorious claim”; and (2) whether there is a “‘reasonable excuse’” for the movant’s failure or neglect to act; and (3) whether the movant “‘acted with due diligence’” after learning of the error or omission; and  (4)    whether “‘no substantial prejudice will result to the other party’” if relief is granted.

The Minnesota Supreme Court granted review to address: (1) whether Rule 5.04 violated a constitutional right to due process; and (2) whether Rule 60.02 is applicable to a Rule 5.04 dismissal and, (3) if so, whether the district court abused its discretion.

The Minnesota Supreme Court’s constitutional analysis found that Rule 5.04 does not violate a litigant’s due process rights because the plaintiff receives notice and process sufficient to satisfy constitutional requirements.  The Court explained that Rule 5.04 provides notice of the possibility of dismissal well in advance of any consequences.  In addition, Rule 60.02 provides for post-deprivation process.

The Court then determined that Rule 60.02 applies to dismissal under Rule 5.04 because the Rule 60.02 language is broad and applies to all “final judgment[s] … order[s] [and] proceeding[s],” except for “marriage dissolution decree[s].  Of particular import, the Court confirmed that an action is automatically dismissed following the expiration of the one-year filing period and explained that a defendant does not need to take any action to achieve that dismissal.  However, the Court then explained that any such dismissal, whether by operation of law after one year, or by order of the court after filing, falls within Rule 60.02’s purview to grant relief under the appropriate circumstances.

Finally, the Court found that the district court abused its discretion by failing to make any findings of fact on each of the four Finden factors.  Therefore, the Court reversed and remanded the case.  This case serves to ensure that any dismissals per Rule 5.04 will be the subject of post-dismissal motions to reopen the case and substantially limit any usefulness of Rule 5.04 to defendants.