Opinion
No. C5-01-638.
Filed October 23, 2001.
Appeal from the District Court, Hennepin County, File No. C1674652.
Charles A. Cox III and
William M. Hart (for appellants)
Hosmer A. Brown (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In November 1999, appellants received notice of a petition and hearing for approval of trust accounts, a proposed plan of distribution of trust assets, and a memorandum of law supporting the petition, which provided in relevant part that a 10% share of the trust assets devised to appellants' mother had lapsed because she predeceased the testator. Appellants did not attend the hearing or object, an order was issued on February 24, 2000, granting the petition, and notice of the order was sent to appellants. It was not until they received a letter dated April 25, 2000, advising that because there were no objections the trust assets were being distributed that appellants contacted an attorney.
On September 5, 2000, appellants sought reconsideration of the order, but the court denied the request. On October 27, 2000, they moved to vacate and a hearing was held on November 14, 2000. While determining that appellants had a reasonable defense on the merits, the court ruled that appellants did not meet the other factors supporting the motion to vacate, and on February 2, 2001, it denied the motion. This appeal followed. Because the district court did not abuse its discretion in denying the motion to vacate, we affirm.
DECISION
A district court's findings of fact will not be reversed unless clearly erroneous. Minn.R.Civ.P. 52.01; In re Estate of Weber, 418 N.W.2d 497, 501 (Minn.App. 1988), review denied (Minn. Apr. 4, 1988). The court's decision denying a motion to vacate is subject to an abuse of discretion standard. Id. at 502.
The district court has the power to vacate an order in a probate matter for "excusable neglect, inadvertence or mistake" within two years of the filing of the order. Minn. Stat. § 525.02(d) (2000). In analyzing a motion to vacate under section 525.02(d), the court applies the standard used in Minn.R.Civ.P. 60.02. In re Estate of McCue, 449 N.W.2d 509, 511 (Minn.App. 1990). In making the decision, the court should use a "liberal policy conducive to the trial of causes on the merits * * *." Id. (citation emphasis omitted).
Thus, a party seeking relief under section 525.02 must show that it
(a) is possessed of a reasonable defense on the merits, (b) has a reasonable excuse for his failure or neglect to answer, (c) has acted with due diligence after notice of the entry of judgment, and (d) that no substantial prejudice will result to the other party.
Id. at 511 (citation omitted). While all four factors must be satisfied, Nguyen v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 487, 490 (Minn. 1997), the relative weakness of one factor may be balanced against a strong showing on the remaining three. Galatovich v. Watson, 412 N.W.2d 758, 761 (Minn.App. 1987).
As to the first factor, a reasonable defense on the merits, appellants contend that under the anti-lapse statute, they take by representation the property to which their deceased mother would have been entitled. Minn. Stat. § 524.2-603(b) (2000). The district court determined this argument constituted a reasonable defense on the merits, and respondent does not dispute this determination.
The second factor addresses whether appellants had a reasonable excuse for failure to answer the petition. McCue, 449 N.W.2d at 511. Attorney neglect may constitute a reasonable excuse. Finden v. Klaas, 268 Minn. 268, 271-72, 128 N.W.2d 748, 750-51 (1964). However, neglect of the party itself does not. Howard v. Frondell, 387 N.W.2d 205, 208 (Minn.App. 1986), review denied (Minn. July 31, 1986).
The court found that where appellants received notice of the hearing and respondent's analysis of the issue concluding that their mother's share had lapsed, but did not act until 10 months after notice of the petition, they did not show a reasonable excuse for failing to object. Appellants argue that the court applied too strict a standard, contending that relief has been granted where a pro se party's failure to act arose from a misunderstanding of law. See Taylor v. Steinke, 295 Minn. 244, 246, 203 N.W.2d 859, 860 (1973) (finding excusable neglect where pro se defendant did not file answer because of impression from plaintiff's attorney that he did not need to do anything further); Galatovich, 412 N.W.2d at 760 (same). Appellants contend that their circumstances are even more compelling. While they were aware that the petition sought a distribution of trust assets that was not advantageous to them, they assert that they had no reason to believe the result was not appropriate. Further, they believed that they were in a relationship of trust with the party who filed the petition with the court, and they had expected they would be treated fairly or at least advised to seek independent counsel if an issue was arguably in dispute.
Appellants' claim of a fiduciary-type relationship has no basis in law or in fact. Nor have appellants cited any contact with respondent's attorney that might have led them to believe that they need not respond to the petition or appear at the hearing. As the district court found, the circumstances do not show a reasonable excuse for failure to respond.
The third factor is whether the appellants acted with due diligence in seeking relief from the order. McCue, 449 N.W.2d at 511. This is measured by a reasonableness standard. Hovelson v. U.S. Swim Fitness, Inc., 450 N.W.2d 137, 142 (Minn.App. 1990), review denied (Minn. Mar. 16, 1990). Even if the party responds very promptly to a notice of default, the court may consider the entire course of delay, including an earlier failure to respond to notice of the action. Id. The district court found that appellants did not act with due diligence because they did not even seek reconsideration until more than six months after receiving the order of distribution, and some four and one-half months after receiving notice of distribution.
Appellants contend that the receipt of the order should not start the time running, because it was not until they received the notice of distribution, which referred to the lack of objection to the petition, that they became suspicious of the propriety of the order. Moreover, considering that they contacted an attorney, and then had to decide whether to risk a family dispute by challenging the order, they assert that they acted with due diligence. In light of the notice given to appellants at every stage of the proceeding and their failure to act until six months after receipt of the order and four and one-half months after receipt of notice of distribution, the district court did not abuse its discretion in determining they failed to act with due diligence.
The final factor is whether substantial prejudice will result to the opponent if the order is vacated. McCue, 449 N.W.2d at 511; Sand v. Sch. Serv. Employees Union, 402 N.W.2d 183, 186 (Minn.App. 1987), review denied (Minn. Apr. 29, 1987). The district court found that substantial prejudice to the other devisees would result if the order is vacated, because the trust assets have been distributed and taxes paid on the distributions, resulting in a substantial change in circumstances. Appellants contend the other devisees would not suffer prejudice if they were required to return money not rightfully theirs. While we find no evidence in the record supporting the argument that the other devisees have had to pay taxes, substantial prejudice would result because the trust assets have already been distributed.
In conclusion, the district court's denial of the motion to vacate was not an abuse of discretion.