This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA IN COURT OF APPEALS A15-1910
Anita Haider, as Personal Representative of the Estate of Evi E. Kari, Respondent,
vs.
Kenneth Kari, Appellant.
Filed July 11, 2016 Affirmed in part and reversed in part Hooten, Judge
Lake County District Court File No. 38-CV-14-363
Martin A. Carlson, Law Offices of Martin A. Carlson, Ltd., Minneapolis, Minnesota; and
Robert V. Espeset, Espe Law, PLLC, White Bear Lake, Minnesota (for respondent)
Kenneth Kari, Two Harbors, Minnesota (pro se appellant)
Considered and decided by Halbrooks, Presiding Judge; Hooten, Judge; and Smith,
John, Judge.
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. UNPUBLISHED OPINION
HOOTEN, Judge
Pro se appellant challenges the district court’s denial of his motion to vacate a
default judgment entered against him in a civil action, arguing that the district court abused
its discretion by denying the motion. Because there is no merit to appellant’s claims that
the default judgment should be vacated on the basis that it was a product of respondent’s
misrepresentations, his excusable neglect, and errors of law, we conclude that the district
court did not abuse its discretion in denying appellant’s motion on these grounds.
However, because there is insufficient evidentiary support for doubling a portion of the
damages under Minn. Stat. § 525.392 (2014), we conclude that the district court abused its
discretion in not vacating the default judgment in part. Therefore, we affirm in part and
reverse in part.
FACTS
Evi E. Kari, the decedent, died on May 7, 2012, and was survived by three adult
children, appellant Kenneth Kari, respondent Anita Haider, and Ronald Kari. In her will,
decedent provided that all of her assets not devised by specific bequest were to be divided
equally among her surviving children and nominated appellant as her personal
representative. The current dispute involves the decedent’s assets that were not devised by
specific bequest, primarily consisting of financial accounts and three vehicles. In total,
these disputed assets are valued at $89,456.44. The largest of the disputed assets is a
certificate of deposit (CD) that is valued at $64,822.55.
2 Respondent filed the decedent’s will with the probate court in December 2012.
Even though appellant had been nominated as the personal representative under the will,
the probate court appointed respondent as personal representative of the decedent’s estate
in June 2013. Appellant was deposed in the probate matter on September 6, 2013. In
January 2014, respondent’s counsel sent a letter to appellant’s then-counsel, demanding
that appellant turn over the disputed assets to the estate.
On April 17, 2014, respondent filed an inventory with the district court that included
the disputed assets. By two orders filed on July 10, 2014, and August 4, 2014, the district
court approved the inventory and ordered appellant to turn over all of the assets of the estate
identified in the inventory to respondent as the personal representative within ten days of
the orders.
In order to recover the value of the disputed assets, on August 27, 2014, respondent
commenced a separate civil action in her capacity as personal representative by effecting
personal service of the summons and complaint upon appellant. In the complaint,
respondent claimed that appellant was indebted to the estate for double damages pursuant
to Minn. Stat. § 525.392 and requested that appellant be ordered to pay respondent’s
attorney fees pursuant to Minn. Stat. § 524.3-720 (2014). On September 3, 2014, seven
days after being served with the complaint, appellant, who was unrepresented at the time
he was served with the summons and complaint, sent a handwritten letter addressed to three
state agencies and the Internal Revenue Service (IRS) and carbon copied respondent’s
attorney on the letter. The subject line of this letter read as follows: “Mother’s Probate—
Theft, Attempted Extortion, Fraud and Slander. By [respondent’s attorney].” The letter
3 also stated, “Besides the items shown in the subject [l]ine above, swindling, abuse and
harassment will be included” and “[t]here are a lot of ‘red flags’ to report.”
Respondent served appellant notice of her motion for a default judgment or for
summary judgment on September 16, 2014, and with her supporting memorandum of law
on October 30, 2014. Appellant did not respond to the motion and made no appearance
when the district court heard respondent’s motion on December 2, 2014. In an order dated
December 8, 2014, the district court granted respondent’s motion and entered judgment in
favor of respondent in the amount of $181,167.88. This sum consisted of $89,456.44 in
damages for the value of the disputed assets, an equivalent amount as double damages
pursuant to section 525.392, and $2,255 in attorney fees pursuant to section 524.3-720.
Appellant did not appeal the default judgment.
Respondent began proceedings to enforce the judgment in the spring of 2015. On
August 4, 2015, appellant, now represented by counsel, filed a motion to vacate the
judgment. By an order filed on September 28, 2015, the district court denied appellant’s
motion to vacate the judgment. This appeal followed.
DECISION
Appellant argues that the district court abused its discretion by denying his motion
to vacate the default judgment pursuant to Minn. R. Civ. P. 60.02. Rule 60.02 provides
that a district court may vacate a final judgment because of misrepresentation of an adverse
party, excusable neglect, or “[a]ny other reason justifying relief from the operation of the
judgment.” “Because the goal of litigation is to reach a resolution of disputes on the merits,
courts should be liberal in opening default judgments.” Westfield Ins. Co. v. Wensmann,
4 Inc., 840 N.W.2d 438, 449 (Minn. App. 2013) (quotation omitted), review denied (Minn.
Feb. 26, 2014). Whether to open a judgment rests within the district court’s discretion and
is reviewed for an abuse of discretion. Palladium Holdings, LLC v. Zuni Mortg. Loan Trust
2006-OA1, 775 N.W.2d 168, 173 (Minn. App. 2009), review denied (Minn. Jan. 27, 2010).
A district court’s discretion in vacating a judgment, however, is limited by the
application of the four Hinz factors. Northland Temporaries, Inc. v. Turpin, 744 N.W.2d
398, 402 (Minn. App. 2008), review denied (Minn. Apr. 29, 2008). The Hinz factors
provide that when considering whether to grant a movant relief from a judgment, a court
must consider whether the movant has: “(1) a reasonable defense on the merits; (2) a
reasonable excuse for the failure or neglect to answer; (3) acted diligently after notice of
entry of the judgment; and (4) demonstrated that no prejudice will occur to the judgment
creditor.” Id. (citing Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 30, 53
N.W.2d 454, 456 (1952)). We may reverse a district court’s denial of a motion to vacate
if the district court acts under a misapprehension of law or fact. See Northland
Temporaries, 744 N.W.2d at 402–05 (reversing denial of motion to vacate where district
court misapprehended law and fact when applying two Hinz factors).
Misrepresentation of Adverse Party
First, appellant argues that the default judgment should be vacated because of
respondent’s misrepresentations. The district court awarded respondent double damages
pursuant to section 525.392. This section provides that “[i]f any person embezzles,
alienates, or converts to personal use any of the personal estate of a decedent or ward before
5 the appointment of a representative, such person shall be liable for double the value of the
property so embezzled, alienated, or converted.” Minn. Stat. § 525.392 (emphasis added).
While appellant argues that respondent obtained the default judgment by
misrepresenting to the district court that appellant had converted estate assets before
respondent’s appointment as personal representative, he identifies no specific
misrepresentation that respondent or her counsel perpetrated on the district court. While
appellant identifies alleged errors made by the district court in applying the law, rule 60.02
states that vacation of a default judgment may be granted on the grounds of
“misrepresentation[] or other misconduct of an adverse party.” Minn. R. Civ. P. 60.02(c)
(emphasis added). Because appellant fails to identify any misrepresentation of respondent
with regard to the district court’s finding of double liability, this does not provide a basis
for vacating the default judgment.
Appellant argues that respondent obtained the default judgment by misrepresenting
to the district court that he had not served an answer to the complaint. This argument is
without merit. Respondent attached appellant’s alleged answer, the September 3, 2014
letter, as an exhibit to an affidavit in support of her motion for default judgment.
Respondent’s attorney also informed the district court of appellant’s letter at the default
judgment hearing. Because respondent presented appellant’s letter to the district court, she
did not misrepresent to the district court that appellant had not answered the complaint, as
the district court was made aware of the letter and had the opportunity to determine
whether, as a legal issue, the letter constituted an answer.
6 Furthermore, the district court did not err in determining that appellant’s letter was
not an answer. Minn. R. Civ. P. 8.02 states that “[a] party shall state in short and plain
terms any defenses to each claim asserted and shall admit or deny the averments upon
which the adverse party relies.” “Each averment of a pleading shall be simple, concise,
and direct.” Minn. R. Civ. P. 8.05(a).
Appellant was served with the summons and complaint on August 27, 2014.
Appellant argues that his September 3, 2014 letter constitutes an answer. Appellant’s
“answer” consisted of a handwritten letter addressed to three state agencies and the IRS.
Respondent’s attorney was carbon copied on the letter. The subject line of the letter read
“Mother’s Probate—Theft, Attempted Extortion, Fraud and Slander. By [respondent’s
attorney.]” The letter then stated, “An accurate account in [l]etter form will be forthcoming
to all government offices as shown above. Besides the items shown in the subject [l]ine
above, swindling, abuse and harassment will be included.” The letter then included a
recitation of appellant’s professional accomplishments before stating that “[t]here are a lot
of ‘red flags’ to report.” The district court concluded that the letter did not constitute an
answer and granted respondent’s motion for default judgment.
The Minnesota Supreme Court stated in Walsh v. U.S. Bank, N.A. that “Minnesota
is a notice-pleading state and does not require absolute specificity in pleading, but rather
requires only information sufficient to fairly notify the opposing party of the claim against
it.” 851 N.W.2d 598, 604–05 (Minn. 2014) (quotation omitted). We conclude that the
district court did not err in determining that appellant’s letter was not an answer, as the
7 information it contained was not sufficient to notify respondent of appellant’s response to
the claims alleged in the complaint.
Appellant next argues that respondent’s memorandum of law in support of her
default judgment misstated the law regarding what is required for a document to constitute
an answer. But, as respondent presented the district court with the caselaw that allegedly
supported its interpretation of the law, this cannot be considered a misrepresentation to the
court. Instead, the district court had the opportunity to review the law cited by respondent
to determine whether it supported respondent’s position. We conclude that the district
court did not abuse its discretion by determining that respondent’s alleged
misrepresentations did not provide a basis for vacating the default judgment.
Excusable Neglect
Appellant argues that the default judgment was obtained as a result of his excusable
neglect and that the district court therefore abused its discretion by denying his motion to
vacate. Specifically, appellant argues that his failure to respond was excusable neglect
because he suffers from macular degeneration and has very poor eyesight, causing him
difficulties in reading documents. In denying appellant’s motion to vacate the default
judgment, the district court considered the Hinz factors and determined that they did not
weigh in favor of vacating the judgment. Appellant asserts that the district court
erroneously applied the Hinz factors in denying his motion to vacate.
As to the first factor, which requires that appellant have a reasonable defense on the
merits, the district court stated that appellant “may have had a reasonable defense on the
merits with regard to some of the claims made by the estate, but did not have a reasonable
8 claim on other aspects.” Appellant argues that he has a reasonable defense on the merits
because the evidence shows that the estate was not entitled to all of the amounts claimed
or to a double recovery. There is substantial evidence in the record that appellant converted
the largest of the disputed assets, the CD. Although the names of both the decedent and
appellant were on the account, appellant testified in his deposition in the probate matter
that the money in the account belonged to the decedent and that her intent was that the CD
would be divided equally among her children upon her death. Furthermore, respondent
provided evidence that appellant liquidated the CD on the date of its maturity, despite a
court order requiring that it be turned over to the estate. Appellant offers no meaningful
defense for refusing to turn over the CD to the estate and, instead, liquidating it. Likewise,
appellant offers very little defense regarding respondent’s claim that he converted the
remaining disputed assets. Rather, appellant argues that he has a defense to being subject
to double liability under section 525.392 because he acted in good faith with regard to the
estate’s assets before respondent was appointed personal representative.
The Minnesota Supreme Court has stated there is a good faith defense to double
liability under section 525.392:
Where there is an honest belief that the property belongs to the one charged with the conversion of it or where he honestly believes that he has a right to possession of it, he should not be subjected to double liability merely because he is unable ultimately to establish such ownership or right of possession. Cases do arise in which there is a genuine question of ownership. . . . A party who believes that he is the owner of property should not be subjected to double liability merely because he asserts his right and happens to lose in the end, if he acts in good faith.
9 Chard v. Darlington, 243 Minn. 489, 498–99, 68 N.W.2d 405, 411 (1955).
Appellant does not dispute that he failed to turn over all of the disputed assets to
respondent as the personal representative as he had been ordered to do or that he converted
some of the disputed assets. However, because he asserts a defense of good faith to double
liability under section 525.392 on the basis that he was acting on behalf of the estate as the
personal representative named in the decedent’s will, this factor seems to weigh somewhat
in favor of vacating the judgment.
Regarding the second factor, requiring a reasonable excuse for the failure to answer,
the district court concluded that there was no reasonable excuse. Appellant argued to the
district court that he had a reasonable excuse because he has bad eyesight and the complaint
and the default judgment motion were printed in small font. The district court rejected this
argument, stating that appellant’s excuse was not “a reasonable excuse for not responding
in any substantive way to the complaint.” The district court further observed that appellant
“apparently was able to read [the complaint] well enough to have it serve as a basis for
complaints he made to the Office of Lawyer’s Professional Responsibility . . . , the IRS,
and other government agencies.” We conclude that the record supports the district court’s
determination that appellant’s poor eyesight did not provide a reasonable basis for failing
to respond to the complaint.
The third factor requires that the movant act diligently after the entry of judgment.
The final judgment against appellant was entered on December 8, 2014, and appellant filed
his motion to vacate on August 4, 2015, almost eight months later. As the district court
observed, appellant filed his motion to vacate only after respondent began efforts to enforce
10 the judgment. Rule 60.02 requires that a motion to vacate on the ground of excusable
neglect be made within a reasonable time, and “not more than one year after the judgment
. . . was entered.” Minn. R. Civ. P. 60.02. Because appellant moved to vacate the default
judgment nearly eight months after the entry of judgment, despite being served with the
summons and complaint, the notice of a hearing for a default or summary judgment motion,
the motion papers, and the notice of entry of judgment, the district court properly
determined that appellant’s showing on this factor does not weigh in favor of vacation. See
Reid v. Strodtman, 631 N.W.2d 414, 419 (Minn. App. 2001) (concluding that movant failed
to act diligently to vacate default judgment when movant was aware of hearing date but
brought motion to vacate seven months later).
Finally, the fourth factor requires that the moving party demonstrate that no
prejudice will occur to the judgment creditor if the motion to vacate is granted. Ordinarily,
the delay and expense of additional litigation are not sufficient to show prejudice under
rule 60.02. Hovelson v. U.S. Swim & Fitness, Inc., 450 N.W.2d 137, 142 (Minn. App.
1990), review denied (Minn. Mar. 16, 1990). However, this court has created an exception
to this rule:
If it is perceived by the [district] 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.
Id.
11 Here, the district court concluded that appellant had not met his burden of showing
that respondent would not suffer prejudice. Specifically, the district court stated that
appellant had been converting estate assets for over three years and that “[i]t will likely be
impossible to untie this Gordian knot, even if one could presume that [appellant] would be
predisposed to cooperate with [respondent].” Here, as the district court noted, appellant
failed to file an answer or participate in the underlying proceedings. Moreover, the district
court stated that, “[i]n [its] view, [appellant’s] motion [to vacate] only came about because
[respondent] was attempting to collect on the judgment in May and June of 2015.” Under
these circumstances, the district court properly determined that appellant did not meet his
burden of establishing lack of prejudice.
Because appellant has demonstrated, at most, one of the four Hinz factors, we
conclude that the district court did not abuse its discretion by concluding that excusable
neglect did not provide a basis for vacating the default judgment.
Any Other Reason Justifying Relief
Appellant argues that the default judgment should be vacated under Minn. R. Civ.
P. 60.02(f), which provides that a district court may vacate a judgment for “[a]ny other
reason justifying relief from the operation of the judgment.” “Relief under this residual
clause is appropriate when the equities weigh heavily in favor of the party seeking relief
and relief is required to avoid an unconscionable result.” Hovelson, 450 N.W.2d at 142–
43. Appellant argues that the default judgment should be vacated because the district court
committed judicial error in ordering that he pay respondent’s attorney fees and because the
district court granted the default judgment for double the value of the disputed assets where
12 there was no evidence that the assets had been converted before the appointment of the
personal representative, as required for double liability under section 525.392.
With regard to the attorney fees, appellant correctly argues that the district court, in
its order granting the default judgment, erred by ordering that appellant personally pay the
attorney fees of respondent in her capacity as personal representative of the estate in the
amount of $2,255, pursuant to section 524.3-720. Section 524.3-720 provides that a
personal representative who prosecutes a proceeding in good faith is entitled to receive
certain expenses, including attorney fees, from the estate, not from an individual.
Therefore, the district court erred in ordering appellant to pay respondent’s attorney fees.
Upon appellant’s motion to vacate the default judgment, the district court acknowledged
appellant’s argument regarding the attorney fees, but determined that the arguments were
in the nature of a motion for reconsideration.
Rule 60.02 is not the proper means to raise alleged judicial error. See Reid, 631
N.W.2d at 420; Sullivan v. Spot Weld, Inc., 560 N.W.2d 712, 716 (Minn. App. 1997) (“Rule
60.02 is limited to the specific situations provided for in the rule itself and does not allow
for general correction of judicial error.” (quotation omitted)), review denied (Minn. Apr.
27, 1997); Arzt v. Arzt, 361 N.W.2d 135, 136 (Minn. App. 1985) (“Rule 60.02 is intended
to correct mistake or inadvertence of a party, or to allow for newly discovered evidence
not to correct for judicial error.” (emphasis added)). The reasoning behind this rule is that
allowing for the correction of judicial error through rule 60.02 would effectively extend
the time for appeal beyond the deadlines provided for in the court rules. See Carter v.
Anderson, 554 N.W.2d 110, 114 (Minn. App. 1996). Because rule 60.02 cannot be used
13 to correct judicial error, we conclude that the district court did not abuse its discretion by
refusing to vacate the default judgment because of the error regarding the award of attorney
fees.
Although this court has stated that rule 60.02 cannot be used for the correction of
judicial error, we have granted relief under rule 60.02(f) where the default judgment was
entered despite a party’s failure to prove an element of their claim. See Wiethoff v.
Williams, 413 N.W.2d 533, 537 (Minn. App. 1987) (vacating default judgment of $20,000
where district court heard no evidence regarding plaintiff’s damages other than plaintiff’s
claims and where district court’s findings were primarily taken directly from complaint);
Hill v. Tischer, 385 N.W.2d 329, 332 (Minn. App. 1986) (concluding default judgment
should be vacated where plaintiff failed to show liability or explain how she arrived at
damages amount).
A party seeking default judgment has the burden of proving every essential element
of his or her case. Hill, 385 N.W.2d at 332 (quotation omitted). In moving for a default
judgment, respondent presented evidence showing that appellant had failed to turn over the
disputed assets despite a request from respondent’s attorney and two court orders.
Respondent provided no evidence, however, regarding appellant’s conversion of a number
of the disputed assets before respondent was appointed personal representative of the
estate, as required for the imposition of double liability pursuant to section 525.392. As
respondent presented no evidence regarding the conversion of some of the disputed assets
before the appointment of the personal representative, we conclude that the district court
abused its discretion by failing to vacate the default judgment in part.
14 However, based on the record, we conclude that respondent presented sufficient
evidence to the district court in connection with its motion for default judgment for the
imposition of double liability with regard to three of the disputed assets. The record
contains some evidence that appellant converted these three assets before respondent was
appointed personal representative. Conversion is “an act of willful interference with
personal property, done without lawful justification by which any person entitled thereto
is deprived of use and possession.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997)
(quotation omitted).
The record indicates that before June 2013, when respondent was appointed
personal representative, appellant traded in the decedent’s Ford Fusion and one of his own
vehicles in order to acquire a different vehicle for his personal use. There is evidence in
the record that appellant sold decedent’s Ford F-150 to himself before June 2013, turned
over one-third of the proceeds to his brother and set aside a share of the proceeds for his
sister but did not turn it over to her. The record also reflects that, shortly after the
decedent’s death in May 2012, appellant depleted one of her checking accounts by using
the funds to pay for his brother’s living expenses. Because this evidence supports
respondent’s contention that appellant converted these assets before June 2013, we
conclude that the district court properly ordered judgment against appellant for double the
value of these assets. Even if the district court erred by concluding that appellant’s conduct
with regard to these assets constituted conversion, we would uphold the district court’s
imposition of double liability with regard to these assets because “[r]ule 60.02 . . . does not
allow for correction of judicial error.” Reid, 631 N.W.2d at 420.
15 However, the record contains no evidence that appellant converted the CD before
June 2013. Respondent argues that a voicemail that appellant left on her telephone on
January 20, 2013, demonstrates that appellant converted the CD. Appellant stated in the
voicemail that he was not going to give respondent one-third of the CD proceeds.
Respondent did not present this evidence to the district court, however, until her
memorandum in opposition to appellant’s motion to vacate the default judgment. At the
time of the default judgment, respondent had the burden of proving all of the elements of
her case, including damages. Hill, 385 N.W.2d at 332. “Rule 60.02 does not provide for
the introduction of evidence that was known to exist before judgment was entered.”
Sullivan v. Spot Weld, Inc., 560 N.W.2d 712, 716 (Minn. App. 1997), review denied (Minn.
Apr. 27, 1997). Because the voicemail was not part of the district court’s record at the time
the district court considered respondent’s default judgment motion, respondent may not
now rely on the voicemail in support of the district court’s imposition of double liability
for the value of the CD.
But, even if we considered the voicemail, we would conclude that the district court
abused its discretion by not reducing the damages award by $64,822.55, the value of the
CD, because the voicemail does not constitute evidence that appellant converted the CD
before June 2013. It is undisputed that appellant was a joint owner with decedent on the
CD, although the money in the CD was decedent’s and decedent’s intention was that the
CD would be split equally between appellant and his two siblings. Although appellant
expressed his intention in the voicemail not to turn over one-third of the CD proceeds to
respondent, it is undisputed that appellant did not liquidate the CD until its maturation in
16 July 2014, over a year after respondent was appointed as personal representative.
Therefore, appellant took no action before the appointment of the personal representative
that constituted interference with the CD such that the estate was deprived of possession of
the CD. If appellant had liquidated the CD and absconded with the proceeds before the
appointment, such action would constitute conversion. But, because appellant in no way
interfered with the CD before the appointment of the personal representative, the district
court abused its discretion by failing to vacate its imposition of double liability for the
conversion of the CD. Therefore, we reduce the default judgment by $64,822.55.
There is also insufficient evidence in the record to support the imposition of double
liability for the remaining disputed assets of the estate, consisting of a second checking
account, a mutual fund, a credit union account, funeral memorials, a loan to Ronald Kari,
and a Ford Tempo. Because there is no evidence indicating that any of these assets were
converted by appellant before respondent was appointed personal representative, we
conclude that the district court erred by failing to vacate its imposition of double liability
for the conversion of these assets. Therefore, we reduce the default judgment by an
additional $10,182.89, the value of these assets, for a total deduction of $75,005.44.
In summary, the district court did not abuse its discretion by denying appellant’s
motion to vacate the default judgment on the grounds of misrepresentation or excusable
neglect. Likewise, the district court did not abuse its discretion in concluding that the
erroneous award of attorney fees did not constitute a basis for vacating the default
judgment. Under these unique circumstances, however, where respondent presented no
evidence indicating appellant’s liability under section 525.392 for a number of the disputed
17 assets, we conclude that the district court abused its discretion by refusing to vacate the
judgment in part under rule 60.02(f). While there was sufficient evidence in the record to
support the imposition of damages for appellant’s conversion of the assets, there was
insufficient evidence to support the imposition of double liability pursuant to section
525.392 for some of the assets. Accordingly, we reduce the default judgment by
$75,005.44 relative to those assets.
Affirmed in part and reversed in part.