Schulz v. Milam

410 N.W.2d 845, 1987 Minn. App. LEXIS 4609
CourtCourt of Appeals of Minnesota
DecidedJuly 28, 1987
DocketNos. C3-87-372, C5-87-373
StatusPublished
Cited by1 cases

This text of 410 N.W.2d 845 (Schulz v. Milam) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schulz v. Milam, 410 N.W.2d 845, 1987 Minn. App. LEXIS 4609 (Mich. Ct. App. 1987).

Opinions

OPINION

FORSBERG, Judge.

This appeal is from a judgment dismissing a claim for damages allegedly sustained by reason of the sale of unregistered securities. Appellants Schulz and Robinson’s case was dismissed for lack of personal jurisdiction in 1981. Appellant Wes-terberg’s case was dismissed in July of 1986 pursuant to an order of the Hennepin County District Court. Appellant Wester-berg’s motion to reinstate on the basis of excusable neglect was denied. Appellants Schulz and Robinson’s identical motion was also denied. We affirm in part and reverse in part.

FACTS

The events and circumstances giving rise to these actions date back to January of 1975 when respondent Milam was the principal of Milam Oil Company and Gas Properties. This company was involved primarily in the drilling and production of crude oil and gas. In January of 1975 it was involved in drilling operations under a lease in Louisiana.

In January of 1975, a geologist who was acquainted with appellant Westerberg, learned of the lease operated by Milam in Louisiana. He called Westerberg to advise him of the interest and Milam’s willingness to sell a small share. Westerberg decided to purchase an interest in the project and telephoned Milam in Illinois to obtain an interest. Westerberg later called Milam again to obtain a further interest on behalf of appellant Schulz, his employee, and to mention that appellants’ counsel, Roy Schwappach, was interested in purchasing an interest. On the basis of previous business dealings in Illinois, Milam also contacted appellant Robinson to offer an interest in the lease.

Milam made the following sales to the four Minnesota residents:

[847]*847Percent Investor Interest Dollar Amount Date of Purchase
Robert Robinson 1% $ 7,790.00 January 31, 1975
Dak Schulz xk% 3,895.00 January 30, 1975
L. John Westerberg 1½% 11,595.00 January 30, 1975
Jean Schwappach 1% 7,790.00 January 30, 1975

Tests and drilling procedures conducted on the property failed to produce any substantial amounts of oil or gas.

In January of 1979, appellants’ counsel commenced an action against Milam on behalf of Westerberg. The complaint alleged that respondents illegally solicited the sale of and sold unregistered securities in the nature of interests in oil and gas leases, in violation of Minnesota law. The complaint further alleged respondents refused Wes-terberg’s attempt to rescind the sale, and reneged on their offer to accept retender of the securities. Respondents defended on the basis that the interests were exempt from registration that appellant knew they were unregistered and was estopped, and that the action was barred by the statute of limitation. Depositions were taken of both Milam (October of 1981) and Westerberg (January 1982). In November of 1981, Mi-lam moved for summary judgment. Wes-terberg’s counsel appeared and submitted an affidavit in opposition to that motion with the Hennepin County District Court. That motion was heard in Hennepin County in December of 1981 and was denied.

An identical action against respondents was commenced in October of 1981 on behalf of appellants Schulz and Robinson. Respondents’ alternative motion to dismiss for lack of personal jurisdiction or for summary judgment in that action was also heard in December of 1981 before the Hen-nepin County District Court. The trial court granted respondents’ motion and quashed the service of the summons, dismissing the action. Although appellants Schulz and Robinson claim to have made good service thereafter, no additional summons or proof of service was ever filed with the court.

No further discovery was conducted in either case after January of 1982, and no further motions were made after 1981. There were no further communications between the parties until April of 1986, when appellants wrote respondents seeking to accelerate the trial of this matter.

On April 10, 1985, Chief Judge Patrick Fitzgerald issued an order establishing the new Hennepin County District Court block system. The order, referenced in Special Rules of Practice, Fourth Judicial District Rule 4.03, provided in part:

Cases filed with the Court prior to July 1, 1985 but not certified ready for trial, will be activated effective July 1, 1985, for the purposes of the initial filing date. All cases activated on this date will be dismissed on July 1, 1986, unless a note of Issue/Certificate of Readiness has been filed or the case has been continued prior to the expiration of 12 months, under Rule 41.02, Rules of Civil Procedure.

No pleadings were filed by appellants before July 1, 1986, and their cases were dismissed pursuant to the above order. Appellants became aware of the dismissal in November, 1986, and promptly moved to vacate, claiming there was excusable neglect as appellants’ attorney was under the mistaken impression the actions were ven-ued in Ramsey County. Appellants’ motion to vacate the dismissal was denied, and they appealed. The cases were consolidated by order of this court.

ISSUES

1. Did the trial court abuse its discretion in refusing to vacate the judgment of dismissal in appellants Schulz and Robinson’s action?

2. Did the trial court abuse its discretion by denying appellant Westerberg’s motion to vacate based on excusable neglect?

ANALYSIS

1. Appellants Schulz and Robinson join appellant Westerberg in arguing that the trial court abused its discretion in refusing to vacate the dismissals of their cases. The Schulz-Robinson case was dismissed by order of the court dated December 29, 1981, for lack of personal jurisdiction. Appellants Schulz and Robinson did not serve the summons and complaint again. Neither did appellants file a note of [848]*848issue or certificate of readiness within the time prescribed by the Hennepin County order. Therefore, we hold that the dismissal of the Schulz-Robinson action was not an abuse of discretion.

2. Appellant Westerberg argues that the trial court erred by neglecting to vacate the judgment of dismissal under Rule 60.-02(1). Appellant did not move the trial court to vacate under 60.02(1), but argued only that he was entitled to vacation of the dismissal on the ground of excusable neglect. The trial court relied exclusively on the unreasonableness of appellant’s excuse in refusing to vacate the judgment.

The Rules of Civil Procedure provide that a court may relieve a party from a final judgment for “[mjistake, inadvertence, surprise or excusable neglect” or “any other reason justifying relief from the operation of the judgment.” Minn.R.Civ.P. 60.02(1), (6). A party seeking to vacate a judgment on grounds of excusable neglect must show (1) a reasonable claim on the merits, (2) a reasonable excuse for failure or neglect to act, (3) due diligence after notice of entry of judgment, and (4) that no substantial prejudice will result to the opponent. Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 30, 53 N.W.2d 454, 456 (1952).

Rule 60.02 is often invoked to set aside a default judgment on grounds of excusable neglect. E.g. Finden v. Klaas, 268 Minn. 268,

Related

Peterson v. Skutt Ceramic Products, Inc.
417 N.W.2d 648 (Court of Appeals of Minnesota, 1987)

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Bluebook (online)
410 N.W.2d 845, 1987 Minn. App. LEXIS 4609, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schulz-v-milam-minnctapp-1987.