In 2013, the Minnesota Supreme Court amended the Minnesota Rules of Civil Procedure to require filing a case within one year of service of a summons upon a defendant. Failure to file results in automatic dismissal, with prejudice, of the case. This new rule, Rule 5.04, changed dramatically the landscape of commencement of a lawsuit in Minnesota, which had previously required only service upon a defendant, with no filing requirement at all.
Rule 5.04 became effective on July 1, 2013, and for the last three years, parties and attorneys have wondered: If the one-year filing deadline is missed, is there any relief from the automatic dismissal?
In two cases decided on August 31, 2016, the Minnesota Supreme Court answered that question with a resounding “yes.”
Gams v. Houghton: I didn’t know.
In Gams v. Houghton, -- N.W.2d –, 2016 WL 4536500 (Minn. Aug. 31, 2016), the court considered whether a case that was dismissed with prejudice by the district court, sua sponte, under Rule 5.04, could be revived under Minnesota Rule of Civil Procedure 60.02, allowing relief to a party from an order or judgment due to “mistake, inadvertence, surprise, or excusable neglect.”
Gams was a lawsuit between brothers-in-law over some “physical altercation” in 2012. Gams commenced the suit on March 22, 2013 by service, which was, and still is, effective commencement of a lawsuit in Minnesota. Three months later, on July 1, 2013, Rule 5.04 became effective, but actually allowed a one-year grace period, so that no action would be involuntarily dismissed under the rule until July 1, 2014. During this period, the case was actively litigated, including extensive settlement negotiations through May, 2014, but Gams never filed the suit in district court. Apparently noticing this omission, the defendant’s attorney sent Gams’ attorney a letter on July 15, 2014, stating: “The new Rule 5.04 took effect July 1, 2014. Therefore, the case is deemed dismissed with prejudice, and we consider the matter closed.” A couple weeks later, Gams’ attorney mailed the summons, complaint and affidavit of service to the court, who accepted the filing and immediately ordered dismissal with prejudice pursuant to Rule 5.04(a).
Gams moved to vacate the dismissal under Rule 60.02(a), claiming excusable neglect in that the plaintiff relied on his attorney, who admitted that he was unaware of the existence of the filing requirements of Rule 5.04(a). The district court denied that motion, finding that Rule 60.02 does not apply to Rule 5.04 dismissals, and that the plaintiff did not satisfy the so-called Finden factors for excusable neglect. The Minnesota Court of Appeals reversed, and the Minnesota Supreme Court affirmed and remanded the case.
The court rejected the defendant’s argument that Rule 60.02 does not apply to Rule 5.04, noting that the only enumerated exception to Rule 60.02 is for marriage dissolution decrees. The court also rejected the defendant’s due process argument, noting that the one-year grace period before the rule went into effect provided ample opportunity to the plaintiff to be heard.
Thus, the court found that indeed, Rule 60.02 does apply to an automatic dismissal under Rule 5.04, requiring an analysis of the Finden factors. The court remanded the case to the district court to make such findings.
Cole v. Wutzke: I knew but thought it didn’t apply to my case.
The Supreme Court issued an opinion further clarifying the application of the Finden factors to dismissals under Rule 5.04 in the companion case, Cole v. Wutzke, -- N.W.2d --, 2016 WL 4536505 (Minn. Aug. 31, 2016). Like Gams, the case was commenced by service on June 5, 2013, but not filed until July 25, 2014, which was 25 days too late under Rule 5.04. Unlike the plaintiff’s attorney in Gams, the Cole attorney actually knew of Rule 5.04, but just did not think it applied to any case filed before July 1, 2014; which was wrong. After the district court dismissed the case with prejudice under Rule 5.04, and denied the plaintiff’s Rule 60.02 motion. The plaintiff appealed, and the Minnesota Court of Appeals reversed, and the Supreme Court agreed with the Court of Appeals, remanding the case to the district court for Finden findings.
In Cole, the court clarified that the Finden factors should not be narrowly construed as applied to Rule 5.04 to meet an “expectation of finality,” but rather, should be construed like any other dismissal under Rule 60.02. The court noted that this is a very “fact intensive” decision in all cases where a plaintiff claims relief from a Rule 5.04 dismissal due to excusable neglect. In so holding, the Supreme Court directed all district courts faced with such a motion to consider and make detailed findings, and admonished that reliance on the “per se” dismissal under Rule 5.04 is, in fact, an abuse of discretion.
A New Era: Case Not Dismissed?
While Rule 5.04 still mandates automatic dismissal for those who miss the one-year filing deadline, Gams and Cole provide an opportunity for any plaintiff who does miss the deadline to challenge that dismissal under Rule 60.02 based on “excusable neglect.” Thus, defendants and their counsel should be prepared to be on the receiving end of a Rule 60.02 motion whenever a case is dismissed under Rule 5.04.
In both Gams and Cole, the defendants and their counsel “laid low” until the one-year filing deadline had passed. While this was the traditional approach, these new cases require a new approach. Laying low may now backfire, and defendants may consider taking an affirmative act to create a foundation for defending the inevitable Rule 60.02 motion. A defendant could, for instance, include an affirmative defense of dismissal under Rule 5.04 in its answer, just as it would include a statute of limitations defense. Doing so, or otherwise giving notice, will create a record to provide a basis for a court to not find excusable neglect, as not all mistakes are subject to relief.
Further, because the determination of excusable neglect is so fact intensive that the likelihood of appellate court overturning such findings is low.
Finally, both Gams and Cole arose just as the new Rule 5.04 became effective. Going forward, it would seem likely that the power of a Rule 60.02 argument should decrease, in that a plaintiff will have a more difficult time arguing that his or her lawyer’s neglect of a well-established court rule is “excusable.” Nonetheless, if a Rule 60.02 motion is made, being prepared with a record of notice of Rule 5.04 in a particular case will be beneficial.
For more information, please contact Brownson Norby, PLLC.
 Rule 5.04(a) provides as follows: Any action that is not filed with the court within one year of commencement against any party is deemed dismissed with prejudice against all parties unless the parties within that year sign a stipulation to extend the filing period. This paragraph does not apply to family cases governed by Rules 301 and 378 of the General Rules of Practice for the District Courts.
 Under Finden v. Klaas, 268 Minn. 268, 128 N.W.2d 748 (Minn. 1964) a party seeking relief under Rule 60.02 must establish four requirements, as follows: (1) that there is a reasonable defense on the merits or a debatably meritorious claim; (2) that there is reasonable excuse for failure or neglect to act; (3) that the party acted with due diligence after learning of the error or omission; and (4) that there will be no substantial prejudice to the other party.