Suppose you are applying to refinance your Hugo property. In pulling your credit report you learn you were sued and lost, but you never knew about it! Are you doomed? Not as doomed as you might think. Minnesota law is actually pretty favorable towards those who were sued, had a judgement rendered against them, but for whatever reason either never did anything about the suit or never knew about it.
A district court may vacate an order or final judgment for reasons of "[m]istake, inadvertence, surprise, or excusable neglect." Minn. R. Civ. P. 60.02(a). Minn. R. Civ. P. 60.02(f) provides that "[o]n motion and upon such terms as are just, the court may relieve a party . . . from a final judgment . . . and may order a new trial or grant such other relief as may be just for . . . [a]ny . . . reason justifying relief from the operation of the judgment." Rule 60.02(f) is "a residual clause to cover unforeseen contingenc[ies]," Anderson v. Anderson, 288 Minn. 514, 518, 179 N.W.2d 718, 722 (1970), or "extraordinary circumstances,"Regents of Univ. of Minn. v. Med. Inc., 405 N.W.2d 474, 481 (Minn. Ct. App. 1987) (quotation omitted), review denied (Minn. July 15, 1987). Additionally, Minn. R. Civ. P. 60.02(f) provides for relief from a judgment for "any 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 defaulting party] and clearly require relief be granted to avoid an unconscionable result." Wiethoff v. Williams, 413 N.W.2d 533, 536 (Minn. Ct. App. 1987).
A party seeking to set aside a judgment under rule 60.02(f) must satisfy a four-prong test: (1) a reasonable defense on the merits; (2) a reasonable excuse for failing to respond; (3) it has acted with due diligence; and (4) no substantial prejudice will result to the other party. Finden v. Klaas, 268 Minn. 268, 271, 128 N.W.2d 748, 750 (1964).
Minnesota courts "liberally apply these factors to further the policy of resolving cases on their merits." Black v. Rimmer, 700 N.W.2d 521, 529 (Minn. Ct. App. 2005). It similarly has been noted that Minnesota courts are strongly averse to default judgments as “[d]efault judgments are to be liberally reopened to promote resolution of cases on the merits." Lyon Fin. Servs., Inc. v. Waddill, 625 N.W.2d 155, 160 (Minn. Ct. App. 2001) (quotation omitted), review denied (Minn. June 19, 2001).
What this law means is, do not give up. A motion to vacate a default judgment should be filed as soon as possible after you learn of the judgment. The worst thing you can do is wait. I can get such a motion prepared and filed for you and it wouldn't be the first time I've argued to vacate a default judgment.
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