By Laura A. Moehrle, Quinlivan & Hughes, P.A. and John A. Sullivan, Quinlivan & Hughes, P.A.
Civil Procedure professors liked to emphasize the distinction between how an action is commenced in federal court versus Minnesota state court. In law school, We understood the difference to be that an action commences in federal court when the summons and complaint are filed; and the action commences in Minnesota when the summons and complaint are served.
We never quite grasped the professor's astonishment that a lawsuit may be commenced and fully litigated--short of trial and assuming no motions requiring judicial involvement-- without a summons and complaint filed with the court. It should not be a surprise that Minnesota, North Dakota and South Dakota are the only states that permit actions to be commenced by "pocket filing" -- service of the complaint rather than by filing it with the court.The amendment to Minnesota Rule of Civil Procedure 5.04 (Rule 5.04) has placed restrictions on this phenomenon known as "pocket filing." The rule does not change the practice regarding commencement of actions-- commencement is still accomplished by service, and filing is not required at that time. However, Rule 5.04 requires that after an action is commenced against a party, the matter must be filed with the court within one year or the matter will be dismissed against all parties, with prejudice.
The language in Rule 5.04 unequivocally states that unless the parties sign a stipulation extending the filing period, the action must be filed within one year of commencement or it is deemed dismissed with prejudice-- meaning on the merits. At the same time, recent district court decisions indicate the rule is not as clear-cut as counting 365 days from service of process or that July 1, 2014 really meant July 1, 2014. The first ten months of Rule 5.04's enforcement have seen a few district court cases releasing the one-year trap for the unaware attorney and disagreement with respect to the role of Rule 60.02 in relation to relief from Rule 5.04
THE INEVITABLE CREATION OF RULE 5.04
The goal of the amendment was not to create more dismissals of actions, but to require that each action be filed, and placed under court management and scheduling within the first year. In theory, the requirement for mandatory filing after one year curtails the problems caused by excessive delay, helps the court to know what cases are out there, and guarantees greater access to the courts for all litigants.
The Rules Subcommittee and the Minnesota Supreme Court Civil Justice Reform Task Force, which participated in creating the rule, wanted to curb the consequences of pocket filing, particularly issues of excessive cost and delay. Recommendations of the Minnesota Supreme Court Civil Justice Reform Task Force Final Report, December 23, 2011 (Task Force Report), p. 21. The Task Force did not believe abolishing service without filing was warranted or worth the confusion that would follow and the energy required to implement it. Id. at 22. However, maintaining the status quo meant the court was not able to effectively manage and expedite each action. The Task Force felt the one-year filing requirement was a happy medium for the problem. Id. This would give the parties one year to litigate, resolve any issues, or even settle the case without any judicial involvement, but if the case could not be resolved within a year, would require that the case be filed and subjected to judicial supervision and management.
The Task Force presented two alternatives to the Minnesota Supreme Court: 1) "Dismissal with prejudice after one year unless parties within that year sign a stipulation to extend the filing period" or; 2) "Dismissal without prejudice but filing is required to reinstate the case." Id. at p. 23. The Minnesota Supreme Court considered the rule for many months and decided on the dismissal with prejudice, with a small transition period for the implementation of Rule 5.04. Any action commenced at any time before July 1, 2013 had until July 1, 2014 to satisfy the rule requirements. Any complaint served after July 1, 2013 has to be filed with the court within one calendar year.
It is unknown to what extent Rule 5.04 will increase revenue to the courts, but it will have an impact. The Task Force cited statistics from New York. In 1991, New York replaced hip-pocket filing with a requirement to file within 30 days of service, and then in 1992, required filing to commence a lawsuit. It is estimated that the first year impact was an increase of $10 million in filing revenue, representing approximately a 20 percent increase. Id. at 21.
As this rule starts to be enforced, courts have been required to interpret the new rule's boundaries.
INTERPLAY BETWEEN RULE 5.04 AND RULE 60.02
The most important issue that needs to be decided is whether Minnesota Rule of Civil Procedure 60.02 (Rule 60.02) governing motions to vacate is a safety net to prevent a Rule 5.04 dismissal. Rule 5.04 does not discuss whether relief from the dismissal is available, but some district courts have suggested Rule 60.02 might be applicable to vacate a dismissal if the criteria of the rule are met. Other courts have suggested Rule 60.02 does not apply to Rule 5.04 dismissals.
Rule 60.02 provides that a final judgment can be vacated under certain circumstances. The relevant part of the rule states, "The court may relieve a party or the party's legal representatives from a final judgment...for the following reasons: (a) Mistake, inadvertence, surprise, or excusable neglect." Minn. R. Civ. P. 60.02. When determining whether to grant relief under Rule 60.02, the supreme court has outlined four factors that the court should consider, namely whether the moving party:
- Has a meritorious claim or defense;
- Has a reasonable excuse for failure to act;
- Has acted with due diligence after the notice of the entry of judgment; and
- Shows that no substantial prejudice will result to the other party if relief is granted.
Finden v. Klaas, 128 N.W.2d 748, 750 (Minn. 1964). The plaintiff must meet all four factors of the test. Nguyen v. State Farm Mut. Auto. Ins. Co., 558 N.W.2d 487, 490 (Minn. 1997).
For all practical purposes, the second factor -- reasonable excuse for failure to act -- is the most important for practitioners. They use it to show no excusable neglect is present. Rule 60.02 motions should be examined against the backdrop of the creation and implementation of Rule 5.04. First, practitioners should focus on the length of time the rule gave practitioners to file the complaint. Rule 5.04 provided a one-year time period for the plaintiff to act and file the lawsuit. The supreme court chose the harsher alternative but gave all cases commenced before July 1, 2013 a whole year to file the case. Arguably, one year is more than significant time, and it is tough to discern an excuse for not filing that would be "reasonable." Most of the cases that have been affected by the rule to date were commenced months or years before July 1, 2013, and were then given an additional year until after the July 1, 2014, deadline for filing. Also, most of the case law surrounding Rule 60 arose in the context of re-opening a default judgment, when a defendant failed to file an answer in a short 20-day period. In contrast, practitioners did not have days to file the complaint to avoid a Rule 5.04 dismissal but had an entire year.
Second, practitioners may have difficulty claiming s/he lacked knowledge of the intricacies of the rule, especially since the rule had been in effect since July 2013. It is important to note that all of the changes to the Minnesota Rules of Civil Procedure in 2013 and Rule 5.04, in particular, were widely publicized to the entire Minnesota bar. In a Bench & Bar article "Reducing Cost & Delay: Minnesota Courts Revise Civil Case Handling" posted June 5, 2013, Judge Louise Bjorkman and practitioner David Herr stated clearly that "[t]he new rules take effect on July 1, 2013, and apply to pending actions as well as those filed after the effective date." The article also stated that no dismissals will occur prior to July 1, 2014, giving those who had pending cases well over one year to comply with the new rule and file the case. The supreme court adopted the rule on February 4, 2013 and made clear it applied to pending cases and the timeline for each case.
In addition to Rule 60.02, a number of practitioners have made constitutional arguments to invalidate Rule 5.04 dismissal, but this argument seems to be without merit or authority. The Minnesota Supreme Court has the right to enact rules that goven the judicial handling of cases. A proponent of a Rule 5.04 dismissal may argue there was more than an adequate period of time to allow the practitioners and their clients to file their cases. Cases are dismissed for a variety of reasons on Rule 12, Rule 56, for insufficient process and service of process, for lack of jurisdiction, on statute of limitations grounds, etc., and now under Rule 5.04. The right to a jury trial has not historically served to trump these dismissals.
On the next page are four recent Rule 5.04 cases considered by the district courts. The timeline is similar for all three but the outcomes vary slightly.
Mallan v. Dexter Township
In Mallan v. Dexter Township (50-CV-14-1695, Mower County District Court). the plaintiff was injured in a motorcycle accident and commenced the action on March 13, 2013. As fate would have it, plaintiff's counsel neglected to file the complaint. The parties conducted discovery. On July 17, 2014 (16 days after the deadline for unfiled complaints) defense counsel moved to have the case dismissed. The court dismissed the action and the plaintiff brought a motion to reopen pursuant to Rule 60.02.
Judge Kevin Siefken wrote a colorful opinion analogizing Rule 5.04 to Noah's Ark.
For many years, civil actions were commenced and the courts knew nothing of them. Litigants placed their complaints and answers in their hip pockets and proceeded to litigate their cases. But then the Supreme Court saw that many cases were not resolved. Years went by without action. Thousands of cases lay in the weeds, waiting to strike at any time. The Court had no way to purge them from the Earth. So the Court declared that it would send a flood. The flood would take the form of Rule 5.04.
The judge continued:
Time passed, and many actions were gathered. On the last day, those actions that were not gathered upon the boat, were washed away by the flood; well most of those actions. Some recognized that the best course of action when you miss the last boat out is to swim --very fast. With the help of a life preserver provided by Rule 60.02, these stragglers hope to catch the boat and be saved from the flood.
The court concluded that plaintiff satisfied the necessary factors under Rule 60.02 to reopen the action and vacate the Rule 5.04 dismissal order. The July 1, 2014 deadline became a July 17, 2014 deadline. The decision is now being appealed.
Gams v. Houghton
In Gams V. Houghton, (69VI-CV-14-478, St. Louis County District Court), plaintiff and defendant were in an altercation on January 14, 2012. Plaintiff suffered a broken femur and incurred medical bills. On March 22, 2013, plaintiff served the summons and complaint and the parties conducted discovery. Defendant sent plaintiff letter on July 15, 2014, stating "The new Rule 5.04 took effect July 1, 2014. Therefore, the case is deemed to be dismissed with prejudice and we consider the matter closed." Plaintiff filed the complaint in court on August 7, 2014 and the court entered an order for dismissal, with prejudice.
On August 27, plaintiff filed a motion to vacate the judgment under Rule 60.02, and on August 28, sought review from the court of appeals. The district court ruled that Rule 60.02 is not a life preserver for Rule 5.04 dismissals, and the proverbial flood had washed plaintiff's action to the deepest depths of the sea. Also, the court noted that even if Rule 60.02 did apply to the case, plaintiff did not prove all four Rule 60.02 elements. The court of appeals dismissed the appeal as premature, but the district court's October 1 order is now being appealed.
Cole v. Wutzke
In Cole v. Wutzke (02-CV-14-4474, Anoka County District Court), the plaintiff commenced the suit on June 5, 2013. Plaintiff and defendant participated in discovery from July 2013 to March 2014. The parties did not contact each other between April and July 2014. Plaintiff filed the complaint on July 23, 2014, and defendant moved to dimiss the action pursuant to Rule 5.04. On August 29, 2014, plaintiff filed a motion to vacate judgment under Rule 60.02, arguing that the failure to file the complaint in compliance with Rule 5.04 was the result of excusable neglect.
Judge Daniel O'Fallon dismissed the complaint with prejudice and stated:
The Court cannot find that ignorance of the law constitutes excusable neglect... Plaintiff's counsel failed to learn of the changes... As noted by the court, the changes were widely available on a number of websites. Further, if ignorance of the law is excusable neglect, then the exception would swallow the rule.
The district court's order is now being appealed.
Luce v. Spoden
Luce v. Spoden (86-CV-14-4194, Wright County District Court), was commenced on March 26, 2013. The action was not filed until August 7, 2014. On October 8, 2014, the court dismissed the case with prejudice and judgment was entered. Plaintiff filed a motion for relief from judgment under Rule 60.02.
Judge Michael Davis granted Plaintiff's motion and stated Rule 60.02 is a safety net for Rule 5.04. "[G]iven the supreme court's oft-cited statement that 'the goal of all litigation is to bring about judgment after trial on the merits,' it is highly unlikely that the Supreme Court would have used the language contained in Rule 5.04 if Rule 60.02 did not exist or was otherwise inoperable."
It remains to be seen whether district court judges are simply unclenching the teeth of the rule's trap until the rule is ubiquitous in practice, or whether judges are creating exceptions that entirely swallow the rule. The court of appeals will have the next word.
The impact of Rule 5.04 remains to be determined. If Rule 60.02 applies to Rule 5.04 motions, if liberally construed, it may eviscerate Rule 5.04. Alternatively, Rule 5.04 may be a "one-hit wonder" in the courts--get 15 minutes of fame but be applied as a true bar to delinquently filed claims, and then never resurface again. Assuming large exceptions are not created, the docket of district court Rule 5.04 cases may soon vanish and the one-year filing may become a standard practice.
Laura Moehrle is a shareholder at Quinlivan & Hughes, P.A. located in St. Cloud, Minnesota. Her practice focuses on medical malpractice and insurance defense litigation primarily in the area of motor vehicle accidents. Laura is the current Co-Chair of MDLA's Medical Malpractice Committee.
John Sullivan is an associate attorney at Quinliven & Hughes, P.A. located in St. Cloud, Minnesota. He practices in civil litigation defense in the areas of medical malpractice and insurance defense litigation. John is a member of the MDLA's Medical Malpractice Committee and New Lawyers Committee.