Dorso Trailer Sales, Inc. v. American Body and Trailer, Inc.
| Decision Date | 31 December 1990 |
| Docket Number | No. C6-90-1381,C6-90-1381 |
| Parties | DORSO TRAILER SALES, INC., Appellant, v. AMERICAN BODY AND TRAILER, INC., et al., Respondents. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The district court did not abuse its discretion in granting appellant's motion to vacate judgment based on respondents' former counsel's failure to disclose controlling statute directly adverse to his client's position and his affirmative misrepresentations to the courts concerning Minnesota law.
2. The district court erred as a matter of law in dismissing the action on res judicata grounds after vacation of the judgment pursuant to Minn.R.Civ.P. 60.02.
3. Minnesota Statutes chapter 80E is not unconstitutional as applied; the good cause requirement of chapter 80E was the subject of prior legislative regulation, and Christopher J. Dietzen, Andrew J. Mitchell, Sharon L. Brenna, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, for appellant.
there is a significant and legitimate public purpose behind other provisions of the chapter.
Edward M. Laine, Nancy L. Cameron, Oppenheimer, Wolff & Donnelly, St. Paul, for respondents.
Considered and decided by KALITOWSKI, P.J., FOLEY and NORTON, JJ.
Appellant challenges the judgment of dismissal entered April 30, 1990, pursuant to the district court's order granting summary judgment in favor of respondent. Respondent filed a notice of review regarding two previous orders of the district court: (1) granting appellant's motion, pursuant to Minn.R.Civ.P. 60.02, to vacate a November 26, 1985, judgment; and (2) Minn.Stat. ch. 80E constitutional as applied to the case.
The basis of this protracted litigation is a contract dated April 29, 1977, between appellant, Dorso Trailer Sales, Inc. (Dorso), and American Body and Trailer, Inc. (American), predecessor of respondent, Polar Manufacturing Co. (Polar). The contract gave Dorso, a semi-truck trailer dealer, the right to sell American's products in Minnesota, North Dakota, South Dakota, Wisconsin, Montana and the Upper Peninsula of Michigan. The contract provided for cancellation by either party after 90 days' written notice.
In August 1979, Polar took over American. A disagreement subsequently arose over Dorso's sales performance. Polar terminated the 1977 agreement in May 1981, giving 90 days' notice as required by the contract. In December 1981, Dorso commenced a breach of contract action against Polar.
Before trial, the court ruled as a matter of law that under common law, the 1977 agreement allowed termination only for cause. Trial was held in March and April 1984. The jury found that Polar terminated the agreement without cause and awarded Dorso $321,302.00 in damages. Judgment was entered on February 15, 1985, for Dorso in the sum of $248,889.45 after set-off for Dorso's unpaid accounts with Polar. (For a more detailed discussion of the facts, see Dorso Trailer Sales, Inc. v. American Body & Trailer, Inc., 372 N.W.2d 412 (Minn.App.1985) [hereinafter Dorso I ].
Polar appealed. This court reversed, holding that the trial court erred in ruling that the dealership agreement provided for termination only for cause. Dorso I, 372 N.W.2d at 415. The Minnesota Supreme Court denied review. The trial court vacated the February 15, 1985, judgment, and judgment was entered on November 26, 1985, for Polar in the amount of $110,946.24. This judgment was for the open account that had previously been asserted as a set-off to Dorso's judgment. Dorso did not contest the amount due on the open account and satisfied the judgment on December 3, 1985.
In May 1986, Dorso's counsel learned of the existence of Minnesota Statutes chapter 80E. Chapter 80E, which became effective in 1981, requires good cause to terminate a franchise agreement with a licensed new motor vehicle dealer. In pertinent part, chapter 80E provides:
Notwithstanding the terms of any franchise agreement or waiver to the contrary, no manufacturer shall cancel or terminate any franchise relationship with a licensed new motor vehicle dealer unless the manufacturer has:
* * * * * *
(c) Good cause for the cancellation or termination.
Minn.Stat. § 80E.06, subd. 1(c) (Supp.1981).
On May 13, 1986, Dorso moved, pursuant to Minn.R.Civ.P. 60.02(a) and (f), for relief from the November 26, 1985, judgment. Dorso argued that relief was warranted by reason of mistake or excusable neglect in that chapter 80E was difficult to find because of the manner in which it was indexed in the statutes. Dorso further argued that relief was warranted under rule 60.02(f) to protect the integrity of the judicial process.
Subsequently, former counsel for Polar admitted that he had known of chapter 80E throughout the litigation but had not disclosed its existence to either Dorso's counsel, the trial court, the court of appeals or the supreme court. Polar's former counsel, by way of affidavit, stated that although he had been aware of chapter 80E, he had concluded that he had no ethical obligation to inform the courts of the statute because, in his opinion, chapter 80E would be unconstitutional as applied to the case.
After learning that Polar's former counsel had known of and failed to disclose the existence of chapter 80E to the courts, Dorso broadened the grounds for its motion for relief from the judgment to include a claim of "fraud * * * misrepresentation, or other misconduct of an adverse party" under rule 60.02(c). Dorso initiated a second action against Polar, specifically stating a claim under Minn.Stat. ch. 80E. In an order dated November 25, 1986, the court vacated the November 26, 1985, judgment pursuant to rule 60.02(a) and (f) and consolidated the two actions.
Polar petitioned for discretionary review of the November 25, 1986, order. The court of appeals denied Polar's petition, finding no compelling reason for review.
In June 1988, the parties brought cross-motions for summary judgment on the issue of whether application of chapter 80E would constitute an unconstitutional impairment of contract. The court granted Dorso's motion, ruling that chapter 80E as applied to the case violated neither the United States Constitution nor the Minnesota Constitution. The court of appeals denied Polar's petition for discretionary review of the order. The Minnesota Supreme Court denied Polar's petition for further review.
On December 14, 1989, Dorso moved for entry of judgment based on the April 10, 1984, special jury verdict. Polar moved for dismissal of the actions or, alternatively, for summary judgment or an order certifying questions to the court of appeals.
On March 30, 1990, the district court issued an order granting Polar's motion to dismiss and denying all other motions. In a memorandum accompanying the order, the court stated that it based its decision to dismiss the actions on two recent Minnesota cases, Mattson v. Underwriters at Lloyds, 414 N.W.2d 717 (Minn.1987), and Sundberg v. Abbott, 423 N.W.2d 686 (Minn.App.1988), pet. for rev. denied (Minn. June 29, 1988) [hereinafter Sundberg II ]. The court found that Mattson and Sundberg II compelled dismissal of the cases on res judicata grounds.
Judgment of dismissal was entered on April 30, 1990, pursuant to the court's order. This appeal followed. Polar filed a notice of review, seeking review of the November 25, 1986, order granting Dorso's motion to vacate the November 26, 1985, judgment. Polar also seeks review of the September 23, 1988, order, which held Minn.Stat. ch. 80E constitutional as applied to the case.
1. Did the district court abuse its discretion in vacating the November 26, 1985, judgment in Polar's favor?
2. Did the district court err as a matter of law in ordering dismissal of the consolidated actions on res judicata grounds despite the prior vacation of the judgment pursuant to Minn.R.Civ.P. 60.02?
3. Is Minnesota Statutes chapter 80E unconstitutional as applied to Polar?
Our review of a district court's decision to vacate a judgment pursuant to Minn.R.Civ.P. 60.02 is limited. The decision to vacate a judgment [under rule 60.02] is largely within the trial court's discretion and that decision will not be reversed on appeal absent a clear abuse of discretion.
Sand v. School Serv. Employees Union, Local 284, 402 N.W.2d 183, 186 (Minn.App.1987), pet. for rev. denied (Minn. Apr. 29, 1987).
Rule 60.02 of the Minnesota Rules of Civil Procedure, in pertinent part, provides:
On motion and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment (other than a divorce decree), order, or proceeding and may order a new trial or grant such other relief as may be just for the following reasons:
(a) Mistake, inadvertence, surprise, or excusable neglect;
* * * * * *
(c) Fraud * * *, misrepresentation, or other misconduct of an adverse party;
* * * * * *
(f) Any other reason justifying relief from the operation of the judgment.
Minn.R.Civ.P. 60.02(a), (c), (f).
The district court based its order to vacate the November 26, 1985, judgment on Minn.R.Civ.P. 60.02(a) and (f). The court found vacation warranted under rule 60.02(a) for two reasons: (1) Dorso's counsel's "mistake" in not finding and calling to the courts' attention Minn.Stat. ch. 80E; and (2) Polar's former counsel's "more grievous mistake" in not disclosing chapter 80E to any of the courts which heard the case. The court further found vacation warranted under rule 60.02(f), reasoning that
[i]t is important to preserve the integrity of the judicial system. A judicial system that would appear to overlook and not consider what may very well be controlling law in a case would not be perceived to be delivering the kind of justice our community expects.
The court declined specifically to use rule 60.02(c) as a basis for vacating the judgment. It noted:
The Court would rather find that [Polar's former]...
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