S. Robideau Constr., Inc. v. Hiber

• Decision Date: 29 August 2016
• Docket Number: A16-0451
• Parties: S. Robideau Construction, Inc., Appellant, v. John E. Hiber, Respondent, Wells Fargo Bank, N.A., Respondent.
• Court: Minnesota Court of Appeals

S. Robideau Construction, Inc., Appellant,
v.
John E. Hiber, Respondent,
Wells Fargo Bank, N.A., Respondent.

A16-0451

STATE OF MINNESOTA IN COURT OF APPEALS

August 29, 2016

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

Affirmed; motion denied
Schellhas, Judge

Washington County District Court
File No. 82-CV-14-6214

Ryan J. Hatton, Peterson Habicht PA, Minneapolis, Minnesota (for appellant)

Ryan L. Kaess, Kaess Law, LLC, St. Paul, Minnesota (for respondent John Hiber)

Considered and decided by Schellhas, Presiding Judge; Reyes, Judge; and Kalitowski, Judge.^*

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UNPUBLISHED OPINION

SCHELLHAS, Judge

Appellant challenges the district court's order vacating a default judgment. We affirm.

FACTS

Respondent John Hiber owned real property that was subject to a mortgage in favor of respondent Wells Fargo Bank N.A. (Wells Fargo). The property sustained damage as a result of a fire on or about January 2, 2014. On or about January 5, Hiber and appellant S. Robideau Construction Inc. (SRC) executed a contract for SRC to perform restoration services on the property. Under the contract, Hiber assigned insurance proceeds from his insurer, American National Property and Casualty (American National), to SRC and agreed to pay interest on unpaid charges. SRC performed restoration services, and, upon completion of progress milestones, American National issued joint checks to SRC, Wells Fargo, and Hiber. Hiber and Wells Fargo endorsed all of those checks to SRC as payment for its restoration services. On or about July 28, American National issued a final joint check in the amount of $53,334.63. Hiber refused to endorse the check to SRC, despite SRC's demand.

In November 2014, SRC served on Hiber and filed with the county recorder a mechanic's lien statement claiming a lien in the amount of $56,175.88, the purported amount owed for the restoration services performed by SRC. In December, SRC sued Hiber

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and Wells Fargo, seeking to foreclose its mechanic's lien and alleging claims of quantum meruit and breach of contract.¹ Hiber did not obtain legal counsel at that time.

On January 23, 2015, SRC served Hiber by U.S. mail with a notice of motion and motion for default and summary judgment; SRC later served Hiber with a memorandum of law, affidavits, and exhibits in support of its motion. On April 10, after a motion hearing at which Hiber failed to appear, the district court granted default and summary judgment to SRC in the amount of $68,841.77. On April 20, the court ordered entry of an amended judgment due to a clerical error in the April 10 judgment. The same day, the court administrator sent the parties notice of filing of the order and entry of the amended judgment.

On April 27, 2015, Hiber filed a letter with the district court, requesting that the case be reopened because he never received SRC's mechanic's lien statement or notice of the April 10 hearing and alleging that SRC failed to complete its work, performed unacceptable work, and caused "other expenses." On April 29, the court noted that affidavits of service were on file and denied Hiber's request.

On June 24, 2015, SRC moved for an order confirming sheriff's sale. On June 29, Hiber was personally served with notice of sheriff's sale. On August 11, Hiber filed another letter with the district court, again asking that the case be reopened and alleging that SRC

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failed to complete its work, performed unacceptable work, and damaged his property. On August 18, the court denied Hiber's request.

Hiber retained counsel and, on August 21, 2015, responded to SRC's motion for an order confirming sheriff's sale. In his response, Hiber requested permission to move for reconsideration of the default judgment or to move to reopen the default judgment. On August 28, the sheriff sold Hiber's property to SRC for $50,000, which was the approximate difference between the value of the property and the outstanding amount owed on Wells Fargo's mortgage. The same day, the parties appeared for a hearing on SRC's motion for an order confirming sheriff's sale. Although the record contains no transcript of the August 28 proceedings, the district court apparently expressed its willingness to entertain additional filings and argument on the issues raised in Hiber's August 21 response, and it reset the hearing for September 28.

On September 11, 2015, Hiber filed a motion to reopen the default judgment "in the interest of justice," along with a supporting memorandum of law. On September 17, Hiber filed an affidavit in support of his motion to reopen the default judgment. On September 22, SRC filed a memorandum and affidavit in opposition to Hiber's motion to reopen. The district court heard arguments on the parties' motions on September 28 and later vacated the default judgment against Hiber.

This appeal follows.

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DECISION

Collateral estoppel

SRC first argues that the district court abused its discretion by vacating the default judgment against Hiber because the court had denied Hiber's two letter requests to reopen the case and therefore his September 11, 2015 motion to reopen the default judgment was barred by the doctrine of collateral estoppel. We disagree. "Whether collateral estoppel precludes litigation of an issue is a mixed question of law and fact that [appellate courts] review de novo." Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004).

Minnesota law provides:

For collateral estoppel to apply, all of the following prongs must be met: (1) the issue must be identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or was in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.

Id. (quotation omitted). "The issue on which collateral estoppel is to be applied must be the same as that adjudicated in the prior action and it must have been necessary and essential to the resulting judgment in that action." Id.

A default judgment may operate as a final judgment on the merits for collateral-estoppel purposes. See Roberts v. Flanagan, 410 N.W.2d 884, 886-87 (Minn. App. 1987) (rejecting appellant's argument that claims adjudicated by default judgment were not actually litigated and were not precluded from relitigation by collateral estoppel and stating that "a default judgment is not only res judicata to another action on the same claim but collateral estoppel as to those issues pleaded in the complaint" (citing Herreid v. Deaver,

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193 Minn. 618, 622, 259 N.W. 189, 191 (1935))). But application of collateral estoppel requires that an issue be determined in a prior adjudication, implying that, to be collaterally estopped, the issue must be presented in a subsequent action. See Hauschildt, 686 N.W.2d at 837 (stating that "[f]undamental to [the] doctrines [of res judicata and collateral estoppel] is that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction cannot be disputed in a subsequent suit between the same parties or their privies" (emphasis added) (quotations omitted)).

Here, Hiber submitted his letter requests to reopen the case and his motion to reopen the default judgment in the same proceeding. We therefore conclude that collateral estoppel did not bar Hiber's motion to reopen the default judgment.

Reconsideration of refusal to reopen

SRC further argues that Hiber's request to move for reconsideration of the default judgment was procedurally improper and that the district court therefore erred by reconsidering its denials of Hiber's letter requests to reopen the case. "We review a district court's decision to allow a motion for reconsideration for an abuse of discretion." Goerke Family P'ship v. Lac qui Parle-Yellow Bank Watershed Dist., 857 N.W.2d 50, 52-53 (Minn. App. 2014) (citing In re Welfare of S.M.E., 725 N.W.2d 740, 743 (Minn. 2007)).

Under the Minnesota General Rules of Practice:

Motions to reconsider are prohibited except by express permission of the court, which will be granted only upon a showing of compelling circumstances. Requests to make such a motion, and any responses to such requests, shall be made only by letter to the court of no more than two pages in length, a copy of which must be served on all opposing counsel and self-represented litigants.

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Minn. Gen. R. Pract. 115.11. "Motions for reconsideration are not opportunities to present facts that were available when the prior motion was considered and will not be allowed to supplement the record on appeal." Am. Bank of St. Paul v. Coating Specialties, Inc., 787 N.W.2d 202, 206 (Minn. App. 2010) (citing Minn. Gen. R. Pract. 115.11 1997 advisory comm. cmt.), review denied (Minn. Oct. 27, 2010). A moving party must file any affidavits and exhibits in support of a nondispositive motion "at least 14 days prior to the hearing" on the motion. Minn. Gen. R. Pract. 115.04(a).

SRC is correct that Hiber did not request to move for reconsideration by letter as required by Minn. Gen. R. Pract. 115.11, instead seeking permission to move for reconsideration in his response to SRC's motion for an order confirming sheriff's sale. Yet the district court implicitly entertained Hiber's request to move for reconsideration as though it were a motion for reconsideration. And Hiber filed his affidavit in support of his motion to reopen the default judgment on September 17, 2015, only 11 days before the September 28 hearing.

But SRC has presented no authority indicating that a district court abuses its discretion by granting a motion to reconsider if the motion is procedurally defective, and we have found no such authority. Instead, we have found cases suggesting that a district court has the discretionary power to entertain a motion notwithstanding its procedural defects. See, e.g., Lee v. Lee, 749 N.W.2d 51, 62 (Minn. App. 2008) (...