Minnesota Court of Appeals vacated a default judgment against a contract-for-deed vendor who failed to answer a mechanic's lien complaint for two and one-half years, finding its colorable defense, diligence, and lack of prejudice outweighed its weak excuse.
Outcome: Vacated for appellant.
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(as of 9/30/2026)
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What happened
The facts of the case, in plain language.
Guillaume's May 26, 1982 complaint alleged it furnished $8,900 in labor and materials to Don-John Company and Summit State Bank of Bloomington as a partnership, yet its attached lien statement said the work was furnished at the request of Restan Care Nursing Homes and its bill of particulars referenced Scarbrough & Associates.
Don-John was the fee owner of the Minneapolis property and in January 1979 sold it to Restan Care Nursing Homes under a contract for deed.
Litin's affidavit denied that Don-John contracted for or agreed to the furnishing of any labor or materials after the 1979 sale and denied ever having been in partnership with Summit State Bank, giving Don-John at least a colorable defense on the merits.
Upon receiving notice of the intended default judgment, Don-John's attorney first sought permission to file an answer and was refused, then promptly contested the default motion and later moved to vacate, acting diligently both before and after entry of the judgment.
Guillaume delayed moving for a default judgment for two and one-half years while litigating Summit State Bank's late-answer appeal, so any prejudice from the passage of time lay at least as much with its own litigation tactics as with Don-John's neglect.
What the court decided
Guillaume & Associates sued Don-John Company for a mechanic's lien and money judgment, alleging Don-John and Summit State Bank had jointly requested $8,900 in labor and materials. Don-John, which had sold the property to Restan Care Nursing Homes under a contract for deed, never answered, believing Restan's payments were current and it had not ordered any work. Two and one-half years later Guillaume sought a default judgment, which the trial court granted and refused to vacate. On appeal, the court applied the four-part test from Kosloski v. Jones — reasonable defense, reasonable excuse, due diligence, and absence of substantial prejudice — and found three factors strongly favored Don-John: Litin's affidavit raised at least a colorable defense, Don-John acted promptly once notified, and Guillaume would suffer little prejudice given minimal discovery. Although Don-John's excuse was weak, the court vacated the default judgment so it could file an answer and defend.
- A defendant may be relieved from a default judgment resulting from attorney neglect where the defendant (a) has a reasonable defense on the merits, (b) has a reasonable excuse for his failure or neglect to answer, (c) has acted with due diligence after notice of the entry of judgment, and (d) shows that no substantial prejudice will result to the other party. (*18)
- The factors considered in determining whether to grant a default judgment are substantially the same as those considered on a motion to vacate a default judgment. (*18)
- The relative weakness of one vacatur factor should be balanced against a strong showing on the other three factors. (*19)
- A default judgment should be vacated where the defaulting defendant presents at least a colorable defense on the merits, acts diligently both before and after notice of the judgment, and imposes little prejudice on the opposing party, even though its excuse for failing to answer is weak. (*19)
How the court reached its decision
The court's reasoning, step by step.
Did the trial court err in granting a default judgment against Don-John and in denying its motion to vacate that judgment? Litin's affidavit denied that Don-John contracted for or agreed to the furnishing of labor or materials after the 1979 sale and denied any partnership with Summit State Bank, while plaintiff's own attachments pointed to Restan Care and Scarbrough & Associates, giving Don-John at least a colorable defense; Don-John's attorney immediately sought permission to answer upon notice and then promptly contested the default motion and moved to vacate; discovery had not been extensive, no depositions had been taken, and no note of issue had been filed; and Guillaume itself delayed two and one-half years before moving for default while litigating Summit State Bank's appeal. The court was satisfied that all four factors were met, concluded the trial court erred in entering the default judgment, and ordered the judgment vacated so Don-John could file an answer and defend.
Should Don-John's weak excuse for failing to interpose an answer preclude vacatur of the default judgment? Although Don-John's excuse was weak, Litin was straightforward in acknowledging service and explaining that he did not respond because he believed Guillaume had no meritorious claim; because the mechanic's lien statute assigns the property as security for payment and Don-John consistently received current contract-for-deed payments from Restan Care, it was not unreasonable for a layman to conclude the vendor would not be held accountable in a dispute between Guillaume and the vendee. The weakness of the excuse factor was outweighed by the strong showing on the other three factors, and Don-John was allowed to file an answer and defend.
Would vacating the default judgment substantially prejudice Guillaume? Discovery had not been extensive, no depositions had been taken, Don-John offered to complete its own discovery in less than three months, and no note of issue had been filed; moreover, if Guillaume suffered prejudice from the passage of time, the fault lay at least as much with its own litigation tactics in delaying the default motion for two and one-half years as with Don-John's neglect. Guillaume would not be substantially prejudiced by vacating the default judgment.
Key quotes from the opinion
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Cases the court relied on
Earlier decisions the court cited as authority for its ruling.
Minnesota statutes cited
Sections of the Minnesota Statutes this opinion cites.
Cases that cite this one
20 later published cases cite this decision.
- Spicer v. Carefree Vacations, Inc. (Minn. Ct. App. 1986)
- Ferdinand Leo Gams, Jr. v. Steven Ronald Houghton (Minn. Ct. App. 2015)
- Northland Temporaries, Inc. v. Turpin (Minn. Ct. App. 2008)
- Black v. Rimmer (Minn. Ct. App. 2005)
- In re the Estate of McCue (Minn. Ct. App. 1990)
- Hovelson v. U.S. Swim & Fitness, Inc. (Minn. Ct. App. 1990)
- Armstrong v. Heckman (Minn. Ct. App. 1987)
- Charson v. Temple Israel (Minn. Ct. App. 1987)
- Hill v. Tischer (Minn. Ct. App. 1986)
- Gelco Corp. v. Crystal Leasing, Inc. (Minn. Ct. App. 1986)
- Steven Charles Lind v. William Guenther (Minn. Ct. App. 2015)
- Jerry Wayne Cole v. Alexander Allen Wutzke (Minn. Ct. App. 2015)
- Langston v. Wilson McShane Corp. (Minn. Ct. App. 2008)
- Hellerstedt v. MacGibbon (Minn. Ct. App. 1992)
- Riemer v. Zahn (Minn. Ct. App. 1988)
- Galatovich v. Watson (Minn. Ct. App. 1987)
- Valley View, Inc. v. Schutte (Minn. Ct. App. 1987)
- Wiethoff v. Williams (Minn. Ct. App. 1987)
- Peterson v. Texas Terrace Convalescent Center (Minn. Ct. App. 1987)
- Schulz v. Milam (Minn. Ct. App. 1987)
This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.
Full opinion
The complete text of the court's opinion as published.
Opinion
OPINION
Respondent Guillaume & Associates, Inc., served appellant Don-John Company with a complaint seeking both a mechanic’s lien and a money judgment. Don-John did not answer the complaint.
After two and one-half years, Guillaume served notice on Don-John of its intention to apply to the district court for a default judgment. Don-John contested the motion, claiming it had not realized that Guillaume had a claim against it and that it had a meritorious defense. The trial court entered a default judgment against Don-John and denied its subsequent motion to vacate the default judgment. We order the default judgment vacated.
FACTS
Don-John Company is the fee owner of real property in Minneapolis, Minnesota. In January 1979 Don-John entered into a contract for deed to sell the property to Restan Care Nursing Homes, Inc.
On May 26, 1982, Guillaume and Associates, Inc., served a summons and complaint on Don-John and the Summit State Bank of Bloomington. The complaint alleged inter alia that Guillaume had furnished labor and materials to “Don-John Company and Summit State Bank of Bloomington, a partnership, at their request and in the amount of $8,900.00 * * *.” A lien statement attached to the complaint states that the labor and material were furnished at the request of Restan Care Nursing Homes. A bill of particulars shows correspondence and an invoice to Scarbrough & Associates. The complaint also sought a mechanic’s lien on the premises. Don-John did not file an answer.
Over the next two and one-half years Guillaume litigated an appeal to the Minnesota Supreme Court taken by defendant Summit State Bank of Bloomington, for leave to file an answer, 1 and completed its discovery with respect to other named parties.
Guillaume served a notice of motion for default judgment upon Don-John on October 19, 1984. Both the company’s attorney and Donald Litin, a partner in Don-John, immediately contacted Guillaume’s attorney and indicated Don-John’s desire to defend the action. The request was denied. At the November 1, 1984, motion hearing Don-John was represented by counsel, who contested the motion for default judgment and submitted an answer to the underlying action.
In its answer Don-John admitted receiving service of the summons and complaint but denied ever being in partnership with Summit State Bank and denied contracting for or having knowledge of the furnishing of labor and materials by Guillaume to the property. Don-John claimed it failed to respond to the complaint because it did not realize Guillaume was seeking relief that could have an adverse effect upon it since Restan Care’s contract for deed payments were current and Don-John had not ordered any work from Guillaume.
Guillaume’s motion for default judgment was granted. Subsequently, Don-John moved to vacate the default judgment and for leave to file an answer and cross-claim. The motion was denied. Don-John appeals from both the default judgment and order denying its motion to vacate.
ISSUE
Did the trial court err in granting a default judgment against appellant and in denying its motion to vacate the judgment?
*18 DISCUSSION
When a party fails to plead or otherwise defend within the time allowed by law, a default judgment may be entered against it. Minn.R.Civ.P. 55.01. The factors to be considered in determining whether to grant a default judgment are substantially the same as those to be considered on a motion to vacate a default judgment. See Coller v. Guardian Angels Roman Catholic Church of Chaska, 294 N.W.2d 712, 715 (Minn. 1980). Don-John argues that the trial court erred because it failed properly to apply the criteria set forth by the Minnesota Supreme Court for determining whether to grant or vacate a default judgment. We agree.
A party may be relieved from a final judgment if the judgment resulted from “excusable neglect.” Minn.R.Civ.P. 60.02. In interpreting this rule as applied to default judgments, the Minnesota Supreme Court has indicated that whether a default judgment “should be opened is a matter largely within the discretion of the trial court, and that court’s decision will not be reversed unless such discretion is abused.” Kosloski v. Jones, 295 Minn. 177, 180, 203 N.W.2d 401, 403 (1973). However, the Minnesota Supreme Court has said that
in keeping with the spirit of Rule 60.02, in furtherance of justice, and pursuant to a liberal policy conducive to the trial of causes on their merits, the court should relieve a defendant from the consequences of his attorney’s neglect in those cases where defendant (a) is possessed of a reasonable defense on the merits, (b) has a reasonable excuse for his failure or neglect to answer, (c) has acted with due diligence after notice of the entry of judgment, and (d) shows that no substantial prejudice will result to the other party-
Id. at 179-80, 203 N.W.2d at 403; see also Conley v. Downing, 321 N.W.2d 36, 40 (Minn. 1982). We are satisfied that the four factors are met in this case.
First, Don-John may have a reasonable defense on the merits. In order to obtain a personal judgment, Guillaume must show that the work was performed at Don-John’s request. In his affidavit Litin denies that Don-John contracted for or agreed to the furnishing of any labor or materials to the property after its sale in 1979. The complaint names Don-John in partnership with the Summit State Bank; however, Litin denies ever having been in such partnership. Moreover, attachments to the complaint indicate that Restan Care arranged for the work performed by Guill-aume in conjunction with Scarbrough and Associates, an entity allegedly having no relationship with Don-John. On the basis of Litin’s affidavit and the attachment to plaintiff’s own complaint, Don-John has at least a colorable defense.
Second, Don-John acted diligently not only after but before notice of the entry of default judgment. Upon receiving notice of Guillaume’s plan to seek a default judgment, Don-John’s attorney first sought to resolve the matter informally, as a matter of professional courtesy, by seeking permission to file an answer from Guill-aume’s attorney. This request was refused. Thereafter, Don-John responded promptly by contesting Guillaume’s motion to enter a default judgment and by later moving to vacate the judgment.
Third, Guillaume will not be substantially prejudiced by vacating the default judgment. Discovery has not been extensive, and no depositions have been taken. In addition, Don-John has indicated its willingness to complete its own discovery in less than three months. Because a note of issue has not been filed, it is not likely that Guillaume would be prejudiced by a delayed trial date.
Furthermore, if Guillaume has been prejudiced by the passage of time, as it contends, the fault lies at least as much with its litigation tactics as with Don-John’s neglect. Guillaume delayed moving for a default judgment for two and one-half years. During that time Guillaume litigated a similar issue in the same action against Summit State Bank, which had filed an answer six days late after a misunderstanding *19 about the date on which the complaint was served. See Guillaume & Associates, Inc. v. Don-John Co., 336 N.W.2d 262-63 (Minn. 1983). The Minnesota Supreme Court reversed the trial court’s denial of the bank’s motion for an extension of time to file an answer. See id. at 264. Thus, the instant case marks the second time Guillaume has forced an appeal by attempting to secure a default judgment when the defaulting party appeared to have a defense on the merits and sought to cure the default. This use of the Minnesota Rules of Civil Procedure is contrary to a central purpose of the rules — “to secure .a just determination of every action.” Id.
Don-John’s excuse for failing to interpose an answer is weak. However, Litin was at least straightforward in acknowledging service of the complaint and indicating that he did not respond because he thought Guillaume did not have a meritorious claim. If Litin’s claims are true, Don-John was not involved in contracting for Guillaume’s labor and materials. In addition, it was not unreasonable for Don-John to believe that Guillaume would not pursue it, the vendor on the contract for deed. Given the facts of this case, it is plausible that a layman might conclude that he would not be held accountable in a dispute between Guillaume and Don-John’s contract-for-deed vendee.
The mechanic’s lien statute is structured to guarantee payment for work performed on property by assigning the property as security. See Minn.Stat. §§ 514.01-.17. Don-John had no reason to believe the property was at risk, having consistently received contractor-deed payments from Restan Care. Thus, even though Don-John may not have acted prudently by not responding to the complaint or consulting an attorney who could have advised it properly, we cannot say that Litin’s evaluation of Don-John’s situation was unreasonable.
It is apparent that the trial court recognized and was influenced by the weakness of Don-John’s excuse. In our view, however, the relative weakness of one factor should be balanced against the strong showing on the other three factors. In keeping with the spirit of the rules, we conclude that Don-John should be allowed to file an answer and defend.
DECISION
The trial court erred in entering a default judgment against appellant. Judgment ordered vacated.
Vacated.
. See Guillaume & Associates, Inc. v. Don-John Co., 336 N.W.2d 262 (Minn. 1983).
Continue your research
- Cases applying the Kosloski four-factor test to vacate default judgments
- Later Minnesota cases weighing a weak excuse against strong showings on the other vacatur factors
- Secondary sources on mechanic's lien exposure of contract-for-deed vendors
Case-law data current through September 30, 2026. Source: CourtListener bulk data.