Jacobson, Stromme & Harwood, P.A., Respondent, vs. Ed Herman & Sons, et al., Appellants, and Ed Herman & Sons, et al., Appellants, vs. Ronald J. Herman, et al., Respondents.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C2-02-560

 

Jacobson, Stromme & Harwood, P.A.,

Respondent,

 

vs.

 

Ed Herman & Sons, et al.,

Appellants,

 

and

 

Ed Herman & Sons, et al.,

Appellants,

 

vs.

 

Ronald J. Herman, et al.,

Respondents.

 

Filed June 10, 2003

Affirmed

Stoneburner, Judge

 

Anoka County District Court

File Nos. C5952360 & CX899375

 

Frank A. Dvorak, Stephen L. Wilson, Foley & Mansfield, P.L.L.P., 1108 Nicollet Mall, Suite 200, Minneapolis, MN 55403 (for respondent Jacobson, Stromme & Harwood, P.A.)

 

Eric J. Braaten, Gena A. Braaten, Nicklaus, Braaten & Hollenhorst, P.L.L.C., 500 Pine Street North, Suite 200, Chaska, MN 55318; and

 

Norris J. Skogerboe, Skogerboe & Skogerboe Chtd., 11937 Central Avenue Northeast, Blaine, MN 55434 (for appellants)

 

Joseph M. Sokolowski, Peter V. Rother, Parsinen, Kaplan, Levy, Rosberg & Gotlieb, P.A., 100 South 5th Street, Suite 1100, Minneapolis, MN 55402-1226 (for respondents Ronald J. Herman and Suzanne Herman)

 

            Considered and decided by Stoneburner, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.

U N P U B L I S H E D  O P I N I O N

STONEBURNER, Judge

 

            Ed Herman & Sons, et al., appeal the district court's sua sponte dismissal of these consolidated actions for failure to prosecute.  Appellants argue that the dismissal was contrary to law because the case had not been called for trial at the time it was dismissed and the facts do not constitute the extraordinary circumstances required for dismissal for lack of prosecution.  We affirm.  

FACTS

 

            Appellants Ed Herman and his three sons, Gerald, Duane, and Ronald Herman, formed appellant partnership, Ed Herman & Sons.  The partnership owned real estate leased to Herman Farms, Inc., a closely held farming corporation owned by the same individuals.  Ronald Herman managed the books and accounts.  The lawsuits involved in this consolidated matter originated in 1989 when appellants sued respondents Ronald Herman and his wife Suzanne Herman for alleged financial mismanagement and breach of fiduciary duty, and respondent Jacobson, Stromme & Harwood, P.A., a law firm that represented various Herman entities, sued the Herman entities for legal fees.  The claims, counterclaims, and cross-claims involve alleged financial mismanagement, breach of fiduciary duty, fraudulent and deceitful practices, commingling of funds, fraudulently-transferred assets, claims for legal fees, attorney malpractice, breach of contract, and conflict of interest.  The lawsuits cover incidents and transactions that go back to 1980.

            By agreement of all parties, the lawsuits were put on hold pending resolution of a mortgage-foreclosure action brought by a chemical company for the unpaid balance of chemicals and fertilizer.  That litigation ended in 1995. 

            After the cases were consolidated in September 1997, a jury trial was scheduled for January 1998.  The parties attempted mediation in the interim, but mediation was unsuccessful.  Although appellants have retained Norris Skogerboe as attorney of record throughout these proceedings, lead counsel for appellants was originally David Skogerboe, who was diagnosed with leukemia in September 1997 and left work to seek treatment.  The trial was continued by agreement of the parties to April 1998.  The parties also agreed to extend discovery deadlines.  In November 1997, the parties agreed to reset the trial for August 1998 and again extended the discovery deadline.  In April 1998, the parties agreed to reset the trial date for November 30, 1998.  David Skogerboe died in September 1998 and attorney Kevin Rouse was retained by appellants as lead counsel.

On November 24, 1998, there was a pre-trial hearing, and the case was continued once again.  A new trial date was not set, but the parties agreed that the trial should start on April 1, 1999, and the court ordered that a pre-trial hearing be scheduled prior to April 1, 1999.  Various motions were ruled on by the district court in June 1999.

In the summer of 1999, appellants' attorney Kevin Rouse abandoned the case.  Appellants have been unable to contact Rouse.  When appellants concluded that they could not contact Rouse, they retained Tom Malone as new lead counsel in August 2000. 

In May 2001, appellants wrote to the district court requesting that the matter be reopened and requesting a trial date in October 2001.  Respondents Ronald and Suzanne Herman requested that the parties attempt mediation again.  Respondent Jacobson, Stomme & Harwood, P.A., requested a six-month continuance to conduct more discovery.

On August 3, 2001, the district court issued an order to show cause, requiring the parties to demonstrate why the case should be kept active.  After a hearing, the district court issued an order dismissing the case with prejudice for failure to prosecute.  Appellants moved for amended findings.  The district court denied the motion and entered judgment in February 2002.  This appeal followed.  Appellants contend that no prejudice was caused by the delay, the delay was excusable, and dismissal was inappropriate because the case was never called to trial before it was dismissed by the district court.[1]

  D E C I S I O N

 

            A district court may, on its own motion, dismiss an action for failure to prosecute.  Minn. R. Civ. P. 41.02(1).  The decision to dismiss an action for failure to prosecute is within the discretion of the district court.  Scherer v. Hanson, 270 N.W.2d 23, 24 (Minn. 1978).  "The standard of review of a dismissal order requires this court to view the record in the light most favorable to the trial court's order."  Reichert v. Union Fidelity Life Ins. Co., 360 N.W.2d 664, 667 (Minn. App. 1985) (citation omitted).  Nevertheless, because dismissal with prejudice "is the most punitive sanction that can be imposed for failure to prosecute, it should be granted only under exceptional circumstances."  Minn. Humane Soc'y v. Minn. Federated Humane Societies, 611 N.W.2d 587, 590 (Minn. App. 2000) (citation omitted). 

The Supreme Court recently held that calling a case for trial is not a prerequisite to dismissal for failure to prosecute, overruling prior case law to the contrary.  Modrow v. JP Foodservice, Inc., 656 N.W.2d 389, 395 (Minn. 2003).  Modrow holds that calling a case for trial is one of multiple factors to be considered when applying the two-prong test of whether the delay was prejudicial and whether the delay was unreasonable and inexcusable.  Id.  See also Wherley v. Foss, 416 N.W.2d 463, 464 (Minn. App. 1987) (establishing the two-prong test for a dismissal under Rule 41.02(a)).

            Based on Modrow, we conclude that the district court did not abuse its discretion by dismissing this case for failure to prosecute despite the fact that it was never called for trial.  We turn then to an analysis of whether the delay was prejudicial and whether the delay was unreasonable and inexcusable. 

 

1.         Did the alleged failure to prosecute prejudice Ronald and Suzanne Herman and the Jacobson firm?

 

Appellants argue that the district court abused its discretion in finding that the age of the case, in and of itself, constituted prejudice to Ronald and Suzanne Herman and the Jacobson firm (collectively respondents).  "Generally, prejudice must be more than the ordinary expense and inconveniences of trial preparation, and is not presumed from the mere fact of delay." Firoved v. General Motors Corp., 277 Minn. 287, 283-84, 152 N.W.2d 364, 368 (1967).  "However, in extraordinary cases of delay, a dismissal with prejudice is justified even without a showing of prejudice to the defendant."  Wherley v. Foss, 416 N.W.2d at 464 (citation omitted).  "After so many years of unnecessary delay, the need to search for identifiable and concrete examples of prejudice diminishes."  Id. (citing Belton v. City of Minneapolis, 393 N.W.2d 244, 246 (Minn. App. 1986)). 

In Wherley, we concluded that a delay from the date of an automobile accident in 1973 to the filing of the complaint in district court in 1986, in and of itself, established prejudice sufficient to support dismissal for failure to prosecute, noting that so long after the event at issue, witnesses are difficult to find and their memories have faded.  The delay in this case is longer than in Wherley and in cases supporting Wherley.

            In this case, the district court noted:

First, the case is extremely old.  The disputed facts underlying this case occurred between 12 and 21 years ago.  There has been a 12-year delay since the cases were filed.  This delay will likely cause available witnesses' memories to fade.  Thus, it is unlikely that even witnesses that could be located would be able to recall with any clarity events that occurred more than twelve years ago.

 

The district court further noted that the case involves factual allegations that are vigorously disputed and there is no showing that all witness have been deposed; Ed Herman is deceased and no representative has been substituted for him and no probate action commenced for his estate; the law firm of Jacobson, Stromme & Harwood has been inactive since November 30, 1997; and many witnesses are deceased or otherwise unavailable.  We conclude that the record supports the district court's finding that the delay has caused prejudice, and, furthermore, conclude that the length of the delay is itself sufficient to establish prejudice sufficient to support the district court's exercise of discretion to dismiss for lack of prosecution.

 

2.         Was the delay unreasonable and inexcusable?

 

Appellants admit that the delay in this case is substantial but argue that the delay has not been unreasonable or inexcusable given the unusual and unfortunate history of the case.  The district court noted that many trial dates were set and continued in this case and that the continuances have been made on motions from "all sides and upon stipulations."  The district court found that the delay caused by the illness and death of David Skogerboe was excusable, but "cannot justify the vast majority of the 12-year delay in this case," and appellants have failed to articulate a justifiable excuse prior to David Skogerboe's illness and after his death.  The record contains sufficient evidence to support the district court's finding that although some of the delay was reasonable and excusable, much of the delay was unreasonable, inexcusable, and attributable to appellants.  The district court did not abuse its discretion by dismissing this case for lack of prosecution. 

Affirmed.

 

[1] The appeal was briefed and argued in 2002, but we stayed further consideration, pending the outcome of a matter then pending before the supreme court concerning the necessity of a case being called to trial prior to dismissal for failure to prosecute.  The supreme court issued its opinion in February 2003.  The parties filed supplemental briefs prior to this matter being submitted for decision.