AMCO BUILDERS & DEVELOPERS INC V TEAM ACE JOINT VENTURE
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STATE OF MICHIGAN
COURT OF APPEALS
AMCO BUILDERS & DEVELOPERS, INC.,
UNPUBLISHED
November 2, 2001
Plaintiff/CounterdefendantAppellee,
V
No. 221513
Wayne Circuit Court
LC No. 97-709362-CK
TEAM ACE JOINT VENTURE,
Defendant/Counterplaintiff/CrossDefendant,
and
HARTFORD FIRE INSURANCE COMPANY,
Defendant/Cross-Defendant,
and
TEAM CONTRACTING, INC., AMERICAN
CONSTRUCTION & ENERGY, AND JARVIS
PAINTING, INC.,
Defendants,
and
ACME DEMOLITION/INTERVALE JOINT
VENTURE,
Defendant-Appellant,
and
INTERVALE EXCAVATING & DEMOLITION,
INC.,
Defendant/Cross-DefendantAppellant,
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And
LEROY LOVE, d/b/a ACME DEMOLITION
COMPANY,
Defendant/Counterplaintiff/CrossPlaintiff.
Before: Hoekstra, P.J., and Talbot and Zahra, JJ.
PER CURIAM.
This action involves claims for breach of contract and tortious interference with a
contractual relationship arising out of a construction project for the City of Detroit. DefendantsAppellants Acme Demolition/Intervale Joint Venture and Intervale Excavating & Demolition,
Inc. (hereinafter referred to as “defendants”) appeal as of right from the trial court’s entry of a
default against them and entry of a default judgment against Intervale Excavating for
$595,606.15, less any setoff for amounts recovered by plaintiff from defendant Team Ace Joint
Venture.1 We reverse and remand.
On November 23, 1998 a settlement conference was held in this matter. At that time,
plaintiff informed the trial court that due to defendants’ lack of cooperation, plaintiff had been
unsuccessful in its attempts to take the deposition of Clarence Carson, a principal of Intervale
Excavating & Demotion, Inc. The trial court entered an order compelling defendants to produce
Carson for deposition within thirty days. The order provided that failure to produce Carson for
deposition would subject defendants to a motion for a default judgment.
Defendants failed to comply with the trial court’s order. On December 23, 1998, plaintiff
filed a motion for entry of default. At the hearing on the motion, defense counsel Alex Miller
stated that he had been unable to reach Carson due to the holidays and to Miller’s son’s illness.
Miller acknowledged that he had “not participated” in discovery and admitted “not having been
available to properly represent” defendants. He assured the court that communications with his
clients had been restored. The court granted the motion for default and ordered a hearing on the
issue of damages. The court’s order of default was entered January 27, 1999.
Defendants moved to set aside the default. In support of their motion, defendants
submitted the affidavit of Carson attesting to facts supporting a meritorious defense. On March
12, 1999, the trial court conducted a hearing on defendants’ motion. Miller assumed
1
This appeal concerns only plaintiff and defendants Intervale Excavating & Demotion, Inc. and
Acme Demolition/Intervale Joint Venture as a result of settlements by other parties.
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responsibility for the delay and stated that defendants were not at fault. The court found that
defendants had not demonstrated good cause to set aside the default and denied the motion.
The court ordered an evidentiary hearing on the issue of damages. Miller moved for an
adjournment, which the court denied. The hearing was conducted in Miller’s absence and the
trial court entered a default judgment in favor of plaintiff on March 18, 1999.
Defendants retained new counsel and moved to set aside the default and default
judgment. Defendants maintained that their failure to comply with the court’s order to produce
Carson for deposition was due solely to the fact that Carson had been unaware that the court had
ordered his production for deposition. Defendants attached to their motion the affidavit of
Carson, in which he attested that he was never notified that he was to appear for deposition.
Carson stated that prior to April 14, 1999, he had no knowledge that a default and a default
judgment had been entered, and he was unaware of the underlying circumstances that led to the
entry of default. Defendants also attached the affidavit of Miller explaining the demands of his
son’s medical condition. Defendants urged the court to set aside the default judgment because
this was not a situation where the parties had flagrantly or intentionally ignored the court’s order.
The court denied the motion to set aside the default judgment because Miller had earlier agreed
to produce Carson for deposition.
On appeal, defendants challenge the trial court’s entry of the default judgment as well as
the trial court’s denial of their motion to set aside the default and default judgment. We review a
trial court’s decision to enter a default or default judgment, as well as its ruling on a motion to set
aside a default or default judgment, for an abuse of discretion. Barclay v Crown Building and
Development, Inc, 241 Mich App 639, 642, 651; 617 NW2d 373 (2000). After reviewing the
record, we reverse on the ground that the trial court abused its discretion in refusing to set aside
the default judgment.
MCR 2.603(D)(1) provides that a motion to set aside a default or a default judgment shall
be granted only upon a showing of good cause and filing of an affidavit of facts demonstrating a
meritorious defense. Zaiter v Riverfront Complex, 463 Mich 544, 551; 620 NW2d 646 (2001);
Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 223; 600 NW2d 638 (1999).2 In
this case, plaintiff did not challenge defendants’ affidavit of meritorious defense. The parties
address only the “good cause” requirement for setting aside a default judgment. To show “good
cause,” a party may establish “(1) a substantial irregularity or defect in the proceeding upon
which the default is based,” or “(2) a reasonable excuse for failure to comply with the
requirements that created the default[.]” Id. at 233.
2
In addition to MCR 2.603(D), a court may grant relief from judgment of default pursuant to
MCR 2.612 for “any other reason justifying relief from the operation of the judgment.” MCR
2.612(C)(1)(f); MCR 2.603(D)(3); Alken-Ziegler, supra at 234 n 7. We recognize that
defendants’ motion was filed pursuant to MCR 2.612(C)(1)(f). However, the court denied the
motion for lack of good cause, and our Supreme Court has stated that the language in MCR
2.612(C)(1)(f) “should not be read to obliterate the analysis” under MCR 2.603(D)(1). AlkenZiegler, supra at 234 n 7.
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As a general proposition, an attorney’s negligence is attributable to the client and does not
normally constitute grounds for setting aside a default judgment. Pascoe v Sova, 209 Mich App
297, 298-299; 530 NW2d 781 (1995), citing White v Sadler, 350 Mich 511, 525; 87 NW2d 192
(1957). In circumstances where the attorney’s conduct rises to the level of abandonment of the
representation, his conduct is not imputed to the client. See White, supra at 523-524. We
conclude that such circumstances exist in this case.
It is clear from a review of the record that Miller’s care for his son seriously interfered
with his representation of defendants. Carson’s affidavit indicates the extent to which the
representation was compromised. Miller failed to apprise Carson that the trial court’s November
23, 1998 order compelled his deposition within thirty days. Further, Miller failed to notify
Carson that a default and default judgment were entered as a result of defendants’ failure to
produce Carson for deposition. Miller’s affidavit regarding the demands of his son’s medical
condition lends credence to defendants’ argument.
In light of Carson’s affidavit as well as Miller’s representations to the court regarding his
failure to participate and his unavailability to properly represent his clients, we conclude that
Miller’s lack of attention to this case exceeded neglect and constituted an abandonment of the
representation. As such, it may not be imputed to defendants. White, supra at 522-524. See
Pascoe, supra at 298-301. Miller’s abandonment of this case constitutes a reasonable excuse for
defendants’ failure to comply with the requirements that caused the default judgment to enter.
Alken-Ziegler, supra at 223, 233. Because plaintiffs did not offer any evidence to contradict
Carson’s affidavit, we conclude that the trial court abused its discretion in denying defendants’
motion to set aside the default judgment for failure to demonstrate good cause.3
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Joel P. Hoekstra
/s/ Michael J. Talbot
3
Plaintiff argued below and now argues on appeal that defendants advanced the same arguments
as in their opposition to the entry of default and offered no new grounds to warrant setting aside
the default judgment. Plaintiff’s argument ignores Carson’s affidavit regarding Miller’s failure
to notify him that his deposition was compelled, which was offered for the first time with
defendants’ motion to set aside the default judgment.
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