GWYN DAVIDSON V DENNIS BELLEHUMEUR
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STATE OF MICHIGAN
COURT OF APPEALS
GWYN DAVIDSON,
UNPUBLISHED
July 30, 2002
Plaintiff-Appellee,
v
No. 222814
Wayne Circuit Court
LC No. 95-537258-CZ
DENNIS BELLEHUMEUR,
Defendant-Appellant,
and
GARY SHULTE, PERSONAL THERAPISTS,
INC., STAFFCO SERVICES, INC., and MEDI
STAFF, INC.,
Defendants.
Before: Whitbeck, C.J., and O’Connell and Meter, JJ.
O’CONNELL, J. (dissenting).
I respectfully dissent. Plaintiff and defendant entered into a settlement agreement where
plaintiff agreed to dismiss her claims against defendant. As a result, the trial court entered a
stipulated order of dismissal with prejudice. In my opinion, the trial court abused its discretion
when it decided to set aside the order of dismissal. An agreement to settle a pending lawsuit is a
contract. The present record is devoid of any “extraordinary circumstances” that would allow
the trial court to set aside the settlement agreement. The plaintiff and defendant should be
required to adhere to the terms and conditions of their settlement agreement.
Plaintiff filed suit against defendants in December 1995 in Wayne Circuit Court alleging
that defendants breached their contract with plaintiff promising to pay her for unused sick and
vacation days. Plaintiff’s claims against Staffco Services, Inc., and Medi Staff, Inc., were
dismissed without prejudice in an order entered by the trial court on September 17, 1996 with the
parties’ stipulation. Plaintiff and the remaining defendants then entered into a settlement
agreement where plaintiff agreed to dismiss her claims against defendants in consideration for
$7,500, paid in four monthly payments of $1,875. As a result, the trial court entered a stipulated
order dismissing, with prejudice, plaintiff’s claims against the remaining defendants. However,
when defendant failed to make a payment pursuant to the settlement agreement, plaintiff moved
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to set aside the order of dismissal in May 1997. For reasons unclear from the record, the trial
court did not address the motion.
When defendant failed to make the third and fourth payments under the settlement
agreement, plaintiff filed a motion to set aside the order of dismissal in November 1997 on the
basis of MCR 2.612. Following a hearing the trial court granted plaintiff’s motion without
explanation.1 On December 22, 1998, after defendant failed to respond to interrogatories and
other requests for information, plaintiff filed a motion for default. The trial court granted
plaintiff’s motion for default in an order entered January 8, 1999, and scheduled a hearing on
plaintiff’s motion for default judgment. It appears from the record that before the hearing,
defendant filed a motion for protective order or continuance, arguing that he had only learned of
the default and impending default judgment approximately one week before the hearing on the
default judgment. Defendant further contended that he was unaware of any legal proceedings
that had occurred after the case was initially dismissed with prejudice pursuant to the settlement
agreement. Nonetheless, on July 9, 1999, the trial court entered a default judgment against
defendant in the amount of $33,000.2 Defendant moved for relief from judgment pursuant to
MCR 2.612 on July 26, 1999. During the hearing on the motion, defense counsel questioned the
trial court’s decision to set aside the order of dismissal and reopen the case on the basis of
defendant’s failure to proffer the required consideration. Without articulating its reasoning, the
trial court subsequently denied defendant’s motion in an order entered August 20, 1999.3
On appeal, defendant argues that the trial court abused its discretion in denying his
motion for relief from judgment. “[A]lthough the law favors the determination of claims on the
merits, it also has been said that the policy of this state is generally against setting aside defaults
and default judgments that have been properly entered.” Alken-Ziegler, Inc v Waterbury
Headers Corp, 461 Mich 219, 229; 600 NW2d 638 (1999) (footnote and citations omitted). In
the instant case, defendant framed his motion in a manner that implicated only MCR 2.612, the
court rule governing relief from judgment.4 We review for an abuse of discretion a trial court’s
ruling on a motion for relief from judgment. Heugel v Heugel, 237 Mich App 471, 478; 603
NW2d 121 (1999).
The court rule at issue in the present case, MCR 2.612(C)(1), provides in pertinent part:
On motion and on just terms, the court may relieve a party or the legal
representative of a party from a final judgment, order, or proceeding on the
following grounds:
1
The initial order setting aside the dismissal was entered December 12, 1997. The trial court
later entered another order setting aside the dismissal on July 9, 1999.
2
The July 9, 1999, order also denied defendant’s motion to appear pro hac vice, for a protective
order, and for a continuance of the June 25, 1999, hearing.
3
For reasons unclear from the record, the trial court also entered an order denying defendant’s
motion to set aside the default judgment on September 21, 1999.
4
It is unclear why defendant did not seek to set aside the default judgment on the basis of MCR
2.603(D).
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(a) Mistake, inadvertence, surprise, or excusable neglect.
(b) Newly discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under MCR 2.611(B).
(c) Fraud (intrinsic or extrinsic), misrepresentation, or other misconduct of an
adverse party.
(d) The judgment is void.
(e) The judgment has been satisfied, released, or discharged; a prior judgment on
which it is based has been reversed or otherwise vacated; or it is no longer
equitable that the judgment should have prospective application.
(f) Any other reason justifying relief from the operation of the judgment.
In his brief on appeal, defendant maintains that the trial court improperly refused to grant
relief from the default judgment. Specifically, defendant argues that he was entitled to such
relief given that the default judgment followed from the trial court’s erroneous decision to set
aside the voluntary order of dismissal with prejudice. In this vein, defendant contends that after
the order of dismissal was entered, plaintiff should have pursued other procedural remedies to
enforce the terms of the settlement agreement rather than seeking to have the order of dismissal
set aside. I agree.
As noted above, the trial court entered the stipulated order of dismissal with prejudice on
January 2, 1997. In her May 13, 1997, motion to set aside the order of dismissal, plaintiff solely
argued that the court should set aside the order of dismissal “to allow [plaintiff] to collect[ ]
[the] . . . settlement amount” reflected in the parties’ agreement. Plaintiff also argued that her
motion was supported by MCR 2.612, but did not specify under what subsection of the rule she
relied. Plaintiff later moved again to set aside the order of dismissal on November 20, 1997,
advancing the same grounds for the motion. During the December 12, 1997, hearing on the
motion, plaintiff’s attorney advised the court that defendant had not tendered the consideration
supporting the contract, and that plaintiff was seeking to set aside the order of dismissal on that
basis. Although the trial court granted plaintiff’s motion for relief from judgment, it did not
specify what subsection guided its judgment. However, in her brief on appeal, plaintiff asserts
that the trial court’s judgment was supported by MCR 2.612(C)(1)(f), which provides that relief
from judgment may be granted for “[a]ny other reason justifying relief from the operation of the
judgment.” Specifically, plaintiff maintains that the trial court’s initial decision to reopen the
litigation was proper to ensure that “justice [was] served.”
I disagree with plaintiff that the trial court correctly decided to set aside the order of
dismissal and reopen the litigation where the consideration supporting the settlement agreement
was not paid in full. “[A]n agreement to settle a pending lawsuit is a contract and is to be
governed by the legal principles applicable to the construction and interpretation of contracts.”
Michigan Mutual Ins Co v Indiana Ins Co, 247 Mich App 480, 484; 637 NW2d 232 (2001).
Michigan law favors settlements and a party who proffers adequate consideration to support a
settlement agreement is entitled to rely on its terms. Stefanac v Cranbrook Educational
Community (After Remand), 435 Mich 155, 163; 458 NW2d 56 (1990); see also Faith Reformed
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Church of Traverse City, Michigan v Thompson, 248 Mich App 487, 497; 639 NW2d 831
(2001). As plaintiff recognizes in her brief on appeal, an essential element of a contract is legal
consideration. Yerkovich v AAA, 461 Mich 732, 740; 610 NW2d 542 (2000); see also Thomas v
Leja, 187 Mich App 418, 422; 468 NW2d 58 (1991) (“It is a fundamental principle of contract
law that a [contractual] promise . . . is not binding if made without adequate consideration.”).
However, even if the contract between the parties to settle the pending lawsuit was rendered
unenforceable by defendants’ failure to tender the requisite consideration,5 I am not persuaded
that plaintiff’s proper recourse was relief from judgment under MCR 2.612(C)(1)(f).
As this Court recognized in Heugel, supra at 478-479, for relief to be granted under MCR
2.612(C)(1)(f), the following three requirements must be met: “(1) the reason for setting aside
the judgment must not fall under subsections a through e,6 (2) the substantial rights of the
opposing party must not be detrimentally affected if the judgment is set aside, and (3)
extraordinary circumstances must exist that mandate setting aside the judgment in order to
achieve justice.” Further, relief is usually granted under subsection f only where the judgment
was obtained as a result of the improper conduct of the party in whose favor it was rendered.
Heugel, supra at 479. Likewise, subsection f was not drafted with the intention that it would
“‘relieve a party of the necessity for protecting his interest by normally prescribed procedures.’”
Stallworth v Hazel, 167 Mich App 345, 356; 421 NW2d 685 (1988), quoting Kaleal v Kaleal, 73
Mich App 181, 189; 250 NW2d 799 (1977).
Under the circumstances of this case, I am of the view that the trial court abused its
discretion in setting aside the order of dismissal on the basis of MCR 2.612, given that the record
is devoid of “extraordinary circumstances” warranting the trial court’s action, Limbach v
Oakland Co Bd of Co Rd Comm’rs, 226 Mich App 389, 393; 573 NW2d 336 (1997); Tomblinson
v Tomblinson, 183 Mich App 589, 595; 455 NW2d 346 (1990), or evidence of improper conduct
on the part of defendant that resulted in obtaining the initial judgment of dismissal. Heugel,
supra; Kaleal, supra. Indeed, the parties do not dispute that the order of dismissal was the result
of a settlement agreement reached through a fair and equitable bargaining process.7 Further,
although plaintiff intimates in her brief on appeal that the settlement that formed the basis for the
order of dismissal was derived from defendant’s fraudulent conduct, there is no record support
for her otherwise unsubstantiated claim.8 As this Court concluded in Marshall v Marshall, 135
5
A contract is rendered void by lack of consideration. See, e.g., Yerkovich, supra at 741; Reed v
Citizens Ins Co of America, 198 Mich App 443, 449; 499 NW2d 22 (1993).
6
However, in Heugel, supra at 481, this Court concluded that relief under subsection f is
appropriate “even where one or more of the bases for setting aside a judgment under subsections
a through e are present, when additional factors exist that persuade the court that injustice will
result if the judgment is allowed to stand.”
7
Notably, the settlement agreement does not contain a provision providing for the reopening of
the litigation in the event consideration was not tendered.
8
The present case is therefore distinguishable from our Court’s decision in Coates v Drake, 131
Mich App 687; 346 NW2d 858 (1984), where extraordinary circumstances were found to exist
where the plaintiffs’ attorney negotiated and accepted a settlement on their behalf without their
consent or knowledge, and further stipulated to an order of dismissal regarding the plaintiffs’
claims.
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Mich App 702, 712; 355 NW2d 661 (1984), in considering the predecessor to subsection f, “a
contract bargained for by two equally positioned parties is well outside the reach of this
provision of the court rule.” Further, where the moving party does not allege improper conduct
by the nonmoving party in obtaining the judgment, relief is inappropriate under subsection f. Id.
The thrust of [MCR 2.612(C)(1)(f)] is clearly to free courts from the
fetters of a set of specifically delineated bases for relieving from default whenever
manifest injustice or an unconscionable result flows from the [judgment].
McDonough v General Motors Corp, 6 Mich App 239, 246; 148 NW2d 911
(1967) (emphasis supplied).]
I am not persuaded that plaintiff demonstrated manifest injustice or an unconscionable
result to the extent that the trial court was warranted in granting relief from judgment and
reopening the litigation once the voluntary order of dismissal was entered. Therefore, I agree
with defendant that because the trial court’s July 9, 1999, default judgment necessarily followed
its earlier decision to set aside the voluntary order of dismissal with prejudice, the order should
be reversed.9
I would reverse and remand for proceedings consistent with this opinion.
/s/ Peter D. O’Connell
9
Given the resolution of this issue, I need not address defendant’s alternate arguments on appeal.
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