EASTERN OIL CO V MARY ERMATINGER
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STATE OF MICHIGAN
COURT OF APPEALS
EASTERN OIL COMPANY,
UNPUBLISHED
August 25, 2009
Plaintiff-Appellant,
v
No. 284286
Oakland Circuit Court
LC No. 05-070411-CZ
MARY ERMATINGER and CADILLAC OIL
COMPANY,
Defendants-Appellees.
EASTERN OIL COMPANY,
Plaintiff-Appellee,
v
No. 284442
Oakland Circuit Court
LC No. 05-070411-CZ
MARY ERMATINGER and CADILLAC OIL
COMPANY,
Defendants-Appellants.
Before: Fitzgerald, P.J., and Talbot and Shapiro, JJ.
TALBOT, J. (dissenting).
I respectfully dissent from the majority opinion reversing the entry of default judgment
by the trial court in this matter.
While, as cited by the majority, “the law favors the determination of claims on their
merits,” Alken-Zeigler, Inc v Waterbury Headers Corp, 461 Mich 219, 229; 600 NW2d 638
(1999), I would also note that it is not the policy of this state to set aside defaults or default
judgments that have been properly entered. Id. at 229; see also Shawl v Spence Bros, Inc, 280
Mich App 213, 221; 760 NW2d 674 (2008). In this instance, based on a thorough review of the
file and pleadings, I believe that sufficient notice was provided to defendants for the valid
effectuation of process.
The majority concludes that defendant, Mary Ermatinger, was “never served” because
neither personal delivery nor certified mailing with a return receipt occurred pursuant to MCR
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2.105(A). The majority concurrently acknowledges that Ermatinger actively avoided service of
process. Contrary to the majority’s position, the failure to technically comply with MCR 2.105
does not render service of process ineffective. Notably, the rules applicable to service of process
“are not intended to limit or expand the jurisdiction given the Michigan courts over a defendant.”
MCR 2.105(J)(1). As a result, strict compliance with the rules is not mandated. MCR
2.105(J)(3); Alycekay Co v Hasko Constr Co, Inc, 180 Mich App 502, 505-506; 448 NW2d 43
(1989). Rather, “[t]his Court has held that service-of-process rules are intended to satisfy the due
process requirement that a defendant be informed of the pendency of an action by the best means
available, by methods reasonably calculated to give a defendant actual notice of the proceeding
and an opportunity to be heard and to present objections or defense.” Bunner v Blow-Rite
Insulation Co, 162 Mich App 669, 673-674; 413 NW2d 474 (1987).
Because the purpose underlying the rules governing service of process is to provide
actual notice of a lawsuit and an opportunity to defend, MCR 2.105(I)(1), courts shall not
dismiss an action based on improper service unless the service failed to inform the defendant of
the existence of a claim within the time specified within the court rules. MCR 2.105(J)(3);
Holliday v Townley, 189 Mich App 424, 425; 473 NW2d 733 (1991). Contrary to the majority’s
opinion, the focus is not on the method of process used to provide the notice but rather on
whether the service used actually provided timely notice of the complaint to an authorized
individual.
With respect to Ermatinger, a process service submitted an affidavit indicating seven
separate attempts to serve Ermatinger at her personal residence. One of these attempts involved
telephone communication between the process server and Ermatinger in an effort to schedule
service, but Ermatinger refused to cooperate in identifying a time to accept service of process.
Ultimately, the process server left the summons and complaint “on the door in an obvious place”
at defendant’s home on November 21, 2005.1 I note that the motion to set aside default and
Ermatinger’s attached affidavit avers “I was [sic] never had knowledge of the Summons and
Complaint served upon me until after a Default was entered.” However, in addition to being
nonsensical, as the affidavit both denies knowledge of the existence of a summons and complaint
while simultaneously appearing to acknowledge service, the affidavit is disingenuous as
Ermatinger does not deny or address receipt of the ex parte motion and order for a temporary
injunction nor the averment of plaintiff’s attorney that he contacted Ermatinger and informed her
of the filing of the complaint and ex parte motion. As this Court observed in Barclay v Crown
Bldg and Dev Inc, 241 Mich App 639, 646; 617 NW2d 373 (2000), citing with approval 1 Dean
& Longhofer, Michigan Court Rules Practice, p 118:
In determining what constitutes “delivery,” the purpose of the service should
always be kept in mind. There is little reason, for example, to require a process
server to trick an evasive defendant into grasping the papers served. Informing
1
It appears that the process server also posted the ex parte motion and order to show cause for
issuance of a temporary injunction, and related pleadings, at Ermatinger’s residence at the same
date and time. The lower court file includes a proof of service indicating the notice of default
was mailed to Ermatinger, at her home address, on December 27, 2005.
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the defendant of the nature of the papers, offering them to the defendant, and
leaving them within the defendant’s physical control ought to suffice to constitute
“delivery.” [Emphasis omitted.]
Further, the validity of Ermatinger’s affidavit submitted in conjunction with defendants’ motion
to set aside entry of default is questionable. The copy contained in the lower court file fails to
indicate that the statements contained in the document are based on personal knowledge. MCR
2.119(B)(1)(c); Regents of the Univ of Michigan v State Farm Mut Ins Co, 250 Mich App 719,
728; 650 NW2d 129 (2002).
Based on a thorough review of the record, I believe Ermatinger’s assertion that she was
not served and that the trial court, therefore, lacked personal jurisdiction cannot be supported.
The documentation in the record clearly establishes that Ermatinger was extremely aware of the
existence of a lawsuit, particularly given the fact that she actively sought to avoid service.
Contrary to defendant’s assertion, a trial court’s refusal to set aside a default judgment should not
be reversed based on a failure to strictly comply with the court rules governing service of process
if the party in default was timely informed of the existence of the action. Alycekay, supra at 506.
Further, I must take strenuous issue with the majority’s contention that the default entered
against Cadillac Oil should be set aside based on this Court’s determination that the process
server was not credible. It is a well-known precept that it is not the role of this Court to make
credibility determinations and that we will not second-guess a trial court’s credibility
determinations. Stallworth v Stallworth, 275 Mich App 282, 286; 738 NW2d 264 (2007). This
is particularly true, given the very explicit determination of the trial court on the issue of
credibility of Cadillac Oil’s resident agent following a hearing:
Honestly, there’s been so much duplicity and chicanery with respect to service in
this that I find that Mr. Pequie [sic] through his demeanor, attitude, and tone is not
credible.
In addition, a review of relevant transcripts contained in the lower court file demonstrates
that Cadillac Oil was also actively avoiding service. Plaintiff’s attorney represented, as an
officer of the court, that he had attempted to serve Cadillac Oil with pleadings through his
runner, who was denied entry to the business. Initially, the process server was also denied access
to the building and did not make successful contact with Cadillac Oil’s resident agent at his
home. Notably, plaintiff’s attorney faxed a copy of the temporary restraining order to the
business and indicated he received proof that the document was successfully transmitted.
Reportedly, the process server did gain access to Cadillac Oil’s place of business and believed he
served the resident agent, who reportedly threw the papers down and denied service had been
effectuated. In addition, on November 29, 2005, a different process server went to Cadillac Oil
to serve a copy of the preliminary injunction. A copy of the document was left at the business
despite the unwillingness of the receptionist, or any other employee present, to physically accept
the documents. While I acknowledge the factual discrepancies or contradictions cited by the
majority regarding service specifically on the identified resident agent, it remains within the
purview of the trial court to make a credibility determination. As with Ermatinger, and given the
active avoidance of service by Cadillac Oil, I believe sufficient documentary evidence exists that
the pleadings were delivered and available to defendant in accordance with the intent of the rules
governing service of process and placing them on notice of the action. Further, the affidavit of
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Cadillac Oil’s resident agent, Roger Piceu, submitted in conjunction with defendants’ motion to
set aside default, suffers from the same deficiencies noted with regard to Ermatinger’s affidavit,
restricting its validity and its legitimate consideration.
Defendants and the majority appear to confuse the basis for setting aside the defaults
from defendants’ arguments pertaining to the damages to be awarded. It is clear that Cadillac
Oil and Ermatinger sought to set aside the defaults by challenging jurisdiction based on lack of
service. Their sole reliance on this position is substantiated by even a cursory review of
defendants’ motion, which addressed only the purported inadequacy of service. This is further
demonstrated by Piceu’s affidavit submitted in conjunction with the motion to set aside the
default, which states in relevant part:
My underlying defenses to this cause of action is that I was never served, that I
am free and entitled to contract and do business with any 3rd Party which I choose.
Even on reconsideration, defendants alleged only the inadequacy of service of process for setting
aside the defaults. Consequently, the trial court correctly resolved defendants’ arguments based
on the content of their pleadings and denied the request to set aside the default on the basis of
service, finding the service of process adequate to meet the intent of the court rules for the
provision of notice and an opportunity to defend.
Unfortunately, both defendants and the majority muddy the waters by then attempting to
suggest alternative bases involving “good cause” and the existence of “meritorious defenses” to
set aside the defaults. However, “good cause” need not be demonstrated, pursuant to MCR
2.603(D)(1), which states:
A motion to set aside a default or a default judgment, except when grounded on
lack of jurisdiction over the defendant, shall be granted only if good cause is
shown and an affidavit of facts showing a meritorious defense is filed. [Emphasis
added.]
As such, I believe the majority, following the arguments put forth by defendants, is confusing the
requirements and the bases under the various court rules for setting aside the defaults.
Arguments pertaining to good cause and meritorious defenses were asserted, not for the setting
aside of the defaults, but rather in conjunction with the ascertainment of damages by the trial
court. Hence the analysis undertaken by the majority, by evaluating good cause and meritorious
defenses, is misplaced with regard to the propriety of the trial court’s denial to set aside the
defaults.
Although I believe that the trial court’s determination to deny defendants’ motion to set
aside the defaults was correct and precludes the necessity of further review of the other issues set
forth, I feel compelled to address the trial court’s award based on the majority’s decision to
remand and the other issues raised in this appeal. Clearly, plaintiff’s pleadings do not contain a
claim for breach of contract with regard to Cadillac Oil. The complaint only alleges the
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existence of a conspiracy between defendants with regard to its claims of misappropriation of
trade secrets and tortious interference with a business relationship.2 As such, Cadillac Oil’s
contention that it cannot be held liable for a breach of contract is moot because the default does
not encompass this claim with regard to this defendant and the final judgment entered by the trial
court does not assign to Cadillac Oil damages pursuant to this claim. It is obvious that the award
of damages by the trial court is very restricted. The damages in the default judgment awarded
plaintiff against Ermatinger are based on the provisions in the non-competition agreement. The
trial court assigned none of these damages to Cadillac Oil and, contrary to plaintiff’s assertion of
joint and several liability, there is no basis for such an assignment. With reference to the
damages awarded to plaintiff against Cadillac Oil, they are minimal and represent only lost
profits calculated for the finite period of time Ermatinger was employed by that defendant.
Further, the trial court denied any continuing injunctive relief to plaintiff based on the natural
expiration of the non-competition agreement. As such, I believe the trial court’s resolution of
this matter to be consistent with the proofs and pleadings put forth by the parties and equitable.
Hence, I would affirm the trial court’s award and judgment, because I believe remand is both in
error and will result in the unnecessary and wasteful expenditure of judicial resources.
/s/ Michael J. Talbot
2
I believe the allegation of conspiracy is not supportable because a cause of action does not exist
for civil conspiracy between a corporation and its agents acting in the scope of their employment.
Blair v Checker Cab Co, 219 Mich App 667, 674; 558 NW2d 439 (1996). However, the claim is
rendered irrelevant based on the trial court’s ultimate decision and award of damages and the
legal recognition that a “conspiracy standing alone without the commission of acts causing
damage would not be actionable. The cause of action does not result from the conspiracy but
from the acts done.” Terlecki v Stewart, 278 Mich App 644, 653; 754 NW2d 899 (2008). As
such, the default on the conspiracy claim is immaterial, as damages were neither awarded nor
attributable to that claim.
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