CRYSTAL DEVELOPMENT LIMITED V SHELDON A HAMILTON
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STATE OF MICHIGAN
COURT OF APPEALS
CRYSTAL DEVELOPMENT, LIMITED,
UNPUBLISHED
December 12, 2000
Plaintiff-Appellee,
v
No. 222579
Iron Circuit Court
LC No. 99-001339-CH
SHELDON A. HAMILTON,
Defendant-Appellant.
Before: Gribbs, P.J., and Kelly and Hoekstra, JJ.
PER CURIAM.
Defendant appeals as of right from a judgment quieting title and ordering partition of real
property once owned by him. Defendant challenges the trial court’s denial of his motion to set
aside the default entered against him for failing to timely file an answer, arguing that he had good
cause and that there was a showing of a meritorious defense to the complaint sufficient to set
aside the default. We reverse.
Defendant, an Illinois resident, in 1965 acquired title to property located in Iron County.
In 1992, the taxes on the property became delinquent. On May 2, 1995, the tax lien on the
property was sold to Harrison and Tinti, a co-partnership consisting of attorneys John L. Harrison
and Steven J. Tinti. A tax deed was issued to Harrison and Tinti in 1996. In February 1997,
Harrison and Tinti quit claimed their interest in the property to plaintiff for the sum of $1. In
addition to serving as plaintiff’s attorney, Tinti was plaintiff’s secretary and treasurer.
In June 1998, more than three years after the property had been sold at tax sale, Tinti
signed as secretary and treasurer of plaintiff, the statutory “Notice by Persons Claiming under
Tax Deed” notifying defendant of his redemption rights. The notice was sent by registered mail
and defendant signed a receipt. The Iron County treasurer verified receipt of this service, and the
following January, a copy of the notice was filed with the treasurer to establish the passing of the
six-month plus thirty-day period that defendant had to redeem the property.
On January 18, 1999, plaintiff filed a complaint to quiet title and to partition the property.
Personal service was made at defendant’s place of business on January 25, 1999. Since
defendant was served out of state with the summons, he had twenty-eight days under MCR 2.108
to answer the complaint, or until Monday, February 22, 1999. However, defendant did not file
an answer by that date. The next day, February 23, 1999, plaintiff filed an application for default
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and non-military affidavit seeking entry of default against defendant for failure to appear, plead,
or otherwise defend the complaint brought against him. The Iron County clerk entered a default
that same day.
Meanwhile, before the expiration of the time to answer the complaint, defendant
contacted attorney John L. Harrison, a co-partner in Harrison and Tinti, the original purchasers of
the tax lien on the land, seeking representation. According to defendant, between the time he
contacted Harrison and the expiration of the time for answering the complaint, Harrison realized
that there was a conflict of interest in his representation of defendant. Defendant was unable to
find adequate representation until after the time for filing an answer to the complaint had expired.
Defendant subsequently retained counsel, and on April 1, 1999 – thirty-eight days after the time
to answer had expired – defendant’s counsel filed a motion to set aside the default and an answer
to the complaint.
Defendant argues that the trial court erred in denying his motion to set aside the default
because it failed to consider whether defendant had shown good cause and a meritorious defense
in his affidavits. MCR 2.603(D)(1) provides that “[a] motion to set aside a default or a default
judgment . . . shall be granted only if good cause is shown and an affidavit of facts showing a
meritorious defense is filed.” The requirements of this court rule, that the moving party
demonstrate good cause and show a meritorious defense, are conjunctive requirements that must
be satisfied by separate inquiries to set aside a default. Alken-Ziegler Inc v Waterbury Headers
Corp, 461 Mich 219, 231-234; 600 NW2d 638 (1999); Barclay v Crown Building &
Development, Inc, 241 Mich App 639, 653; 617 NW2d 373 (2000). Unless there has been a
clear abuse of discretion, a trial court's order denying a motion to set aside an entry of default will
not be set aside. Alken-Ziegler, supra at 227.
Here, the record reveals that in refusing to set aside the default in this case, the trial court
appeared to focus on the good cause inquiry, relying exclusively on the fact that defendant’s
answer was filed more than a month late. However, the circuit court’s mere recitation of the time
that had passed since the expiration for filing an answer was insufficient to fulfill the
requirements of MCR 2.603. Alken-Ziegler, supra at 231-234; see Komejan v Suburban Softball,
Inc, 179 Mich App 41, 49; 445 NW2d 186 (1989) (The trial court failed to exercise its discretion
at all where, based on an erroneous assumption that it had no authority to set aside a default more
than one year after it was entered, it denied defendant’s motion to set aside the default solely
because it was filed more than one year after entry of default.).
We find that the trial court abused its discretion when determining if good cause existed
on the basis of its limited analysis of the amount of time transpiring from receipt of the summons
and complaint to the entry of default to defendant’s filing of both a motion to set aside the default
and an answer to the complaint. The record reveals that defendant attempted to obtain counsel
before an answer was due, but that defendant’s counsel of choice discovered a conflict of interest
and declined to represent defendant in the matter. Defendant thereafter sought and obtained
alternative counsel, but the time to answer the complaint had expired. Defendant’s alternative
counsel filed a motion to set aside the default and an answer to the complaint thirty-eight days
after the time to answer had expired. On these facts, we conclude that defendant had a
reasonable excuse for his failure to file an answer, and therefore good cause existed. See
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Bednarsh v Winshall, 364 Mich 113, 114; 110 NW2d 729 (1961) (Where the defendant had to
seek alternative counsel because his attorney also represented the plaintiff, and the defendant’s
second attorney filed the motion to set aside the default within 15 days after default and three
days after judgment, the Supreme Court concluded that “defendant acted with reasonable care
and dispatch, that the minor delay on the part of the defense resulted from confusion in the
changing of attorneys and that this was seized upon with undue haste by plaintiff.”). Because we
conclude that the trial court abused its discretion in determining good cause and failed to
properly consider the second requirement of MCR 2.603(D)(1), whether defendant had asserted a
meritorious defense, we must reverse for that determination and any further action necessary as a
result of that determination.
Reversed and remanded for further action consistent with this opinion. We do not retain
jurisdiction.
/s/ Roman S. Gribbs
/s/ Michael J. Kelly
/s/ Joel P. Hoekstra
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