BRUCE SPRAGUE V KAREN M BENEFIELD
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STATE OF MICHIGAN
COURT OF APPEALS
BRUCE SPRAGUE and
CINDY SPRAGUE,
UNPUBLISHED
March 16, 2001
Plaintiffs-Appellees,
v
KAREN M. BENEFIELD, DENNIS BENEFIELD,
and SUSAN E. REHAK,
No. 221953
Livingston Circuit Court
LC No. 98-016781-CZ
Defendants-Appellants.
Before: Bandstra, C.J., and Griffin and Collins, JJ.
PER CURIAM.
Defendants appeal as of right from an order granting plaintiffs’ motion for summary
disposition. We affirm.
This case involves an independent action by plaintiffs, pursuant to MCR 2.612(C), to set
aside a default judgment entered in 1995 in the case of Benefield & Rehak v Homeowners
Association Zukey Shores No. 1, lower court file number 94-13634-CZ (the underlying action).
The underlying action was a quiet title suit brought by the present defendants regarding a lake
front lot designated as “Outlot B” in Zukey Shores No. 1, located in Livingston County.1 The
individual lot owners in the subdivision were neither made parties defendant in the action nor
given notice of the complaint either by personal service or mailing. Instead, service of the
complaint was attempted on the sole named defendant, Homeowners Association Zukey Shores
No. 1 (the association), pursuant to substituted service by publication. After the association
failed to answer the complaint or take other action as permitted by law, a judgment of default was
entered in favor of the present defendants. The default judgment in the underlying action gave
defendants ownership of Outlot B by adverse possession.
1
Zukey Shores No. 1 is a subdivision comprised of 33 lots, all of which, except for two lots,
front Zukey Lake. Outlot B fronts Zukey Lake and is situated between the lots owned by
defendants Benefield and defendant Rehak.
-1-
In the present case, the essence of plaintiffs’ complaint is that defendants committed a
fraud on the court in the quiet title action by failing to include the other lot owners of the Zukey
subdivision, including plaintiffs, as parties and failing to provide proper notice to the lot owners.
Plaintiffs allege that they and the other lot owners hold an interest in Outlot B pursuant to a
dedication of the property for the benefit and common use of all lot owners in the subdivision.
Plaintiffs further allege that the named defendant in the underlying action, the association, did
not exist and held no interest in Outlot B.
The circuit court granted the present plaintiffs’ motion for summary disposition pursuant
to MCR 2.116(C)(10). In so doing, the lower court ruled that (1) the dedication was effective – a
recorded plat contained language that expressly dedicated the use of Outlot B to the common use
of all the lot owners in the subdivision, (2) notice in the underlying action was effected by
publication, (3) the order allowing notice by publication was based on the affidavit of
defendants’ previous attorney in the underlying action, (4) the names and addresses of at least
two of the lot owners were known by defendants before the underlying suit was filed, and (5) the
names and addresses of all of the lot owners in the subdivision were available through
examination of the tax rolls. The Honorable Stanley J. Latreille concluded:
I will make the further finding that the affidavit [of defendants’ previous
attorney] upon which it [the order for substitute service] was based was so
sketchy, so lacking in information, and really misleading in light of what we know
to be the facts that it was tantamount to fraud and effectively fraudulent in the
sense that it mislead [sic] the Court into believing that all proper and easily
available or readily available avenues of inquiry had been explored when in fact
that was not the case.
Citing fraud on the court, Judge Latreille set aside the default judgment pursuant to MCR
2.612(C)(3). As a result of the circuit court’s order granting summary disposition and setting
aside the default judgment, title to the property reverted to the owners of record as established
before the entry of the default judgment.
On appeal, defendants argue the trial court erred in granting plaintiffs’ motion for
summary disposition and setting aside the default judgment. The essence of defendants’
argument is that although defendants’ attorney in the underlying action may have been incorrect
in his conclusion that legal interests in the property were not created in the lot owners, there was
no evidence of fraudulent intent on the part of the attorney when he submitted the affidavit to
obtain substitute service on the association. Defendants do not dispute the factual basis of the
lower court’s ruling; rather, they disagree with the trial court’s conclusion that the manner in
which they obtained the default judgment constituted a fraud on the court. Because the trial
court’s factual assumptions, specifically its conclusion that the platted dedication was effective,
have not been challenged by the parties to this appeal, we proceed with our analysis accepting
that plaintiffs are interested parties in quiet title proceedings involving Outlot B.
This Court reviews rulings on motions for summary disposition de novo. Van v Zahorik,
460 Mich 320, 326; 597 NW2d 15 (1999). A trial court “may grant a motion for summary
disposition under MCR 2.116(C)(10) if the affidavits or other documentary evidence show that
there is no genuine issue in respect to any material fact, and the moving party is entitled to
-2-
judgment as a matter of law.” Smith v Globe Life Ins Co, 460 Mich 446, 454-455; 597 NW2d 28
(1999). In addition, all affidavits, pleadings, depositions, admissions, and other documentary
evidence filed in the action or submitted by the parties are viewed “in the light most favorable to
the party opposing the motion.” Id. See also Maiden v Rozwood, 461 Mich 109, 120-121; 597
NW2d 817 (1999). The decision to set aside a default judgment is reviewed for an abuse of
discretion. Ferguson v Delaware Int’l Speedway, 164 Mich App 283, 294; 416 NW2d 415
(1987).
MCR 2.603(D)(3) provides that a “court may set aside an entry of default and a judgment
by default in accordance with MCR 2.612.” MCR 2.612(C)(3) provides:
This subrule does not limit the power of a court to entertain an
independent action to relieve a party from a judgment, order, or proceeding; to
grant relief to a defendant not actually personally notified as provided in subrule
(B); or to set aside a judgment for fraud on the court.
In the context of MCR 2.612(C)(3), a fraud is perpetrated on the court where some
material fact is concealed from the court or some material misrepresentation is made to the court.
Matley v Matley (On Remand), 242 Mich App 100, 101; 617 NW2d 718 (2000); MacArthur v
Miltich, 110 Mich App 389, 391; 313 NW2d 297 (1981). Depriving a party in interest of his or
her rights in a pending cause of action operates as a fraud on that person,2 and failure to advise
the court of the true situation so that arrangements might be taken to give the party his or her day
in court operates as a fraud on the court. Moody v Carnegie, 356 Mich 434, 442; 97 NW2d 46
(1959). In Moody, our Supreme Court recognized the power of a court of equity to grant a
rehearing and set aside an improperly entered decree in order to relieve a party of fraud. In that
case, a quiet title action, the trial court ordered a rehearing where it was shown that the owner of
the property in question was not notified of a hearing affecting her rights in the property. The
record indicated that in addition to the plaintiff’s own attorneys not advising her of the hearing
date, the defendants had not made an earnest effort to discover her identity as true owner for
purposes of serving her with the statutory notice required for them to purchase the property under
a tax sale. An equally divided Supreme Court affirmed the trial court’s determination that the
failure of the defendants to advise the court that they had not actually served the true owner or,
for that matter, the prior owner (who would most likely have contacted its successor in interest),
constituted a fraud on the court:
Defendants have appealed from the decree entered, claiming that the trial
court had no jurisdiction to grant the rehearing, and in any event that he abused
his discretion in so doing. Emphasis is placed on the failure of the trial judge to
specifically find that defendant William Carnegie was guilty of fraud. It is
apparent, however, that in granting the petition the judge was convinced from the
2
Moreover, in Mullane v Central Hanover Bank & Trust Co, 339 US 306, 314; 70 S Ct 652; 94
L Ed 865 (1950), the United States Supreme Court held that notice, reasonably calculated to
apprise interested parties of the pendency of the action and afford them an opportunity to defend,
is a fundamental and elementary requirement of due process in any action which is to be
accorded finality. US Const, Am XIV.
-3-
showing made that the rights of plaintiff had not been properly protected. It may
be noted in this connection that on the first hearing defendant William Carnegie,
called for cross-examination under the statute, stated that he had contacted the
Briggs Commercial & Development Company for the purpose of inquiring if that
corporation was still the owner of the lot. He was advised that the property had
been sold, and that it would be necessary to check records to determine the
purchaser or purchasers. Defendant did not further pursue the inquiry, but did
check the records in the office of the county treasurer, which apparently indicated
that the lot had been assessed to A. Moody. It is a fair inference that the notice of
the tax sale and amount necessary for redemption was prepared in reliance on the
treasurer’s record. That defendant did not make an earnest effort to discover the
then owner, or the residence thereof, is evident. Neither did he cause service to be
made on the Briggs Commercial & Development Company which was at the time
the owner of record. Had he done so, it is quite probable that the corporation
would have endeavored to contact its successor in title.
***
Depriving plaintiff of her rights to have her cause of action properly presented to
the court through her own testimony operated as a fraud on her. Failure to advise
the trial judge of the true situation to the end that arrangements might be taken to
obtain her testimony was a fraud on the court whose duty it was to see that justice
in the cause was properly administered. It is no answer to the situation presented
to say that defendants are not shown to have been parties to the fraudulent
conduct in question, nor are we concerned at this time with the reasons for the
failure of those who owed plaintiff the duty to advise that the case was set for
trial, and that she should be prepared to testify, to observe such duty. Regardless
of motives, the result was not in accord with her just rights. The consequences
must fall on defendants to the extent of precluding them from profiting as a result
of the failure to inform plaintiff, and the trial judge, of facts that both were
entitled to know. On discovering the true situation as set forth in the
uncontroverted sworn statements of the plaintiff in her application for relief the
trial judge proceeded to remedy the injustice that had been done in the only
effective way that was open to him. [Id. at 437-438, 441-442 (emphasis added).]
Thus, a fraud on the court may arise where there has been a corruption of the impartial
functions of a court due to an intentional or unintentional material misrepresentation by a party. 3
3
See also Adair v Cummins, 48 Mich 375, 382-383; 12 NW 495 (1882), in which the Court,
addressing a disproportionate division of property by court-appointed commissioners in a
partition case, stated,
[I]t is not the meaning of the court that the commissioners were really
actuated by a specific and sedate design to perpetrate a cheat. But the view is that
they fully intended to act precisely as they did, and that whatever notion was in
(continued…)
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A situation analogous to that in Moody exists in the present case, and we can conclude with
relative certainty, as the Moody Court did, that “[h]ad the trial judge been advised that plaintiff
had not been notified of the hearing and given an opportunity to be present and testify in her own
behalf, it is quite probable that the decree dismissing the case would not have been made.” Id. at
439.
MCR 3.411(B)(2)(b), applicable to civil actions to determine interests in land, provides
that “[t]he complaint must allege . . . the interest the defendant claims in the premises[.]”
Further, MCL 600.2932(1); MSA 27A.2932(1) provides:
Any person, whether he is in possession of the land in question or not, who
claims any right in, title to, equitable title to, interest in, or right to possession of
land, may bring an action in the circuit courts against any other person who claims
or might claim any interest inconsistent with the interest claimed by the plaintiff,
whether the defendant is in possession of the land or not. [Emphasis added.]
MCR 2.205(A) mandates that
Subject to the provisions of subrule (B) and MCR 3.501, persons having
such interests in the subject matter of an action that their presence in the action is
essential to permit the court to render complete relief must be made parties and
aligned as plaintiffs or defendants in accordance with their respective interests.
The affidavit of defendants’ attorney submitted to the court in the underlying action in order to
procure alternate service of process by publication on the association stated:
I . . . being duly sworn deposeth and say that diligent inquiry has been
made of the public record and the individuals most likely to have knowledge
regarding the Defendant and service of process has been unable to be effectuated.
Admitting on appeal that “[p]erhaps [their attorney] was ultimately incorrect in his ‘legal’
assessment of who was the ‘interested party,’ ” defendants nonetheless argue that a fraud on the
court based on the above affidavit did not occur because the attorney did in fact make inquiry
concerning “Homeowners Association Zukey Shores No. 1” and it is a fact that no such entity
could be personally served.4 This logic is myopic and ignores the heart of the matter – the simple
inquiries that were not, but should have been, made by defendants to ensure the inclusion of all
interested parties in the quiet title suit and divulged to the trial court to allow for the proper and
complete disposition of the action.
(…continued)
point of fact in their minds the court in judging of the proceeding in reference to
its quality in equity is bound to construe it as fraudulent.
4
Indeed, plaintiffs maintain that the association does not even exist, and no proofs to the contrary
have been advanced by defendants.
-5-
The record indicates that in the underlying action, defendants searched through various
public records but were unable to locate the association, the entity they presumed to be the
interested party defendant in the quiet title action. Despite the failure to locate the association or
garner a response from it following issuance of the ex parte order allowing service of process by
publication, defendants proceeded with their cause of action against the association alone,
culminating in the default judgment. However, as the trial court noted, the interests of all the
subdivision property owners, including plaintiffs, in Outlot B were readily ascertainable from a
review of the tax rolls, and the names and addresses of at least two of the lot owners were known
by defendants before the underlying suit was filed. Moreover, a recorded plat contained language
that expressly dedicated the use of outlot B for all the owners in the subdivision. This
information, critical to the legitimacy of defendants’ action to quiet title, see MCR
3.411(B)(2)(b), MCL 600.2932(1); MSA 27A.2932(1), and MCR 2.205(A), supra, was a matter
of public record that was never properly explored by defendants before filing their motion for a
default judgment against the nonexistent homeowners association. Plaintiffs and the subdivision
lot owners should have been named as parties in the underlying action and were entitled to
service of process pursuant to MCR 2.105(A), not service by publication, unless there was a
showing that service could not be effected.
We therefore agree with the circuit court’s ruling that defendants misled the court in the
underlying action into believing that all proper and readily available avenues of inquiry into
affected property interests had been explored when in fact that was not the case. As in Moody,
supra at 437, defendants failed to make an “earnest effort” to determine ownership rights in
Outlot B. Whether intentional or otherwise, defendants failed to disclose the material fact that
plaintiffs and the other lot owners had an interest in the property on the basis of the dedication
and should have been named as party defendants in the action to quiet title. Conversely, a
material fact was misrepresented to the court -- that the association was the proper and only
defendant. There is little doubt from the record before us that had the court been aware of
plaintiffs’ interest in the quiet title action, the default judgment would not have been issued.
Reiterating the Moody Court’s observations, “[r]egardless of motives, the result was not in
accord with [the plaintiff’s] just rights. The consequences must fall on defendants to the extent
of precluding them from profiting as a result of the failure to inform plaintiff, and the trial judge,
of facts that both were entitled to know.” Id. at 442.
In the absence of a genuine issue of material fact that defendants failed to effect personal
service or service of process by mail on plaintiffs as interested parties in the underlying action,
the lower court did not err in granting summary disposition pursuant to MCR 2.116(C)(10). In
this regard, we hold that Judge Latreille did not abuse his discretion in ruling that a material
misrepresentation was made with regard to the proper parties in the underlying action, which
warranted setting aside the default judgment to avoid an injustice.
Defendants next contend the trial court abused its discretion in failing to hold an
evidentiary hearing to determine whether there was fraud on the court.5 Because plaintiffs’
5
Plaintiffs claim that defendants failed to preserve this issue for appeal. Although defendants
did not make a request for an evidentiary hearing, we hold that the issue is preserved because of
(continued…)
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action was based on fraud on the court, defendants’ argument is that summary disposition should
not have been granted pursuant to MCR 2.116(C)(10), and a trial should have taken place. We
have already concluded, as a matter of law, that based on undisputed facts summary disposition
was properly granted to plaintiffs pursuant to MCR 2.116(C)(10); therefore, no trial was
necessary on the issue of fraud on the court and the trial court did not abuse its discretion in this
regard. Rapaport v Rapaport, 185 Mich App 12, 16; 460 NW2d 588 (1990).
In any event, an evidentiary hearing was not mandated under the circumstances. MCR
2.119(E)(2) provides that “[w]hen a motion is based on facts not appearing of record, the court
may hear the motion on affidavits presented by the parties, or may direct that the motion be heard
wholly or partly on oral testimony or deposition.” (Emphasis added.) Relying on MCR
2.119(E)(2), this Court in Williams v Williams, 214 Mich App 391, 399-400; 542 NW2d 892
(1995), held that an evidentiary hearing was not required on the issue whether a fraud on the
court occurred, stating:
While recognizing that the level of proof relating to allegations of fraud is
“of the highest order,” we believe that the trial court itself is best equipped to
decide whether the positions of the parties . . . mandate a judicial assessment of
the demeanor of particular witnesses in order to assess credibility as part of the
fact-finding process. Some motions undoubtedly will require such an assessment,
e.g., situations in which “swearing contests” between two or more witnesses are
involved, with no externally analyzable indicia of truth. Other motions will not,
e.g., situations in which ascertainable material facts are alleged, such as the
contents of a bank account on a particular day. Where the truth of fraud
allegations can be determined without reference to demeanor, we do not believe
that the law requires a trial court to devote its limited resources to an in-person
hearing.
Finally, defendants argue that plaintiffs did not own any property in the subdivision at the
time the underlying suit was filed and service attempted; therefore, plaintiffs lack standing in the
present case to set aside the judgment.6 Questions of law are reviewed de novo. Franklin
(…continued)
the nature of the summary disposition motion. Plaintiffs’ action to set aside the default judgment
was based on an allegation of fraud on the court, and plaintiffs filed a motion for summary
disposition pursuant to MCR 2.116(C)(10) arguing that there was no genuine issue of fact that
fraud on the court occurred and that the default judgment should be set aside; therefore, a trial on
the issue was unnecessary. By defendants simply challenging the (C)(10) motion, which they
did, defendants were essentially arguing that a trial or evidentiary hearing was necessary because
there were issues of fact. Therefore, the issue has been preserved for appeal.
6
Plaintiffs argue that defendants waived any claim based on lack of standing pursuant to MCR
2.116(D)(2). Although plaintiffs do not specify, we assume plaintiffs are claiming that the lack
of standing defense falls under MCR 2.116(C)(5), which provides for summary disposition
where “[t]he party asserting the claim lacks the legal capacity to sue.” In Leite v Dow Chemical
(continued…)
-7-
Historic Dist Study Committee v Village of Franklin, 241 Mich App 184, 187; 614 NW2d 703
(2000).
MCR 2.201(B) provides that “[a]n action must be prosecuted in the name of the real party
in interest[.]” As explained by this Court in In re Foster, 226 Mich App 348, 358; 573 NW2d
324 (1997):
In order to have standing, a party must have a legally protected interest
that is in jeopardy of being adversely affected. Solomon v Lewis, 184 Mich App
819, 822; 459 NW2d 505 (1990). In Bowie v Arder, 441 Mich 23, 42-43; 490
NW2d 568 (1992), the Supreme Court, quoting 59 Am Jur 2d, Parties, § 30, p
414, noted that
“[o]ne cannot rightfully invoke the jurisdiction of the court to enforce private
rights, or maintain a civil action for the enforcement of such rights, unless one has
in an individual or representative capacity some real interest in the cause of
action, or a legal or equitable right, title, or interest in the subject matter of the
controversy. This interest is generally spoken of as ‘standing.’”
Plaintiffs have an interest in a lot located in the subdivision that gives plaintiffs an
interest in the property at issue. Accordingly, plaintiffs’ interest will be jeopardized if the default
judgment is not set aside. Defendants cite no authority to support their proposition that a court
must look at a person’s standing at the time of the original action to determine standing at the
time an action is undertaken to set aside a judgment. Parties may not leave it to this Court to
search for authority in support of their position. In re Toler, 193 Mich App 474, 477; 484 NW2d
672 (1992).
Defendants’ argument does not allow an injured party redress, but would potentially
allow redress for a past owner who now does not own any lot in the subdivision. We note that
MCR 3.411(H) provides that a judgment determining an interest in land only determines the
rights of parties involved in the action. Because plaintiffs and the other lot owners were never
made parties in the underlying action, their rights in the property were not determined, and the lot
owners, including plaintiffs, would have standing to file a quiet title action regarding the
property. Without setting aside the default judgment, there would exist, and did exist, two
competing legal interests in the property. Defendants still have the opportunity to proceed with
the action to quiet title based on adverse possession.
(…continued)
Co, 439 Mich 920; 478 NW2d 892 (1992), our Supreme Court held that a defense based on a
claim that a party was not a real party in interest (standing) is not the same as a claim that a party
lacked the legal capacity to sue. The Court further held that a motion for summary disposition
based on the real party in interest defense should be brought pursuant to MCR 2.116(C)(8) or
(10) based on the pleadings or other circumstances of the particular case. Id. A (C)(8) or (C)(10)
motion may be brought at any time pursuant to MCR 2.116(D)(3). Therefore, plaintiffs’
argument that defendants waived the defense lacks merit.
-8-
Defendants’ argument that plaintiffs were bound by the inaction of their predecessors in
interest and could not bootstrap to acquire standing lacks merit. The inaction of plaintiffs’
predecessors in interest was caused by defendants’ failure to properly identify the parties in
interest and give proper notice pursuant to MCR 2.105(A). Plaintiffs had a personal stake in
setting aside the judgment at the time their complaint was filed; therefore, they had standing, and
the trial court did not err in granting plaintiffs’ motion for summary disposition.
Affirmed.
/s/ Richard A. Bandstra
/s/ Richard Allen Griffin
/s/ Jeffrey G. Collins
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