Alycekay Co. v. Hasko Const. Co., Inc., Docket No. 104640

• Decision Date: 21 November 1989
• Docket Number: Docket No. 104640
• Parties: ALYCEKAY COMPANY, a registered Michigan copartnership, Plaintiff, v. HASKO CONSTRUCTION COMPANY, INC., a Michigan corporation, and Pyramid Construction, a Michigan corporation, Defendants, Cross-Plaintiffs, Appellees, v. C. JORDAN & SON, INC., a Michigan corporation, Defendant, Cross-Defendant, Appellant, and John Stevens Associates, Inc., a Michigan corporation, Reliance Insurance Company, a Pennsylvania corporation, and Owens-Corning Fiberglas, a foreign corporation, Defendants. 180 Mich.App. 502, 448 N.W.2d 43
• Court: Court of Appeal of Michigan — District of US

Page 43

448 N.W.2d 43

ALYCEKAY COMPANY, a registered Michigan copartnership, Plaintiff, v. HASKO CONSTRUCTION COMPANY, INC., a Michigan corporation, and Pyramid Construction, a Michigan corporation, Defendants, Cross-Plaintiffs, Appellees, v. C. JORDAN & SON, INC., a Michigan corporation, Defendant, Cross-Defendant, Appellant, and John Stevens Associates, Inc., a Michigan corporation,

Reliance Insurance Company, a Pennsylvania

corporation, and Owens-Corning

Fiberglas, a foreign

corporation,

Defendants.

Docket No. 104640.

180 Mich.App. 502, 448 N.W.2d 43

Court of Appeals of Michigan.

Submitted March 15, 1989.

Decided Aug. 1, 1989.

Released for Publication Nov. 21, 1989.

[180 MICHAPP 503] Kohl, Secrest, Wardle, Lynch, Clark & Hampton by Michael L. Updike, Farmington Hills, for Hasko Const. Co., Inc.

[180 MICHAPP 504] Gromek, Bendure & Thomas by John A. Lydick, Detroit, for C. Jordan & son, inc.

Before DOCTOROFF, P.J., and MAHER and MARILYN J. KELLY, JJ.

PER CURIAM.

Appellant, C. Jordan & Son, Inc., appeals as of right from the circuit court's order denying its motion to set aside a default judgment. We affirm.

Plaintiff, Alycekay Company, brought suit for property damage resulting from faulty installation of a building roof. Appellees Pyramid Construction and Hasko Construction Company, Inc., acting as a joint venture, were the general contractors. Jordan was a subcontractor providing labor and materials for the roof installation. When plaintiff filed suit, Jordan was in Chapter 11 bankruptcy. Hasko and Pyramid sought and obtained an order from the bankruptcy court lifting the automatic stay of proceedings against Jordan. On November 3, 1986, Hasko and Pyramid filed a cross-complaint against Jordan seeking indemnification for damages which the court might award against them. They mailed a copy of the cross-complaint to Jordan's trustee in bankruptcy.

When Jordan did not respond by November 19, Hasko and Pyramid mailed a document entitled "Notice of Intention to Take Default" to Jordan's trustee. Hearing was scheduled for November 26. Five days later Hasko and Pyramid mailed the trustee a notice of hearing on their motion for default judgment scheduled for December 10. A renotice of hearing for December 17 was also mailed. At the December 17 hearing, the trial court granted a default judgment in the amount of $59,442.28. Counsel for Hasko and Jordan served a true copy of it on Jordan's trustee.

[180 MICHAPP 505] Seven months later, on July 17, 1987, Jordan filed a motion to set aside the default judgment. The trial court denied the motion.

Whether a default judgment should be set aside is a decision within the sound discretion of the trial court. It will not be reversed on appeal absent a showing of clear abuse of discretion. Dollar Rent-A-Car Systems v. Nodel Const., 172 Mich.App. 738, 741, 432 N.W.2d 423 (1988); Deeb v. Berri, 118 Mich.App. 556, 325 N.W.2d 493 (1982). The moving party must demonstrate both good cause and a meritorious defense. Deeb, supra at p. 561, 325 N.W.2d 493. Good cause includes: (1) a substantial irregularity or defect in the proceeding upon which the default was based; (2) a reasonable excuse for failure to comply with the requirements that created the default; or (3) some other reason showing that manifest injustice would result if the judgment were allowed to stand. Reed v. Walsh, 170 Mich.App. 61, 64, 427 N.W.2d 588 (1988).

Jordan attempts to demonstrate good cause based on substantial defects or irregularities in the proceeding. It cites the failure of Hasko and Pyramid to mail a complaint, summons and notice of intent to take a default to Jordan's corporate office. It complains also of their omission to file a default and affidavit of default. The trial court, citing Bunner v. Blow-Rite Insulation Co., 162 Mich.App. 669, 413 N.W.2d 474 (1987), concluded that the failure to send the pleadings to the corporate office was not a substantial defect. The court did not address the failure to file a default.

MCR 2.105(D)(2) provides that service of process on a corporation in bankruptcy may be made by serving the trustee and mailing a copy of the complaint to the corporation's principal office. Pyramid admits that it did not mail a copy of the complaint to Jordan's principal office. Where service [180 MICHAPP 506] of process is defective, the trial court may be deprived of personal jurisdiction over the defendant and left without legal authority to render a judgment. Dogan v. Michigan Basic Property Ins. Ass'n, 130 Mich.App. 313, 320, 343 N.W.2d 532 (1983).

We conclude that the failure to mail a copy of the complaint to...