Cangemi v. Prestige Cadillac, Inc.

Docket Number356069
Decision Date09 June 2022
PartiesSALVATORE CANGEMI, Plaintiff-Appellant, v. PRESTIGE CADILLAC, INC., Defendant-Appellee. SALVATORE CANGEMI, Plaintiff-Appellant, v PRESTIGE CADILLAC, INC., Defendant-Appellee.
CourtCourt of Appeal of Michigan — District of US

UNPUBLISHED

Oakland Circuit Court LC No. 2019-177457-NZ

Macomb Circuit Court LC No. 2020-001510-NZ

Before: Cameron, P.J., and O'Brien and Swartzle, JJ.

PER CURIAM.

In this action arising from plaintiff's purchase of a used automobile from defendant, plaintiff appeals as of right the trial court's order granting defendant's motion for summary disposition under MCR 2.116(C)(7) and (C)(10). The trial court dismissed most of plaintiff's claims under MCR 2.116(C)(7), holding that they were subject to an arbitration clause in the vehicle purchase agreement, and dismissed plaintiff's remaining claim under the Magnuson-Moss Warranty Act (MMWA), 15 USC 2301 et seq., pursuant to MCR 2.116(C)(10). For the reasons set forth in this opinion, we affirm.

I. BACKGROUND

In 2018, plaintiff purchased a used 2016 GMC Yukon from defendant. Plaintiff explained that he found the Yukon on a website and then went to defendant's showroom to see it. Before purchasing it, he spent about three hours at defendant's dealership looking at and discussing the vehicle. He also took it on a test drive and did not notice any problems with it. According to plaintiff, the salesperson told him that the vehicle was a lease turn-in, had only one prior owner, and had gone through the dealership's 72-point inspection. He was also told that the vehicle had not been involved in any accidents. Plaintiff agreed that he knew the vehicle was a used vehicle, but the purchase agreement incorrectly checked boxes indicating that the vehicle was both a "new" and a "demonstrator" vehicle. Plaintiff said that he did not check the vehicle's history through a reporting service, such as CARFAX, before making the purchase. Plaintiff also said he was told that the vehicle was still subject to the manufacturer's warranty.

On the way home from the dealership after making the purchase, the vehicle began to shake on the freeway at speeds over 60 miles per hour. Plaintiff reported the problem to defendant, who agreed to balance the tires, which seemed to address the problem. About three or four weeks later, however, plaintiff noticed that the bumper was melting, which he believed was because the muffler exhaust was too high. Defendant addressed the problem with the bumper, but when plaintiff received the vehicle back, the dashboard lights indicated a problem with the sensors on the vehicle, which were not working. Believing that the vehicle was still under General Motors' warranty, plaintiff took it to two other GM dealerships, both of which indicated that there was damage to the frame that made the vehicle unsafe. There was also damage to the vehicle's wiring, which had been sloppily repaired. Plaintiff learned that the vehicle had previously been involved in an accident and that GM would not honor the manufacturer's warranty due to that accident. Plaintiff took the vehicle back to defendant, who assured him that there was nothing wrong with the frame.

In October 2019, plaintiff brought this action against defendant, alleging claims for (1) fraudulent inducement, (2) breach of warranty of title, (3) breach of express warranties, (4) breach of the implied warranty of merchantability, (5) revocation of acceptance and damages (6) violation of the MMWA, (7) violation of the Michigan Consumer Protection Act, MCL 445.901 et seq., (8) violation of the motor vehicle code, MCL 257.248a, (9) mutual mistake, (10) innocent misrepresentation, and (11) violation of the Motor Vehicle Service and Repair Act, MCL 257.1301 et seq. Service was accomplished by sending a copy of the summons and complaint to the Michigan Secretary of State pursuant to MCL 257.248(4). Although the documents were served on the Secretary of State on October 28, 2019, they were not forwarded to defendant until December 10, 2019. Yet, as of January 15, 2020-over a month after the complaint was forwarded to defendant-defendant had still not responded to the complaint, and, consequently, a default was entered against it. On February 10, 2020, defendant moved to set aside the default, and the trial court granted defendant's motion.

Eventually, in October 2020, after discovery, defendant moved for summary disposition of all of plaintiff's claims. Defendant argued that it was entitled to summary disposition of the MMWA claims under MCR 2.116(C)(10) because it disclaimed any implied warranty and no express warranty was offered. Defendant argued that all other claims were subject to dismissal under MCR 2.116(C)(7) because they were subject to an arbitration clause in the purchase agreement. The trial court granted defendant's motion. This appeal followed.

II. DEFAULT

Plaintiff first argues that the trial court erred by setting aside the default that was entered when defendant failed to timely respond to plaintiff's complaint. We disagree.

This Court "review[s] for an abuse of discretion a trial court's decision on a motion to set aside a default and whether to grant a default judgment." Huntington Nat'l Bank v Ristich, 292 Mich.App. 376, 383; 808 N.W.2d 511 (2011). A trial court abuses its discretion when its decision falls outside the range of principled outcomes. Id.

The policy of this state is generally against setting aside defaults that have been properly entered. Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich. 219, 229; 600 N.W.2d 638 (1999). MCR 2.603(D)(1) provides that "[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 a statement of facts showing a meritorious defense, verified in the manner prescribed by MCR 1.109(D)(3), is filed." Accordingly, a default will not be set aside unless the defaulting party demonstrates both "good cause" and a "meritorious defense." Village of Edmore v Crystal Automation Sys, Inc, 322 Mich.App. 244, 255; 911 N.W.2d 241 (2017). In this case, plaintiff does not contest that defendant demonstrated the existence of a meritorious defense. He argues, however, that the trial court erred by finding that defendant demonstrated good cause to set aside the default.

This Court has explained:

In determining whether a party has shown good cause, the trial court should consider the following factors:
(1) whether the party completely failed to respond or simply missed the deadline to file;
(2) if the party simply missed the deadline to file, how long after the deadline the filing occurred;
(3) the duration between entry of the default judgment and the filing of the motion to set aside the judgment;
(4) whether there was defective process or notice;
(5) the circumstances behind the failure to file or file timely;
(6) whether the failure was knowing or intentional;
(7) the size of the judgment and the amount of costs due under MCR 2.603(D)(4);
(8) whether the default judgment results in an ongoing liability (as with paternity or child support); and (9) if an insurer is involved, whether internal policies of the company were followed.
Neither of these lists is intended to be exhaustive or exclusive. Additionally, as with the factors provided in other contexts, the trial court should consider only relevant factors, and it is within the trial court's discretion to determine how much weight any single factor should receive. [Village of Edmore, 322 Mich.App. at 255-256, quoting Shawl v Spence Bros, Inc, 280 Mich.App. 213, 238-239; 760 N.W.2d 674 (2008).]

In this case, the summons was issued on October 22, 2019. Plaintiff served defendant in accordance with MCL 257.248(4), which provides that a licensed automobile dealer, as a condition precedent to the granting of a license, must stipulate and agree "that legal process affecting the dealer, served on the secretary of state or a deputy of the secretary of state, has the same effect as if personally served on the dealer." According to the proof of service, the complaint and summons were served on the Bureau of Licensing Regulations Division in Lansing, Michigan, on October 25, 2019. According to a letter from the Secretary of State, the documents were received there on October 28, 2019, but were not forwarded to defendant by mail until December 10, 2019. Thus, although service on the Secretary of State was a proper method of service, there was an approximate six-week delay before the Secretary of State forwarded the complaint to defendant, which appears to have received the complaint in mid-December 2019. The default was entered on January 15, 2020, after defendant failed to timely respond to the complaint. Defendant moved to set aside the default on February 10, 2020, which would have been approximately six to eight weeks after it would have received the complaint from the Secretary of State.

We agree with plaintiff that the manner of service, while unusual, was permissible. However, because the delay by the Secretary of State in forwarding the complaint to defendant contributed to defendant's delay in responding to the complaint, it properly can be considered, among other factors, in determining whether defendant demonstrated good cause for setting aside the default. Accordingly, the trial court did not err by considering this factor in determining whether it supported setting aside the default.

Plaintiff complains that the trial court did not address the delay that occurred after the summons and complaint were forwarded to defendant. Defendant primarily attributed this delay to a change in its personnel. Defendant's owner or general manager, Gregory Jackson, filed an affidavit in...

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