Groulx v. Carlson

• Citation: 176 Mich.App. 484,440 N.W.2d 644
• Decision Date: 05 June 1989
• Docket Number: Docket No. 107247
• Parties: Roy GROULX and Janet M. Groulx, Plaintiffs-Appellees, v. Kenneth D. CARLSON and Dolores P. Carlson, Defendants-Appellants.
• Court: Court of Appeal of Michigan (US)

Page 644

440 N.W.2d 644

176 Mich.App. 484

Roy GROULX and Janet M. Groulx, Plaintiffs-Appellees, v. Kenneth D. CARLSON and Dolores P. Carlson, Defendants-Appellants.

Docket No. 107247.

Court of Appeals of Michigan.

Submitted Feb. 14, 1989.

Decided April 17, 1989.

Released for Publication June 5, 1989.

Jennings & Turkelson, P.C. by Eugene I. Turkelson, West Branch, for plaintiffs-appellees.

Fregolle & Fregolle, P.C. by Paul E. Fregolle, Southfield, for defendants-appellants.

Before HOOD, P.J., and WAHLS and NEFF, JJ.

WAHLS, Judge.

Defendants, Kenneth D. Carlson and Dolores P. Carlson, appeal as of right from a February 23, 1988, order of the Roscommon Circuit Court denying their motion to set aside a December 18, 1987, consent judgment. The consent judgment between defendants and plaintiffs, Roy E. Groulx and Janet M. Groulx, was in settlement of plaintiffs' action for claim and delivery and breach of contract stemming from defendants' default on obligations incurred in connection with the purchase of plaintiffs' septic cleaning business, The Apex Company. Entry of the consent judgment was preceded by a conference in the chambers of the circuit judge on the morning of December 14, 1987, at which counsel, the court clerk, and the court reporter were present and at which the terms of the proposed consent judgment, acknowledged to be "a correct statement of the agreement" by defendants' attorney, were orally read into the record by plaintiffs' attorney. On appeal, defendants contend, in essence, that the circuit court erred in denying their motion to set aside the consent judgment because the agreement upon which it was based was not binding. More specifically, defendants argue that the agreement was not binding because it was not made in "open court," as required by MCR 2.507(H); was not based on a meeting of the minds; and included elements of mistake, excusable neglect, and fraud meriting relief under MCR 2.612(C)(1)(a) and (c). We affirm.

The record reveals that on the morning of December 14, 1987, the date set for trial in this case, counsel advised the court that a settlement had been reached. Since a jury had already been assembled in the courtroom, the judge, the court clerk, the court reporter, and the parties' counsel convened in the judge's chambers in order to permit counsel to enter the terms of the parties' agreement on the record. Those terms were recited by plaintiffs' counsel as follows:

"Now comes the parties hereto and hereby stipulate and agree as follows: One: That a consent judgment shall issue against the defendants and in favor of the plaintiffs in the amount of $45,000.

"Two: That defendants shall pay within five business days the sum of $10,000 to plaintiffs.

"Three: That the balance of $35,000 shall bear interest at the rate of ten percent per annum and shall be paid to plaintiffs in monthly installments of $500 or more commencing January 14th, 1988, and the 14th of every month thereafter for a period of 36 months, whereupon the entire balance shall be due.

"Four: Plaintiffs shall forego any collection or mediation sanctions as long as defendants remain current, that is, within ten days, then plaintiffs may accelerate the balance and take such steps to enforce the judgment as may be permitted by statute and court rule.

"Five: No costs, sanctions or interest to date shall be awarded to either party, and all equipment seized pursuant to court order shall be returned to defendants upon payment of the initial $10,000. That will be signed by all parties."

Defendants' counsel then indicated his clients' knowledge of, and consent to, the terms of the agreement as follows:

"That is a correct statement of the agreement. I have read the agreement to my client, and he has agreed to it. His wife, who is probably in this matter only due to the fact she is Mr. Carlson's wife, has also indicated she will agree to it. I can take this over to my office and have it typed right now."

After this agreement was placed on the record, the court excused the jury.

At the hearing on December 18, 1987, on a motion for entry of consent judgment, the trial judge, noting that "I have to rely on counsel who tell me [that a case] is settled," signed the proposed consent judgment. Moreover, at the hearing held on January 26, 1988, on defendants' motion to set aside the consent judgment, the trial judge indicated that at the December 14, 1987, proceeding, "certainly it was represented to me by both attorneys that they had already talked to their clients" and that "I have had a lot of experience in this kind of matter, and I was fully satisfied that both of these attorneys could bind their clients by a stipulation, and a stipulation made sense to me, and I accepted it on the record." "[N]o way was I going to let that jury go," the trial judge stated, "unless I knew we had the thing dismissed."

On appeal, defendants first argue that the circuit court erred in denying their motion to set aside the consent judgment because the agreement among the parties upon which the judgment was based was not made in "open court," as required by MCR 2.507(H). That court rule provides:

"An agreement or consent between the parties or their attorneys respecting the proceedings in an action, subsequently denied by either party, is not binding unless it was in open court, or unless evidence of the agreement is in writing, subscribed by the party against whom the agreement is offered or by the party's attorney."

Defendants suggest that the agreement in this case was a mere informal, in-chambers understanding and thus was not binding upon them under MCR 2.507(H). In support of their position, defendants cite cases holding that a court, in order to be "open," must have a judge presiding, ¹ an alleged off-the-record agreement reached in the chambers of a trial judge was not made in "open court," ² and an oral agreement to settle reached by the parties' attorneys was not made in "open court." ³ These cases are distinguishable from the instant litigation since the settlement in the present matter was formally placed on the record at a proceeding presided over by the trial judge.

The facts in this case are not essentially dissimilar from those in Pedder v. Kalish, 26 Mich.App. 655, 182 N.W.2d 739 (1970). In that case, following protracted settlement discussion in chambers with the trial judge and with plaintiffs and defendants, the attorneys made a record in open court--presumably, in the courtroom--of an agreement which had been reached. Subsequently, the defendants expressed an unwillingness to abide by the settlement terms, and the plaintiffs moved for entry of a judgment pursuant to the stipulated settlement. The trial court declared the settlement void and placed the case on the trial calendar. This Court reversed and remanded the case for entry of judgment in conformity with the stipulated settlement, citing GCR 1963, 507.9, the predecessor of MCR 2.507(H), and noting that "[w]e cannot agree that litigants are free to disregard a settlement agreement knowingly entered into on the court record and, as to which, mistake, fraud, or unconscionable advantage is not claimed." 26 Mich.App. at 657, 182 N.W.2d 739. "Compromise of pending controversies are [sic] favored by the courts," the Pedder panel stated, "and will only be voided on satisfactory evidence of mistake, fraud, or unconscionable advantage." 26 Mich.App. at 658, 182 N.W.2d 739.

The main distinguishing factor between Pedder and the present case is that the record of the settlement agreement was generated in the courtroom in the former and in the chambers of the trial judge in the latter. In both, however, the agreement was read aloud by the parties' attorneys in the presence of the trial judge, the court clerk, and the court reporter, all of whom had formally convened for court business. We believe that it is the formality of recorded court business, rather than the physical presence of the participants in a courtroom, which is the hallmark of a proceeding which may be described as constituting an "open court" session. Thus, we agree with the following observations of the New York Court of Appeals:

"The term 'open court' as it has been used since ancient times and as, it will be suggested, it is used in CPLR 2104, is a technical term in the law. It refers to a judicial proceeding in a court, whether held in public or private, and whether held in the court house, a courtroom, or any place else, so long as it is, in an institutional sense, a court convened, with or without a jury, to do judicial business. Typically, in a court of record an open court has in attendance a clerk who makes entries of judicial events in a docket, register, or minute book, and in modern times there is a court reporter, who makes a record of all the proceedings.

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"Judicial proceedings in 'open court', wherever held, including...