Levitt v. Kacy Mfg. Co.
| Decision Date | 12 July 1985 |
| Docket Number | Docket No. 76944 |
| Citation | 370 N.W.2d 4,142 Mich.App. 603 |
| Parties | Lewis A. LEVITT and Roberta B. Levitt, Plaintiffs-Appellees, v. KACY MANUFACTURING COMPANY, Defendant-Appellant. 142 Mich.App. 603, 370 N.W.2d 4 |
| Court | Court of Appeal of Michigan — District of US |
[142 MICHAPP 604] Joseph D. Zeleznik, Pontiac, Bruce T. Leitman, Bloomfield Hills, for plaintiffs-appellees.
[142 MICHAPP 605] Vandeveer, Grazia, Tonkin, Kerr, Heaphy, Moore, Sills & Poling, P.C., by Thomas M. Peters, Birmingham, for defendant-appellant.
Before WAHLS, P.J., and MAHER and NOBLE *, JJ.
In this product liability suit, default judgment was entered in favor of plaintiffs, in the amount of $114,300 for Lewis Levitt and $15,000 for Roberta Levitt. Defendant appeals as of right both from the order denying its motion to set aside the default and from the default judgment. We believe the circuit judge abused her discretion in failing to set aside the default. Accordingly, we set aside the default and default judgment and remand for trial.
Defendant failed timely to appear in circuit court due to the mishandling of the summons and complaint by an agent or former agent of its insurer. Following is a chronology of the events leading to the default judgment:
November 10, 1983. The complaint was filed in Oakland County Circuit Court.
November 14, 1983. Service of process was made upon defendant in Illinois. The summons and complaint were delivered to defendant's insurance broker, which in turn passed them on to an insurance management company.
November 16, 1983. The papers were received by Curt Arndt of Transco, an underwriting and claims management facility. Transco's relationship with defendant's insurer had apparently been severed effective 9/30/83.
December 15, 1983. Plaintiffs filed default and [142 MICHAPP 606] affidavit of default. Defendant was not served with notice of this act.
December 27, 1983. Curt Arndt notified plaintiff's attorney that defendant's insurer was in receivership and no work would be done on the case until 1/27/84; Arndt forwarded the summons and complaint to defendant's insurer with a note that a filing extension had been granted.
January 3, 1984. Plaintiffs filed a motion for default judgment.
January 19, 1984. Defense counsel filed an appearance.
January 25, 1984. Defense counsel filed an answer, demand for jury trial and motion to set aside default.
February 1, 1984. Oakland Circuit Judge Hilda Gage denied the motion to set aside because, although the affidavit of facts showed a meritorious defense, defendant had not shown "excusable neglect or whatever the applicable language is".
February 8, 1984. Following a hearing on damages, default judgment was awarded plaintiffs in the amount stated above.
February 17, 1984. A written order denying the motion to set aside default was entered and stated in part that the Court "finds no excusable neglect of good cause".
It is evident that, after being served, defendant promptly placed the summons and complaint in the normal channels leading to its insurer. The papers passed rapidly and successfully through two levels before going astray. Curt Arndt apparently should never have received the papers, but, in any event, he had no explanation why, having [142 MICHAPP 607] received them, he took no action on them for more than a month. Plaintiffs' attorney admits receiving a phone call from Arndt on December 27, 1983, but denies that he gave a filing extension or was even asked for one. With this one exception, there is no dispute over the facts.
The policy of this state favors the meritorious determination of issues and encourages the setting aside of defaults. Wood v. Detroit Automobile Inter-Ins. Exchange, 413 Mich. 573, 585-586, 321 N.W.2d 653 (1982); Bigelow v. Walraven, 392 Mich. 566, 574, 221 N.W.2d 328 (1974); Walters v. Arenac Circuit Judge, 377 Mich. 37, 47, 138 N.W.2d 751 (1966) (O'Hara, J.), quoted in Freeman v. Remley, 23 Mich.App. 441, 448, 178 N.W.2d 816 (1970).
We realize that this Court on occasion has stated that "the policy of this state is against setting aside defaults and default judgments that have been properly entered". Dogan v. Michigan Basic Property Ins. Ass'n, 130 Mich.App. 313, 320, 343 N.W.2d 532 (1983); Thomas v. Jones, 120 Mich.App. 191, 192, 327 N.W.2d 433 (1982). However, in Dogan, supra, and Thomas, supra, this Court focused on the default judgments and did not separately consider the defaults. Therefore, we do not believe that the policy stated in those cases was intended to apply to the instant case where defendant has separately preserved its objection to the circuit court's denial of its motion to set aside the default.
GCR 1963, 520.4 provides in part:
[142 MICHAPP 608] The "good cause" requirement may be satisfied by showing:
"(1) a substantial defect or irregularity in the proceedings upon which the default was based, (2) a reasonable excuse for failure to comply with the requirements which created the default, or (3) some other reason showing that manifest injustice would result from permitting the default to stand." 2 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 662, quoted in Bigelow, supra, 392 Mich. p. 576, fn. 15, 221 N.W.2d 328.
Consistent with the differing policies of this state toward setting aside defaults and default judgments as noted above, a lesser showing is required to establish good cause to set aside a default. This proposition is suggested by GCR 1963, 520.4 itself, which provides that, where a default judgment has been entered, a motion to set aside is to be decided according to the guidelines set forth in GCR 1963, 528. Where a default alone has been entered, the court rules do not limit the court's discretion. Furthermore, we find persuasive the federal court's treatment of the analogous federal rules, F.R.Civ.P., 55(c) and 60(b). "[F]ederal courts are willing to grant relief from a default entry more readily and with a lesser showing than they are in the case...
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...diligent nor reasonable. A party is responsible for any action or inaction by the party or the party's agent. Levitt v. Kacy Mfg. Co., 142 Mich.App. 603, 609, 370 N.W.2d 4 (1985). Regarding the apparent failure of counsel for Waterbury # 1 to act on behalf of Waterbury # 2, the panel observ......
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