Park v. American Cas. Ins. Co.

• Decision Date: 24 September 1996
• Docket Number: Docket Nos. 171787,179930
• Citation: 219 Mich.App. 62,555 N.W.2d 720
• Parties: Benjamin PARK, Plaintiff-Appellee, v. AMERICAN CASUALTY INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 720

555 N.W.2d 720

219 Mich.App. 62

Benjamin PARK, Plaintiff-Appellee, v. AMERICAN CASUALTY INSURANCE COMPANY, Defendant-Appellant.

Docket Nos. 171787, 179930.

Court of Appeals of Michigan.

Submitted March 12, 1996, at Lansing.

Decided Sept. 24, 1996, at 9:00 a.m.

Per Opinion of Judge Corrigan

John S. Paterson and Kimberly A. Tomczyk, Sandusky, and Appellate Services by Rosemary A. Gordon, Grosse Pointe Farms, for plaintiff-appellee.

Vandeveer Garzia, P.C. by Hal O. Carroll, Terrance P. Lynch, Robert D. Brignall, and Christine A. Fischer, Detroit, for defendant-appellant.

Before: FITZGERALD, P.J., and CORRIGAN and C.C. SCHMUCKER, ^* JJ.

FITZGERALD, Presiding Judge.

In Docket No. 171787, defendant appeals as of right from an order dismissing plaintiff's cause of action and ordering the case into arbitration pursuant to the language of a no-fault automobile insurance policy. In Docket No. 179930, defendant appeals as of right from an order of judgment affirming the arbitration award of $482,226.51. The appeals were consolidated.

Defendant issued a business automobile policy to plaintiff's employer, Ben Fox Trucking Company. While driving a truck owned by the company, plaintiff was allegedly struck by a hit-and-run driver. As a result of being forced off the road, plaintiff suffered severe injuries. Plaintiff filed this suit to compel arbitration of his claim for uninsured motorist coverage under the policy. Defendant answered that plaintiff's loss was not subject to arbitration because "there was no contact between the [truck] and the phantom vehicle."

Plaintiff moved for summary disposition on the ground that the terms of the insurance policy clearly required arbitration upon the request of a party where the parties disagree whether the insured is entitled to coverage for uninsured motorist protection. Defendant disagreed, arguing that summary disposition was inappropriate because there was no contact between the hit-and-run vehicle and the truck and, therefore, the uninsured motorist provision did not apply. Although the trial court denied the motion without prejudice, an order was not entered and plaintiff's counsel renoticed the hearing for May 24, 1993.

On April 29, 1993, the trial court entered a scheduling conference order and notice of pretrial settlement conference and trial. The court scheduled the bench trial for three days, beginning November 16, 1993.

On August 17, 1993, the court entered an order submitting the matter to arbitration upon the parties' stipulation. The stipulation provided that "an order may be entered by this Court as the question of contact has been agreed by the parties and this matter should go to arbitration on the point of injury." However, the order for arbitration was set aside on November 1, 1993, on the basis of the parties' stipulation and "for the reason that the issue of contact is not agreed to at this time." Plaintiff then filed a motion for summary disposition on November 10, 1993, and noticed the hearing for December 6, 1993.

Defense counsel did not appear on the scheduled trial date of November 16, 1993. The court entered a default against defendant at that time. Plaintiff requested that the court decide whether contact occurred and allow plaintiff to present his case based upon the proofs already submitted on the record. After reviewing the evidence before it, the court found that contact occurred. ¹ The court thereafter granted plaintiff's request to submit the matter to arbitration and issued an order requiring the parties to appear on December 6, 1993.

On November 29, 1993, defendant filed a motion to set aside the court's order on the ground that defendant's new counsel was not apprised of the date set for trial. Defendant sought an order to submit the issue of contact to arbitration along with the issue of injury.

At the hearing regarding the motion, the court noted that defendant's request to submit the question of contact to the arbitrators was the relief plaintiff originally sought. After recounting defense counsel's missed conference dates and adequate notice of the trial date, the court determined that it would be unfair to plaintiff and "not good for the administration of justice" to set aside the order. The court entered an order denying defendant's motion to set aside the determination.

An arbitration panel heard the case. The panel decided that the worker's compensation and social security disability payments received by plaintiff were not a permissible setoff because they were not of like kind to the noneconomic damages sought. The panel awarded plaintiff $482,226.51.

Docket No. 171787

Defendant first contends that the trial court abused its discretion in refusing to set aside the default judgment. I disagree.

The question whether a default or a default judgment should be set aside is within the sound discretion of the trial court and will not be reversed on appeal absent a clear abuse of that discretion. Gavulic v. Boyer, 195 Mich.App. 20, 24, 489 N.W.2d 124 (1992). Except when grounded on lack of jurisdiction over the defendant, a motion to set aside a default or a default judgment generally may be granted only if good cause is shown and an affidavit of facts showing a meritorious defense is filed. MCR 2.603(D)(1); Marposs Corp. v. Autocam Corp., 183 Mich.App. 166, 171, 454 N.W.2d 194 (1990). Good cause sufficient to warrant setting aside a default or a default judgment includes: (1) a substantial defect or irregularity in the proceeding on which the default was based, (2) a reasonable excuse for the failure to comply with requirements that created the default, or (3) some other reason showing that manifest injustice would result if the default or default judgment were allowed to stand. Gavulic, supra at 24-25, 489 N.W.2d 124. An attorney's negligence is attributable to the client and normally does not constitute grounds for setting aside a default judgment. Pascoe v. Sova, 209 Mich.App. 297, 298-299, 530 N.W.2d 781 (1995). However, even if there is no reasonable excuse for the failure to comply with the requirements that created the default, "[t]he showing of a meritorious defense and factual issues for trial may, under certain circumstances, fulfill the good-cause requirement by way of constituting a reason evidencing that manifest injustice would result from permitting a default to stand." Komejan v. Suburban Softball, Inc., 179 Mich.App. 41, 51, 445 N.W.2d 186 (1989).

Here, there is no reasonable excuse presented for defense counsel's failure to appear. Substitute counsel admitted that a copy of the April 29, 1993, scheduling order that set the November 16, 1993, trial date was included with the transferred file. Counsel should have discerned the trial date from the case file when the file was received from former counsel.

Further, defendant argued only that the arbitrators should determine the question whether contact occurred. As the court correctly pointed out, plaintiff's initial position was that the arbitrators should determine whether contact occurred. Because defendant originally requested that the court make such a determination, defendant could not then argue that the court erred in making the determination. Defendant cannot now seek reversal on the basis that the court decided an issue that defendant itself asked that the court decide. See Detroit v. Larned Associates, 199 Mich.App. 36, 38, 501 N.W.2d 189 (1993). Defendant failed to show good cause to set aside the judgment.

Defendant also failed to show that it had a meritorious defense. In its motion to set aside the November 16, 1993, determinations, defendant failed to argue that contact between the truck and the phantom driver did not occur. Rather, defendant relied solely upon a showing of "good cause," which, as indicated above, was not established.

Next, defendant contends that the trial court's factual finding that contact occurred is clearly erroneous. By failing to show facts constituting a meritorious defense, defendant did not raise any factual issues that would warrant a trial on the merits of the question of contact. See Komejan, supra at 51, 445 N.W.2d 186. Further, MCR 2.603 does not require the court to weigh evidence or proofs before entering a default. Therefore, defendant cannot argue on appeal that the court's finding that contact occurred was clearly erroneous on the basis of the evidence before the court at the time it entered the default.

Docket No. 179930

Defendant argues that the trial court erred in failing to set aside the arbitration award because the arbitrators made an error of law in holding that a setoff clause in the uninsured motorist provision requiring deduction of social security disability benefits and worker's compensation benefits from amounts payable under an uninsured motorist provision is contrary to public policy. I disagree.

The uninsured motorist provision of the insurance policy provided that

2. Any amount payable under this coverage shall be reduced by:

a. All sums paid or payable under any workers' compensation, disability benefits or similar law.

A purpose of the no-fault act is to provide a contractual right of action against one's own insurer for wage-loss and medical expenses arising from a motor vehicle accident. A tort action for noneconomic and excessive loss was preserved in cases of severe loss. Bradley v. Mid-Century Ins. Co., 409 Mich. 1, 62, 294 N.W.2d 141 (1980). A thorough discussion of the relationship between no-fault benefits and uninsured benefits was provided in Bradley, id. at 62-63, 294 N.W.2d 141, and is worth repeating:

The Legislature has thus divided an injured person's loss into two categories--loss for which the no-fault insurer is liable and loss for which the tortfeasor is liable. No-fault insurance provides security for the first type; uninsured motorist coverage, which presupposes that the insured is entitled to recovery under the tort system, provides...