Trost v. Buckstop Lure Co., Inc.

• Decision Date: 01 May 2002
• Docket Number: Docket No. 220165.
• Citation: 249 Mich. App. 580,644 N.W.2d 54
• Parties: Fred D. TROST and Fred D. Trost Enterprises, Inc., Plaintiffs-Appellants, v. BUCKSTOP LURE COMPANY, INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

644 N.W.2d 54

249 Mich. App. 580

Fred D. TROST and Fred D. Trost Enterprises, Inc., Plaintiffs-Appellants, v. BUCKSTOP LURE COMPANY, INC., Defendant-Appellee.

Docket No. 220165.

Court of Appeals of Michigan.

Submitted June 6, 2001, at Grand Rapids.

Decided February 5, 2002, at 9:00 a.m.

Released for Publication May 1, 2002.

Golden and Kunz, P.C. (by Robert H. Golden and Armand D. Kunz), Lathrup Village, for the plaintiffs.

Glassen, Rhead, McLean, Campbell & Schumacher (by Kevin V.B. Schumacher), Lansing, for the defendant.

Before NEFF, P.J., and DOCTOROFF and WILDER, JJ.

PER CURIAM.

In this action seeking relief from a judgment, plaintiffs Fred D. Trost and Fred D Trust Enterprises, Inc.,¹ appeal as of right from a trial court order granting defendant summary disposition pursuant to MCR 2.116(C)(8). We affirm.

I. Facts and Proceedings

In 1992, defendant Buckstop Lure Company, Inc., filed a libel action against plaintiffs Fred D. Trost and Fred D. Trost Enterprises, Inc., in the Montcalm Circuit Court. Following a several-week trial, the trial court entered a judgment in the amount of $4 million in favor of Buckstop. As a result of that judgment, Trost filed an application for delayed leave to appeal on April 1, 1994. The parties then stipulated to dismiss the appeal with prejudice. Subsequently, on January 12, 1995, Trost filed another claim of appeal, seeking to appeal an order denying a motion to set aside a default. Again, this appeal was, by stipulation of the parties, dismissed with prejudice.

Then, on February 10, 1999, Trost filed in the circuit court the instant independent action against Buckstop. This action sought relief from the judgment in the previous action pursuant to MCR 2.612(C)(3). Specifically, Trost alleged (1) that the court in the previous action lacked subject-matter jurisdiction, (2) that the proofs elicited by Trost's counsel at trial had been "infirm and not cognizable by [the] court," (3) that the prior judgment had been "based upon an improper statement and understanding of the law by the Court," (4) that the conduct of and preparation for trial by Trost's counsel had been "either absent, incompetent or negligently performed and that [Trost] was deprived of the advice and presence of competent counsel," and (5) that "manifest injustice" had taken place as a result of these actions.

Rather than filing an answer to Trost's complaint, Buckstop moved for summary disposition pursuant to MCR 2.116(C)(8), arguing that MCR 2.612(C)(3) allowed a court to grant relief from a judgment in an independent action only if a party performed fraud on the court. In response, Trost argued that MCR 2.612(C)(3) provided three bases for an independent action seeking relief from judgment: (1) to relieve a party from a judgment, order, or proceeding, (2) to grant relief to a defendant not actually served, and (3) to set aside a judgment for fraud on the court. Trost further maintained that if the court did not have subject-matter jurisdiction over the underlying libel claim, MCR 2.612(C)(3) permits him to seek relief from the judgment. The trial court granted defendant's motion, finding that MCR 2.612(C)(3) provides relief from a judgment only when a defendant had not been personally notified or when fraud was perpetrated on the court, and that neither of those two bases had been pleaded by Trost. The trial court also found that even if MCR 2.612(C)(3) allowed independent actions solely "to relieve a party from a judgment, order, or proceeding," there was no showing of facts that would form the basis for such an action.

II. Standard of Review

This Court reviews de novo the grant of summary disposition, Crown Technology Park v. D & N Bank, FSB, 242 Mich.App. 538, 546, 619 N.W.2d 66 (2000), and will not affirm summary disposition under MCR 2.116(C)(8) unless the claim is so clearly unenforceable as a matter of law that no factual development could possibly justify a judgment in favor of the nonmoving party. Smith v. Stolberg, 231 Mich. App. 256, 258, 586 N.W.2d 103 (1998). For a motion to be granted under MCR 2.116(C)(8), the pleadings must make it clear that the plaintiff has failed to state a claim on which relief can be granted and that no amount of factual development would justify the plaintiff's claim for relief. Spiek v. Dep't of Transportation, 456 Mich. 331, 337, 572 N.W.2d 201 (1998).

III. Analysis

The first question that we must decide is whether MCR 2.612(C)(3) allows a party to seek relief from a judgment in an independent action on grounds other than extrinsic fraud or nonservice. We conclude that it does.

MCR. 2.612(C)(3) provides:

This subrule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding; to grant relief to a defendant not actually personally notified as provided in subrule (B); or to set aside a judgment for fraud on the court.

The express language of MCR 2.612(C)(3) provides that the provisions in MCR 2.612(C)(1) and (2) in no way "limit[s] the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding...." Hence, a party need not allege fraud or nonservice in order to seek relief from a judgment in an independent action pursuant to MCR 2.612(C)(3). In this regard, we find the following commentary to be particularly persuasive:

MCR 2.612(C)(3) expressly notes that its provision for relief from judgment by a motion directly in the same proceedings" does not limit the power of a court to entertain an independent action to relieve a party from a judgment." In Michigan, an independent action in chancery for relief from a judgment has been long recognized. Such independent equitable actions granted relief either by setting aside the judgment, if rendered by the same court, or by enjoining its enforcement or execution or declaring it void, if rendered by another court. This equitable relief was most frequently granted as to judgments at law but was also available to restrain enforcement of an equity decree itself.

Relief from a judgment by an independent equitable action has been recognized in Michigan as proper on numerous grounds, including the following: judgment void for lack of jurisdiction; newly-discovered evidence; after-discovered defense; and extrinsic fraud in the procurement of a judgment. If the judgment is not void for lack of jurisdiction, the party seeking relief from a judgment by an independent equitable action must show that it has a meritorious defense or cause of action before equitable relief will be given. [Michigan Court Rules Practice, Rule 2.612, § 2612.17, p. 483 (citations omitted; emphasis added).]

In the instant case, Trost based his complaint on five factual grounds, including lack of subject-matter jurisdiction. Because the two prior appeals were dismissed with prejudice, there was no remedy at law available to Trost; therefore, the complaint, on its face, fulfilled the requirements of MCR 2.612(C)(3) and case law on independent actions. Accordingly, the trial court erred in determining that MCR 2.612(C)(3) only allowed for independent actions based on nonservice or extrinsic fraud.

Nonetheless, the court also found that even if MCR 2.612(C)(3) provided Trost with an independent action for relief from the judgment, he had not pleaded sufficient facts to state a cause of action, and therefore, Buckstop was entitled to summary disposition. We agree. In his complaint, Trost first alleged that because the court did not have subject-matter jurisdiction of Buckstop's initial libel claim, he was entitled to relief from the judgment. We disagree. As stated in Grubb Creek Action Committee v. Shiawassee Co. Drain Comm'r, 218 Mich. App. 665, 668-669, 554 N.W.2d 612 (1996):

Jurisdiction is the power of a court to act and the authority of a court to hear and determine a case. A court's subject-matter jurisdiction is determined only by reference to the allegations listed in the complaint. If it is apparent from the allegations that the matter alleged is within the class of cases with regard to which the court has the power to act, then subject-matter jurisdiction exists. Any subsequent error in the proceedings amounts to error in the exercise of jurisdiction. When a court lacks subject-matter jurisdiction, the court's acts and proceedings are of no force and validity.

An order entered without subject-matter jurisdiction may be challenged collaterally and directly. Error in the exercise of jurisdiction may be challenged only on direct appeal. The erroneous exercise of jurisdiction does not void a court's jurisdiction as does the lack of subject-matter jurisdiction. However, error in the exercise of jurisdiction can result in the setting aside of the judgment. [Internal citations omitted.]

See also In re Hatcher, 443 Mich. 426, 439, 505 N.W.2d 834 (1993), Luscombe v. Shedd's Food Products Corp., 212 Mich. App. 537, 541, 539 N.W.2d 210 (1995), and In re Waite, 188 Mich.App. 189, 196-197, 200, 468 N.W.2d 912 (1991).

The prior action against Trost alleged libel and was brought in the circuit court. In Michigan, the circuit courts are courts of general jurisdiction and are vested with "original jurisdiction to hear and determine all civil claims" unless the constitution or statutes provide otherwise. MCL 600.605; see also M.C.L. § 600.601 and Const. 1963, art. 6, §§ 1, 13. The Legislature has provided for civil actions alleging libel. MCL 600.2911. In providing for these civil actions, the Legislature did not indicate that libel claims were to be brought in a court other than the circuit court. Id. Thus, it is apparent that Buckstop properly brought its libel action against Trost in the circuit court and that the circuit court had subject-matter jurisdiction over that claim. Grubb, supra; MCL 600.601, 600.2911; Const. 1963, art. 6, §§ 1, 13.

Trost argues that although Buckstop filed a complaint sounding in libel, because...