Zaiter v. Riverfront Complex, Ltd., Docket No. 116357.
| Citation | 463 Mich. 544,620 N.W.2d 646 |
| Decision Date | 18 January 2001 |
| Docket Number | Docket No. 116357. |
| Parties | Marcy ZAITER, Plaintiff-Appellee, v. RIVERFRONT COMPLEX, LTD., and Virgil D. Riley, Defendants-Appellants. |
| Court | Michigan Supreme Court |
Law Office of Glen N. Lenhoff (by Glenn N. Lenhoff and Julie A. Gafkay) Flint, MI, for plaintiff.
Mary A. Mahoney, Madison Heights, MI, for defendants-appellants.
After the defendants failed to participate in discovery, the circuit court entered a $50,000 default judgment. The Court of Appeals affirmed. We affirm in part and reverse in part. The circuit court did not err when it entered a default judgment with regard to liability. However, we remand this case to the circuit court to allow the defendants the opportunity to have a jury decide the question of damages.
Plaintiff Marcy J. Zaiter worked for defendant Riverfront Complex, Ltd., as an x-ray technician. She says she was fired because she was pregnant. Riverfront says she was discharged as an economic move, because her salary was greater than the x-ray billings that were being generated from her work.
On October 8, 1996, Ms. Zaiter filed a complaint in which she alleged that Riverfront had discharged her in violation of the Civil Rights Act. M.C.L. § 37.2202; MSA 3.548(202). The complaint included a demand for a jury trial, and was accompanied by interrogatories and a request for the production of documents.1
Riverfront answered the complaint, and stated its reliance on Ms. Zaiter's demand for a jury trial. Signing the answer, counsel for Riverfront provided a business address on Edward Avenue in Madison Heights. By spring of the following year, Riverfront had not answered the interrogatories or the request for the production of documents. Ms. Zaiter's attorney wrote to Riverfront's lawyer on February 4, 1997, demanding answers by February 14. This and all other correspondence mentioned in this opinion were sent to Riverfront's lawyer at her Edward Avenue address in Madison Heights.
Ms. Zaiter's attorney wrote again on March 7 to confirm a March 6 telephone conversation in which answers had been promised by March 14. The letter also included a request for production of two Riverfront employees for deposition.
On April 2, Ms. Zaiter's attorney filed a motion to compel answers to the interrogatories and document requests. A notice of hearing was sent to defense counsel. Like the correspondence from Ms. Zaiter's lawyer, each notice of hearing mentioned in this opinion bore defense counsel's Edward Avenue address in Madison Heights.
The circuit court's ruling was an April 14 order that required answers by April 24. Since defense counsel did not appear for the hearing, Ms. Zaiter's lawyer mailed a copy of the order to her on April 14, and enclosed a notice that the two employees would be deposed on April 23.
An April 23 letter to defense counsel recites that the depositions were adjourned to May 9 at "your request" and confirms a telephone conversation in which defense counsel promised Ms. Zaiter's lawyer that she would provide answers to the discovery requests before the May 9 depositions.
On May 9, Ms. Zaiter's lawyer faxed a letter to defense counsel. Pursuant to a May 8 conversation, the depositions again had been adjourned. The letter also confirmed defense counsel's promise to provide the overdue answers by May 12.
Ms. Zaiter's attorney filed a motion for default on June 24, mailing notice of the hearing to defense counsel. The attorney recited the broken promises regarding discovery and noted the court's April 14 order, and also explained that June 10 had been the third notice date for depositions, but that defense counsel and her client's employees had not appeared. Ms. Zaiter's counsel asked for default judgment and for an award of $2,5000 in costs.
The circuit court considered the motion on June 30. Its conclusion was reflected in an order that was not entered until July 15, because entry was delayed so that Ms. Zaiter's lawyer could mail to defense counsel the seven-day notice that is part of the procedure set forth in MCR 2.602(B)(3). The July 15 order required Riverfront to respond to the interrogatories and the request to produce by July 11.2 Failing that, a default judgment would be entered. The court also ordered Riverfront to pay $250 in sanctions by July 29.
When no answers were provided, Ms. Zaiter's attorney filed a July 25 motion for default judgment. Two notices of hearing were mailed to defense counsel.
The circuit court heard the motion on September 8. Defense counsel did not appear and thus did not assert Riverfront's right to a jury trial on damages. At a short hearing on damages, Ms. Zaiter testified that she had suffered $18,000 in economic damages, and emotional stress as well. She had been diagnosed with depression, and her pregnancy "almost led to a miscarriage." Counsel asked for judgment in the amount of $50,000, a figure that the court later attributed, inaccurately, to a mediation evaluation.
At the conclusion of the hearing, the circuit court granted the request orally, but asked that entry of the written judgment be deferred until the seven-day entry procedure was followed again. Thus, Ms. Zaiter's lawyer sent defense counsel notice of the pending entry of the default judgment. No objection was received, and the court entered the $50,000 default judgment on September 22.3 Ms. Zaiter's attorney faxed a copy of the judgment to defense counsel.
On October 9, Riverfront moved to set aside the default and the default judgment. In the motion, defense counsel stated that she had received no correspondence from Ms. Zaiter's attorney since the May 9 fax; nor had she received any of the motions or orders. Counsel suggested that the problem might lie in the court's records, which showed a former business address. Counsel did not explain why correspondence mailed to her Edward Avenue address in Madison Heights would go unanswered. She said that there was good cause to set aside the default judgment and that Ms. Zaiter's suit—"a case of questionable liability" should be heard on its merits.
The circuit court heard Riverfront's motion on October 27. Defense counsel said she could not explain her failure to receive mail at her current address, though she thought perhaps the problem was that the mail had been misdirected to another business on the same premises. She said that, throughout the same period, she had been providing diligent representation of Riverfront in an unrelated matter, and that there would have been no reason for her to neglect the present suit.
Defense counsel also stated to the court her "belief" that she had answered the October 1996 discovery requests at some prior point, though she could not produce copies of answers or a proof of service. She promised to look when she returned to her office.
The court ruled on October 29, 1997. Before the court delivered its opinion, defense counsel told the court that a search of her files revealed that she had sent the answers back on May 12. Unfortunately, she had sent them to an attorney who had no role in this case—counsel for a party involved in unrelated litigation with Riverfront in district court. She also had sent the answers to the district court. So far as she knew, neither set of misdirected answers had ever been returned to her.4
The court thanked defense counsel for that information, and then delivered its opinion, concluding:
Defendant offers as an explanation for her lack of contact, that control over this case, as nonreceipt of mail. She asserts that this is good cause and that a meritorious defense exists. However, this Court is convinced that the receipt of mail should not be the only method whereby an attorney should be prompted to keep abreast of the progress and status of a case. The purpose of a default judgment is to discourage attorneys from failing to represent their clients in a reasonably diligent and prompt manner. Unfortunately, it has the effect of adjudicating matters not on the merits alone. However, it is appropriate in specific circumstances and, unfortunately, the Court believes that this is one of them.
On November 18, the circuit court entered an order denying the motion to set aside the default judgment.
Riverfront next filed a December 1 motion, asking the circuit court to ...
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