Case Name: A & K RESTAURANTS, INC v. GJOKA
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1982-07-13
Citations: 118 Mich. App. 59
Docket Number: Docket No. 57985
Parties: A & K RESTAURANTS, INC v GJOKA
Judges: Before: D. C. Riley, P.J., and D. E. Holbrook, Jr., and M. J. Kelly, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 118
Pages: 59–64

Head Matter:
A & K RESTAURANTS, INC v GJOKA
Docket No. 57985.
Submitted February 11, 1982, at Detroit.
Decided July 13, 1982.
A & K Restaurants, Inc., brought an action against Vata Gjoka and Hana Gjoka for breach of a purchase agreement. The summons and complaint were served upon Vata Gjoka. No • responsive pleadings were filed and plaintiff filed a motion for default, which was granted. A default judgment was entered against defendants and, two weeks later, defendants filed a motion to set aside the default judgment. The Macomb Circuit Court, George R. Deneweth, J., denied the defendants’ motion and they appeal. Held:
The trial court’s denial of the motion to set aside the default judgment was an abuse of discretion. Under the facts of the case, allowing the default judgment to stand would be manifestly unjust.
Reversed and remanded for entry of an order granting the defendants’ motion.
D. C. Riley, P.J., dissented. She would hold that the trial court did not abuse its discretion in finding that the defendants failed to show good cause for setting aside the default judgment. However, the decision was only based on one of the reasons set forth by defendants for setting aside the judgment. Judge Riley would remand for a determination by the trial court of whether the judgment should be set aside on the basis of manifest injustice.
References for Points in Headnotes
[1] 46 Am Jur 2d, Judgments §§ 739, 776.
Appealability of order setting aside, or refusing to set aside, default judgment. 8 ALR3d 1272.
[2, 4] 46 Am Jur 2d, Judgments § 682.
[3] 46 Am Jur 2d, Judgments §§ 709, 717.
Fraud in obtaining or maintaining default judgment as ground for vacating or setting aside in state courts. 78 ALR3d 150.
[4] 47 Am Jur 2d, Judgments § 1152.
Opinion of the Court
1. Judgments — Default Judgments — Setting Aside Judgment — Court Rules.
A trial court may set aside a default judgment where the defendant makes a showing of good cause and files an affidavit of facts showing a meritorious defense; good cause for setting aside a default judgment is shown where manifest injustice would result from permitting the default to stand (GCR 1963, 520.4).
2. Judgments — Default Judgments — Setting Aside Judgment.
A trial court’s decision regarding whether a default judgment should be set aside is discretionary and will only be reversed upon a showing of a clear abuse of discretion.
Dissent by D. C. Riley, P. J.
3. Judgments — Setting Aside Judgment — Court Rules.
Relief from a judgment is permissible upon a showing of mistake or excusable neglect, fraud, or misrepresentation by an adverse party, or any other reason justifying relief from the operation of the judgment (GCR 1963, 528.3).
4. Judgments — Default Judgments — Setting Aside Judgment — Court Rules.
A trial court’s order refusing to set aside a default judgment, where the trial court failed to consider the applicability of a court rule allowing relief from judgments and failed to exercise its discretion as to that rule on the record, necessitates a remand for a determination of whether the court rule should apply to the case (GCR 1963, 528.3).
Doherty & Thomas, P.C., for plaintiff.
Ronald R. Gold, for defendants.
Before: D. C. Riley, P.J., and D. E. Holbrook, Jr., and M. J. Kelly, JJ.

Opinion:
Per Curiam.
On May 8, 1980, plaintiff commenced this action for breach of a purchase agreement and copies of a summons and complaint were served upon defendant Vata Gjoka. When no responsive pleadings were filed, a default judgment against defendants was entered. Defendants moved to set aside the default with supporting affidavits, but their motion was denied. Defendants appeal as of right, GCR 1963, 806.1.
On appeal, defendants argue that the trial court erred when it refused to set aside the default judgment. GCR 1963, 520.4 allows a trial court to. set aside a default judgment where defendant makes a showing of good cause and an affidavit of facts showing a meritorious defense is filed. The decision as to whether a default judgment should be set aside is discretionary and will not be reversed unless a clear abuse of discretion is shown. Borovoy v Bursar Realty Corp, 86 Mich App 732, 737; 273 NW2d 545 (1978), lv den 406 Mich 924 (1979). Good cause for setting aside a default judgment is showp when manifest injustice would result from permitting the default to stand. H & L Heating Co v Bryn Mawr Apartments of Ypsilanti, Ltd, 97 Mich App 496, 505; 296 NW2d 354 (1980).
While we agree with the dissent that defendants should have known an action was commenced against them, we disagree that the trial court did not abuse its discretion when it failed to set aside the default judgment. In the affidavit annexed to the brief in support of the motion to set aside the default judgment, defendants claimed that the machines had been returned to their rightful owners, A & M International Leasing Corp.; that defendants had informed plaintiff's principal of that fact and that plaintiff's principal "indicated that the matter was resolved"; and that defendants had no further liability thereon.
Furthermore, plaintiff's attorney, at oral arguments before this Court, conceded that it did not have to make payments on the leased machines to the rightful owners of the machines. Since plaintiff did not have to pay for the machines, we find that it would be manifestly unjust to allow the default judgment to stand.
We reverse the trial court's denial of the motion to set aside the default judgment and remand for entry of an order granting said motion.