Court Opinion

ID: 3154815
Source: CourtListenerOpinion
Date Created: 2015-11-16 08:05:59.964572+00
Date Added: 2024-06-11T11:58:43.366648
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

PETER STUTCHER and MARISA STUTCHER,                                  UNPUBLISHED
                                                                     November 12, 2015
               Plaintiffs/Counter Defendants-
               Appellees,

v                                                                    No. 322739
                                                                     Oakland Circuit Court
GREG LOVIO,                                                          LC No. 2012-131052-NO

               Defendant/Counter Plaintiff-
               Appellant.
and

RACHAEL VANITTERSUM,

               Defendant/Counter Plaintiff.

Before: STEPHENS, P.J., and CAVANAGH and MURRAY, JJ.

PER CURIAM.

       Defendant Greg Lovio appeals by right orders dismissing defendants’ counterclaim,
granting plaintiffs a default, and granting plaintiffs a default judgment for $9,603.78 in damages
and $38,550.38 in attorney fees in this landlord-tenant action. We vacate these orders and
remand for proceedings consistent with this opinion.

        This case arose from defendants’ alleged breach of a residential lease agreement entered
into with plaintiffs in January 2012. Plaintiffs alleged that defendants began to breach the lease
almost immediately, and by August 2012, plaintiffs served defendants with notice that they were
terminating the lease. Plaintiffs claim that after they recovered the property through a district
court action, they discovered that defendants had damaged the property. Plaintiffs then filed an
8-page “first amended complaint” alleging breach of contract, common-law and statutory
conversion, and interference with a business relationship. Defendants responded, arguing that
when they received the rental premises, it was in a state of disrepair and plaintiffs failed to make
the requested and necessary repairs. Defendants filed a counterclaim alleging statutory
conversion and nuisance/trespass. Defendants later added counts of constructive eviction and
intentional infliction of emotional distress.

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       On September 26, 2013, defendants’ attorney filed a motion to withdraw, explaining that
defendants were engaged in a custody dispute and that their adversarial posture prevented him
from representing both of them in this proceeding. He also asserted that the custody dispute was
consuming most of defendants’ time and financial resources. The trial court granted the motion,
and ordered defendants to obtain new counsel by 9:00 a.m. on November 14, 2013, at which time
they were to appear, with or without counsel, for a pretrial scheduling conference. The court
ordered defendants’ now former counsel to serve copies of the order on them. When defendants
did not appear for the scheduling conference, the circuit court granted plaintiffs’ motion to
dismiss defendants’ counterclaim with prejudice, entered a default against defendants, and
ordered plaintiffs to move for entry of a default judgment.

        Before entry of the default judgment, defendant Lovio filed a motion to set aside the
default in propria persona, indicating that he had no knowledge that a default had been filed, he
had a meritorious defense, and plaintiffs had kept the $1,800 security deposit. At the February
12, 2014 hearing on plaintiffs’ motion for entry of the default judgment, defendant Lovio advised
the court that defendant Vanittersum had been the one in contact with their attorney but they split
up and she no longer spoke to defendant Lovio. He also advised the court that they had rented
plaintiffs’ place but withheld the rent for two months because of necessary repairs not being
made and then they were evicted. Defendant Lovio indicated that he had no money to hire
another attorney, but had evidence to disprove plaintiffs’ damage claims and requested a hearing.
When the court asked plaintiffs’ counsel about the damage claims, counsel referred to the
affidavit of plaintiff Peter Stutcher which indicated that plaintiffs suffered damages in the
amount of $9,603.78, but incurred attorney fees in the amount of $35,451.28. Plaintiffs’ counsel
explained these “attorney fees” by stating that his clients had to pay “to defend all of the
counterclaims that were brought by defendants,” but plaintiff’s counsel failed to mention
plaintiff’s 8-page “first amended complaint.” Defendant Lovio again requested a hearing on
damages and the trial court refused, stating: “It’s too late.” The court then granted plaintiffs’
motion for default judgment.

       On February 27, 2014, a notice of appearance of counsel was filed on behalf of
defendants and, on April 7, 2014, a motion to set aside the default judgment was filed on behalf
of defendant Lovio. Defendant Lovio again argued that he never received the notice to appear at
the pretrial scheduling conference and, as set forth in MCR 2.401(G)(2), manifest injustice
would result if the default judgment entered against him was not set aside considering his
substantial defenses to plaintiffs’ claims. On April 16, 2014, a hearing was held on defendant
Lovio’s motion and it was denied on the ground that it was too late. On June 26, 2014, the trial
court entered a default judgment in favor of plaintiffs in the amount of $48,154.16, plus interest.
This appeal followed.

       Defendant Lovio argues that the circuit court abused its discretion by entering a default
against him for failing to appear at a single scheduling conference without evaluating the
circumstances as required under MCR 2.401(G). We agree.

        We review a trial court’s decision to enter a default for an abuse of discretion. Barclay v
Crown Bldg & Dev, Inc, 241 Mich. App. 639, 642; 617 NW2d 373 (2000). A trial court abuses its
discretion when the decision rendered is outside the range of reasonable and principled
outcomes. Maldonado v Ford Motor Co, 476 Mich. 372, 388; 719 NW2d 809 (2006).

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        “A trial court’s authority to enter a default or a default judgment against a party must fall
within the parameters of the authority conferred under the court rules.” Henry v Prusak, 229
Mich. App. 162, 168; 582 NW2d 193 (1998). MCR 2.401(G) governs default for failure to attend
a scheduled conference, and states that failure of a party to attend a scheduled conference as
directed by the court “may constitute a default to which MCR 2.603 is applicable or a ground for
dismissal under MCR 2.504(B).” MCR 2.401(G)(1). However, MCR 2.401(G)(2) further states:

               The court shall excuse a failure to attend a conference or to participate as
       directed by the court, and shall enter a just order other than one of default or
       dismissal, if the court finds that

               (a) entry of an order of default or dismissal would cause manifest
       injustice; or

               (b) the failure was not due to the culpable negligence of the party or the
       party’s attorney.

        A default or dismissal “is a drastic sanction that should be taken cautiously.”
VandenBerg v VandenBerg, 231 Mich. App. 497, 502; 586 NW2d 570 (1998). Accordingly,
before dismissing a claim or entering a default, “the trial court is required to carefully evaluate
all available options on the record and conclude that the sanction of dismissal is just and proper.”
Vicencio v Ramirez, 211 Mich. App. 501, 506; 536 NW2d 280 (1995). The court that fails to
evaluate other available options on the record abuses its discretion. Id. at 506-507. Some of the
factors that may be considered before imposing the sanctions of default or dismissal include:
“(1) whether the violation was wilful or accidental; (2) the party’s history of refusing to comply
with previous court orders; (3) the prejudice to the opposing party; (4) whether there exists a
history of deliberate delay; (5) the degree of compliance with other parts of the court’s orders;
(6) attempts to cure the defect; and (7) whether a lesser sanction would better serve the interests
of justice.” Id. at 507.

        In this case, there is no record that the court considered MCR 2.401(G)(2) before granting
plaintiffs’ “motion to dismiss all counterclaims and for entry of default judgment for failure to
appear” at one scheduling conference. That is, there is no record to indicate that the trial court
evaluated all available options before concluding that the harsh sanctions of default and
dismissal were just and proper for missing a single scheduling conference after defendants’
attorney was permitted to withdraw. See Vicencio, 211 Mich. App. at 506. Because we cannot
discern the trial court’s rationale, we conclude that the trial court abused its discretion. See id. at
506-507; see also Houston v Southwest Detroit Hosp, 166 Mich. App. 623, 631; 420 NW2d 835
(1988) (“An appellate court cannot review a decision for abuse of discretion unless it knows how
and why the discretionary decision was made.”).

        Accordingly, we vacate the court’s orders dismissing defendants’ counterclaim, granting
plaintiffs a default, and granting plaintiffs a default judgment for $9,603.78 in damages and
$38,550.38 in attorney fees. We remand the matter to the trial court for further proceedings to
consider whether sanctions for the failure to attend a single scheduling conference are
appropriate under MCR 2.401(G), and if so, whether dismissal and default are just and proper
sanctions. In light of our ruling, we need not address defendant Lovio’s other issues on appeal.

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        Vacated and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.

                                                        /s/ Cynthia Diane Stephens
                                                        /s/ Mark J. Cavanagh
                                                        /s/ Christopher M. Murray

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