Court Opinion

ID: 4530662
Source: CourtListenerOpinion
Date Created: 2020-05-01 09:06:39.921348+00
Date Added: 2024-06-11T12:25:10.460732
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                           COURT OF APPEALS

YETTIE SCHULTHESS COSTNER,                                          UNPUBLISHED
                                                                    April 30, 2020
               Plaintiff-Appellant,

v                                                                   No. 345464
                                                                    Wayne Circuit Court
DONALD C. BURNIAC and,                                              LC No. 16-011072-CZ
LINDA ANN BURNIAC,

               Defendants-Appellees.

Before: M. J. KELLY, P.J., and K. F. KELLY and SERVITTO, JJ.

PER CURIAM.

       Plaintiff appeals as of right the trial court’s September 2018 order granting defendants’
motion to quash/relief from judgment. We reverse and remand for entry of an order denying
defendants’ motion for relief from judgment.

                       I. FACTS AND PROCEDURAL BACKGROUND

        Plaintiff initiated a lawsuit in 2009 against defendants in Georgia when they allegedly
breached an agreement between the parties for the purchase of plaintiff’s certified public
accounting business in Georgia. That matter concluded with the entry of a final judgment against
defendants in 2013. That judgment was domesticated in Michigan in 2016. In 2018, defendants
filed an action in Louisiana against plaintiff and several others. They alleged claims of breach of
contract, defamation, fraud, conversion, and nullity of the October 2013 Georgia judgment. That
matter led to a decision from the Courts of Appeal of Louisiana’s First Circuit, Burniac v Costner,
277 So3d 1204; 2018-1709 (La App 1 Cir 5/31/19). The general facts were set forth in that case:

               In 2008, Yettie S. Costner executed an asset purchase agreement wherein
       she sold a tax preparation and accounting business that she operated in Georgia to
       Georgia Management Enterprises, Inc. (“GME”). The business sold included the
       existing clients, goodwill, equipment, software license rights, and Mrs. Costner’s
       agreement not to compete for a period of five years. The agreement provided for
       the purchase of the business by an initial payment of $1,000, plus 119 additional
       payments of $1,000 each, to be paid in monthly installments.1 Shortly after selling

                                               -1-
       the business, Mrs. Costner and her then-husband, Henry Costner, moved to
       Louisiana.

               In July 2009, Mrs. Costner filed suit in Georgia against GME, Donald
       Burniac (as the incorporator of GME), Linda Burniac (as the president of GME),
       and Kurt Hines (as an employee of GME), for breach of contract, tort damages, and
       injunctive relief. In the Georgia complaint, Mrs. Costner alleged that in addition to
       the aforementioned asset purchase agreement, there was an agreement wherein
       GME arranged to lease the real property in which Mrs. Costner formerly operated
       her business. She further alleged that she and Mr. Burniac entered into a verbal
       contract whereby Mrs. Costner agreed to perform tax and accounting work for
       GME as an independent contractor. Despite these agreements, Mrs. Costner
       claimed that she stopped receiving lease payments and payments for the purchase
       of the business in March 2009. She also alleged that GME, the Burniacs, and Mr.
       Hines were liable for misrepresentation and fraud for failing to perform services for
       which clients had paid and for failing to compensate her for work she performed.
       Hence, in addition to damages for breach of contract and tort, Mrs. Costner sought
       mandatory injunctive relief to regain access to the real property leased to GME and
       to the business assets sold, including her former clients’ files, computer software,
       data, and equipment. She also requested permission to perform tax and accounting
       services for her former client as part of the injunctive relief requested. [Burniac,
       277 So3d at 1206-1207.]
       1
        Per the agreement, Mrs. Costner was also entitled to collect an annual contingent
       payment of ten percent of GME’s gross sales, but only for gross sales in the range
       of $120,000 to $150,000 per fiscal year for a period of ten years.

        Plaintiff’s Georgia complaint alleged that defendants resided, conducted business, and
committed tortious acts and omissions in Darien, Georgia, at the time her claims arose. Plaintiff
also alleged that the Georgia court had personal jurisdiction over GME, Hines, and defendants.
Through attorney Mark Johnson and Abney Whitehead, defendants, GME, and Hines then filed
an answer and affirmative defenses, and GME filed its own counterclaims against plaintiff.
Defendants admitted that before April 2009 they resided at the alleged Georgia residence, but
denied committing any acts or omissions as alleged. Defendants neither admitted nor denied that
the Georgia court had personal jurisdiction over them or Hines on the basis that plaintiff’s
complaint sought a legal conclusion defendants were unable to make. Defendants also asserted
that plaintiff’s allegations regarding personal jurisdiction were “denied by operation of law.”

        Two weeks after filing defendants’ answer and affirmative defenses, attorney Abney
Whitehead, filed an acknowledgment of service indicating that GME, the Burniacs, and Hines
“acknowledge[d] personal service in said cause, receipt of copy of complaint and summons, and
waives further service.” Over the coming months attorney Mark Johnson filed responses to
plaintiff’s discovery requests including individual responses to interrogatories on behalf of Linda
Burniac and Donald Burniac (although the content of those responses is unknown), and, along
with plaintiff’s attorney, a joint motion for the extension of discovery.

                                               -2-
        Over a year later, in May 2011, Whitehead withdrew from representing defendants, GME,
and Hines in the Georgia litigation, “with the express permission and consent of [GME], Donald
C. Burniac, Linda A. Burniac, and Kurt Hones . . . .” The following February, defendants and
plaintiff filed a joint stipulation to waive trial by jury. In January 2013, Johnson filed a motion to
withdraw with the Georgia court. Johnson asserted that he had repeatedly attempted to reach
GME, the Burniacs, and Hines, by telephone call, e-mail, and a certified letter without success.
The Georgia court entered an order allowing Johnson to withdraw as defendants’ attorney in mid-
February 2013.

       Defendants did not appear for a March 2103 pretrial conference. The trial court
subsequently granted a motion by plaintiff to dismiss defendants’ answer and counterclaim without
prejudice, and entered an order requiring defendants, GME, and Hines to “appear and show cause
before me on the 31[st] day of October, 2013, at 9:00 o’clock, A.M., as to why the relief and
prayers of the Plaintiff should not be granted as stated in her complaint.” When defendants failed
to appear, the Georgia court entered the following final judgment against defendants, GME, and
Hines:

               This action came on for a hearing before the court on October 31, 2013, the
       Honor Robert L. Russell, III, presiding, and the issues having been duly heard and
       tried, and a decision having been duly rendered;

               Plaintiff having shown personal and subject matter jurisdiction is proper in
       this court; that Plaintiff’s right of action existed on the commencement of this suit;
       all necessary parties being made a party hereto; all Defendants having been served
       or acknowledged service; Defendants having made an appearance in this court;
       Defendants having failed to participate in discovery and having failed to appear in
       person or by counsel upon the call of this case, Defendants’ answers and
       counterclaim having previously been stricken; and Plaintiff having proved her
       causes of actions and damages;

               IT IS ORDERED AND ADJUDGED that, with respect to Counts II, III, V,
       and IX of Plaintiff’s complaint, that the Plaintiff, Yettie Schulthess Costner, recover
       from the Defendants Georgia Management Enterprises, Inc., Donald C. Burniac,
       Linda A. Burniac, and Kurt Hines, jointly and severally, the sum of $222,500.00
       with interest thereon as provided by O.C.G.A § 7-4-12.

               IT IS FURTHER ORDERED AND ADJUDGED that, with respect to
       Counts VI (fraud) and VII (punitive damages) of Plaintiff’s complaint, that the
       Plaintiff, Yettie Schulthess Costner, recover from the Defendants, Georgia
       Management Enterprises, Inc., Donald C. Burniac, Linda A. Burniac, and Kurt
       Hines, the sum of $360,000.00, individually from each such named defendant, with
       interest thereon as provided by O.C.G.A. § 7-4-12.

                Pursuant to O.C.G.A. § 7-4-12, such judgment shall bear annual interest
       upon the principal amount of such judgment at a rate equal to the prime rate as
       published by the Board of Governors of the Federal Reserve System, as published
       in statistical release H.15 or any publication that may supersede it, on the day this

                                                 -3-
       judgment is entered plus 3 percent. Such interest shall apply to the state judgment
       amount and such interest shall be collectable as part of, and in addition to, the
       amount of the judgment.

              In the May 2013 term of this Court, so ordered and adjudged, this 31st day
       of October, 2013.

        At some point thereafter, plaintiff discovered defendants resided in Michigan. On August
30, 2016, plaintiff filed an affidavit and notice of entry of foreign judgment in the Wayne Circuit
Court to have the Georgia judgment enforced in Michigan. On September 1, 2016, the court clerk
signed the notice of entry and accepted the foreign judgment for filing. The affidavit and notice
of entry were served by plaintiff on defendants at a post office box in Plymouth, Michigan.
Enforcement of the domesticated judgment was stayed for 21 days. Three days before the Georgia
judgment became enforceable in Michigan, “the Burniacs executed a warranty deed on September
19, 2016, to transfer a piece of real property that they owned in Michigan [10075 Red Maple Drive,
Plymouth, MI,] to a Louisiana irrevocable trust [Laurel Oaks Co].” Burniac, 277 So3d at 1207.
On September 26, 2017, a writ of garnishment was issued for Donald Burniac’s tax return,
resulting in the subsequent garnishment of $52,975 on October 22, 2017. On September 14, 2017,
after discovering the transfer while investigating defendants’ finances, plaintiff filed an action in
Michigan “to void the warranty deed and recover the real property that the Burniacs transferred to
the Louisiana trust.” Burniac, 277 So3d at 1207.

        Following a November 2017 order from another Wayne Circuit Court judge permitting
alternate service in plaintiff’s case to void the warranty deed, defendants and GME filed suit
against plaintiff (and others) in Louisiana in January 2018. Burniac, 277 So3d at 1207-1208. Six
months after filing suit in Louisiana, defendants filed the instant motion to quash or for relief from
judgment.

       In their motion, defendants argued that the Georgia judgment was void for lack of service
and personal jurisdiction and, as a result, was unenforceable in Michigan. Defendants also
contended that although the acknowledgment of service at issue was signed by Whitehead,
defendants’ affidavits established that they never hired an attorney in the underlying case and did
not authorize anyone to accept service on their behalf.

        Plaintiff responded that defendants’ motion should be denied under MCR 2.603 and MCR
2.612. Relevant to this appeal, plaintiff argued that relief from judgment under MCR 2.612 was
inappropriate because the motion was untimely, having not been filed until nearly two years after
domestication of the Georgia judgment in Michigan, and was not justified under the catchall
provision of MCR 2.612(C)(1)(f). Plaintiff also argued that defendants’ motion was an improper
collateral attack, and that defendants had waived the defense of lack of personal jurisdiction. After
argument, the trial court granted defendants’ motion and denied plaintiff’s request for sanctions,
explaining that it relied on defendants’ brief, MCR 2.612(C)(1)(d), and Blackburne & Brown
Mortg Co v Ziomek, 264 Mich. App. 615; 692 NW2d 388 (2004) in arriving at its decision.

                                                 -4-
                   II. MCR 2.612’S REASONABLE TIME REQUIREMENT

       Plaintiff first argues on appeal that the trial court erred by granting defendants’ motion to
quash or for relief from judgment because defendants did not file the motion within a reasonable
time. We agree.

        This Court reviews for an abuse of discretion a trial court’s ruling on a motion for relief
from judgment. Dep’t of Environmental Quality v Waterous Co, 279 Mich. App. 346, 364; 760
NW2d 856 (2008). “An abuse of discretion occurs when the trial court’s decision is outside the
range of reasonable and principled outcomes.” Kalaj v Khan, 295 Mich. App. 420, 425; 820 NW2d
223 (2012). Additionally, “ ‘[t]he proper interpretation and application of a court rule is a question
of law, which we review de novo.’ ” Rose v Rose, 289 Mich. App. 45, 49; 795 NW2d 611 (2010),
quoting Henry v Dow Chem Co, 484 Mich. 483, 495; 772 NW2d 301 (2009) (alteration in original).

         MCR 2.612(C)(1)(d) provides that a trial court can relieve a party from a “final judgment,
order, or proceeding” if “[t]he judgment is void.” MCR 2.612(C)(2) states that the motion for
relief from judgment under that subrule “must be made within a reasonable time, and, for the
grounds stated in subrules (C)(1)(a), (b), and (c), within one year after judgment, order, or
proceeding was entered or taken.”

        When there is a want of jurisdiction over the parties or the subject matter, no matter what
formalities may have been taken by the trial court, the action is void because of its want of
jurisdiction. Consequently, its proceedings may be questioned collaterally as well as on direct
appeal. Altman v Nelson, 197 Mich. App. 467, 472–73; 495 NW2d 826 (1992); see also Nash v
Salter, 280 Mich. App. 104, 120; 760 NW2d 612 (2008), quoting Blackburne, 264 Mich. App. at
620-621 (“ ‘[C]ollateral attack may be made in the courts of this state by showing that the judgment
sought to be enforced was void for want of jurisdiction in the court which issued it.’ ”) (Alteration
in original). And, “a motion that seeks to set aside a judgment because it is void is not subject to
the one-year requirement. Instead, such a motion may be heard by the trial court if it is brought
within a reasonable time.” Inverness Mobile Home Cmty, Ltd v Bedford Tp, 263 Mich. App. 241,
247; 687 NW2d 869 (2004). Whether a motion was filed within a reasonable time depends on the
circumstances of the case. See, e.g. Laffin v Laffin, 280 Mich. App. 513, 522 n 1; 760 NW2d 738
(2008).

        In this matter, the Georgia judgment was entered in October 2013. Plaintiff asserts that in
2015, she discovered that defendants were residing in Michigan. She therefore filed an affidavit
and notice of entry of foreign judgment on August 30, 2016, which also contained a proof of
service of the document upon defendants. The judgment was thereafter domesticated in Michigan
on September 1, 2016. Plaintiff executed several writs of garnishment on various purported
accounts and assets of defendants throughout 2016. Of note, one of the writs was sent to Comerica
Bank, of whose Detroit legal department filed a garnishee disclosure on December 8, 2016. In the
disclosure, Comerica indicated that Donald Burniac held an account with it, but that the account
was not subject to garnishment because his social security benefits were deposited into that
account. Also on the disclosure, Comerica certified that it had mailed or personally served a copy
of the garnishment to Donald Burniac on December 2, 2016 and the disclosure to him on December
8, 2016. Citizens Bank was also served with a writ of garnishment and while it stated in its

                                                 -5-
disclosure that defendants’ account had been closed, it also certified that it sent a copy of the
disclosure to defendants on January 17, 2017.

       In September 2017, plaintiff initiated an action against defendants in Wayne County,
Michigan, circuit court asserting that defendants had fraudulently transferred title to Michigan real
property from their names to a trust in order to avoid the October 2013 Georgia judgment (and
domestication of the same in Michigan). The Georgia judgment was attached to the complaint.

        Plaintiff successfully garnished defendant Donald Burniac’s Michigan income taxes of
over $52,000.00 in October 2017. Defendants filed a lawsuit against plaintiff in January, 2018.
In their complaint, they reference the Georgia matter and assert that Georgia did not obtain
personal jurisdiction over them such that any judgment in that matter in Georgia was void.

        Defendants did not file their motion for relief from judgment until July of 2018. At the
hearing on defendants’ motion, plaintiff indicated that defendants claimed they did not receive
mail at a Michigan post office box that the USPS indicated was in their names. In response,
defendants’ counsel stated, “Your Honor, I think there’s a very big [mis]understanding here on
Plaintiff’s counsel’s behalf . . . . we’re not challenging the service or the procedure of the
domestication.” Defendants’ counsel reaffirmed, “At no point did we say that they didn’t receive
service of domestication, I don’t know where that’s coming from.”

        Based upon the above, defendants were aware of the Georgia judgment at the very least by
December of 2016.1 Knowledge on the part of the defendants may be considered when
determining whether a motion for relief from judgment was made within a reasonable time, as
required by MCR 2.612(C)(2). In Laffin, 280 Mich. App. at 522 n 1, for example, this Court noted
that a motion for relief from judgment brought five years after the judgment was entered but only
3 months after notice of the underlying issue, was brought within a reasonable time.

        Defendants have failed to explain or offer any reason why they failed to take any action
with respect to the Georgia judgment until near five years after it was entered and until nearly two
years after the judgment was domesticated in Michigan. According to their counsel in the instant
action, there was no question that they were properly served with the September 2016 action to
domesticate the Georgia judgment here. The trial court, however, did not address the timeliness
of defendants’ motion. Indeed, the trial court gave no analysis in rendering its decision on
defendants’ motion, stating only that it was granting defendants’ motion on the basis of the reasons
articulated in defendants’ motion, MCR 2.612(C)(1)(d), and Blackburne.

1
  This Court notes that GME, a company owned and operated by defendants, was also part of the
Georgia lawsuit. At no time did GME or defendants assert that the Georgia court failed to obtain
jurisdiction over GME. Additionally, counsel of record in the Georgia lawsuit was the same for
defendants and GME and there has been no claim that counsel did not have the authority to act on
behalf of GME. Presumably, defendants would have been the persons to obtain the services of an
attorney on behalf of GME. Thus, it is difficult, if not impossible, to believe that defendants were
unaware of the Georgia judgment until the matter was pursued in Michigan even if, as they assert,
they did not give GME’s counsel permission to represent them in the Georgia matter.

                                                -6-
        Even taking into account that defendants appear to have moved to different states several
times over the past few years, their defense counsel’s acknowledgement that defendants were
served in the domestication matter, coupled with the years’ long length of time between entry of
the Georgia judgment and defendants’ filing of their motion, leads to the inescapable conclusion
that defendants have failed to establish that their motion for relief from judgment was brought
within a reasonable time. As a result, the trial court’s grant of defendant’s’ motion did not fall
within the realm of reasonable and principled outcomes and thus constituted an abuse of discretion.

      Reversed and remanded for entry of an order denying defendants’ motion for relief from
judgment. We do not retain jurisdiction.

                                                            /s/ Michael J. Kelly
                                                            /s/ Kirsten Frank Kelly
                                                            /s/ Deborah A. Servitto

                                                -7-