Court Opinion

ID: 4150304
Source: CourtListenerOpinion
Date Created: 2017-03-06 08:08:26.877153+00
Date Added: 2024-06-11T14:49:56.206774
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

KEITH MOHN and LISA MOHN,                                            UNPUBLISHED
                                                                     March 2, 2017
               Plaintiffs-Appellants,

v                                                                    No. 329944
                                                                     Oakland Circuit Court
HUNTINGTON NATIONAL BANK and                                         LC No. 2015-144983-CH
HUNTINGTON MORTGAGE COMPANY,

               Defendants-Appellees.

Before: JANSEN, P.J., and BECKERING and GADOLA, JJ.

PER CURIAM.

       Plaintiffs, Keith and Lisa Mohn, appeal as of right the trial court’s order granting
summary disposition to defendants, Huntington National Bank (HNB) and Huntington Mortgage
Company (HMC), pursuant to MCR 2.116(C)(10). At issue on appeal is whether the trial court
abused its discretion when granting HNB’s motion for reconsideration at the inception of the
case and setting aside the default that had been entered against HNB. We affirm.

        This case arises out of a future advance mortgage, which secured a $62,000 equity line of
credit, acquired by plaintiffs in 2004. Due to plaintiffs’ failure to make payments on the loan,
defendants scheduled a foreclosure sale for January 20, 2015. Plaintiffs filed suit on January 14,
2015, alleging that defendants had failed to follow the legal requirements for notice of a
foreclosure sale. On January 26, 2015, plaintiffs sent the summons and complaint by certified
mail without restricted delivery to HNB’s headquarters in Ohio, addressed to “Huntington
National c/o Stephen D. Steinour.” Steinour is HNB’s chief executive officer. The return receipt
shows that someone named “Mirela Yoriw” signed for the certified letter.1 Upon plaintiffs’
request, on February 26, 2015, the trial court entered a default against HNB for failure to plead
or otherwise respond to the summons and complaint.

1
  The signature on the return receipt is difficult to decipher; this is the name the trial court and
the parties settled upon. There is no record evidence as to who this person is or what position, if
any, he or she holds at HNB.

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        On March 11, 2015, HNB filed a motion to set aside the default, arguing that because
plaintiffs had not properly effectuated service, the trial court had not acquired jurisdiction over
HNB when it entered the default. The trial court denied HNB’s motion on the grounds that HNB
had not shown good cause or submitted an affidavit of facts showing a meritorious defense,
pursuant to the requirements set forth in MCR 2.603(D)(1) for setting aside a default. On April
24, 2015, HNB moved the trial court to reconsider its order, contending that MCR 2.603(D)(1)
was inapplicable because HNB was asserting lack of jurisdiction. The trial court granted HNB’s
motion for reconsideration and set aside the default, holding that, because plaintiffs had failed to
establish the role of Mirela Yoriw at HNB, it was impossible to know whether effective service
had been made upon HNB. Ultimately, the case concluded when the trial court granted
defendants’ motion for summary disposition under MCR 2.116(C)(10).

        On appeal, plaintiffs argue that the trial court improperly granted HNB’s motion for
reconsideration because proper service was effectuated; consequently, MCR 2.603(D)(1) did
apply, and as the trial court had initially concluded in its denial of HNB’s motion, HNB failed to
meet the court rule’s requirements for setting aside a default.

        We review a trial court’s decision on a motion for reconsideration for an abuse of
discretion. Bill & Dena Brown Trust v Garcia, 312 Mich App 684, 699; 880 NW2d 269 (2015).
In order to succeed in a motion for reconsideration, “[t]he moving party must demonstrate a
palpable error by which the court and the parties have been misled and show that a different
disposition of the motion must result from correction of the error.” MCR 2.119(F)(3). We also
review a trial court’s decision on a motion to set aside a default for an abuse of discretion. See
Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 234; 600 NW2d 638 (1999). An
abuse of discretion occurs “when the court’s decision falls outside the range of principled
outcomes.” Bill & Dena Brown Trust, 312 Mich App at 699. The interpretation of court rules
constitutes a legal question that we review de novo. Salter v Patton, 261 Mich App 559, 561;
682 NW2d 537 (2004).

        Michigan’s Supreme Court has explained: “A court ‘cannot adjudicate [an in personam]
controversy without first having obtained jurisdiction [over the] defendant by service of
process . . . .’ ” Lawrence M Clark, Inc v Richco Constr, 489 Mich 265, 274; 803 NW2d 151
(2011), quoting Eisner v Williams, 298 Mich 215, 220; 298 NW 507 (1941). The court rule
governing service of process is MCR 2.105. The rule “organizes the service of process choices
according to the individual or corporate nature of the defendant[,]” and “[t]he methods described
in the rule ‘are intended to satisfy the due process requirement that a defendant be informed of an
action by the best means available under the circumstances.’ ” Bullington v Corbell, 293 Mich
App 549, 556; 809 NW2d 657 (2011), quoting MCR 2.105(J)(1). “Compliance with the court
rules fulfills the constitutional requirement of ‘notice reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections.’ ” Bullington, 293 Mich App at 556, quoting Mullane v
Central Hanover Bank & Trust Co., 339 US 306, 314; 70 S Ct 652; 94 L Ed 865 (1950).

       A party served with process who fails to plead or otherwise defend is susceptible to
having a default entered against it. MCR 2.603(A)(1). A default so entered may be set aside
pursuant to MCR 2.603(D), which provides: “A motion to set aside a default or a default
judgment, except when grounded on lack of jurisdiction over the defendant, shall be granted only

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if good cause is shown and an affidavit of facts showing a meritorious defense is filed.” MCR
2.603(D)(1) (emphasis added). Good cause may be shown by: “(1) a substantial defect or
irregularity in the proceedings upon which the default was based, (2) a reasonable excuse for
failure to comply with the requirements which created the default, or (3) some other reason
showing that manifest injustice would result from permitting the default to stand.” Shawl v
Spence Bros, Inc, 280 Mich App 213, 221; 760 NW2d 674 (2008) (quotation marks and citations
omitted).

        Contrary to plaintiffs’ presumption, HNB did not file its motion to set aside the default
pursuant to MCR 2.603. Rather, HNB contended that because service of process was defective,
the trial court had not acquired jurisdiction over HNB at the time it entered the default, and
accordingly, the default should be set aside. See Lawrence M Clark, Inc, 489 Mich at 274.2

       There is no dispute that HNB is an active private corporation. Pursuant to MCR
2.105(D), service of process on an active domestic or foreign private corporation may be made
by:

       (1) serving a summons and a copy of the complaint on an officer or the resident
       agent;

       (2) serving a summons and a copy of the complaint on a director, trustee, or
       person in charge of an office or business establishment of the corporation and
       sending a summons and a copy of the complaint by registered mail, addressed to
       the principal office of the corporation[.][3]

       Plaintiffs contend that they perfected service on HNB under either MCR 2.105(D)(1) or
(2) because they “served” a copy of the summons and complaint by certified letter to a person
who, “[u]pon information and belief . . . was on [sic] officer, resident agent director, trustee, or
person in charge of an office or business establishment of the corporation[.]” Plaintiffs
misapprehend the requirements of proper service.

        “With regard to private corporations, the court rules require personal service on an
officer, [resident] agent, director, trustee, or person in charge of an office or business
establishment.” Bullington, 293 Mich App at 557, citing MCR 2.105(D)(1) and (2) (emphasis
added). “If service is made by serving a summons and copy of the complaint on a director,
trustee, or person in charge of an office of business establishment, the plaintiff must also send a

2
  See also Dogan v Michigan Basic Property Ins Ass’n, 130 Mich App 313, 320; 343 NW2d 532
(1983) (“. . . the proper basis for vacating the default judgment where service of process was
defective is that the defective service deprived the trial court of personal jurisdiction over the
defendant and the trial court was, therefore, without legal authority to render a judgment (by
default or otherwise)).”
3
   MCR 2.105(D)(3) and (4) provide other service of process options that are inapplicable under
the circumstances.

                                                -3-
summons and complaint ‘by registered mail, addressed to the principal office of the
corporation.’ ” Id., quoting MCR 2.105(D)(2).4

        In the present case, plaintiffs do not argue, nor does the record show, that plaintiffs did
anything other than send their summons and complaint via certified mail to HNB’s corporate
office, where someone of uncertain name and unknown position signed for it. Under neither
(D)(1) nor (D)(2) does that alone constitute proper service. Because plaintiffs failed to comply
with proper service requirements under MCR 2.105 and there is no evidence that the trial court
had otherwise acquired personal jurisdiction over HNB, the trial court lacked jurisdiction when
it entered the default against HNB.5

        HNB’s motion to set the default aside was grounded on lack of jurisdiction.
Consequently, the trial court erroneously analyzed the motion under MCR 2.603(D), which is
inapplicable where such motion is “grounded on lack of jurisdiction over the defendant.” MCR
2.603(D)(1). The trial court did not abuse its discretion when granting HNB’s motion for
reconsideration because HNB demonstrated that the trial court had committed palpable error by
relying on MCR 2.603(D), and because the trial court had not acquired personal jurisdiction over
HNB at the time it entered the default, the trial court did not abuse its discretion in setting aside
the default.

       Affirmed.

                                                              /s/ Kathleen Jansen
                                                              /s/ Jane M. Beckering
                                                              /s/ Michael F. Gadola

4
  A person may use registered mail to serve process when a corporation “has failed to appoint
and maintain a resident agent.” MCR 2.105(D)(4)(a). Nothing in the record supports that HNB
failed to appoint or maintain a resident agent.
5
  The obligation to answer a complaint is only triggered after being properly served with the
summons and complaint or otherwise having the defects in service cured (such as where the
defendant nonetheless acknowledges receiving the summons and complaint by formally
responding to them), neither of which has been shown here. See Dogan, 130 Mich App at 319-
320 (“The validity of the default and the default judgment must ultimately turn upon the fact of
due service of process. If there is a motion to set aside the default or the default judgment or if
there is a collateral attack upon the default judgment, the facts constituting due service of process
will have to be shown.”); Hill v Frawley, 155 Mich App 611, 614; 400 NW2d 328 (1986).

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