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Docket Number

Docket No. 24718.

Attorney(S)

Joseph J. Cauchi and John P. Murphy, for plaintiffs. Verna L. Bennett, in propria persona.

Judges

D.E. HOLBROOK, J.

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Smart Summary

Whalen v. Bennett, Michigan Court of Appeals (Dec. 9, 1976) — Summary

Factual and Procedural Background

On April 23, 1972, Verna L. Bennett entered into a sales agreement with John F. and Jean L. Whalen for Lots 481–484 of Hillcrest subdivision in Roscommon County for $3,300. The buyers paid the purchase price on time. The agreement required the seller to pay costs including deed recording, revenue stamps, title insurance, and road improvement or installation to Roscommon County specifications.

Plaintiffs filed a four-count complaint on December 10, 1974, seeking specific performance or, alternatively, damages, and alleging fraud based on representations about road improvements. Defendant answered on January 22, 1975, denying allegations and asserting she acted in good faith and that $16,000 had been expended surveying and road building within the subdivision. Discovery exchanges and exhibits followed; defendant's March 12, 1975, exhibits showed the Roscommon County Road Commission had abandoned and vacated the subject roads on May 19, 1972, and detailed work performed.

Plaintiffs amended their complaint on March 25, 1975, dropping a co-defendant and obtained an order staying proceedings 30 days to allow defendant to obtain counsel; defendant did not obtain counsel. Plaintiffs moved for summary judgment (noticed for May 21, 1975). Defendant was served by mail. On May 21, 1975, defendant did not appear at the hearing; plaintiffs later applied for default judgment, noticed for June 4, 1975. A letter from a physician dated May 21 stating the defendant should not attend the scheduled hearing was received and filed by the clerk. The May 21 motion had been before Judge Robert B. Webster, but the June 4 motion was heard before Judge Farrell E. Roberts; defendant alleges she attended Judge Webster's courtroom on June 4 at the appointed time, then when informed of the transfer arrived at Judge Roberts' courtroom at 9:20 a.m., by which time the default judgment had been taken and filed. The clerk's file shows the default judgment in plaintiffs' favor for $26,033.22 was entered June 4, 1975. Judgment for plaintiffs was entered and the defendant appealed.

Legal Issues Presented

Whether plaintiffs were entitled to summary judgment on their claims where defendant's pleadings, affirmative defenses, interrogatory answers, and exhibits presented material issues of fact.
Whether plaintiffs were entitled to a general default judgment based on defendant's failure to appear at the summary judgment motion hearing under the circumstances of this case.
Whether the entry of a default judgment complied with the notice requirements of GCR 1963, 520.2(2), and whether lack of proper notice denied defendant due process.

Arguments of the Parties

Plaintiffs' Arguments

Plaintiffs sought a default judgment under GCR 1963, 520.2(2), asserting the defendant was found to be in default on May 21, 1975, and that proper notice of application and supporting affidavits had been served and filed.
At the June 4 hearing plaintiffs' counsel stated the defendant was not an infant, not incompetent, not in military service, and had appeared personally in the action, requesting entry of default judgment.

Defendant's Arguments

Defendant denied the complaint's allegations and asserted she acted in good faith with respect to road construction and had expended funds (affirmative defense: $16,000 expended in surveying and road building).
Defendant provided answers to plaintiffs' interrogatories and exhibits (including evidence the county had abandoned and vacated the roads) that presented material factual issues.
Defendant contended she did not receive proper notice of the June 4 hearing because the motion was transferred to another judge's courtroom; she alleges she was in Judge Webster's courtroom at the appointed time and only reached Judge Roberts' courtroom at 9:20 a.m., at which point the default judgment had already been taken and filed. A physician's letter was filed advising she should not attend the May 21 hearing.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kaminski v Standard Industrial Finance Co, 325 Mich. 364; 38 N.W.2d 870 (1949)	Material issues of fact raised by pleadings and discovery preclude summary judgment.	The court cited Kaminski to support the conclusion that the defendant's answer, affirmative defenses, interrogatory answers, and exhibits presented material issues of fact, thus precluding summary judgment.
Hecker Products Corp v Transamerican Freight Lines, Inc, 296 Mich. 381; 296 N.W. 297 (1941)	Where claim is for unliquidated damages, a plaintiff is not entitled to summary judgment.	The court applied Hecker Products to hold that because plaintiffs' claim sought unliquidated damages, summary judgment was improper.
Advance Dry Wall Co v Wolfe-Gilchrist, Inc, 14 Mich. App. 706, 713; 165 N.W.2d 906, 910 (1968)	Failure to provide proper notice of a proceeding may deny due process and render a judgment voidable.	The court relied on Advance Dry Wall to conclude that the notice here was effectively no notice because the hearing occurred in a different courtroom than indicated, and that allowing the judgment to stand would deny due process.

Court's Reasoning and Analysis

The court analyzed the case in two primary respects: the propriety of summary judgment and the validity of the default judgment.

First, the court reviewed plaintiffs' motion for summary judgment and the record. It found that defendant's answer, affirmative defenses, her answers to interrogatories, and the exhibits attached to those answers presented material issues of fact. Citing Kaminski, the court held these factual disputes precluded summary judgment. The court further observed that plaintiffs' claim included unliquidated damages and cited Hecker Products to conclude that on these facts plaintiffs were not entitled to summary judgment. The court also noted that issues involving state of mind (e.g., scienter in fraud claims) make summary judgment particularly inappropriate because they create genuine disputes over factual questions.

Second, the court addressed plaintiffs' application for a default judgment. It determined that plaintiffs were not entitled to take a general default based on defendant's failure to appear at the motion for summary judgment hearing where summary judgment itself was not warranted. Independently, the court examined notice under GCR 1963, 520.2(2), which requires written notice at least seven days prior to a hearing where the party has appeared in the action. The notice mailed to defendant specified Judge Webster's courtroom, but the motion was heard and granted in Judge Roberts' courtroom. Defendant alleged she was present in Judge Webster's courtroom at the appointed time and only reached Judge Roberts' courtroom at 9:20 a.m., at which time the default judgment had been taken and filed. The court concluded that, under these facts, the notice received by defendant was effectively no notice. Citing Advance Dry Wall, the court held that allowing the judgment to stand under those notice circumstances would deny due process.

Holding and Implications

REVERSED AND REMANDED.

Holding: The Court of Appeals reversed the default judgment entered June 4, 1975, and remanded the case for trial on the merits. The court ordered that costs be awarded to the prevailing party below.

Implications: The immediate effect is that the default judgment in the amount of $26,033.22 is vacated and the case proceeds to trial on the merits. The court concluded plaintiffs were not entitled to summary judgment or to a general default under the circumstances present, and that the notice given did not satisfy GCR 1963, 520.2(2) and due process. The opinion did not announce a new legal rule; it applied existing precedent to the facts of this case.

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WHALEN v BENNETT

D.E. HOLBROOK, J.

The defendant appeals from a default judgment in the amount of $26,033.22 entered against her in favor of plaintiffs on June 4, 1975, which was filed in the clerk's office for Oakland County at 9:20 a.m. on that day.

On April 23, 1972, defendant Verna L. Bennett entered into a sales agreement with plaintiffs John F. Whalen and Jean L. Whalen for the sale of Lots 481, 482, 483 and 484 of Hillcrest subdivision, Roscommon County, Michigan, for the sum of $3,300, with $100 down and the balance to be paid by May 10, 1972. The total price was paid on time. The agreement provided that the:

"Seller agrees to pay from purchasers total purchase price the following: (A) Cost of deed recording and preparation, (B) Cost of revenue stamps for deed, (C) Cost of title insurance policy, (D) Cost of road improvement or installation to county of Roscommon specifications."

On December 10, 1974, the plaintiffs filed a four-count complaint against the defendant and another person, William L. Bennett, seeking specific performance or, in the alternative, damages for breach of the contract and alleged fraud based upon defendant's claimed false representations concerning the road improvement mentioned in the contract.

On January 22, 1975, defendant answered the complaint denying the allegations of plaintiffs and claiming good faith in attempting to comply with the contract as to construction of the roads in question. Defendant also filed an affirmative defense representing that the sum of $16,000 had been expended in surveying and road building within the subdivision.

On February 3, 1975, plaintiffs filed interrogatories for defendant to answer, and thereafter defendant filed interrogatories for plaintiffs to answer. Plaintiffs' interrogatories were answered by defendant March 3, 1975, except as to a few of the questions, and as to those questions she claimed they were inappropriate. Plaintiffs answered the interrogatories of the defendant as far as possible.

On March 12, 1975, defendant filed additional exhibits to her answer to plaintiffs' interrogatories, showing that the Roscommon County Road Commission had abandoned and vacated the subject roads in the Hillcrest subdivision on May 19, 1972, subsequent to the date of agreement of purchase set forth above. It further contained specific information on the work done on the subject roads.

On March 25, 1975, plaintiffs filed an amendment to the complaint, dropping William L. Bennett as a party defendant. Mr. Bennett had been improperly named as an original defendant. Plaintiffs' amendment was in conformance with an order of the court. This order further stayed the proceedings for 30 days to allow Verna L. Bennett to obtain counsel. This order was filed in the clerk's office on April 3, 1975. Why this 73-year-old lady defendant failed to obtain counsel is not explained, but she did not.

Plaintiffs then filed on May 13, 1975, a motion for summary judgment noticing the same for May 21, 1975, at 9 a.m. and to be held before the Honorable Robert B. Webster. This motion was brought under GCR 1963, 117.2(3). Mr. Whalen signed an affidavit in support of this motion. Service was had on defendant by mail posted May 13, 1975. Defendant failed to appear on May 21, 1975, and plaintiffs filed on May 29, 1975, an application for default judgment, which was noticed on June 4, 1975, before the Honorable Robert B. Webster. On May 21, 1975, there appears in the records a letter from Rex J. Cheff, D.C., marked as being received at 9:20 a.m. and filed in the clerk's office at 4:06 p.m. The letter reads as follows:

"Mrs. Verna L. Bennett is a patient of mine and under my care and treatment.

"It is not adviseable [sic] for her to attend the Court Hearing slated for May 21, 1975."

All the proceedings prior to June 4, 1975, were held in the courtroom of and before the Honorable Robert B. Webster. However, for some reason the motion docket for June 4, 1975, of Judge Webster was transferred to be heard before the Honorable Farrell E. Roberts in his courtroom. Defendant has represented that she was in Judge Webster's courtroom at 9 a.m. on June 4, 1975, and further, by the time she obtained the proper information of the transfer from the clerk and proceeded to the courtroom of Judge Roberts, it was 9:20 a.m. when she arrived. The default judgment had been taken and filed by the clerk's office. This allegation has not been denied by the plaintiffs.

The transcript of the proceedings taken on June 4, 1975, relates the following:

"The Clerk: Calling the case of John Whalen, et al, versus Verna Bennett, 119142.

"Mr. Murphy: If it please the court, my name is John Murphy. I represent the plaintiffs in this action. We are making application today for a default judgment against the defendant, Verna Bennett, under the provision of GCR 1963, 520.2(2). The defendant is found to be in default May 21, 1975 by the Honorable Robert Webster. Proper notice of application and supporting affidavits were served and filed and a proof of service of above was duly filed. The defendant is not an infant. She is not incompetent and not in military service of the State of Michigan, or the United States of America. Defendant has appeared personally in this action. Therefore we would request that the court grant our default judgment in this case.

"The Court: Motion is granted."

Plaintiffs' motion set for May 21, 1975, was for a summary judgment.

Count I of plaintiffs' complaint was for specific performance or in the alternative for damages in the amount of $7,500, if the defendant was unable to perform the contract. Count II was a claim based upon fraud. Count III was a claim based upon fraud. Count IV was a claim based upon conversion. The answer by defendant to plaintiffs' complaint and the affirmative defenses contained in defendant's answer, together with her answers to the interrogatories of the plaintiffs and exhibits attached thereto presented material issues of fact to be determined by the trial court, thus precluding the granting of a summary judgment. Kaminski v Standard Industrial Finance Co, 325 Mich. 364; 38 N.W.2d 870 (1949). Plaintiffs' motion for summary judgment and the affidavit filed in support thereof disclosed that plaintiffs' claim was for unliquidated damages. Under these facts, plaintiffs were not entitled to a summary judgment. Hecker Products Corp v Transamerican Freight Lines, Inc, 296 Mich. 381; 296 N.W. 297 (1941).

Further, in cases involving state of mind such as the scienter requirement in fraud, summary judgment will hardly ever be appropriate because it will be difficult to foreclose a genuine dispute over this factual question. 1 Honigman Hawkins, Michigan Court Rules Annotated (2d ed), Author's Comments, pp 360, 361. We perceive no way that plaintiffs could have properly been entitled to a summary judgment in this complicated factual case.

We also determine that plaintiffs were not entitled to take a general default of defendant upon her failure to appear at the motion for summary judgment hearing, where plaintiffs were not entitled under the circumstances present in this case to a summary judgment for the reasons herein before stated.

In addition, we also rule that the default judgment must be vacated for another reason, i.e., a lack of proper notice. GCR 1963, 520.2(2) provides in part:

"[N]o judgment by default shall be entered against an infant or incompetent person unless represented in the action by a general guardian, guardian ad litem, or other such representative who has appeared therein. If the party against whom judgment by default is sought has appeared in the action, he (or if appearing by representative, his representative) shall be served with written notice of the application for judgment at least 7 days prior to the hearing on such application."

As herein stated, the notice sent to defendant indicated that the hearing on the default judgment would be in the courtroom of the Honorable Robert B. Webster. Defendant alleges, and plaintiffs do not deny, that she was in the courtroom of the Honorable Robert B. Webster at the appointed time and day. The motion was actually heard and granted by the Honorable Farrell E. Roberts, in his courtroom. Thus, the "notice" received by defendant under the facts present herein was in effect no notice at all. As this Court said in Advance Dry Wall Co v Wolfe-Gilchrist, Inc, 14 Mich. App. 706, 713; 165 N.W.2d 906, 910 (1968): "The rules as to notice were not properly fulfilled and to allow the judgment to stand against her would be to deny her due process."

Reversed and remanded for a trial on the merits. Costs to be awarded the prevailing party below.

WHALEN v. BENNETT