Lawrence M Clarke, Inc v. Richco Construction, Inc
489 Mich. 265
| Mich. | 2011Background
- Plaintiff sued Richco Construction, Inc. for breach of contract and fraud arising from sewer system work on a Monroe County subdivision (2003-2004).
- Richco’s officers were identified in state filings, with Ronald and Thomas as principal figures and as registered agents at 27734 Ecorse Road, Romulus, Michigan.
- Plaintiff could not effect service; Richco vacated its listed address, and attempts to locate defendants via multiple leads failed, leading to initial dismissal without prejudice (Oct. 30, 2006).
- Plaintiff refiled on Jan. 7, 2007, requesting alternative service; the trial court authorized substituted service by posting at the registered address, mailing to Thomas and Ronald, and newspaper publication (MCR 2.106).
- Default entered Apr. 5, 2007; notice sent to Richco, Thomas, and Ronald; a default judgment was entered Oct. 10, 2007 totaling $371,598.37 against all three defendants.
- Defendants learned of the default judgment only after their vehicles were seized on Apr. 12, 2008, prompting an emergency motion to set aside the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether knowledge of the action excused relief under 2.612(B). | Plaintiff contends substituted/publicized notice provided actual knowledge. | Richco argues no actual knowledge due to lack of service; constructive notice is insufficient. | Relief granted; lack of actual knowledge satisfies 2.612(B). |
| Whether defendants entered a timely appearance within one year after final judgment. | No timely appearance within one year to justify relief. | Defendants entered an appearance within one year (April 16-22, 2008). | Yes, appearance timely; within one year. |
| Whether there was a reason justifying relief and meritorious defenses exist. | Plaintiff argues damages and fraud claims supported by record evidence. | Meritorious defenses exist to breach of contract and fraud; damages lack sufficient proof. | Yes; meritorious defenses shown and damages susceptible to challenge. |
| Whether innocent third-party prejudice would result from setting aside the judgment. | Setting aside could prejudice plaintiff’s recovery and expectations. | No third-party interests implicated; all parties to contract are parties to action. | No prejudice to innocent third parties. |
Key Cases Cited
- National Car Rental v. S & D Leasing, Inc., 89 Mich. App. 364 (1979) (lack of actual notice permits relief from default judgment)
- Krueger v Williams, 410 Mich. 144 (1981) (substituted service and due process standards; reasonableness of notice)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (due process requires notice reasonably calculated to inform)
- Allied Electric Supply Co., Inc. v. Tenaglia, 461 Mich. 285 (1999) (relief from judgment standards and interplay of rules 2.612 and 2.603)
- Sidun v. Wayne County Treasurer, 481 Mich. 503 (2008) (publication notice and adequacy of notice under Mullane)