993 N.W.2d 11
Mich. Ct. App.2022Background:
- Steven and Laura Jackson sold WMT & D, Inc. to Bulk AG Innovations, LLC (BAI) in an asset purchase (March 29, 2018); the sale included earn-out payments and the Jacksons remained as employees.
- After closing, BAI (led by O. Victor Mowatt) retained certain cash and accounts receivable at Mowatt’s request as a temporary loan; plaintiffs contend they were never repaid and also did not receive earn-out payments.
- Plaintiffs sued BAI and Mowatt (May 1, 2020) for breach of contract, conversion, and other claims; neither defendant answered and the clerk entered defaults against both defendants.
- Plaintiffs moved for default judgment seeking $180,000 (one year’s earn-out), $317,987.16 (loan), trebling under MCL 600.2919a(1), attorney fees, and costs.
- The trial court entered a default judgment awarding $180,000 (earn-out), attorney fees ($27,036.50), and costs ($550.64) — total $207,587.14 — but denied the loan damages and trebling for lack of evidentiary support; a motion for reconsideration with additional spreadsheets and an affidavit was denied.
- On appeal the Court of Appeals affirmed, holding the trial court did not clearly err in its damages determination nor abuse its discretion in denying reconsideration.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment damages should include $317,987.16 for unpaid cash/accounts receivable (loan) | Jacksons argued the loan was unpaid and entitled them to the stated sum | BAI/Mowatt implicitly argued no dispute on liability but contested the sufficiency of evidence for that damages amount | Trial court properly refused loan damages for lack of evidence; affirmed |
| Whether the trial court abused discretion by denying plaintiffs’ motion to reopen evidence/reconsider | Jacksons argued they could supply additional proof on reconsideration to establish the loan amount | Defendants argued plaintiffs had opportunity and failed to present necessary proof earlier | Denial was not an abuse of discretion; plaintiffs could have presented evidence earlier |
| Whether plaintiffs proved breach-of-verbal-contract damages with reasonable certainty | Jacksons claimed spreadsheets/affidavit showed the loan amount and damages | Defendants pointed to lack of linkage, outdated exhibits, and inclusion of non-receivable items (WIP) | Damage claim failed the reasonable-certainty requirement for verbal-contract damages; award denied |
| Whether treble damages under MCL 600.2919a(1) must be awarded | Jacksons sought trebling of conversion damages (accounts receivable and cash) | Defendants argued no underlying proven damages and trebling is discretionary | Trebling is permissive and no damages were proved to treble; refusal to treble not reversible error |
Key Cases Cited
- Epps v 4 Quarters Restoration LLC, 498 Mich 518 (default admits liability but not the amount of damages)
- Hannay v Dep’t of Transp, 497 Mich 45 (plaintiff bears burden to prove damages by preponderance)
- Triple E Produce Corp v Mastronardi Produce, Ltd, 209 Mich App 165 (damage awards reviewed for clear error)
- Woods v SLB Prop Mgt, LLC, 277 Mich App 622 (denial of reconsideration reviewed for abuse of discretion)
- People v Duncan, 494 Mich 713 (abuse-of-discretion standard described)
- Van Buren Charter Twp v Visteon Corp, 319 Mich App 538 (verbal-contract damages require reasonable certainty)
- Aroma Wines & Equip, Inc v Columbian Distrib Servs, Inc, 303 Mich App 441 (use of "may" shows permissive/discretionary trebling under MCL 600.2919a)