911 N.W.2d 241
Mich. Ct. App.2017Background
- Crystal Automation (defendant) leased antenna/equipment space on Edmore's water tower since 2003 under a written Lease with an initial 5‑year term and automatic renewals; Lease allowed tenant termination in limited circumstances but did not expressly give landlord termination or eviction rights.
- In 2015 Edmore contracted to repaint/maintain the tower and directed Crystal to remove its equipment; Crystal objected, proposed alternatives, and warned service interruptions would affect customers/911.
- Edmore sued in March 2016 seeking injunctive relief to force removal and termination of the Lease; expedited briefing/hearing was ordered.
- Crystal filed opposition papers to injunctive relief and appeared at hearings, but its answer was filed two days late; the clerk entered default on April 14, 2016.
- The trial court granted Edmore partial summary disposition and then denied Crystal’s motion to set aside the default and entered a default judgment terminating the Lease and awarding fees/damages to Edmore.
- The Court of Appeals reversed: it held the default was improperly entered because Crystal had “otherwise defended,” the trial court erred in refusing to set aside the default, and the Lease did not grant Edmore the unilateral right to force removal/terminate the Lease as the trial court concluded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the clerk’s entry of default was proper and whether default judgment should be set aside | Crystal failed to timely file an answer, so default was proper and no good cause to set it aside | Crystal “otherwise defended” the action by opposing injunctive relief and summary disposition; its late answer and prompt motion show good cause and meritorious defense | Default was improperly entered; trial court abused discretion in denying motion to set aside; good cause and meritorious defense existed |
| Whether the trial court properly granted partial summary disposition in Edmore’s favor under MCR 2.116(C)(9) and (10) | Lease unambiguously allowed landlord to order tenant off premises for maintenance, so Crystal breached | Lease requires tenant to protect equipment but does not give landlord unilateral eviction/termination power; terms must be read together | Trial court misconstrued Lease; summary disposition improper because Lease did not grant Edmore unilateral right to evict/terminate |
| Whether paragraph 7(D) and paragraph 10 authorized landlord to require removal of equipment during painting | Plaintiff reads ¶7(D)+¶10 as permitting removal in landlord’s sole discretion | Defendant reads ¶7(D) as requiring tenant to protect equipment at its cost, and ¶19 gives tenant limited termination rights — no landlord eviction power | Contract construed as a whole: no language granting Edmore unfettered right to order removal/terminate; trial court erred in its interpretation |
| Whether plaintiff was entitled to attorneys’ fees under ¶12(B) indemnity clause | Clause contemplates recovery of fees/costs from tenant | Clause covers indemnification for third‑party claims, not disputes between landlord and tenant over Lease terms | Trial court’s award premised on erroneous Lease construction; fee recovery not appropriately decided on the record |
Key Cases Cited
- Shawl v. Spence Bros., 280 Mich. App. 213 (2008) (factors for determining good cause to set aside default)
- Marposs Corp. v. Autocam Corp., 183 Mich. App. 166 (1990) (party that "otherwise defended" cannot be defaulted)
- Alken‑Ziegler, Inc. v. Waterbury Headers Corp., 461 Mich. 219 (1999) (default ordinarily not set aside if properly entered)
- Huntington Nat'l Bank v. Ristich, 292 Mich. App. 376 (2011) (abuse of discretion standard for set‑aside review)
- Village of Dimondale v. Grable, 240 Mich. App. 553 (2000) (MCR 2.116(C)(9) standard)
- Latham v. Barton Malow Co., 480 Mich. 105 (2008) (MCR 2.116(C)(10) standard)
- Old Kent Bank v. Sobczak, 243 Mich. App. 57 (2000) (contract interpretation focuses on parties’ intent and plain language)
- United Coin Meter Co. v. Lasala, 98 Mich. App. 238 (1980) (courts may not create remedies not agreed to in contract)