John D Hearn v. Peoples Community Inst Missionary Baptist Church ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
JOHN D. HEARN, UNPUBLISHED
November 28, 2017
Plaintiff-Appellant,
v No. 333665
Wayne Circuit Court
PEOPLES COMMUNITY INSTITUTIONAL LC No. 13-008941-CK
MISSIONARY BAPTIST CHURCH, doing
business as CHRISTIAN FAITH MINISTRIES,
Defendant-Appellee.
Before: JANSEN, P.J., and CAVANAGH and GADOLA, JJ.
PER CURIAM.
Plaintiff appeals as of right an order dismissing his case against defendant for failure to
appear at a settlement conference in this breach of contract action involving a promissory note.
We vacate the order and remand for entry of an order granting plaintiff’s motion for summary
disposition, with prejudice, and denying defendant’s motion for reconsideration.
This matter arises from the execution of a promissory note on June 1, 2006, in the
principal amount of $775,000. Plaintiff contends he loaned the money, which was the entirety of
his retirement savings, to defendant. Plaintiff’s son, David Hearn, executed the promissory note
on behalf of defendant as its pastor at the time. Although the outstanding balance of the
promissory note was due and payable in full on June 1, 2009, defendant made no payments on
the note.
Plaintiff contends the trial court erred in dismissing his case as a sanction for his failure
to attend the scheduled settlement conference. Plaintiff asserts that he had a reasonable
expectation the conference would be adjourned because the case evaluation had not been
completed, and further, a lesser sanction should have been imposed. After review for an abuse
of discretion, we agree. See Fisher v Belcher, 269 Mich. App. 247, 262; 713 NW2d 6 (2005).
“[T]rial courts possess the inherent authority to sanction litigants and their counsel,
including the power to dismiss an action.” Maldonado v Ford Motor Co, 476 Mich. 372, 376;
719 NW2d 809 (2006). “This power is not governed so much by rule or statute, but by the
control necessarily vested in courts to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases.” Id. Trial courts are, however, also endowed with the authority
to sanction by statute and court rule. Id. Specifically relevant in this matter are MCR
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2.504(B)(1) (“If a party fails to comply with these rules or a court order, upon motion by an
opposing party, or sua sponte, the court may enter a default against the noncomplying party or a
dismissal of the noncomplying party’s action or claims.”), and MCR 2.401, which states:
(G) Failure to Attend or to Participate.
(1) Failure of a party or the party’s attorney or other representative to attend a
scheduled conference or to have information and authority adequate for
responsible and effective participation in the conference for all purposes,
including settlement, as directed by the court, may constitute a default to which
MCR 2.603 is applicable or a ground for dismissal under MCR 2.504(B).
(2) The court shall excuse a failure to attend a conference or to participate as
directed by the court, and shall enter a just order other than one of default or
dismissal, if the court finds that
(a) entry of an order of default or dismissal would cause manifest injustice; or
(b) the failure was not due to the culpable negligence of the party or the party’s
attorney.
Because “[d]ismissal is a drastic step that should be taken cautiously,” “[b]efore
imposing such a sanction, the trial court is required to carefully evaluate all available options on
the record and conclude that the sanction of dismissal is just and proper.” Vicencio v Ramirez,
211 Mich. App. 501, 506; 536 NW2d 280 (1995). In ascertaining whether dismissal constitutes
an appropriate remedy, the trial court should evaluate the following nonexhaustive list of factors
on the record:
(1) whether the violation was wilful or accidental; (2) the party’s history of
refusing to comply with previous court orders; (3) the prejudice to the opposing
party; (4) whether there exists a history of deliberate delay; (5) the degree of
compliance with other parts of the court’s orders; (6) attempts to cure the defect;
and (7) whether a lesser sanction would better serve the interests of justice. [Id. at
507.]
In this case, the trial court imposed the harshest sanction—dismissal—without examining
the relevant factors and without considering whether a lesser sanction would be just and proper
under the circumstances of this case. See id. Plaintiff’s counsel did fail to appear at the
scheduled conference, after assuming it would be adjourned again because a case evaluation had
not been conducted. And this failure can be construed as “wilful” or not “accidental.” See id.
But counsel did make arrangements to be available if the conference proceeded. And counsel
did not delay in filing a motion to explain his error to the trial court.
There is also no indication in the trial court record that plaintiff’s counsel had a history of
noncompliance with court orders. Further, dismissal of the case was extremely prejudicial to
plaintiff. This matter has been pending since 2013. If the statute of limitations does not prevent
it, plaintiff would be required to refile this case which would further, and significantly, delay its
resolution. And there appears to be no prejudice to defendant in permitting the litigation to
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proceed. While the litigation was protracted, there is nothing in the trial court record to
specifically attribute any lengthy delays to plaintiff’s behavior. To the contrary, plaintiff had to
file several motions to prompt defendant’s response or compliance during these proceedings and
numerous hearings were rescheduled by the trial court. In fact, defendant failed to appear for a
scheduled conference in October 2015 and was not similarly sanctioned—despite defendant’s
history of delaying these proceedings. Finally, considering the whole record, it is clear that a
lesser sanction than dismissal of plaintiff’s case would better serve the interests of justice. See
id. Dismissal of plaintiff’s case for a single procedural misstep during this several-year litigation
provides a potential windfall to defendant; alleviating defendant of the responsibility of
establishing its entitlement to retain the $775,000 obtained through the promissory note without
any repayment or determination of entitlement. In summary, considering the several factors
discussed above, the trial court’s dismissal of the case constituted an abuse of discretion and the
order is vacated. See Fisher, 269 Mich. App. at 262.
Plaintiff also argues that the trial court erred in granting defendant’s motion for
reconsideration of a previous order granting plaintiff’s motion for summary disposition. After
review for an abuse of discretion, we agree. See Churchman v Rickerson, 240 Mich. App. 223,
233; 611 NW2d 333 (2000).
In December 2013, plaintiff filed a motion for summary disposition under MCR
2.116(C)(9) and (10), arguing that there was no genuine issue of material fact that defendant was
liable under the plain terms of the promissory note, which was attached as an exhibit. That is,
the promissory note became due and payable in full on June 1, 2009, and defendant had failed to
pay any portion of the amount owed—as defendant admitted in its response to plaintiff’s request
for admissions, which was also attached as an exhibit. Further, plaintiff argued, defendant failed
to plead any valid defense to plaintiff’s claim. Accordingly, plaintiff requested the trial court to
grant its motion for summary disposition. Thereafter, the trial court entered a scheduling order
setting forth the specific date the response to the motion was due, and warning that the failure to
timely file such responsive brief would result in dismissal.
After defendant failed to file a response to plaintiff’s motion, the trial court entered an
order granting plaintiff’s motion for summary disposition. When an adverse party does not
respond to a properly supported motion for summary disposition filed under subrule (C)(10), as
required by MCR 2.116(G)(4), “judgment, if appropriate, shall be entered against him or her.”
See also Nastal v Henderson & Assoc Investigations, Inc, 471 Mich. 712, 725; 691 NW2d 1
(2005). Subsequently, defendant filed a motion for reconsideration under MCR 2.119(F), which
provides:
(1) Unless another rule provides a different procedure for reconsideration of a
decision . . . a motion for rehearing or reconsideration of the decision on a motion
must be served and filed not later than 21 days after entry of an order deciding the
motion.
* * *
(3) Generally, and without restricting the discretion of the court, a motion for
rehearing or reconsideration which merely presents the same issues ruled on by
the court, either expressly or by reasonable implication, will not be granted. The
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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.
The motion for reconsideration filed by defendant was untimely because it was not filed within
21 days after entry of the order granting plaintiff’s motion for summary disposition. See MCR
2.119(F)(1). Further, the motion for reconsideration filed on behalf of defendant, a corporation,
was not filed by legal counsel; rather, it was filed in propria persona by John Hearn, Jr.,
defendant’s alleged pastor at the time. Our Supreme Court has held:
[I]n any judicial proceeding with which the corporate fiduciary is concerned, in
the probate court or any other court of record, it must be represented by a duly
licensed attorney. . . . While an individual may appear in propria personam, a
corporation, because of the very fact of its being a corporation, can appear only by
attorney regardless of whether it is interested in its own corporate capacity or in a
fiduciary capacity. A layman is not authorized to practice law merely because he
is an employee of a corporate fiduciary. [Detroit Bar Ass’n v Union Guardian
Trust Co, 282 Mich. 707, 711; 281 N.W. 432 (1938) (citations omitted).]
This reflects a basic principle of law that a corporation must necessarily be represented by an
attorney. Id. at 711-712. Therefore, the motion for reconsideration should have been stricken as
the product of the unauthorized practice of law. But even if the motion for reconsideration was
not stricken, defendant failed to show that the trial court made a palpable error by entering the
dismissal order. Thus, considering the totality of the circumstances presented in this case, the
trial court abused its discretion by granting defendant’s motion for reconsideration. See
Churchman, 240 Mich. App. at 233. Accordingly, this case is remanded to the trial court for entry
of an order granting plaintiff’s motion for summary disposition, with prejudice, and denying
defendant’s motion for reconsideration.
Reversed and remanded to the trial court for proceedings consistent with this opinion.
We do not retain jurisdiction. Plaintiff is entitled to costs as the prevailing party. MCR
7.219(A).
/s/ Kathleen Jansen
/s/ Mark J. Cavanagh
/s/ Michael F. Gadola
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