Dfcu Financial v. Rodernold Monts ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
DFCU FINANCIAL, UNPUBLISHED
May 14, 2015
Plaintiff-Appellant,
v No. 320375
Wayne Circuit Court
RODERNOLD MONTS, LC No. 11-013161-CK
Defendant-Appellee,
and
ACLU,
Garnishee-Defendant.
Before: RIORDAN, P.J., and JANSEN and FORT HOOD, JJ.
PER CURIAM.
In this breach of contract action, plaintiff, DFCU Financial (“DFCU”), appeals as of right
an order sustaining the objections of defendant, Rodernold Monts (“Rodernold”), to a writ of
garnishment. We reverse and remand for reinstatement of the writ.
Rodernold and his former wife, Kimberly Monts (“Kimberly”), obtained a home equity
line of credit from DFCU in 2003. In October 2011, DFCU filed a complaint alleging that
Rodernold and Kimberly had failed to pay the balance due on the loan, approximately $30,000.
The trial court entered default judgments against Kimberly and Rodernold in 2012. A few
months after these default judgments entered, Kimberly and Rodernold divorced. The judgment
of divorce ordered that Kimberly would assume this debt and indemnify Rodernold. On June 2,
2013, the trial court issued a writ of garnishment against Rodernold. Rodernold objected to the
writ on the basis that Kimberly assumed the debt in the judgment of divorce, which Rodernold
argued absolved him of any liability to DFCU. After a hearing, the trial court sustained
Rodernold’s objections, holding that the divorce judgment precluded DFCU from seeking
garnishment against Rodernold.
DFCU argues that, in light of MCR 3.101(K)(1), the trial court erred when it sustained
Rodernold’s objections. We agree. A trial court’s decision to set aside a writ of garnishment is
reviewed for an abuse of discretion. Sys Soft Technologies, LLC v Artemis Technologies, Inc,
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301 Mich App 642, 650; 837 NW2d 449 (2013). An abuse of discretion occurs when the trial
court reaches a decision outside the range of principled outcomes. Id. The proper interpretation
of a court rule is an issue of law reviewed de novo. Wilcoxon v Wayne Co Neighborhood Legal
Servs, 252 Mich App 549, 553; 652 NW2d 851 (2002).
“Garnishment proceedings are entirely creatures of statute and are to be strictly
construed.” Westland Park Apartments v Ricco, Inc, 77 Mich App 101, 104 n 1; 258 NW2d 62
(1977). Pursuant to MCR 3.101(K), after a writ of garnishment has issued, objections to the writ
may be filed. However, the scope of such objections is limited. See MCR 3.101(K)(1) and (2).
“Objections may only be based on defects in or the invalidity of the garnishment proceeding
itself, and may not be used to challenge the validity of the judgment previously entered.” MCR
3.101(K)(1). Rodernold’s objections were based on his belief that, because the divorce judgment
ordered Kimberly to pay the debt owed to DFCU, he was no longer liable for the debt.
Rodernold’s objections were clearly directed toward the validity of the default judgment, i.e.,
whether he was liable for the debt in the first instance. The trial court’s decision to sustain the
objections was similarly based on a conclusion that the underlying judgment was invalid in light
of the divorce judgment. Objections to a writ of garnishment “may not be used to challenge the
validity of the judgment previously entered.” MCR 3.101(K)(1). Because Rodernold’s
challenge to the writ of garnishment was based on the validity of the underlying judgment and
not the garnishment proceeding itself, his objections should have been rejected by the trial court.
MCR 3.101(K)(1). Accordingly, the trial court abused its discretion when it sustained the
objections. See Ronnisch Constr Group, Inc v Lofts on the Nine, LLC, 306 Mich App 203, 208;
854 NW2d 744 (2014) (“[A] court abuses its discretion when it makes an error of law.”).
We further note that the basis of the trial court’s ruling was itself erroneous. The divorce
judgment was entered in a separate proceeding to which DFCU was not a party. As such, DFCU
was not bound by the judgment. See, e.g., Eyde v Michigan, 393 Mich 453, 454-455; 225 NW2d
1 (1975) (discussing “the established principle that those not a party or privy to an action are
unaffected by the judgment rendered in that action . . . .”); Damm v Mason, 102 Mich 545, 546;
61 NW 3 (1894) (mortgagee was not bound by a decision deciding title to the mortgaged
property where that decision was rendered in a case to which the mortgagee was not a party).
Nor did the judgment of divorce absolve Rodernold of his liability to DFCU. The judgment of
divorce stated that Kimberly would “assume the full amount of the joint debt,” and stated that
she would “indemnify and hold [Rodernold] harmless.” By stating that Kimberly would
indemnify Rodernold with regard to the debt, the judgment only addressed liability for the debt
as between Kimberly and Rodernold. Rodernold could still be liable to DFCU, but he could
maintain an action against Kimberly to indemnify him for his liability. See Langley v Harris
Corp, 413 Mich 592, 597; 321 NW2d 662 (1982) (“[I]ndemnity shifts the entire loss from the
party who has been forced to pay to the party who should properly bear the burden.”); Wausau
Underwriters Ins Co v Ajax Paving Indus, Inc, 256 Mich App 646, 653; 671 NW2d 539 (2003)
(“[W]hen one promises to indemnify another, the promise is to reimburse for the entire loss.”).
Thus, the trial court’s conclusion that the divorce judgment eliminated Rodernold’s liability to
DFCU was erroneous.
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Reversed and remanded for reinstatement of the writ of garnishment. We do not retain
jurisdiction. DFCU, the prevailing party, may tax costs. MCR 7.219.
/s/ Michael J. Riordan
/s/ Kathleen Jansen
/s/ Karen M. Fort Hood
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