Daniel Sutter v. Ocwen Loan Servicing LLC ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
DANIEL SUTTER and SHERYL SUTTER, UNPUBLISHED
May 24, 2016
Plaintiffs-Appellees,
v No. 320704
Ingham Circuit Court
OCWEN LOAN SERVICING, LLC, LC No. 13-000642-CZ
Defendant-Appellant.
ON REMAND
Before: OWENS, P.J., and JANSEN and MURRAY, JJ.
PER CURIAM.
This case returns to us on order of our Supreme Court, which, in lieu of granting leave to
appeal, vacated our prior judgment in the case and remanded the case to this Court “to reconsider
whether the plaintiffs’ complaint stated a legally cognizable claim of statutory conversion under
MCL 600.2919a(1)(a).”1 On further consideration of the issue, we again conclude that plaintiffs’
complaint stated legally cognizable claims regarding common-law conversion, declaratory relief,
and injunctive relief, but failed to state a legally cognizable claim of statutory conversion. We
further conclude that the trial court did not err in denying defendant’s motion to set aside the
default or in denying defendant’s motion for relief from judgment. Accordingly, we affirm in
part, reverse in part, and remand for further proceedings consistent with this opinion.
I. SUFFICIENCY OF THE COMPLAINT
On further consideration of the issue, we again conclude that plaintiffs pleaded legally
cognizable claims regarding common-law conversion, declaratory relief, and injunctive relief,
but plaintiffs failed to plead a legally cognizable claim of statutory conversion.
“We review for an abuse of discretion a trial court’s decision on a motion to set aside a
default and whether to grant a default judgment.” Huntington Nat’l Bank v Ristich, 292 Mich
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Sutter v Ocwen Loan Servicing, LLC, 499 Mich 874 (2016).
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App 376, 383; 808 NW2d 511 (2011). “A trial court abuses its discretion when it reaches a
decision that falls outside the range of principled outcomes.” Id.In determining whether the trial court properly denied defendant’s motion to set aside the
default, we first consider whether plaintiffs pleaded legally cognizable claims in their complaint.
“It is an established principle of Michigan law that a default settles the question of liability as to
well-pleaded allegations and precludes the defaulting party from litigating that issue.” Wood v
Detroit Auto Inter-Ins Exch, 413 Mich 573, 578; 321 NW2d 653 (1982) (emphasis added). “The
entry of a default does not operate as an admission that the complaint states a cause of action.”
State ex rel Saginaw Prosecuting Attorney v Bobenal Investments, Inc, 111 Mich App 16, 22;
314 NW2d 512 (1981). “Manifest injustice would result if a default was not set aside where the
plaintiff failed to state a claim upon which relief can be granted, because a complaint that fails to
state a cause of action cannot support a judgment.” Lindsley v Burke, 189 Mich App 700, 702-
703; 474 NW2d 158 (1991).
The complaint must state sufficient facts to put the defendant on notice of the claims
against which it must defend. Kincaid v Cardwell, 300 Mich App 513, 529; 834 NW2d 122
(2013). MCR 2.111(B)(1) provides that a complaint must contain “[a] statement of the facts,
without repetition, on which the pleader relies in stating the cause of action, with the specific
allegations necessary reasonably to inform the adverse party of the nature of the claims the
adverse party is called on to defend[.]” The Michigan Supreme Court has adopted the following
principles in determining whether a pleading is sufficient:
The plaintiff’s declaration or complaint should contain a direct and
positive averment of all the ultimate facts, as distinguished from evidentiary facts,
necessary to state a cause of action in the plaintiff’s favor and against the
defendant, followed by a demand or prayer for the relief to which the plaintiff
claims to be entitled. The probative facts necessary to prove such ultimate facts
should not be pleaded. Neither is it necessary for him to plead facts of which the
court takes judicial notice, and consequently, he is not required to plead a public
statute, when his cause of action is based thereon, although when his action is
based upon a private statute or a municipal ordinance or the law of another state,
such laws and ordinances must be pleaded as any other fact. The facts making up
the cause of action should be set forth in their logical order, in ordinary and
concise language, but with the requisite degree of certainty required by general
rules of pleading. Every material fact essential to the existence of the plaintiff’s
cause of action, and which he must prove to sustain his right of recovery, must be
averred, in order to let in proof thereof. Every issue must be founded upon some
certain point, so that the parties may come prepared with their evidence and not
be taken by surprise, and the jury may not be misled by the introduction of
various matters.
Notwithstanding changes that have been introduced by modern systems of
pleading, it still remains the duty of the plaintiff to state his cause of action in his
declaration, complaint, or petition, and the right of the defendant to be apprised
thereby of the facts which are believed to constitute the plaintiff’s cause of action.
The plaintiff’s allegation must be such, if proved as laid, as to show as a matter of
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law the essential elements of a cause of action in his favor, and a cause of action
should be so stated that the court may determine its character as ex contractu or ex
delicto, although it is not necessary for the plaintiff in so many words to state the
character of his action as ex delicto or ex contractu. On the other hand, a pleading
properly drawn should contain no further allegations than thus indicated. It is not
required that the plaintiff aver any fact which is not necessary to his right. He is
not required to state the circumstances tending to prove the facts alleged,—the
character of the evidence upon which he intends to rely,—or to anticipate matters
of defense which the defendant may possibly set up. In general, the complaint or
petition is sufficient if its allegations state facts upon which the plaintiff relies for
a recovery, and if it adequately advises the defendant of the charge so as to enable
him to prepare his defense. [Steed v Covey, 355 Mich 504, 510-511; 94 NW2d
864 (1959) (emphasis added), quoting 41 Am Jur, Pleading, § 77, pp 343-345
(quotation marks omitted).]
A. CONVERSION CLAIMS
Conversion is “any distinct act of dominion wrongfully exerted over another’s personal
property in denial of or inconsistent with his rights therein.” Aroma Wines & Equip, Inc v
Columbian Distrib Servs, Inc, 497 Mich 337, 346; 871 NW2d 136 (2015) (citations and
quotation marks omitted). Conversion may occur when there is a temporary deprivation of
personal property, such as when the plaintiff’s property is restored to him. Pamar Enterprises,
Inc v Huntington Banks of Mich, 228 Mich App 727, 734; 580 NW2d 11 (1998). A check is the
personal property of the designated payee. Id. Under MCL 440.3110(4), “an instrument made
payable to two or more persons not alternatively, is payable to all of them and may be
negotiated, discharged, or enforced only by all of them.” Id. at 733 (emphasis added). A check
may be the subject of a conversion. See id. at 734. MCL 440.3420 provides, in part:
(1) The law applicable to conversion of personal property applies to
instruments. An instrument is also converted if it is taken by transfer, other than a
negotiation, from a person not entitled to enforce the instrument or a bank makes
or obtains payment with respect to the instrument for a person not entitled to
enforce the instrument or receive payment. An action for conversion of an
instrument may not be brought by (i) the issuer or acceptor of the instrument or
(ii) a payee or endorsee who did not receive delivery of the instrument either
directly or through delivery to an agent or a co-payee.
(2) In an action under subsection (1), the measure of liability is presumed
to be the amount payable on the instrument, but recovery may not exceed the
amount of the plaintiff’s interest in the instrument.
We again conclude that plaintiffs’ complaint stated a legally cognizable claim of
common-law conversion. According to plaintiffs’ complaint, defendant was assigned a forged
mortgage on plaintiffs’ property. Defendant obtained a homeowner’s insurance policy on the
property pursuant to the mortgage. A wind storm caused significant damage to plaintiffs’
property, and plaintiffs filed a claim for damages with the insurance company. Meanwhile,
plaintiffs informed defendant that the United States Court of Appeals for the Sixth Circuit
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determined that the mortgage was void ab initio. The insurer subsequently issued a check for
$16,860.68, made payable to defendant, plaintiffs, and plaintiffs’ attorneys. The insurance
company mailed the check to defendant and informed plaintiffs that they needed to contact
defendant to arrange the distribution of the funds. Plaintiffs’ attorneys contacted defendant to
locate the payment and arrange to distribute the funds, but defendant failed to tell plaintiffs the
location of the check or arrange to distribute the proceeds. Plaintiffs alleged that defendant did
not have an insurable interest in the property because the mortgage was void ab initio.
Plaintiffs alleged that (1) they are entitled to the $16,860.68, minus the $695 insurance
premium, (2) defendant was not a holder in due course because defendant received notice of
plaintiffs’ claim before the check was issued, (3) defendant “converted and/or attempted to
convert” the check “contrary to MCL 600.2919a(1) and MCL 440.3420(1)” because defendant
“wrongfully refused and failed to transfer possession of the American Security Insurance
Company check to the Plaintiffs” and (4) defendant’s conduct caused plaintiffs to incur damages
of $16,860.68, minus the $695 insurance premium. Plaintiffs requested that defendant endorse
and transfer the check, and that the court award plaintiffs treble damages, prejudgment and
postjudgment interest, and attorney fees and costs.
A party that obtains a forged instrument does not have a right or interest in the property,
even if the party obtained the forged instrument in good faith. See Special Prop VI, LLC v
Woodruff, 273 Mich App 586, 591; 730 NW2d 753 (2007) (“ ‘[W]here a deed is forged, those
innocently acquiring interests under the forged deed are in no better position as to title than if
they had purchased with notice.’ ”) (citation omitted). Thus, according to plaintiffs’ complaint,
defendant did not have an interest in the property because the mortgage was void ab initio. One
must have an insurable interest before he can insure property. See Agricultural Ins Co v
Montague, 38 Mich 548, 551 (1878). Accordingly, plaintiffs’ complaint sufficiently alleged that
defendant did not have an insurable interest in the property.
Although plaintiffs alleged that defendant was a designated payee of the check, once
defendant was informed that it had no interest in the property, it had clear proof that it was not
entitled to the check. At this point, defendant was required to endorse the check and send the
check to plaintiffs. Plaintiffs sufficiently pleaded a claim of common-law conversion in their
complaint because the complaint alleged that defendant withheld the $16,860.68 check from
plaintiffs after it learned that the mortgage was found to be void ab initio and after plaintiffs
demanded the check. Although it is unclear from the complaint what defendant did with the
check after receiving it, the complaint sufficiently alleged that defendant wrongfully withheld the
check and refused to give it to plaintiffs on demand. Therefore, plaintiffs’ complaint sufficiently
pleaded a claim of common-law conversion. See MCL 440.3420(1); Aroma Wines, 497 Mich at
346.
However, after reviewing the allegations contained in the complaint, we again conclude
that plaintiffs failed to plead a legally cognizable claim of statutory conversion. MCL
600.2919a, the statutory conversion statute, provides:
(1) A person damaged as a result of either or both of the following may
recover 3 times the amount of actual damages sustained, plus costs and reasonable
attorney fees:
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(a) Another person’s stealing or embezzling property or converting
property to the other person’s own use.
(b) Another person’s buying, receiving, possessing, concealing, or aiding
in the concealment of stolen, embezzled, or converted property when the person
buying, receiving, possessing, concealing, or aiding in the concealment of stolen,
embezzled, or converted property knew that the property was stolen, embezzled,
or converted.
(2) The remedy provided by this section is in addition to any other right or
remedy the person may have at law or otherwise.
“Conversion ‘to the other person’s own use’ requires a showing that the defendant employed the
converted property for some purpose personal to the defendant’s interests, even if that purpose is
not the object’s ordinarily intended purpose.” Aroma Wines, 497 Mich at 358-359.
Plaintiffs alleged that defendant received the insurance check, “failed and otherwise
refused to notify the Plaintiffs and/or their attorneys as to the location of the insurance payment,”
and “failed to make arrangements for the distribution of the insurance check’s proceeds.”
However, plaintiffs did not assert that defendant employed the check for some purpose personal
to defendant’s interests. Instead, plaintiffs merely alleged that defendant converted or attempted
to convert the check contrary to MCL 600.2919a(1) and MCL 440.3420(1) when defendant
“wrongfully refused and failed to transfer possession” of the check. The complaint did not
contain any allegation regarding the fact that defendant converted the check for its own use.
Accordingly, we again conclude that plaintiffs failed to include allegations in their complaint
necessary to reasonably inform defendant of the nature of the statutory conversion claim. See
MCR 2.111(B)(1). Therefore, plaintiffs’ complaint stated a legally cognizable claim of
common-law conversion, but did not state a legally cognizable claim of statutory conversion.
B. DECLARATORY AND INJUNCTIVE RELIEF
We again conclude that plaintiffs were entitled to the declaratory and injunctive relief
that they sought in their complaint based on the allegations in the complaint. With regard to their
claim for declaratory relief, plaintiffs explained, as discussed above, that the mortgage assigned
to defendant was forged and that the United States Court of Appeals for the Sixth Circuit found
the mortgage to be void ab initio. Plaintiffs alleged that defendant did not have an insurable
interest in the property and that, consequently, it was not entitled to any of the insurance
proceeds. Plaintiffs further alleged that they were entitled to the insurance proceeds, but that
defendant refused to notify plaintiffs or their attorneys regarding the location of the check or
arrange for the distribution of the proceeds. Plaintiffs requested that the court declare that
plaintiffs are entitled to the proceeds of the insurance payment, minus the $695 insurance
premium, and declare that plaintiffs are entitled to the proceeds of the second insurance payment
that will be made once the repairs are made to the property. Plaintiffs cited MCR 2.605, which
provides, in part, “In a case of actual controversy within its jurisdiction, a Michigan court of
record may declare the rights and other legal relations of an interested party seeking a
declaratory judgment, whether or not other relief is or could be sought or granted.” MCR
2.605(A)(1).
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Plaintiffs also sought an injunction, pursuant to MCR 3.310, compelling defendant to
release the insurance payment. The factors for determining whether a preliminary injunction is
warranted include:
(1) the likelihood that the party seeking the injunction will prevail on the
merits, (2) the danger that the party seeking the injunction will suffer irreparable
harm if the injunction is not issued, (3) the risk that the party seeking the
injunction would be harmed more by the absence of an injunction than the
opposing party would be by the granting of the relief, and (4) the harm to the
public interest if the injunction is issued. [Davis v Detroit Fin Review Team, 296
Mich App 568, 613; 821 NW2d 896 (2012) (citations and quotation marks
omitted).]
With regard to a permanent injunction, this Court weights several factors in determining whether
the trial court properly issued a permanent injunction, including:
(a) the nature of the interest to be protected, (b) the relative adequacy to the
plaintiff of injunction and of other remedies, (c) any unreasonable delay by the
plaintiff in bringing suit, (d) any related misconduct on the part of the plaintiff, (e)
the relative hardship likely to result to defendant if an injunction is granted and to
plaintiff if it is denied, (f) the interests of third persons and of the public, and (g)
the practicability of framing and enforcing the order or judgment. [Janet Travis,
Inc v Preka Holdings, LLC, 306 Mich App 266, 274; 856 NW2d 206 (2014)
(citation and quotation marks omitted).]
“Courts balance the benefit of an injunction to a requesting plaintiff against the damage and
inconvenience to the defendant, and will grant an injunction if doing so is most consistent with
justice and equity.” Id. at 274-275.
Plaintiffs requested that the court “effectuate and enforce the Court’s determination that
the Plaintiffs are entitled to receive all of the proceeds of the insurance payment and the payment
to be made after the repairs to the Plaintiffs’ home have been completed.” Plaintiffs incorporated
their allegations with regard to their claim for declaratory relief. Plaintiffs asserted that they
suffered and will continue to suffer irreparable harm because their home was severely damaged
by the wind storm, their home was still in disrepair, and plaintiffs did not have the ability to pay
for the repairs. Plaintiffs asserted that they were worried about the structural integrity of the
home and their well-being in the home. Thus, plaintiffs requested that the court “[p]reliminarily
and permanently enjoin the Defendant and compel it to release the insurance check to the
Plaintiffs.” The court entered a default judgment declaring, in part, that plaintiffs were entitled
to the $16,860.68 check, subtracting the $695 premium payment that defendant made, as well as
an additional insurance payment of $4,482.69 once repairs were made on the property. We agree
with the trial court that plaintiffs were entitled to declaratory and injunctive relief based on the
allegations in their complaint. Therefore, we conclude that plaintiffs pleaded legally cognizable
claims for declaratory and injunctive relief with regard to the check and the future payment of
$4,482.69.
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II. ATTORNEY FEES
Plaintiffs were not entitled to attorney fees because the complaint did not plead a legally
cognizable claim of statutory conversion. We review for an abuse of discretion the trial court’s
decision to award attorney fees. Great Lakes Shores, Inc v Bartley, 311 Mich App 252, 254; 874
NW2d 416 (2015). “As a general rule, attorney fees are not recoverable from a losing party
unless authorized by a statute, court rule, or other recognized exception.” Id. at 255. Because
we conclude that plaintiffs failed to sufficiently plead a claim of statutory conversion, we again
conclude that plaintiffs were not entitled to attorney fees pursuant to MCL 600.2919a(1).
Plaintiffs do not cite to another statute, court rule, or recognized exception that would permit
them to recover attorney fees. Accordingly, we reverse the trial court’s award of attorney fees.
III. MOTION TO SET ASIDE DEFAULT
We further conclude that the court did not err in denying defendant’s motion to set aside
the default because defendant failed to establish good cause and a meritorious defense. MCR
2.603(D) provides:
(1) A motion to set aside a default or a default judgment, except when
grounded on lack of jurisdiction over the defendant, shall be granted only if good
cause is shown and an affidavit of facts showing a meritorious defense is filed.
(2) Except as provided in MCR 2.612, if personal service was made on the
party against whom the default was taken, the default, and default judgment if one
has been entered, may be set aside only if the motion is filed
(a) before entry of a default judgment, or
(b) if a default judgment has been entered, within 21 days after the default
judgment was entered.
(3) In addition, the court may set aside a default and a default judgment in
accordance with MCR 2.612.
(4) An order setting aside the default or default judgment must be
conditioned on the defaulted party paying the taxable costs incurred by the other
party in reliance on the default or default judgment, except as prescribed in MCR
2.625(D). The order may also impose other conditions the court deems proper,
including a reasonable attorney fee.
MCR 2.603(D)(1) requires a showing of good cause and the filing of an affidavit showing a
meritorious defense. Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 229; 600
NW2d 638 (1999). “ ‘The good cause requirement . . . may be satisfied by demonstrating a
procedural irregularity or defect or a reasonable excuse for failing to comply with the
requirements that led to the default judgment.’ ” Bullington v Corbell, 293 Mich App 549, 560-
561; 809 NW2d 657 (2011) (citations omitted). “[M]anifest injustice is the result that would
occur if a default were to be allowed to stand where a party has satisfied the ‘meritorious
defense’ and ‘good cause’ requirements of the court rule.” Alken-Ziegler, 461 Mich at 233. “[I]f
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a party states a meritorious defense that would be absolute if proven, a lesser showing of ‘good
cause’ will be required than if the defense were weaker, in order to prevent a manifest injustice.”
Id. at 233-234.
This Court has clarified that the decision on this issue should be based on the totality of
the circumstances. Shawl v Spence Bros, Inc, 280 Mich App 213, 237; 760 NW2d 674 (2008).
This Court listed several factors for the trial court to consider with regard to good cause,
including “whether the party completely failed to respond or simply missed the deadline to file;”
“if the party simply missed the deadline to file, how long after the deadline the filing occurred;”
“the duration between entry of the default judgment and the filing of the motion to set aside the
judgment;” “whether there was defective process or notice;” “the circumstances behind the
failure to file or file timely;” “whether the failure was knowing or intentional;” “the size of the
judgment and the amount of costs due under MCR 2.603(D)(4);” “whether the default judgment
results in an ongoing liability (as with paternity or child support);” and “if an insurer is involved,
whether internal policies of the company were followed.” Id. at 238. With regard to a
meritorious defense, the trial court should consider whether the affidavit includes evidence that
“the plaintiff cannot prove or defendant can disprove an element of the claim or a statutory
requirement;” “a ground for summary disposition exists under MCR 2.116(C)(2), (3), (5), (6), (7)
or (8);” or “the plaintiff’s claim rests on evidence that is inadmissible.” Id. The court is only
required to consider the relevant factors, and the court has the discretion to determine the weight
of any particular factor. Id. at 239. The list of factors is not exclusive. Id.
Defendant failed to show good cause to set aside the default. Defendant contended that
there was good cause to set aside the default because it requested that its prior counsel, which
represented defendant in other matters related to plaintiffs, defend it in this case. However,
defendant learned that its prior counsel failed to respond to the complaint, and defendant
immediately retained different counsel. Defendant’s current counsel immediately sent the check
to plaintiffs, without endorsing the check, and requested that default be set aside. Defendant
argued that the issue regarding its counsel constituted a minor error that did not warrant entry of
default. Defendant also pointed out that it retained counsel to represent it in the case three days
after entry of the default.
However, we conclude that defense counsel’s failure to respond to the complaint did not
constitute a reasonable excuse for failure to comply with the requirements that led to default. An
attorney’s negligence is generally attributable to his client. Amco Builders & Developers, Inc v
Team Ace Joint Venture, 469 Mich 90, 96; 666 NW2d 623 (2003). Defendant failed to respond
to the complaint, and we agree with the trial court that the failure to do so because of the
confusion regarding which attorneys represented defendant did not constitute a minor error that
would give rise to a reasonable excuse for failure to respond. Defendant did not argue in its
motion to set aside the default that there was another reasonable excuse for its failure to comply
with the requirements leading to default or that there was a procedural irregularity giving rise to
good cause to set aside the default. Therefore, defendant failed to establish good cause to set
aside the default. See MCR 2.603(D)(1); Bullington, 293 Mich App at 560-561.
Furthermore, defendant did not establish a meritorious defense. Defendant contended
that it had a meritorious defense to the complaint because it was the named insured under the
policy, and plaintiffs were the additional insureds. Defendant contended that plaintiffs did not
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make loan payments or pay real estate taxes over the past several years. Defendant further
argued that it obtained property insurance and that it had the power to act for plaintiffs with
regard to the insurance coverage. Therefore, defendant was entitled to the check. The injunction
claim was rendered moot because defendant forwarded the check to plaintiffs. With regard to
plaintiffs’ conversion claim, defendant argued that the conversion claim was conclusory.
Furthermore, plaintiffs could not establish conversion because defendant was a payee on the
check, and defendant procured the insurance.
Defendant included an affidavit of its national managing counsel, stating that defendant
did not endorse, cash, or deposit the check. Instead, defendant forwarded the complaint to its
prior counsel with the expectation that prior counsel would defend it in this case. However,
defendant learned that its prior counsel did not respond to the complaint, and defendant retained
its current counsel to defend it in the case. Defendant’s current counsel sent the check through
overnight mail to plaintiffs’ counsel. The affidavit stated that defendant had a meritorious
defense because plaintiffs failed to state a claim for relief.
Defendant failed to show a meritorious defense to plaintiffs’ claims. As discussed above,
defendant was not entitled to the insurance proceeds because there was no valid mortgage on the
property. Furthermore, the affidavit merely stated, “Ocwen has a meritorious defense because
Plaintiffs’ Complaint generally fails to conform to minimum pleadings requirements and each
individual count fails to state a claim for relief as more fully detailed in Ocwen’s accompanying
Motion to Set Aside the Default.” The statement in the affidavit was conclusory and, as noted
above, plaintiffs pleaded sufficient claims regarding common-law conversion, declaratory relief,
and injunctive relief in their complaint. Accordingly, the trial court properly denied the motion
to set aside the default because defendant failed to establish good cause or a meritorious defense.
See MCR 2.603(D)(1).
IV. MOTION FOR RELIEF FROM JUDGMENT
The trial court also properly denied defendant’s motion for relief from judgment.
Defendant filed a motion for relief from judgment under MCR 2.611 and MCR 2.612. We
review for an abuse of discretion a trial court’s decision on a motion to set aside a judgment.
Wolf v Mahar, 308 Mich App 120, 128; 862 NW2d 668 (2014). “A court abuses its discretion
when its decision is outside the range of principled outcomes.” Id. (citation and quotation marks
omitted).
MCR 2.611(A)(1) provides, in part:
A new trial may be granted to all or some of the parties, on all or some of
the issues, whenever their substantial rights are materially affected, for any of the
following reasons:
* * *
(e) A verdict or decision against the great weight of the evidence or
contrary to law.
* * *
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(g) Error of law occurring in the proceedings, or mistake of fact by the
court.
MCR 2.612(C)(1) provides, in part:
On motion and on just terms, the court may relieve a party or the legal
representative of a party from a final judgment, order, or proceeding on the
following grounds:
* * *
(f) Any other reason justifying relief from the operation of the judgment.
Defendant requested relief from judgment, contending that it could not convert an unendorsed
and uncashed check. Defendant pointed out that it did not endorse the check. Defendant argued
that it was a payee and that it did not convert the funds for its own use because it did not endorse
the check. It further contended that good cause existed to set aside the default because venue
was improper in Ingham County. Defendant contended that plaintiffs were residents of Lapeer
County, and because conversion is an intentional tort, the lawsuit should have been filed in
Lapeer County. Finally, it contended that the court improperly entered default judgment without
considering the merits of plaintiffs’ claims or evidence regarding damages.
As discussed above, plaintiffs failed to state a legally cognizable claim of statutory
conversion. Thus, we agree with defendant that the trial court erred in awarding treble damages
and attorney fees. However, for the reasons discussed above, we conclude that the trial court did
not err in otherwise denying defendant’s request for relief from judgment because plaintiffs’
complaint stated legally cognizable claims for common-law conversion, injunctive relief, and
declaratory relief, and defendant failed to establish good cause and a meritorious defense for
setting aside the default.
In its motion for relief from judgment, defendant raised for the first time the issue
whether venue was proper. The trial court determined that defendant waived this issue by failing
to raise it earlier. MCR 2.221(A) provides that a motion for a change of venue must be filed
either before or at the time that the defendant files an answer. Defendant did not file a motion
for a change of venue or an answer to plaintiffs’ complaint. Therefore, the trial court did not err
in ruling that defendant waived the issue. In addition, the court properly concluded that the
venue issue was an insufficient basis to set aside the default judgment. MCL 600.1645 provides,
“No order, judgment, or decree shall be void or voidable solely on the ground that there was
improper venue.” Therefore, even assuming that venue was improper, the default judgment was
not void or voidable merely because the case was filed in the wrong venue. See id.V. CONCLUSION
We affirm the trial court’s grant of declaratory and injunctive relief to plaintiffs, as well
as its determination that plaintiffs are entitled to recover the check, less the insurance premium,
under a theory of common-law conversion, but we reverse the entry of default judgment on the
issue of statutory conversion and the award of treble damages pursuant to MCL 600.2919a(1).
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Finally, we reverse the award of attorney fees under MCL 600.2919a(1). We remand the case to
the trial court for modification of the judgment consistent with this opinion.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction. No costs, neither party having prevailed in full. See
MCR 7.219(A).
/s/ Donald S. Owens
/s/ Kathleen Jansen
/s/ Christopher M. Murray
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