City of Ann Arbor v. St James Church of God in Christ Ypsilanti ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
CITY OF ANN ARBOR, UNPUBLISHED
February 23, 2017
Plaintiff-Appellee,
v No. 330336
Washtenaw Circuit Court
ST. JAMES CHURCH OF GOD IN CHRIST LC No. 15-000451-CB
YPSILANTI and REVEREND MELVIN LEWIS,
Defendants-Appellants.
Before: HOEKSTRA, P.J., and SAAD and RIORDAN, JJ.
PER CURIAM.
In this nuisance-abatement litigation, plaintiff the City of Ann Arbor (“the City”) filed
suit against defendants, Reverend Melvin Lewis (“Lewis”) and St. James Church of God in
Christ Ypsilanti (“the Church”) (collectively “defendants”), to have a building on the Church’s
property declared a nuisance and to obtain relief allowing the City to demolish the building. A
default was entered against the Church under MCR 2.603(A)(1) for failing to file an answer or
otherwise defend against the complaint. Following a motion by the City for entry of default
judgment under MCR 2.603(B)(3), the trial court then entered a default judgment against the
Church, granting the City’s request to allow demolishment of the building. The Church moved
to set aside the default judgment. The trial court denied this motion and later denied a motion for
reconsideration. Defendants now appeal as of right. Because the trial court did not abuse its
discretion by denying defendants’ motion to set aside the default judgment against the Church,
we affirm.
The Church is incorporated as a nonprofit corporation, and Lewis is the Church’s resident
agent. Lewis is also the pastor of the Church. The Church owns land in the City of Ann Arbor,
and the underlying substantive dispute in this case relates to a purportedly dangerous building on
the Church’s property.
In particular, on May 4, 2015, the City initiated the current lawsuit against defendants,
seeking to have the building on the Church’s property declared a nuisance and to obtain relief
allowing the City to demolish the building at defendants’ expense without interference from
defendants. In response to the City’s complaint, Lewis filed an answer and affirmative defenses.
Notably, Lewis filed his responsive pleading in propria persona and, in doing so, he purported to
act in his own name and on behalf of the Church. However, Lewis is not a lawyer, meaning that
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he could not represent the Church. See Detroit Bar Ass'n v Union Guardian Trust Co, 282 Mich
707, 711; 281 NW 432 (1938). Thus, despite Lewis’s efforts, the Church failed to plead or
otherwise defend against the complaint as provided by law. MCR 2.603(A)(1). As a result, a
default was entered against the Church on July 29, 2015. The City then moved for a default
judgement under MCR 2.603(B)(3). Following a hearing, the trial court granted the City’s
motion for a default judgment, explaining to Lewis that he could not represent the Church and
that a default judgment was appropriate because the Church had failed to respond to the
complaint.
The Church then obtained an attorney and moved to have the default judgment set aside.
According to the motion, there existed good cause to set aside the default judgment because
Lewis was unaware that his representation of the Church constituted the unauthorized practice of
law and, once informed of this fact, he promptly obtained legal counsel for the Church.
Regarding a meritorious defense, as supported by an affidavit from Lewis, defendants contended
that the City failed to inform the Church why its proposed plans for the building had been
rejected;1 and, once given this information in the course of the City’s current lawsuit, the Church
corrected the defects in its proposed plan. According to defendants, they should be given the
opportunity to correct any safety issues and to avoid the harsh result of demolition.
The trial court denied the motion to set aside the default judgment, concluding that
Lewis’s ignorance of the law did not constitute good cause to set aside the default judgment and
that Lewis’s tactical errors could not be excused merely because he proceeded in propria
persona. Given that the Church had not shown good cause, the trial court did not decide whether
the Church had a meritorious defense.
Lewis was subsequently dismissed from the case. The Church later moved for
reconsideration of its motion to set aside the default judgment. However, the trial court denied
the motion as failing to demonstrate a palpable error. Defendants now appeal as of right.
According to the parties, the building in question has been demolished.2
1
Prior to the present lawsuit, pursuant to administrative proceedings under Chapter 101 of the
Ann Arbor City Code, which included notice and a show cause hearing before the City’s
Building Board of Appeals (“BBA”), the building on the Church’s property was determined to
be “dangerous.” The Church was given an opportunity to make the building safe, but the
Church’s site plans were rejected by the City. The BBA then entered an administrative order for
the demolishment of the building, and the Church failed to appeal this final determination.
According to the City, arrangements were made to have the building demolished, but defendants
interfered and prevented demolition, which prompted the current lawsuit.
2
Because the building has been demolished, the City maintains that defendants’ efforts to set
aside the default are now moot. We disagree. “An issue becomes moot when a subsequent event
renders it impossible for the appellate court to fashion a remedy.” Kieta v Thomas M Cooley
Law Sch, 290 Mich App 144, 147; 799 NW2d 579 (2010). “However, a question is not moot if it
will continue to affect a party in some collateral way.” People v Cathey, 261 Mich App 506,
510; 681 NW2d 661 (2004). See, e.g., Hayford v Hayford, 279 Mich App 324, 325; 760 NW2d
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On appeal, defendants first contend that the trial court abused its discretion by denying
the motion to set aside the default judgment because the Church demonstrated good cause for its
failure to comply with the requirements leading to the default judgment. Specifically, defendants
argue that good cause exists because Lewis was reasonably “confused” about how to proceed.
According to defendants, such confusion may be experienced by pro per litigants and licensed
attorneys alike. Citing Bednarsh v Winshall, 364 Mich 113; 110 NW2d 729 (1961) and other
cases, defendants assert that, in the case of attorneys, such “confusion” has been held to provide
a reasonable excuse for failing to comply with the requirements leading to the default judgment.
Defendants maintain that this same reasoning supports the assertion that Lewis’s “confusion”
provides good cause for the Church’s failure to respond to the complaint and that it would be a
miscarriage of justice not to set aside the default judgment. We disagree.
We review a trial court’s decision on a motion to set aside a default judgment for an
abuse of discretion. Shawl v Spence Bros, Inc, 280 Mich App 213, 218; 760 NW2d 674 (2008).
An abuse of discretion “involves far more than a difference in judicial opinion.” Saffian v
Simmons, 477 Mich 8, 12; 727 NW2d 132 (2007) (citation and quotation marks omitted).
“Rather, an abuse of discretion occurs only when the trial court's decision is outside the range of
reasonable and principled outcomes.” Id.“Michigan law generally disfavors setting aside default judgments that have been
properly entered.” Barclay v Crown Bldg & Dev, Inc, 241 Mich App 639, 653; 617 NW2d 373
(2000). Under MCR 2.603(D)(1), a trial court may set aside a default judgment as follows:
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.
The party moving to set aside the default bears the burden of demonstrating good cause and a
meritorious defense.3 Saffian, 477 Mich at 15. In particular, to establish “good cause,” the party
seeking to set aside the default must show: “(1) a procedural irregularity or defect, or (2) a
reasonable excuse for not complying with the requirements that created the default.” Barclay,
503 (2008). In this case, although the building has been destroyed, the Church faces other
consequences as a result of the default judgment. For example, under the judgment entered by
the trial court, the City may place a lien on the Church’s property, the judgment may be recorded
with the register of deeds, and the Church is responsible for the City’s expenses. While setting
aside the default judgment could not save the building, it could potentially relieve the Church of
the other ramifications of the judgment. In these circumstances, the appeal is not moot. See
Cathey, 261 Mich App at 510; Hayford, 279 Mich App at 325.
3
The trial court did not reach the question of whether the Church had a meritorious defense.
Nevertheless, on appeal, the City maintains that the Church’s motion to set aside the default
judgment should also have been denied because the Church lacked a meritorious defense. As
discussed infra, the trial court did not abuse its discretion by denying the Church’s motion for
lack of good cause. Given the lack of good cause, we need not reach the City’s arguments
regarding the existence of a meritorious defense. Zaiter v Riverfront Complex, Ltd, 463 Mich
544, 553 n 9; 620 NW2d 646 (2001).
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241 Mich App at 653. The trial court has discretion to determine whether a defendant's excuse
for failing to timely answer the complaint was reasonable. Saffian, 477 Mich at 16. “Manifest
injustice is not a third form of good cause that excuses a failure to comply with the court rules
where there is a meritorious defense.” Barclay, 241 Mich App at 653.
In evaluating good cause, “[a] party is responsible for any action or inaction by the party
or the party's agent,” Alken-Ziegler, Inc, 461 Mich at 224, and negligence does not normally
constitute grounds for setting aside a default judgment, Park v Am Cas Ins Co, 219 Mich App 62,
67; 555 NW2d 720 (1996). Moreover, “a person acting in propria persona should be held to the
same standards as members of the bar,” Totman v Sch Dist of Royal Oak, 135 Mich App 121,
126; 352 NW2d 364 (1984); and, “a lay defendant's lack of knowledge of the law and its
consequences will not necessarily provide a reasonable excuse and good cause to set aside a
default,” Reed v Walsh, 170 Mich App 61, 65; 427 NW2d 588 (1988). Further, a party’s failure
to obtain counsel, despite sufficient time to do so, is considered a problem of “his own making”
that demonstrates neither good cause nor the occurrence of a manifest injustice. First Bank of
Cadillac v Benson, 81 Mich App 550, 555; 265 NW2d 413 (1978). See also Miller v Rondeau,
174 Mich App 483, 489; 436 NW2d 393 (1988).
In this case, the trial court did not abuse its discretion by concluding that Lewis’s
ignorance of the law did not provide good cause for the Church’s failure to file a timely response
to the complaint. In particular, it is a rudimentary principle of law that a corporation has a
separate legal existence. Fraser Trebilcock Davis & Dunlap PC v Boyce Trust 2350, 497 Mich
265, 275; 870 NW2d 494 (2015). See also MCR 2.201(C)(4). Consequently, a non-lawyer
cannot proceed in propria persona on behalf of a corporation. Detroit Bar Ass'n, 282 Mich at
711; Peters Prod, Inc v Desnick Broad Co, 171 Mich App 283, 287; 429 NW2d 654 (1988).
Rather, a corporation must be represented by an attorney, and a non-lawyer attempting to
represent a corporation is engaged in the unauthorized practice of law. Detroit Bar Ass'n, 282
Mich at 711. See also MCL 600.916; Shenkman v Bragman, 261 Mich App 412, 416; 682
NW2d 516 (2004). Thus, Lewis could not file an answer on behalf of the Church, and the
Church’s complete failure to respond to the complaint resulted in the entry of a default, and
subsequently a default judgment, against the Church. See Huntington Nat Bank v Ristich, 292
Mich App 376, 387; 808 NW2d 511 (2011); MCR 2.108(A)(1); MCR 2.110(B)(1); MCR
2.603(A)(1), (C)(3).
Contrary to defendants’ arguments, they have not identified a procedural irregularity or
defect, or a reasonable excuse for not complying with the requirements that created this default.
See Barclay, 241 Mich App at 653. There is nothing irregular or unusual about the fact that a
corporation must be represented by an attorney. To the contrary, a corporation’s need for an
attorney is a well-recognized and long-settled legal principle of this State. See Detroit Bar Ass'n,
282 Mich at 711. That Lewis, as a non-attorney, was unaware of this rule of law does not
establish a reasonable excuse constituting good cause for setting aside the default. See Reed, 170
Mich App at 65. Rather, once served with the complaint, the Church had the opportunity to
consult an attorney and file a response, but it failed to do so. Cf. Miller, 174 Mich App at 489.
That Lewis instead chose to improperly proceed on behalf of the Church was a problem of his
own making, First Bank of Cadillac, 81 Mich App at 555; and, having decided to proceed in
propria persona, Lewis was “bound by the burdens that accompany such election,” Hoven v
Hoven, 9 Mich App 168, 174; 156 NW2d 65 (1967). Further, because Lewis is an agent of the
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Church, the Church is responsible for Lewis’s action in improperly attempting to proceed in
propria persona and his inaction in failing to obtain an attorney. See Alken-Ziegler, Inc, 461
Mich at 224. Overall, given the facts of this case, the trial court did not abuse its discretion by
determining that Lewis’s unilateral confusion about the law did not constitute good cause for the
Church’s failure to respond. See Saffian, 477 Mich at 15-16. Thus, the trial court properly
denied defendants’ motion to set aside the default judgment. See MCR 2.603(D)(1).
In contrast, defendants point to several cases in which “confusion” by attorneys was
purportedly recognized as good cause for setting aside a default. Defendants contend that
Lewis’s similar “confusion” in this case is equally excusable. However, a brief review of these
cases makes plain that what defendants describe as “confusion” was occasioned by unusual
circumstances in the proceedings not caused solely by the defendant and that the “confusion”
could not be categorized as a unilateral misunderstanding of the law.4 In comparison, in this
uncomplicated case, Lewis simply made the decision to proceed in propria persona, despite the
well-settled rule that he could not represent a corporate entity as a non-lawyer. There was no
reasonable basis in the facts or law for this “confusion.” See Huntington Nat Bank, 292 Mich
App at 392-393. Indeed, even if we were to view this case as a close question, “the trial court
had discretion to determine whether defendant's excuse for failing to timely answer the
complaint was reasonable,” Saffian, 477 Mich at 16; and defendants have not shown that the trial
court’s decision fell outside the range of reasonable and principled outcomes. Because the trial
court’s decision was not an abuse of discretion, the Church is not entitled to have the default
judgment set aside. See id.Finally, on appeal, defendants argue for the first time that the trial court committed error
warranting reversal and violated their due process rights by failing to hold a hearing and issue a
ruling on their motion to stay proceedings pending the Church’s motion for reconsideration
and/or their appeal to this Court. Given our conclusion that defendants are not entitled to set
aside the default judgment against the Church, defendants’ unpreserved due process arguments
regarding the motion to stay are moot. That is, “a case is moot when it presents only abstract
questions of law that do not rest upon existing facts or rights.” B P 7 v Bureau of State Lottery,
4
See Bednarsh, 364 Mich at 113-114 (finding good cause for the defendant’s slight delay in
filing an answer where the defendant contacted an attorney, but because the attorney had
previously represented the plaintiff, the attorney turned the matter over to another attorney); ISB
Sales Co v Dave's Cakes, 258 Mich App 520; 672 NW2d 181 (2003) (finding good cause where
the attorneys on both sides of the case agreed to an irregular, and “unwise,” informal process of
communications that resulted in the defendant missing deadlines); Jones v Philip Atkins Constr
Co, 143 Mich App 150; 371 NW2d 508 (1985) (finding good cause where the plaintiff’s attorney
was dealing with the defendant’s claim office in Michigan but a writ of garnishment was served
on the insurance commissioner and then forwarded to offices out-of-state which had no record of
the litigation); Levitt v Kacy Mfg Co, 142 Mich App 603; 370 NW2d 4 (1985) (finding good
cause due to unusual problems associated with the defendant’s insurance company being in
receivership, such that the suit papers were erroneously sent to the insurance underwriter after
the underwriter’s relationship with the insurance company had been severed).
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231 Mich App 356, 359; 586 NW2d 117 (1998). Here, even if there was some error relating to
the motion to stay, the fact remains that the Church cannot succeed in setting aside the default
judgment and preventing the demolition of the building or the other consequences of the default
judgment. In other words, at this time, consideration of issues relating to the motion to stay
would be purposeless because there is simply no relief available for defendants.5 “An issue
becomes moot when a subsequent event renders it impossible for the appellate court to fashion a
remedy.” Kieta, 290 Mich App at 147. We will not decide moot issues. Garrett v Washington,
314 Mich App 436, 449; 886 NW2d 762 (2016).
Affirmed. Having prevailed in full, the City may tax costs pursuant to MCR 7.219.
/s/ Joel P. Hoekstra
/s/ Henry William Saad
/s/ Michael J. Riordan
5
Defendants suggest on appeal that they are entitled to damages from the City because the City
proceeded in “bad faith” by demolishing the building before the trial court ruled on the motion to
stay. Defendants cite no supporting legal authority for this cursory argument, and thus we
consider this argument to be abandoned. See Bill & Dena Brown Trust v Garcia, 312 Mich App
684, 695; 880 NW2d 269 (2015).
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