Lark v. the Detroit Edison Co.

99 Mich. App. 280 (1980) 297 N.W.2d 653

LARK
v.
THE DETROIT EDISON COMPANY

Docket Nos. 44253, 44254.

Michigan Court of Appeals.

Decided August 11, 1980.

Dice, Sweeney, Sullivan & Feikens, P.C. (by John L. Christensen), for defendant and third-party plaintiff.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, P.C. (by Henry J. Maher and Christine D. Oldani), for third-party defendant.

Before: BASHARA, P.J., and D.C. RILEY and E.A. QUINNELL,^[*] JJ.

RILEY, J.

These consolidated appeals arose out of two lawsuits brought against Detroit Edison Company (hereinafter Edison) for negligence in failing to provide two employees of Reliance Truck Company (hereafter Reliance) with a safe place to work.

In the fall of 1976, Edison was allowed to file third-party complaints against Reliance. Reliance subsequently filed motions for summary judgment on each third-party complaint. The motions were based on the fact that both Reliance and Edison were insured by Hartford Accident and Indemnity Company. Reliance argued that since it is impossible to sue oneself, the complaints should be dismissed. Edison believed that Reliance's interpretation of the insurance policy was correct and did not oppose the motions. The motions for summary judgment were granted on March 22, 1978.

On February 2, 1979, Edison filed motions to set aside the orders dismissing the third-party complaints. Edison alleged that since the orders were entered, it had become aware of an exception in its insurance policy which would allow suit against Reliance. Edison argued that the lower court should set aside the summary judgments based on GCR 1963, 528.3. The lower court disagreed and denied Edison's motions on March 7, 1979.

GCR 1963, 528.3 provides relief from a final judgment or order under certain limited circumstances. Two of these reasons have been alleged by Edison here:

"(1) mistake, inadvertence, surprise, or excusable neglect; [and] * * *

"(6) any other reason justifying relief from the operation of the judgment."

The lower court found no reason to set aside the summary judgments. This was a discretionary decision, one which will not be disturbed on appeal absent a clear showing of an abuse of discretion. See O'Neill v O'Neill, 65 Mich App 332, 336; 237 NW2d 315 (1975), Freeman v Remley, 23 Mich App 441, 448; 178 NW2d 816 (1970).

Edison first claims that it made a mistake by not opposing the motions for summary judgment. We do not believe that GCR 1963, 528.3(1) was designed to relieve counsel of ill-advised or careless decisions. See Federal's Inc v Edmonton Investment Co, 555 F2d 577 (CA 6, 1977), Hoffman v Celebrezze, 405 F2d 833 (CA 8, 1969). Its application should be limited to extraordinary circumstances where the failure to set aside the court's final determination will result in substantial injustice.

In Kibby v Rhoads, 29 Mich App 261; 185 NW2d 117 (1970), plaintiff received a default judgment against the defendant for a slip and fall injury. Subsequently, plaintiff sued defendant's insurer in a garnishment action. Even though it was properly served with notice of the suit, the insurer did not defend the original action, claiming that it thought the suit had been dropped. The insurer then tried to have the default judgment set aside under GCR 1963, 528.3(1). This Court agreed with the trial court's conclusion that neither inadvertence, mistake, nor excusable neglect had been established. The Court found the insurer's story to be "incredible". Even if true, the Court stated, it was inexcusable that the insurer would not have investigated thoroughly whether the plaintiff had actually dropped the suit.

We find Edison's actions to be equally indefensible. Edison consciously chose not to answer the summary judgment motions because it believed Reliance's insurance contract covered the accidents. With diligence, Edison easily could have read the contract and discovered that the accidents were not covered; thus, Reliance could have been sued. We will not equate this lack of due diligence with the mistake or excusable neglect required under the rule for setting aside a judgment.

Edison also alleges that relief should be granted under GCR 1963, 528.3(6), for "any other reason justifying relief from the operation of the judgment". As stated in Kaleal v Kaleal, 73 Mich App 181, 189-190; 250 NW2d 799 (1977), each case must be examined on its facts to determine whether this extraordinary relief is necessary. Three requirements must be satisfied: (I) the reason for setting aside the judgment must not fall under subrules (1) through (5), (II) the substantial rights of the opposing party must not be detrimentally affected if the motion is set aside, and (III) extraordinary circumstances must exist which mandate setting aside the judgment in order to achieve justice.

Edison's claim fails on all three counts. First, Edison has failed to allege any reason for setting aside the judgment beyond the mistake or neglect which is encompassed in subrule (1). Furthermore, as the lower court recognized, Reliance has now been prejudiced by the ten-month lapse since the summary judgment was entered. For example, during the ten months, Reliance personnel freely gave information to Edison, thinking that Reliance was no longer liable. Finally, we do not believe that the instant facts reflect the type of extraordinary circumstances which would justify relief. We must conclude, therefore, that the trial judge did not abuse his discretion in denying Edison's motions to set aside the judgment.

Affirmed.

Costs to third-party appellee.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.