Clohset v. No Name Corp.

296 Mich.App. 525

824 N.W.2d 191

CLOHSET

v.NO NAME CORPORATION.

Docket No. 301681.

Court of Appeals of Michigan.

Submitted May 4, 2012, at Detroit.

Decided May 15, 2012, at 9:10 a.m.

Butzel Long (by Robert H. Schwartz, Bloomfield Hills,

Michael J. Lavoie, David J. DeVine, Joseph E. Richotte, Detroit, and Mary M. Mullin) for plaintiff.

Dykema Gossett PLLC (by Jill M. Wheaton, Ann Arbor, and Kerry K. Cahill, Bloomfield Hills) for defendants.

Before: KIRSTEN FRANK KELLY, P.J., and WILDER and BOONSTRA, JJ.

BOONSTRA, J.

Plaintiff, Phillip M. Clohset, appeals as of right a circuit court order denying his motion for summary disposition and granting summary dispositionin favor of defendants, No Name Corporation (No Name), Geraldine K. Goodman, and the estate of Walter A. Goodman, deceased, entered on November 30, 2010. We vacate the judgment of the circuit court and remand to the district court for reinstatement and enforcement of the stipulated consent judgment entered on October 1, 1999.

The facts of this case are not in dispute. But the case presents an unusual procedural history that requires us to consider issues of (a) subject-matter jurisdiction and (b) the validity, or degree of validity, of a stipulated consent judgment entered by the district court in an amount in excess of its jurisdictional limit.

Under the unusual circumstances outlined herein, we conclude that the district court had subject-matter jurisdiction over this case and that its entry of a stipulated consent judgment was proper, without regard to the jurisdictional amount-in-controversy limit that applies under the district court's general jurisdictional authority. Moreover, having neither appealed nor properly moved to alter or amend the stipulated consent judgment, defendants could not collaterally attack it, under the circumstances presented, 10 years later. Our conclusion derives in part from the well-established maxim that a party may not properly create error in a lower court and then claim on appeal that the error requires reversal. See, e.g., Dresselhouse v. Chrysler Corp., 177 Mich.App. 470, 477, 442 N.W.2d 705 (1989) (“[a] party is not allowed to assign as error on appeal something which his or her own counsel deemed proper [in the trial court] since to do so would permit the party to harbor error as an appellate parachute”).

We find that the district court erred by transferring this case to the circuit court. Further, given the jurisdiction of the district court, we find that the circuit court erred by ruling on the merits of the case, by dismissing plaintiff's claims, and by granting summary disposition to defendants on plaintiff's claims.

I. FACTUAL AND PROCEDURAL HISTORY

This action was originally brought by Clarence and Virginia Clohset (the Clohsets). The Clohsets have since passed away and plaintiff, Phillip Clohset, has taken over as personal representative of their estates. The Clohsets and defendant No Name entered into a lease agreement for commercial premises in 1991, to which defendants Geraldine Goodman and Walter Goodman obligated themselves as guarantors for No Name. Defendant No Name subsequently failed to make its lease payments. The Clohsets filed a demand for possession on No Name in the district court on October 6, 1998, demanding possession of the premises. On October 21, 1998, they filed a complaint against No Name for nonpayment of rent, seeking possession of the premises and costs, but not seeking money damages, which the complaint acknowledged would exceed the district court's general statutory jurisdictional limit of $25,000. MCL 600.8301(1). The complaint noted that money damages would be sought in a separate action in the circuit court.

On November 11, 1998, the Clohsets entered into a settlement agreement with No Name, Geraldine Goodman, and Walter Goodman, stating, in part, that No Name owed the Clohsets $384,822.95, plus 9.5 percent interest. The settlement agreement further required the parties to execute “pocket” consent judgments for entry, potentially, in the district court and/or the circuit court. The consent judgments were to be held by the Clohsets, and one or both were to be filed in the event that No Name or the Goodmans defaulted on the settlement agreement. Upon their filing,the consent judgments would add Geraldine Goodman and Walter Goodman as named defendants, and would obligate all defendants as set forth therein. Subsequently, the Clohsets filed the district court consent judgment, along with an affidavit from their attorney at the time, stating that defendants had defaulted and owed the Clohsets a net amount of $222,102.09, plus additional amounts, including costs and attorney fees, as outlined in the settlement agreement. The district court entered the stipulated consent judgment on October 1, 1999.¹

Over nine years passed, during which time plaintiffs Clarence and Virginia Clohset and defendant Walter Goodman passed away, and then on March 24, 2009, plaintiff sent defendant Geraldine Goodman a demand letter for $222,102.09. Defendants stipulated with regard to a renewal of the consent judgment and the district court entered the stipulated renewal of the consent judgment on September 15, 2009. On October 14, 2009, defendants moved to vacate the original, October 1, 1999, consent judgment on the ground that the district court had lacked subject-matter jurisdiction to enter it. Plaintiff responded by moving to transfer the proceedings to the circuit court. The district court denied defendants' motion to vacate the judgment, granted plaintiff's motion to transfer (while striking proposed language that would have found a lack of subject-matter jurisdiction), and transferred the case to the circuit court pursuant to MCR 2.227(A)(1) (which authorizes a transfer only when the transferring court “determines that it lacks jurisdiction of the subject matter of the action”).

Plaintiff then moved for entry of the consent judgment (previously entered in the district court) in the circuit court. The circuit court denied that motion, holding that the judgment was void for lack of subject-matter jurisdiction in the district court, dismissed the case without prejudice, and permitted plaintiff to file an amended complaint. After filing an amended complaint asserting breach of the parties' various agreements and related equitable claims, plaintiff moved for summary disposition on his breach claims only, and defendants countered with a motion for summary disposition on all of plaintiff's claims, both contract-based and equitable. The circuit court granted summary disposition in favor of defendants and dismissed plaintiff's claims.

Plaintiff claims on appeal that the circuit court erred by denying his motion to enter the consent judgment in the circuit court, by dismissing his initial claims, and by later denying summary disposition to plaintiff and granting summary disposition to defendants.

II. STANDARD OF REVIEW

This Court reviews a trial court's decision whether to enter a consent judgment for an abuse of discretion. Cf. Vestevich v. West Bloomfield Twp., 245 Mich.App. 759, 763, 630 N.W.2d 646 (2001) (“This Court reviews for abuse of discretion a trial court's decision on a motion to set aside a consent judgment.”). “An abuse of discretion occurs when the trial court chooses an outcome falling outside the range of principled outcomes.” Edry v. Adelman, 486 Mich. 634, 639, 786 N.W.2d 567 (2010), citing People v. Babcock, 469 Mich. 247, 269, 666 N.W.2d 231 (2003), clarification den. 469 Mich. 1224, 668 N.W.2d 892 (2003). A motion under MCR 2.116(C)(8) tests the legal sufficiency of a claim by the pleadings alone. Maiden v. Rozwood, 461 Mich. 109, 119, 597 N.W.2d 817 (1999). The motion should be granted only when the plaintiff's claims are “ ‘so clearly unenforceable as a matter of law that no factual development could possibly justify recovery.’ ” Id. (citation omitted). Likewise, a motion made under MCR 2.116(C)(9) tests the legal sufficiency of a defense. BC Tile & Marble Co., Inc. v. Multi Bldg. Co., Inc., 288 Mich.App. 576, 582, 794 N.W.2d 76 (2010). The motion should be granted only when “ ‘ “the defendant's pleadings are so clearly untenable that as a matter of law no factual development could possibly deny the plaintiff's right to recovery.” ’ ” Price v. High Pointe Oil Co., Inc., 294 Mich.App. 42, 50, 817 N.W.2d 583 (2011), lv. gtd. 491 Mich. 870, 809 N.W.2d 566 (2012), quoting USA Cash # 1, Inc. v. Saginaw, 285 Mich.App. 262, 265–266, 776 N.W.2d 346 (2009), quoting Slater v. Ann Arbor Pub. Sch. Bd. of Ed., 250 Mich.App. 419, 425–426, 648 N.W.2d 205 (2002). We review de novo a trial court's grant of summary disposition on the basis of legally insufficient pleadings. Maiden, 461 Mich. at 118, 597 N.W.2d 817. A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Liparoto Constr., Inc. v. Gen. Shale Brick, Inc. 284 Mich.App. 25, 29, 772 N.W.2d 801 (2009). When deciding a motion for summary disposition under this subrule, a court must consider the pleadings, affidavits, depositions, admissions, and other documentary evidence submitted in the light most favorable to the nonmoving party. Corley v. Detroit Bd. of Ed., 470 Mich. 274, 278, 681 N.W.2d 342 (2004). We review de novo a trial court's decision on a motion under this subrule. Latham v. Barton Malow Co., 480 Mich. 105, 111, 746 N.W.2d 868 (2008). The underlying question of whether a court had subject-matter jurisdiction is a question of law that this Court reviews de novo. Elba Twp. v. Gratiot Co. Drain Comm'r, 294 Mich.App. 310, 320, 812 N.W.2d 771 (2011).

III. ANALYSIS

Although plaintiff does not argue that the district court had subject-matter jurisdiction to enter the consent judgment, and does not challenge defendants' right to have collaterally attacked the judgment 10 years later or the circuit court's holding that the judgment was void ab initio, a discussion of these...