Huntington Nat'l Bank v. Ristich

292 Mich.App. 376

808 N.W.2d 511

HUNTINGTON NATIONAL BANK

v.RISTICH.

Docket No. 297151.

Court of Appeals of Michigan.

Submitted April 12, 2011, at Detroit.Decided April 26, 2011, at 9:00 a.m.

Simon, Galasso & Frantz, PLC, Troy (by Steven A. Morris, Craig T. Mierzwa, and Frank R. Simon), for plaintiff.

Joseph & Associates P.C. (by Paul T. Joseph, Okemos, and Adil Daudi, Ann Arbor), for defendant.

Before: BECKERING, P.J., and WHITBECK and M.J. KELLY, JJ.

PER CURIAM.

In this action for breach of contract and fraud, defendant, Jovica Ristich, appeals as of right the trial court's January 25, 2010, order denying defendant's motion to set aside a default and entering a default judgment in favor of plaintiff Huntington National Bank. We affirm.

I

On October 1, 2009, plaintiff filed a complaint against defendant alleging two counts of breach of contract and one count of fraud. Plaintiff alleged that defendant breached (1) a June 2009 personal loan agreement in which defendant obtained approximately $55,000 in financing for a 2008 BMW 6 Series automobile and (2) a June 2009 personal credit-line agreement in which defendant obtained $25,000. According to plaintiff, defendant did not grant it a security interest in the BMW pursuant to the loan agreement, and he misrepresented his yearly income on his applications for the loan and credit line.

On October 5, 2009, defendant was personally served with a copy of the summons and complaint. Nine days later, defendant, proceeding in propria persona, moved the trial court for an evidentiary hearing and a stay of the proceedings. Defendant asserted that he believed the FBI, the United States Secret Service, and a special agent were investigating him for “the same allegations contained in the Complaint in this case.” Defendant also asserted that

if he [were] required to answer the Complaint and compelled to proceed in [the] cause of action, his responses could be utilized against him if charged by the U.S. Attorney's Office and this obligation would violate his fifth amendment rights guaranteed under the United States Constitution and art. 1, § 17 of the Michigan Constitution of 1962.

Defendant, therefore, requested that the trial court conduct an evidentiary hearing and stay the proceedings to “protect his constitutional rights.” He did not file an answer to the complaint.

Plaintiff subsequently requested, and the county clerk entered, a default against defendant “for failure to plead or otherwise defend as provided by law.” Plaintiff then moved for findings of fact and a default judgment against defendant. Plaintiff also filed a response to defendant's motion for an evidentiary hearing and a stay of the proceedings, arguing that it was entitled to have defendant respond to the complaint and to a discovery record of his assertion of the privilege against self-incrimination in response to each question plaintiff asked. Plaintiff argued that defendant could not make a blanket assertion of the privilege against self-incrimination by refusing to file an answer and that defendant had failed to “provide support in the record” to warrant an evidentiary hearing.

At a January 4, 2010, hearing, the trial court denied defendant's motion for an evidentiary hearing and a stay of the proceedings because a default had been entered against him. The court opined that the arguments defendant raised in his motion were insufficient, stating that defendant could not “just wave a magic wand because he's been indicted and say I'm immune from civil process.” The court instructed defendant to answer the complaint and answer each allegation specifically and to raise the privilege against self-incrimination in response to each paragraph that he believed he could not answer so that the court could determine whether it was a sufficient response to the complaint. Finally, the court instructed defendant to move the court in writing if he wished to set aside the default.

Thereafter, plaintiff again moved for findings of fact and a default judgment against defendant. Defendant moved to set aside the default, arguing that manifest injustice would result if the court allowed the default to stand because his motion for an evidentiary hearing and a stay of the proceedings constituted “other action permitted by law” under MCR 2.108(A)(1) and a defense under MCR 2.603(A)(1). Defendant also submitted an affidavit of meritorious defense. In the affidavit, defendant stated: “I have a meritorious defense to Plaintiff's complaint in that I dispute the amount of the debt owed.”

At a January 25, 2010, hearing, the trial court denied defendant's motion to set aside the default. The court stated that “there may be” good cause to set aside the default, but “it's not been fleshed out or put forth to me by way of affidavit.” The court held that defendant had not provided a meritorious defense, stating that

the only affidavit that we do have from [defendant] only says that he has a meritorious defense and that he disputes the amount of debt owed.... [I]t's not sufficient in terms of an affidavit setting forth what the defense to the claim is, simply to make a general denial.

The court concluded that defendant had defrauded plaintiff and entered a default judgment in plaintiff's favor in the amount of $86,423.06, plus interest. Defendant moved for reconsideration, and the court denied the motion on March 18, 2010.

II

Defendant argues that the trial court erred when it denied his request to set aside the default and granted the default judgment. Specifically, defendant argues that his motion to stay the proceedings was equivalent to a request for an extension of time to file an answer. We disagree.

We review defendant's unpreserved claim for plain error affecting his substantial rights. See Kern v. Blethen–Coluni, 240 Mich.App. 333, 336, 612 N.W.2d 838 (2000). As a general rule, “[a] defendant must serve and file an answer or take other action permitted by law or [the Michigan Court Rules] within 21 days after being served with the summons and a copy of the complaint.” MCR 2.108(A)(1). MCR 2.603(A)(1) requires a court clerk to enter a default of a defendant when the defendant fails “to plead or otherwise defend as provided by [the Michigan Court Rules].” But, under MCR 2.108(E), “[a] court may ... extend the time for serving and filing a pleading ... if [a] request is made before the expiration of the period originally prescribed” and the court's authority to do so is not limited by another rule. Under MCR 2.119(A)(1)(b) and (c), a motion must “ state with particularity the grounds and authority on which it is based” and “ state the relief or order sought.”

Defendant moved for an evidentiary hearing and stay of the proceedings. However, the motion did not state that he was seeking an extension of time to file an answer, nor did it state the grounds or authority on which the trial court could extend the time for filing an answer, i.e., MCR 2.108(E). Therefore, we cannot conclude that defendant moved for an extension of time to file an answer, which would have shielded him from default in the event that he did not file an answer within 21 days after being served with the summons and complaint. See MCR 2.108(A)(1); MCR 2.603(A)(1).

According to defendant, moving for a stay of the proceedings is equivalent to moving for an extension of time under MCR 2.108(E) because both motions request the same relief: more time to file an answer. But defendant has not identified any legal rule supporting the assertion that the two motions are equivalent. Moreover, defendant's argument, which focuses on the factual circumstances of his case, ignores a significant distinction between a motion for a stay of the proceedings and a motion for an extension of time to file an answer. While a defendant might assume that a motion to stay the proceedings extends the time for filing an answer, nothing in the motion notifies the trial court of the defendant's desire to extend the time, as a motion under MCR 2.108(E) does. The trial court could assume that the defendant fully intends to answer within 21 days of service. For this reason, motions to stay the proceedings and to extend the time for filing an answer should not be treated synonymously. In order to request an extension of time for filing an answer, a defendant must file a motion pursuant to MCR 2.108(E), particularly requesting the extension. See MCR 2.119(A)(1).

Accordingly, we hold that the trial court did not plainly err by denying defendant's motion to set aside the default and granting the default judgment in plaintiff's favor and properly rejected defendant's claim that a motion to stay the proceedings was the equivalent of a motion for an extension of time to file an answer.

III

Defendant further argues that the trial court should have granted his motion to set aside the default because he took “other action permitted by law” under MCR 2.108(A)(1) and “otherwise defend[ed]” himself under MCR 2.603(A)(1) by filing a motion for an evidentiary hearing and a stay of the proceedings, wherein he invoked the constitutional privilege against self-incrimination. Again, we disagree.

Defendant preserved this issue by raising it in his motion to set aside the default. See Detroit Leasing Co. v. Detroit, 269 Mich.App. 233, 237, 713 N.W.2d 269 (2005). We review issues of law, including the interpretation and application of court rules and constitutional issues, de novo. Henry v. Dow Chem. Co., 484 Mich. 483, 495, 772 N.W.2d 301 (2009); Champion v. Secretary of State, 281 Mich.App. 307, 309, 761 N.W.2d 747 (2008). 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. Saffian v. Simmons, 477 Mich. 8, 12, 727 N.W.2d 132 (2007). A trial court abuses its discretion when it reaches a decision that falls outside the range of principled outcomes. Corporan v. Henton, 282 Mich.App. 599, 605–606, 766 N.W.2d 903 (20...