Don't Bet the Business

One of the first things new lawyers become accustom to is living with an almost paranoid preoccupation (read fear) of their own calendars. Upon passing the bar and getting a job, we quickly learn to make sure that each new date promptly gets added, that amended dates get replaced, that old dates get removed, but above all that before leaving the office each night we dutifully check our “tomorrow,” and the next couple days too, just to be sure we don’t miss, or have not missed, miss something important. 

This preoccupation with dates and schedules becomes second nature; it’s part of what lawyers are and do and, quite frankly, we often do not understand why others can be so cavalier when facing a ticking clock with an approaching deadline.

Now to be fair, some deadlines are soft; they come and go with little or no ramifications if the deadline is missed. Other deadlines are hard, very hard, and missing those can have catastrophic results. One of the easiest examples of a hard deadline is the response due-date when one is served with a summons and complaint. That due-date will vary depending upon where the lawsuit is pending, who or what entity has been served or where the service actually occurs. 

But one thing is consistent – once proper service occurs there is a finite deadline before responsive pleadings are required. Miss that deadline and the result can be a “default” or, worse, a “default judgment.” Making calls to clients to inform them that not only is their case over but an adverse judgment was entered because a deadline was missed is a call no lawyer ever wants to make.

In Michigan, a validly entered default will only be set aside if an order is entered: (1) based on the parties' agreement or (2) after a motion is filed and “good cause is shown and an affidavit of facts showing a meritorious defense is filed.” MCR 2.603(D)(1). The trial court judge is given wide discretion to determine if a default should stand or be set aside. 

On appeal, a trial court's ruling will only be disturbed upon a finding of an “abuse of discretion.” Shawl v Spence Bros, Inc, 280 Mich App 213, 218; 760 NW2d 674 (2008). "An abuse of discretion occurs when the court's decision falls outside the range of reasonable and principled outcomes." Ypsilanti Charter Tp v Kircher, 281 Mich App 251, 273; 761 NW2d 761 (2008). Trust me when I say this, it is rare that an appellate court finds a trial court acted wholly outside the range of reasonable and principled outcomes.

That said, to establish “good cause," the moving party will need to show: "(1) a substantial defect or irregularity in the proceedings upon which the default was based, (2) a reasonable excuse for failure to comply with the requirements which created the default, or (3) some other reason showing that manifest injustice would result from permitting the default to stand." Shawl at 221.

This “good cause” requirement is not casually satisfied. Rather, demonstrating a good cause will require just that, an actual “good cause.” Offering nothing more than that you had other pressing things to do, you did not realize how important the response deadline actually was or your lawyer dropped the ball, generally, will not suffice.

Even if the trial judge accepts your good cause offering, you also must file an affidavit of facts establishing, to the court’s satisfaction, that a meritorious defense to the claims plead is shown.  When deciding whether a meritorious defense exists, the trial judge typically will consider whether: "(1) the plaintiff cannot prove or defendant can disprove an element of the claim or a statutory requirement; (2) a ground for summary disposition exists ... or (3) the plaintiff's claim rests on evidence that is inadmissible." Shawl at 238.  Make no mistake, the burden of proving these two prongs lands squarely on the party in trouble and who is seeking to set aside the default. In my experience, and regardless of what anyone says, the burden is extremely heavy.

The surest way to avoid the anxiety and potential loss one faces by an adverse default and/or default judgment is never to be in that position. It’s easier than you might think. 

When served with a summons and complaint, regardless of whether you think service was improper or you believe that claims are baseless, do not hesitate – act, immediately. Call your lawyer, or if you don’t have lawyer, get a referral by someone you know and trust. The problem will not go away. Hoping it will is only going to make it worse and the result might be something that cannot be fixed.