‘Good Cause’ Not Established To Set Aside Default Judgment Of Divorce

The trial court properly entered a default judgment of divorce in this case because the defendant failed to show “good cause” for setting aside the default, the Michigan Court of Appeals has ruled.

“Even after defendant explained the circumstances [for not responding to the divorce complaint] – that she was the victim of domestic violence … such explanation still did not adequately explain why she could not respond, especially where the assault occurred two months before the answer was due,” the Court of Appeals wrote in Bainbridge v Bainbridge (Docket No. 369537). “Defendant’s argument simply leaves it to the Court to connect the dots between her reason for failing to respond and its apparent justification.”

Meanwhile, the Court of Appeals also vacated the default judgment of divorce and remanded the case, finding the trial court issued erroneous rulings on property division and spousal support. 

“It appears … the trial court’s order did not comport with its stated intent and, moreover, was not equitable to the extent the balance of defendant’s 401(k) was in plaintiff’s name. … More generally, … the trial court’s division of other assets was inequitable.”

Therefore, “we affirm the court’s order denying [the defendant’s] motion to set aside the default, vacate the court’s judgment of divorce, and remand for further proceedings …,” the Court of Appeals held.

Judge Brock A. Swartzle, Judge Kirsten Frank Kelly and Judge Christopher M. Murray were on the panel that issued the unpublished opinion.

Background

The plaintiff filed a complaint for divorce on October 31, 2023 in Berrien County Circuit Court. The plaintiff served the complaint on November 7, 2023. After the defendant failed to respond to the complaint, the plaintiff obtained a default judgment of divorce on December 1, 2023.

The defendant filed a motion to set aside the default. In her motion, the defendant stated: “My husband and I had been in the middle of a domestic case while being served! I also had to go out to Minnesota to the Mayo Clinic due to medical reasons for a week. Through all the stress I completely lost track of the 21 days.” The trial court denied the defendant’s motion, finding that she failed to establish good cause. After an order was entered, the plaintiff sent notice of a pro confesso hearing on January 9, 2024.

The defendant then filed a motion for reconsideration, providing more detail about her failure to respond. She indicated that she was the victim of a domestic assault on October 3, 2023, which led to the plaintiff pleading guilty to disturbing the peace on December 4, 2023. In addition, the defendant asserted the plaintiff’s proposed judgment of divorce was inequitable, especially because it awarded the plaintiff his 401(k) account, which included the balance of the defendant’s old 401(k) that she had rolled into his.

The trial court held a hearing and rejected the defendant’s motion for reconsideration, finding that it did not abuse its discretion by denying the motion to set aside the default. The trial court also granted the judgment of divorce, stating that its intent was to “split” the property. In its order, the trial court stated the parties had to “work together to divide any remaining personal property” and had to “immediately list and sell” the marital home. The parties were awarded “any bank accounts and their balances in their respective names,” in addition to “any pension, 401(k) or retirement plan in his or her name has [sic] his or her sole and separate property free and clear from any claim of the other.” The trial court order further said 1) the plaintiff was awarded “the 2011 Chevrolet Suburban as his sole and separate property free and clear from any claim” of the defendant and the plaintiff “agree[d] to hold the Defendant harmless for said debt,” and 2) the defendant was awarded “the 2019 Toyota Tundra as her and separate property free and clear from any claim of the Plaintiff” and the defendant “agree[d] to hold the Plaintiff harmless for said debt.”

As for spousal support, the trial court ordered that “[n]either party is entitled to spousal support,” which would be “forever barred” and “non-modifiable.”

The defendant appealed.

Motions Denied

The Court of Appeals first addressed the denial of the defendant’s motion to set aside the default judgment and motion for reconsideration. Referencing the Michigan Court Rules, the appeals court pointed out that, on December 1, 2023, the plaintiff was entitled to seek a default for the defendant’s failure to respond.

“A party may seek to set aside default by filing a motion that demonstrates that the defaulted party had good cause and a meritorious defense,” the Court of Appeals wrote, citing MCR 2.603(D)(1). “The defaulted party must file the motion within 21 days of entry of default judgment or, if no judgment was yet entered, before entry of such judgment. MCR 2.603(D)(2).”

Moreover, “the ‘good cause’ and ‘meritorious defense’ requirements of MCR 2.603(D)(1) are analytically different concepts and that a party must show both in order to prevail on a motion to set aside a default judgment,” the Court of Appeals explained. “The defendant has the burden to demonstrate good cause and a meritorious defense in order to set aside the default. … The good cause requirement … may be satisfied by demonstrating a procedural irregularity or defect or a reasonable excuse for failing to comply with the requirements that led to the default judgment.”

In this case, “there were no procedural irregularities concerning plaintiff’s service of the complaint; thus, defendant’s ability to demonstrate good cause rests on whether she was able to show that she had a ‘reasonable excuse’ for failing to respond,” the Court of Appeals stated.

The defendant, in her motion to set aside the default, “provided two explanations for why she did not timely respond,” the Court of Appeals observed. “First, she stated that she and plaintiff were involved in a ‘domestic case.’ And second, defendant explained that for approximately one week, she was out of state for health reasons. Neither excuse is sufficient to establish a reasonable excuse to fail to respond.”

Regarding the defendant’s “domestic case” reasoning, “it is not obvious what she meant by that phrase,” the Court of Appeals said. “In hindsight it is clear that defendant meant to describe a ‘domestic violence’ case, but from the point of view of the trial court, it just as easily could have interpreted the phrase to mean the divorce case presently before it. But even if the trial court could have interpreted the proper meaning at the time, it is nevertheless unclear from defendant’s submission what aspects of the domestic violence case prevented her from responding to the complaint.”

The defendant’s assertion concerning her Mayo Clinic visit was “similarly flawed,” the Court of Appeals said. “The complaint was filed on October 31, 2023, and the answer was due on November 21, 2023. … Thus, defendant had 12 days before her trip to the Mayo Clinic and 3 days after to address the response to the complaint. While defendant’s illness may have provided a reason for not being able to respond while she was preparing to go and returning, none of those potential justifications were provided by defendant in her motion to set aside default or her motion for reconsideration. In other words, defendant provided an arguably reasonable excuse for not being able to respond between November 13 and November 18, 2023, but did not do so for the remainder of the time she was not in the hospital. Again, defendant leaves it to the Court to rationalize the justifications without explicitly stating them herself. It could be that she was too sick before her trip, or too preoccupied with the thought of the trip to be able to respond. But none of those justifications were provided to the trial court or this Court, and it was not, therefore, an abuse of discretion for the court to deny the motion.”

Turning to the defendant’s motion for reconsideration, the Court of Appeals said the motion “reiterated what she already told the court in her motion to set aside, namely that she was out of the state for health reasons for approximately one week and was dealing with a ‘domestic case’ with her husband. While defendant certainly added more detail to these circumstances in her motion for reconsideration, these were issues that had already been ruled on by the court.”

Further, the defendant’s argument that the trial court applied the wrong standard – abuse of discretion instead of palpable error – when deciding her motion for reconsideration was “waived by failing to first raise the issue with the trial court,” the Court of Appeals said, citing MCR 2.613(A). “Moreover, and even though defendant is correct that the court used the wrong standard, she cannot show that had the court used the palpable error standard, she would have obtained a different outcome.”

Accordingly, “the trial court did not abuse its discretion when it denied defendant’s motion to set aside default or when it denied her motion for reconsideration of the same,” the Court of Appeals held.

Division Of Marital Assets

In conclusion, the Court of Appeals focused on the defendant’s remaining argument: “the manner in which the trial court divided the parties’ retirement accounts.”

The defendant maintained that it was “inequitable” to award the plaintiff the 401(k) account because the defendant had rolled her 401(k) account into his account during the marriage, the Court of Appeals observed. “While defendant did not provide any independent evidence of this having occurred, she did raise the issue with the trial court. For its part, the court expressed its desire to ‘split’ the retirement accounts, but did not address defendant’s assertion that if the accounts were simply awarded by ownership in name, she would lose her contribution to his account.” Therefore, the trial court’s order did not comply with its “stated intent” and was inequitable “to the extent the balance of defendant’s 401(k) was in plaintiff’s name.”

The Court of Appeals further explained the trial court’s division of other marital assets was  inequitable. “The default judgment of divorce states that spousal support is ‘forever barred’ and ‘non-modifiable.’ However, the right of a party to seek modifications to spousal support is statutory and cannot be waived without ‘clearly expressing in a settlement their intent to render a spousal support award final, binding, and nonmodifiable.’” Similar to Koy v Koy, 274 Mich App 653 (2007), the defendant “never expressed a clear intent to waive her right to seek to modify spousal support, as the entry of that provision was done through default judgment. As in Koy, therefore, we vacate and remand with directions that the trial court remove this provision from the judgment of divorce.”

Meanwhile, the Court of Appeals also noted the trial court awarded the plaintiff the 2011 Chevrolet Suburban, which the defendant alleged was fully paid for, while the defendant was awarded the 2019 Toyota Tundra, which still had a balance on its loan. “While it may be that the value of the 2011 Chevrolet, without a loan, is similar to the 2019 Toyota Tundra with a loan, there was no testimony regarding the relative value of the vehicles or the balance on the loan under which the trial court could have equitably divided the assets.”

Based on the foregoing, “the trial court’s division of the retirement account, its award of the vehicles, and its order that spousal support be nonmodifiable were all [in]equitable under the circumstances,” the Court of Appeals concluded. “Accordingly, we vacate the judgment of divorce and remand for further proceedings.”