Motion to set aside a default; MCR 2.603(D); Shawl v Spence Bros, Inc; Good cause

Holding that the totality of the circumstances weighed against a showing of good cause to set aside the default, the court concluded the trial court correctly decided not to reach the meritorious defense analysis. Thus, it affirmed the order denying defendants’ motion to set aside the default. A $1,000,000 default judgment was entered against them. The court considered the factors used in the totality of the circumstances test under Shawl to determine if good cause has been shown. The first factor is “whether the party completely failed to respond or simply missed the deadline to file. A formal written pleading in response to a complaint is required pursuant to MCR 2.111.” Given that defendants completely failed to respond to the trial court, this factor weighed against their showing good cause. So did the second factor, as they “did not file late; they never filed an answer to the complaint at all.” The third factor weighed in their favor as they “retained counsel on the day of the hearing on the motion for entry of default judgment,” and their attorney promptly moved to set aside the default four days later, “before a default judgment was entered.” The fourth factor weighed against them as defendants were properly served. And because they “understood the date, time and how to access the hearing on the motion for entry of default judgment, one can reasonably infer that the same defendants could understand the 21-day deadline to file an answer to the complaint as well. The fifth factor weighs against a showing of good cause.” Next, given that they comprehended “they should log on to a Zoom hearing on a specific date at a certain time but did not act at all as to the answer deadline,” the sixth factor could at best be neutral. As to the seventh factor, the court considered “the size of the judgment and the amount of costs due under MCR 2.603(D)(4).” The judgment amount was substantial, “even split between the parties, but it is also an amount that defendants do not contest in this Court and did not appear to contest in the trial court. The seventh and eighth factors, then, given that defendants do not contest the size of the judgment, only weigh slightly in favor of a showing of good cause. The ninth factor applies only when the default involves an insurer, which is not the case here, so this factor is not considered.”