Poling v. Secretary of State

369 N.W.2d 261, 142 Mich. App. 54

• Court: Michigan Court of Appeals
• Decided: April 15, 1985
• Docket: Docket 79903
• Status: Published

Opinion

Danhof, C.J.

Defendant, the Secretary of State, appeals as a matter of right from a lower court order denying his motion to set aside a default judgment. We affirm.

Plaintiff, a resident of Indiana, filed suit in Ingham County Circuit Court and alleged that he was injured as a result of the use, operation, maintenance, or ownership of a motor vehicle. He claimed that, since neither he nor the vehicle involved in the accident had a policy of no-fault insurance, no-fault benefits were due and owing him through the Assigned Claims Facility. 1

Plaintiff alleged that he applied for benefits through the plan, but that the claim was denied since "no motor vehicle [was] involved”. The complaint sought a money judgment against defendant, together with 12% interest, costs, attorney fees, and other statutory interest. Service was made on defendant on May 2, 1983, shortly after the case was filed. Defendant failed to respond and, on or about July 22, 1983, a default was entered. On February 21, 1984, plaintiff moved for a default judgment. Objections were filed by defendant on February 29, 1984, contending that the circuit court lacked jurisdiction to grant a money judgment and that its failure to respond was due to excusable neglect.

At the hearing on the motion for default judgment, the trial court rejected defendant’s objections and proceeded to hear testimony on the amount of damages. Default judgment was entered and plaintiff was awared approximately $65,000 in damages, with defendant being held responsible for future benefits.

Defendant moved for rehearing or relief from judgment. This motion was denied. From this denial, defendant appeals, arguing that the Court of Claims has exclusive jurisdiction over such claims for money damages and that, alternatively, the lower court abused its discretion in refusing to set aside the default judgment.

Section 6419 of the Court of Claims Act, MCL 600.6419(1); MSA 27A.6419(1), provides in part that "the jurisdiction of the court of claims * * * over claims and demands against the state or any of its departments, commissions, boards, institutions, arms or agencies, shall be exclusive”. Section 6419(1)(a) further provides that the Court of Claims has jurisdiction to entertain "all claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state” and any of the above-named divisions thereof. However, § 6419(4) excepts from the jurisdiction of the Court of Claims those actions based upon a statute that "expressly confer[s] jurisdiction thereof upon the circuit courts”. At issue here is whether the instant case involves a claim against the state or is excepted from the Court of Claims Act by virtue of § 6419(4).

In Burnett v Moore, 111 Mich App 646, 649; 314 NW2d 458 (1981), in addressing whether the position of State Police Trooper was a "state office” for purposes of the Court of Claims Act, this Court noted that such determination necessarily involves inquiry into the legislative intent embodied in the particular statute which created the position. We adopt this as our starting point and turn to the nature of the no-fault act in order to determine the intent of the Legislature with respect to claims against the Secretary of State.

This Court’s decision in Jackson v Secretary of State, 105 Mich App 132; 306 NW2d 422 (1981), lv den 412 Mich 882 (1981), is instructive. In holding that the Secretary of State did not have authority to make an initial determination as to the eligibility of claimants, it was stated:

"To conclude otherwise would run contrary to the objectives for which the no-fault act was passed, Le., to provide prompt monetary relief for losses suffered in vehicular accidents at the lowest cost to the system and the individual. Dolson v Secretary of State, 83 Mich App 596, 599; 269 NW2d 239 (1978). Unnecessary circuity of actions would result if we were to conclude that the defendant possesses the judicial power he claims. If a claimant were to be declared by defendant to have an 'obviously ineligible’ claim and that decision subsequently were to be reversed on appeal to the courts, the claimant would merely gain the right to have that claim assigned to an insurer, which insurer could then, in turn, engage in protracted litigation over the merits of that claim. This is incompatible with the objectives of the no-fault act.” 105 Mich App 139-140.

The same holds true in determining the legislative intent with respect to the jurisdiction of the Court of Claims. We do not believe that the Legislature intended that a claimant sue in the Court of Claims to determine whether defendant improperly refused (or failed) to assign his claim and, then, upon a proper assignment, insitute an action in circuit court for any ensuing dispute between the claimant and the insurer to which the claim is ultimately assigned.

Similarly, where, as here, defendant assigns the claim to himself pursuant to § 3172, and a dispute subsequently arises, a "jurisdictional dilemma” may still present itself if the Court of Claims is deemed to have jurisdiction. For example, MCL 500.3112; MSA 24.13112 provides that, for any dispute regarding entitlement to or apportionment of survivors’ benefits, any interested person "may apply to the circuit court for an appropriate order”. No exception is carved for assignments to the facility. Should such a dispute arise under circumstances similar to those prevailing here, a clearly "[unnecessary circuity of actions would result”, contrary to the essence of the no-fault act, were we to hold that a suit arising from the initial dispute with the Secretary of State must be brought in the Court of Claims. Because § 3172 clearly contemplated the facility’s participation in the system in much the same manner as a private insurer, without making further distinction between the two and with a likelihood that the facility would become involved in a § 3112-like dispute, we believe the nature of the no-fault act belies defendant’s contention in this regard. In this connection, § 3112 may be said to fall within the exception of § 6419(4) of the Court of Claims Act, since it confers jurisdiction upon the circuit courts.

This is consistent with general "jurisdictional” principles. The Court of Claims is a legislative court, not a constitutional court. Littsey v Bd of Governors of Wayne State University, 108 Mich App 406, 412; 310 NW2d 399 (1981), lv den 413 Mich 882 (1982). A circuit court has original jurisdiction over all matters unless prohibited by law, with divestiture of such jurisdiction being accomplished only "under clear mandate of the law”. Wikman v City of Novi, 413 Mich 617, 645; 322 NW2d 103 (1982). Accord, Samuel v Dep’t of Mental Health, 140 Mich App 101; 364 NW2d 294 (1985). Based on the foregoing, including the overall purpose of the no-fault act, we cannot say that, by clear mandate of law, jurisdiction over the instant matter has been reposed in the Court of Claims.

Defendant’s second claim of error is that the lower court improperly refused to set aside the default judgment. A default or default judgment may be set aside for "good cause” shown and upon the filing of an affidavit of facts presenting a meritorious defense. GCR 1963, 520.4. Good cause may be established by a substantial defect in the proceedings, a reasonable excuse for failure to reply, or some other reason showing that a manifest injustice will result. Daugherty v Michigan (After Remand), 133 Mich App 593, 597-598; 350 NW2d 291 (1984). Defendant does not assert "good cause” as a result of a substantial defect or irregularity in the proceedings.

We observe initially that this lawsuit was precipitated by defendant’s determination that plaintiff was not entitled to no-fault benefits. Because defendant is considered an "insurer” once he has assigned a claim to himself, 1979 AC, R 11.101(e), such determination was within his authority. Cf., Jackson, supra. However, as with any other insurer, an aggrieved claimant may bring an action against defendant challenging the merits of that determination. On May 10, 1983, defendant acknowledged receipt as of May 2, 1983, of plaintiffs summons and complaint. That the complaint was thereafter misfiled within the department does not constitute a reasonable excuse. Neglect or omission does not provide adequate grounds for setting aside a default judgment. First Bank of Cadillac v Benson, 81 Mich App 550, 555; 265 NW2d 413 (1978). Nor do we think that an "inadvertent misfiling” constitutes good cause.

Defendant cites Tozer v Charles A Krause Milling Co, 189 F2d 242, 245 (CA 3, 1951), involving FRP 60(b), for the proposition that "inexcusable neglect can hardly be determined in a vacuum” and that cases involving large sums of money should not be determined by default. We agree that inexcusable neglect should not be determined in a vacuum; however, this is precisely why we believe that the nature of the underlying action, viz.: that the no-fault act, in general, and defendant’s responsibilities regarding the Assigned Claims Facility, in particular, are aimed at facilitating the prompt settlement of claims, militates against defendant’s position.

Moreover, defendant relies upon Daugherty, supra, in support of his position that a meritorious defense exists and that a manifest injustice will result if the default judgment is not set aside. In Daugherty, supra, pp 598-599, this Court held that:

"Review of the pleadings and affidavits indicates that defendants will suffer manifest injustice if the default is not set aside. First, defendants have established the existence of a meritorious defense and raised serious questions of fact that should be determined in a trial on the merits. Although the trial court ignored defendants’ denial that the bridge constituted an intentional nuisance in fact, defendants did provide sufficient assertions of fact in the affidavits attached to their third motion to set aside the default.”

Here, no facts were recited in the affidavit in support of defendant’s objections to plaintiff’s motion for default judgment. The affiant attested that he "verily believes that legal and factual questions exist which may or may not contain a meritorious claim on behalf of plaintiff or meritorious defenses on behalf of defendant”. Similarly, the affidavit in support of defendant’s motion for rehearing or for relief from judgment only recited facts relating to the misfiling of plaintiff’s complaint. This is in direct contrast to Daugherty, supra, where the affidavit attested to facts supporting a meritorious defense and a claim that manifest injustice would result. The affidavits here are insufficient; that is, they recite no facts which would permit us to hold that the lower court abused its discretion. Without an affidavit of facts showing a meritorious defense or manifest injustice, the record before us is insufficient to reverse the lower court. Defendant’s unattested assertions in his brief regarding plaintiff’s ineligibility for benefits does not constitute an "affidavit of facts showing a meritorious defense”.

The lower court’s judgment against defendant Secretary of State is affirmed.

1 Pursuant to MCL 500.3171 et seq.; MSA 24.13171 et seq., the Secretary of State is mandated to organize and maintain an Assigned Claims Facility and plan, subject to certain restrictions, for the benefit of persons injured as a result of accidental bodily injury arising out of the use, ownership, operation and maintenance of a motor vehicle as a motor vehicle in this state. A person is entitled to make claim against the fund essentially where no personal protection insurance applies to the injury. See § 3172.