Opinion
No. 331660
08-10-2017
GALAXY SOFTWARE SOLUTIONS, INC., Plaintiff-Appellee, v. ASHISH KUMAR PANDEY, Defendant-Appellant.
UNPUBLISHED Wayne Circuit Court
LC No. 15-003096-CK Before: MARKEY, P.J., and METER and SHAPIRO, JJ. PER CURIAM.
Defendant appeals by right the entry of a default judgment against him and the denial of his motion to set aside the default in this action to enforce a contract to not compete. We affirm.
This Court reviews a decision to grant or deny a default judgment for an abuse of discretion. Huntington Nat'l Bank v Ristich, 292 Mich App 376, 383; 808 NW2d 511 (2011). "A trial court abuses its discretion when it reaches a decision that falls outside the range of principled outcomes." Id.
Defendant argues that he demonstrated good cause for failing to timely appear in the action. We disagree. Under MCR 2.603(D)(1), "[a] motion to set aside a default or a default judgment, except when grounded on lack of jurisdiction over the defendant, shall be granted only if good cause is shown and an affidavit of facts showing a meritorious defense is filed." A party can demonstrate "good cause" by establishing: "(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 v Spence Bros, Inc, 280 Mich App 213, 221; 760 NW2d 674 (2008) (citations and quotations omitted).
"[M]anifest injustice" is not a discrete occurrence such as a procedural defect or a tardy filing that can be assessed independently. Rather, manifest injustice is the result that would occur if a default were to be allowed to stand where a party has satisfied the "meritorious defense" and "good cause" requirements of the court rule. [Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 233-234; 600 NW2d 638 (1999).]
In this case, defendant alleges no substantial defect or irregularity in the default proceedings or contest jurisdiction on appeal. Instead he contends that he had good cause to believe that his employer's attorney was handling this matter for him. But this contention does not constitute "good cause" to set aside the default. An attorney's negligence is attributable to the client and does not usually constitute a basis for setting aside a default judgment. Pascoe v Sova, 209 Mich App 297, 298-299; 530 NW2d 781 (1995).
Defendant also appears to argue that "manifest injustice" would result if the default were permitted to stand because plaintiff did not and does not have a valid claim against him. Despite defendant's assertions, plaintiff did state a valid claim against him, and he has failed to assert a meritorious defense to that claim. The allegations in the complaint and the default and default judgment entered against him were based on his employment contract with plaintiff. The deficiencies in the complaint do not negate the fact that defendant entered into a written contract with plaintiff, agreeing in Article 9.1:
During the period of employment and for a period of Twelve (12) months after the termination of employment with COMPANY [plaintiff] for any reason, CONSULTANT [defendant] shall not directly or indirectly, without involving COMPANY [plaintiff], provide services or attempt to provide services or introduce [a] third party for any reason or arrange for services with the CLIENT [Technofina] to whom the services have been provided with this agreement. CONSULTANT [defendant] agrees that if he/she continues to provide services to the CLIENT [Technofina] after terminating his/her employment with COMPANY [plaintiff], CONSULTANT [defendant] shall pay COMPANY [plaintiff] it's [sic] profit for the entire period he/she provides services to [the] CLIENT [Technofina]. This payment is due within 7 business days after he/she receives payment for further services.The contract also contains a liquidated damages provision that requires the payment of $20,000 or the amount calculated in Article 9.1, whichever is greater, for a breach of the contract. Although, as defendant argues, the contract is not clear regarding whether the liquidated damages provision only applies to the disclosure of confidential compensation information, the contract is clear that it provides for damages to be paid by defendant if defendant goes to work for Technofina within one year after his employment with plaintiff is terminated.
Plaintiff provided testimony and defendant admits that he left plaintiff's employment and took work with Technofina within one year of the date after leaving his employment with plaintiff. Although defendant claims that he never received a copy of the employment contract and correctly asserts that this employment contract was not the contract attached to the complaint, he never denies that he signed the relevant contract, and these claims do not preclude his obligations under the contract. Further, after his motion to set aside the default was denied, defendant consented on the record, through his attorney, to damages of $20,000, presumably pursuant to the liquidated damages clause of his employment contract. Thus, failing to set aside the default judgment would not constitute manifest injustice. And because defendant has failed to establish "good cause" under the court rule to justify the setting aside of the default, the trial court did not abuse its discretion by failing to set aside the default or by entering the default judgment against him.
We affirm. As the prevailing party, plaintiff may tax costs. MCR 7.219.
/s/ Jane E. Markey
/s/ Patrick M. Meter