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UNPUBLISHED Wayne Circuit Court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. SHAPIRO, J. (dissenting)
Plaintiff-corporation filed suit alleging that defendant, its former employee, violated the terms of a non-compete agreement and that it was entitled to liquidated damages of $20,000. The complaint was dismissed for failure of service but was reinstated on plaintiff's motion. After defendant was served, he failed to file a timely answer, and a default was entered on plaintiff's request. A motion for default judgment was filed, and defendant filed a response to the motion along with a motion to set aside the default. The trial court denied the motion to set aside the default, granted the motion to enter a default judgment, and refused defendant's request for a hearing on damages.
I respectfully dissent as I believe the trial court erred in failing to set aside the default and, having granted the default judgment, in refusing to conduct a hearing on damages.
Defendant has stated a good cause for the failure to file an answer and provided an affidavit that set forth meritorious defenses. The explanation concerned the existence of a recently concluded, related case. According to counsel, the company defendant now works for was very recently sued by plaintiff seeking lost profits resulting from that company's hiring of defendant, a cause of action that on its face appears to be closely related, if not duplicative of the instant case. Plaintiff received $60,000 in that suit, though it is not clear whether this was by settlement or by judgment. In his affidavit, defendant averred that he "received assurances from my employer that my employer's attorneys were handling the matter." He has also proffered e-mails that demonstrate that his present employer's corporate counsel was to respond to the complaint. In my view, this is not a typical situation in which a defendant's default may not be set aside for attorney negligence. Given the prior, related suit and the assurances he received from his employer, defendant had good cause to believe that his employer was going to continue to manage the defense of the litigation arising out of his hiring.
Defendant's affidavit also set forth several meritorious defenses. First, that plaintiff had received full compensation for its alleged losses in the prior suit and that the instant suit was an attempt to obtain a double recovery. Second, that plaintiff had earlier breached the contract by refusing to pay him his full wages, as found by the Department of Labor. Third, that he did not violate any terms of his agreement or any statute. Given the unusual circumstances of the prior suit and these meritorious defenses, I would conclude that the trial court abused its discretion by refusing to set aside the default.
Assuming the entry of default judgment was proper, I would remand this case for the hearing on damages requested by defendant. Although plaintiff's complaint requested a sum certain, i.e., $20,000, in damages, the trial court allowed plaintiff to increase the damage request to $41,000 at the motion hearing without prior notice to defendant. The court then denied defendant's request to conduct a hearing on damages apparently concluding that it was in defendant's interest to accept the $20,000 sum rather than risk a judgment for $41,000. However, defendant's counsel specifically requested the hearing and declined the court's suggestion that it agree to a judgment for $20,000. Accordingly, the trial court should have conducted a hearing, at least to determine if defendant was entitled to a set-off for unpaid wages or to prevent a double recovery.
The colloquy read:
THE COURT: Okay. What do you have to say, sir?
MR BATEY (defense counsel): May I question Mr. Tiwari?
THE COURT: Yes; you may.
MR. BATEY: Mr. Tiwari, isn't it true that on February 27th of 2015 the Department of Labor issued a finding that you owed my client seven thousand six hundred sixty-one dollars and fifteen cents ($7,661.15), because you failed to pay his wages?
MR. TIWARI: That's correct. That is for the period of April and after his termination because he has not submitted time sheet. Later on he submitted time sheet. Because he was not eligible to get paid as for the UCIS rules through the new employer. So DOL asked us to pay us [sic], and he submitted time sheet to us later on.
MR. BATEY: But that was for the time that he was working for you and doing work for Technofina that -
MR. TIWARI: Actually he did not send the time sheet, and later on -
MR. BATEY: But he was -
MR. TIWARI: Because he was not eligible.
THE COURT: Hold on. I don't care. Let's just get to the real issue here.
MR. BATEY: Right. I'm getting to my issue, Your Honor.
THE COURT: We're not trying the case.
MR. BATEY: I understand that, Your Honor. But I do believe my client is entitled to a trial on damages. But in any event -
THE COURT: Your client isn't entitled to anything, because he didn't respond to the complaint.
MR. BATEY: I understand that, Your Honor.
THE COURT: Okay. So now you know, if you want to have a hearing on the damages, the Court could do that. But you know, I think it's pretty clear in terms of at the very least, the twenty thousand dollars ($20,000); okay? And if you're willing to accept that, there will be no hearing. If you want to go ahead and say that it's forty some thousand dollars based on what he has testified to, then we can go ahead and have a hearing. He's not entitled to a trial.
MR. BATEY: Well, a hearing, Your Honor.
THE COURT: That's what you meant.
MR. BATEY: And I apologize.
THE COURT: Okay.
MR. BATEY: The issue on this is -
THE COURT: Wait just a second.
MR. CAROLAN (plaintiff's counsel): We'd be willing to accept the twenty thousand dollars.
THE COURT: Well then, that's it. Okay. Motion granted.
In the colloquy, it is clear that while plaintiff's counsel was willing to accept a judgment for $20,000, no such agreement is given by the defense. Given defendant's claim of a potential double recovery and his request for an evidentiary hearing on damages, I believe the trial court erred in entering judgment.
I would reverse and remand with direction to set aside the default judgment.
/s/ Douglas B. Shapiro