Opinion
No. 347417
04-02-2020
GARNER PROPERTIES AND MANAGEMENT, Plaintiff-Appellant, v. CRYSTAL PRUITT and BILLY PRUITT, Defendants-Appellees, and SHIRLEY PORTER, Defendant.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Wayne Circuit Court
LC No. 18-006141-CK Before: M. J. KELLY, P.J., and FORT HOOD and BORRELLO, JJ. PER CURIAM.
Plaintiff appeals as of right the trial court's entry of a default judgment in plaintiff's favor against defendants Crystal Pruitt and Billy Pruitt (defendants) jointly and severally for the amount of $17,030.43 but declining to award plaintiff any monetary damages for repairs or ordinance violation fines related to the property defendants had been leasing. On appeal, plaintiff challenges the propriety of the trial court's award of damages. For the reasons set forth in this opinion, we affirm.
Defendant Shirly Porter was dismissed from the case below and is not implicated in our analysis of the issues presented on appeal.
I. BACKGROUND
Defendants, as tenants, entered into a written residential lease, with the lease term beginning on June 27, 2015. Under the lease agreement, defendants were obligated to pay rent of $1,200 on the first of day of each month, were responsible for all utility charges, and were to maintain the premises in good condition. The agreement also required defendants to provide reimbursement for the cost of any repairs to the premises for damage caused by defendants' misuse or neglect. The lease provided that it would continue on "a yearly basis" and that defendants could terminate their tenancy by giving plaintiff 90 days' written notice. At some point, plaintiff was hired by the owner of the leased property to manage the property.
On June 1, 2018, plaintiff initiated this action in a one-count complaint for breach of contract. Plaintiff alleged that defendants had failed to pay rent as required by the lease, had vacated the premises in approximately January 2018, had caused "substantial damages" to the premises, had "failed to satisfy their obligations under the contract despite having received notice and demand to do so," and had thereby breached the parties' contract. Plaintiff further alleged that it was entitled to damages in the form of lost rent, late fees, damage to the premises caused by defendants, unpaid utility bills, court fees, interest, and other contractual damages. Plaintiff sought a total of $27,339.88 in damages, "plus costs, interest, and attorney's fees."
Defendants failed to answer the complaint or otherwise defend the action, and a default was entered on October 17, 2018. On December 3, 2018, plaintiff moved the trial court to enter a default judgment against defendants. The trial court held two hearings on the motion. After the first hearing, the trial court asked plaintiff to verify the $14,524 it was seeking as damages for repairs. Plaintiff responded by submitting an affidavit completed by one of its managing members asserting, as relevant to the issues on appeal, that plaintiff had incurred $24,102.64 in repair costs and $2,178 in ordinance violations related to the subject property. According to the affidavit, these amounts were based on a repair quote completed by 4 Diamond Services on January 17, 2018, and the register of actions related to each of the various charged ordinance violations. These respective documents were attached to the affidavit.
Following the second hearing, the trial court entered an order of default judgment in plaintiff's favor for $17,030.43, which represented damages for rent, late fees, costs for eviction, the water bill, and the cost of snaking the drain. Plaintiff does not challenge the damages awarded for these categories on appeal. However, the trial court's order specifically denied an award of any damages for repairs to the property or ordinance violation fines. The trial court explained on the record at the hearing that it was denying plaintiff's requests for damages related to repairs and ordinance violation fines because there was "no evidence of payment by the Plaintiff with respect to these alleged damages. The trial court reasoned as follows:
I'm not going to give you damages based on a quote. It's a quote.
It very well could've been that, it's not the work that was done, it's a quote for work to be done. So I have no idea without evidence of what your client actually paid what work they had done.
I am satisfied that, you know, with these blown up pictures that this was an unusual situation where substantial repairs were needed, but I need proof of what they paid.
II. ANALYSIS
On appeal, plaintiff argues that the trial court erred in determining the amount of damages to award on plaintiff's motion for a default judgment.
We review for clear error a trial court's determination on the issue of the amount of damages to award. See Marshall Lasser, PC v George, 252 Mich App 104, 110; 651 NW2d 158 (2002). "We will not set aside a nonjury award merely on the basis of a difference of opinion." Id. (quotation marks and citation omitted). "Clear error exists where, after a review of the record, the reviewing court is left with a firm and definite conviction that a mistake has been made." Id.
Plaintiff argues that the trial court should have awarded the entirety of plaintiff's alleged damages because plaintiff's claim for damages was unopposed. Relatedly, plaintiff maintains that it was unnecessary for the trial court to have held a hearing on the issue of damages because there was no dispute regarding the amount of damages since defendants did not participate in the action to oppose plaintiff's claimed damages. Additionally, plaintiff argues that the trial court erred by requiring proof of payment as evidence of its damages related to repair costs and ordinance violation fines.
"It is an established principle of Michigan law that a default settles the question of liability as to well-pleaded allegations and precludes the defaulting party from litigating that issue." Wood v Detroit Auto Inter-Ins Exch, 413 Mich 573, 578; 321 NW2d 653 (1982). "However, a default judgment is not an admission regarding damages." Kalamazoo Oil Co v Boerman, 242 Mich App 75, 79; 618 NW2d 66 (2000). Nonetheless, and contrary to plaintiff's appellate argument, the holding of further proceedings regarding the issue of damages once a party has been defaulted "is within the discretion of the trial court." Wood, 413 Mich at 585. As provided in MCR 2.603(B)(3)(b),
If, in order for the court to enter a default judgment or to carry it into effect, it is necessary to
(i) take an account,
(ii) determine the amount of damages,
(iii) establish the truth of an allegation by evidence, or
(iv) investigate any other matter,
the court may conduct hearings or order references it deems necessary and proper, and shall accord a right of trial by jury to the parties to the extent required by the constitution.
Here, plaintiff's reliance on the lack of opposition to its damages claim does not establish that the trial court abused its discretion by holding further proceedings on the issue of damages where the court sought further evidence of the amount of damages plaintiff suffered with respect to certain categories of damages. Wood, 413 Mich at 585. Furthermore, we conclude that the trial court did not clearly err by determining that the evidence submitted with respect to repair costs and ordinance violation fines was essentially speculative and did not sufficiently demonstrate that plaintiff had suffered damages in those amounts were there was no evidence that plaintiff paid those amounts or had such repair work done. See Marshall Lasser, 252 Mich App at 109-111 (concluding that a trial court's decision on the amount of damages awarded was not clearly erroneous where the plaintiff's "proofs were too speculative to satisfy the award it was seeking"). "The party asserting a breach of contract has the burden of proving its damages with reasonable certainty, and may recover only those damages that are the direct, natural, and proximate result of the breach." Alan Custom Homes, Inc v Krol, 256 Mich App 505, 512; 667 NW2d 379 (2003).
Affirmed. No costs are awarded. MCR 7.219.
/s/ Michael J. Kelly
/s/ Karen M. Fort Hood
/s/ Stephen L. Borrello