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140683 - Clarke v Richco Construction

Lawrence M. Clarke, Inc.,
 
Christopher G. Bovid
 
Plaintiff-Appellee,
 
v
(Appeal from Ct of Appeals)
 
 
(Monroe - Costello, J.)
 
Richco Construction, Inc., Ronald J. Richards, Jr., and Thomas Richards,
 
John D. Staran
 
Defendants-Appellants.
 


Summary

​Lawrence M. Clarke, Inc. was hired to supply labor and material for a project in Ash Township, Monroe County to develop a residential subdivision known as Carleton Crossings. In the summer of 2003, Clarke hired Richco Construction, Inc. as a subcontractor to work on the water, storm, and sanitary sewer systems for the project. The principals and apparently the sole shareholders of Richco were Ronald J. Richards, Jr., and Thomas A. Richards. Clarke sued Richco, claimed that construction and repair work was not properly performed, and that Clarke incurred considerable expense in rebuilding the infrastructure that Richco was supposed to build; Clarke’s complaint alleged breach of contract by Richco and fraud by Ronald and Thomas Richards. But Clarke’s complaint was dismissed after it could not serve the defendants: Richco abandoned its registered corporate office with no forwarding address, and Clarke could not find a current address for either shareholder.

 

Clarke later filed a second complaint with a motion for alternate service. In the motion Clarke explained its prior, unsuccessful efforts to locate the defendants. The trial court granted the motion, allowing Clarke to serve the defendants by posting the documents at Richco’s registered address, sending the documents to the individual defendants by U.S. mail to the same address, and publishing a copy of the order in a Monroe County newspaper pursuant to Michigan Court Rule 2.106. None of the defendants responded to the complaint; ultimately, following an evidentiary hearing, Clarke obtained a default and judgment of $371,598 against Richco and the two shareholders. Several months later, Clarke located the individual defendants and began to execute on their personal assets. The defendants filed an emergency motion to set aside the default judgment; the trial court denied their motion, largely because the defendants failed to provide an affidavit of meritorious defense (although one was offered during the motion hearing). The court also denied the defendants’ motion for reconsideration (supported by affidavits) and their motion to stay enforcement of the judgment.
 
The defendants appealed to the Court of Appeals, which affirmed in an unpublished per curiam opinion. The Court of Appeals held that the alternate service was reasonably calculated under the circumstances to notify the defendants of the lawsuit, and that Clarke had conducted a diligent search to find the defendants. The Court of Appeals also held that the trial court had personal jurisdiction over the defendants, and that the trial court properly denied the motion to set aside the default judgment because the defendants did not file an affidavit in support of the motion. The defendants appeal.