Henry v. Prusak

In Henry v. Prusak, 229 Mich App 162, 168; 582 NW2d 193 (1998), the circuit court ordered counsel and parties to appear for a settlement conference and "be prepared to negotiate in good faith effort sic to reach a fair and reasonable settlement." Id. at 165. The parties and their counsel appeared at the settlement conference, but no settlement resulted. On that same day, the circuit court entered an order of default against the defendants because the defendants' insurance representative failed to make an offer to settle at the settlement conference. Id. at 166. The defendants filed a motion for reconsideration and a motion to set aside default judgment, and both motions were denied; however, the defendants were afforded a jury trial on damages. Id. at 166-167. The Court recognized that a trial court may order persons with the authority to settle a case to appear for a settlement conference pursuant to MCR 2.401(F). Henry, supra at 168. However, the Court could find no authority for the trial court to default a party for failure to negotiate at the settlement conference. Id. at 169-170. The Michigan Court of Appeals concluded that the entry of a default against the owner and driver of a vehicle "solely on the basis of a nonparty insurance carrier's refusal to make a settlement offer" deprived the owner and driver of "due process, the right to assert a defense, and the right to have a jury determine any disputed issues of fact." 582 N.W.2d at 196. The court reasoned as follows: "A court cannot "force" settlements upon parties. The practical effect of the trial judge's sanction of default against a party whose insurance carrier's representative refuses to make an offer to pay money is to force settlement. While we certainly encourage settlement negotiations as an essential and necessary tool for the resolution of disputes and docket control in congested courts, we cannot tolerate the routine practice of entering a default against a party for failure of the party's insurance carrier to make an offer of settlement." Id.