When a corporation or limited liability company is conducting business in Michigan, it must be very careful when it receives a summons and complaint naming it as a defendant in a lawsuit.
Under Michigan law, a corporation or limited liability company has twenty-one (21) days from the date its registered agent is served with a copy of the summons and complaint to file an answer. MCR 2.108(A)(1); MCR 2.105(D)(1). If the corporation or limited liability company fails to file an answer within the requisite twenty-one (21) days, a default could be entered against the corporation or limited liability company, which operates as an admission of liability on the party of the corporation or limited liability company. MCR 2.603(A); Wood v. DAIIE, 413 Mich. 573, 578 (1982).
Once the default has been entered against a defendant, it can only be set aside after the defendant has taken certain procedural steps and the Michigan policy is generally against the setting aside of defaults that have properly been entered. Alken-Ziegler, Inc. v. Waterbury Headers Corp., 461 Mich. 219, 229 (1999). Indeed, to set aside a default, a defendant must file a motion showing good cause and attach to the motion an affidavit showing a meritorious defense. MCR 2.603(D)(1); Amco Builders & Developers, Inc. v. Team Ace Joint Venture, 469 Mich 90, 95 (2003).
As shown above, a corporation or limited liability company, including their resident agent, must be diligent in checking all documents received in connection with a lawsuit to ensure that any action, including the filing of an answer, is timely filed to prevent the entry of a default being entered against the corporation or limited liability company.