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### STATE OF MICHIGAN

COURT OF APPEALS

KRISTI JACKSON-PHELPS,

Plaintiff-Appellant, UNPUBLISHED December 17, 2015

v No. 323132 Saginaw Circuit Court JOHN C. DIPIERO and JOHN C. DIPIERO, P.C., LC No. 13-021293-NZ

Defendant-Appellees.

Before: G ADOLA , P.J., and K. F. K ELLY and F ORT H OOD , JJ.

P ER C URIAM

.

Plaintiff appeals as of right t he trial court’s opinion and or der granting defendants’ motion for summary disposition. We affirm.

This case arises from plaintiff’s termination from her employm ent at the Saginaw Housing Commission (“SHC”). Plain tiff began working for SHC in 2003, and was the executive secretary from 2008 until her termination. In mid-October 2010 , defendant John DiPiero began an internal audit for the year ending June 30, 2010. During th e course of the audit, an SHC employee suggested that DiPiero examine the Shelter Plus Care ( “SPC”) program for irregularities. DiPiero expande d the scope of his audit and di scovered, among other concerns, that plaintiff, who had been in charge of approving applicants for SPC program, had approved her son for an SPC program for which he did not qualify. At Di piero’s suggestion, Peter Chitekwe, the executive director of the SHC, placed plaintiff o n a leave of absence with pay. The scope of the audit was then expanded to include all of plai ntiff’s activities at SHC. DiPiero subsequently confirmed the violations and further found, among other inconsistencies, that plaintiff’s other son was also admitted into an SPC program for which he did not qualify.

Plaintiff was thereafter sus pended without pay and, ultimately, terminated.

In 2011, plaintiff filed suit against SHC and Chitekwe, allegi ng violation of the Whistleblower Protection Act (“WPA”), MCL 15.361 et seq ., and breach of contract. Regarding her breach of contract claim, plaintiff asserted that the SHC v iolated her employment contract

when it terminated her without cause. The suit was arbitrated. In regard to plaintiff’s breach of contract claim, the arbitrator held:

This Arbitrator concludes that t he findings set forth in the f inal independent audit report by DiPi ero that [plaintiff] breached h er fiduciary duties-2- and committed fraud constituted just cause for her termination. Accordingly, Respondents did not breach her employment contract . . . .

The arbitrator further found tha t plaintiff’s WPA claim failed.

Plaintiff then filed the instant lawsuit against DiPiero and h is accounting firm, claiming that DiPiero’s audit findings were false and maliciously made, and that she was terminated and suffered damages as a result. P laintiff alleged (1) tortious i nterference with a business relationship, (2) fal se light invasion of privacy, and (3) negl igence. Defendants responded with a motion for summary disposition, ar guing that plaintiff’s tort c laims were barred by res judicata and collateral estoppel on the basis of the arbitration award. The trial court agreed, and dismissed plaintiff’s cla im. Plaintiff appeals.

Plaintiff argues that the trial court erred in concluding that her claims were barred by res judicata and collateral es toppel. We disagree.

The applicability of the legal doctrines of res judicata and collateral estoppel present a question of law subject to de novo review. Estes v Titus , 481 Mich 573, 578-579; 751 NW2d 493 (2008). Likewise, this Court reviews de novo a trial court ’s decision to grant or deny a motion for summary disposition. Barrow v Pritchard , 235 Mich App 478, 480; 597 NW2d 853 (1999).

“The doctrine of res judicata bars a subsequent action when (1 ) the first action was decided on the merits, (2) the matter contested in the second a ction was or could have been resolved in the first, and (3) both actions involve the same pa rties or their privies.” Estes , 481 Mich at 585 (footnotes and quotation marks omitted). “Generall y, for collateral estoppel to apply three elements must be satisfied: (1) a question of fact essential to the judgment must have been actually litigated and determined by a valid and final jud gment; (2) the same parties must have had a full [and fair] opportunity to litigate the issue; a nd (3) there must be mutuality of estoppel.” Monat v State Farm Ins Co , 469 Mich 679, 692; 677 NW2d 843 (2004) (internal quotation marks and citations omitted). Collateral estoppel “a pplies to factual determinations made during grievance hearings or arbitration proceedings.” Porter v Royal Oak, 214 Mich App 478, 485; 542 NW2d 905 (1995). In applying collateral estoppel, the courts must strike a balance between the rights of the litigants to their day in cou rt and the need to eliminate repetitious litigation. Howell v Vito’s Trucking Co , 386 Mich 37, 48; 191 NW2d 313 (1971).

On appeal, plaintiff asserts that the issues decided in her ca se against SHC and Chitekwe were not the same as the issues presented in the current case, and, thus, collateral estoppel and res judicata do not apply. 1 More specifically, plaintiff argues that the factual issues d etermined by the arbitrator in the first case were not the same as are ne cessary in this case. According to plaintiff, in the prior case, the relevant determination was wh ether SHC terminated plaintiff for

the reason stated. The arbitrator concluded that SHC terminate d plaintiff based upon its reliance

1 We note that, in regard to res judicata, plaintiff does not ar gue that the current action does not involve the same parties or their privies. Estes , 481 Mich at 585.-3- on DiPiero’s audit findings and c onclusions. Plaintiff asserts that the arbitrator did make a determination on the veracity of the audit. In opposition, def endants assert that the arbitrator’s decision, a final decision on th e merits, specifically found th at plaintiff’s prior claim was without merit because the audit report was just cause for plaintiff’s t ermination. The arbitrator determined that just cause existed for termination despite plai ntiff’s assertions that the findings in the audit report were not true.

Plaintiff brought two claims against the SHC and Chitekwe in t he prior lawsuit, one pursuant to the WPA and the other for breach of her employment contract. For her WPA claim, plaintiff asserted that she was fired because she did or was go ing to “blow the whistle” on Chitekwe for alleged improper ac tions. The arbitrator rejected her claim because he found that plaintiff’s factual assertion that she di d or was going to “blo w the whistle” on Chitekwe’s alleged improper actions was not credible. That finding has no relevan ce to the claims that plaintiff has brought against defendants in the instant case, because the arb itrator’s finding that there were no pre-textual reasons for plainti ff’s termination did not resolve whether DiPiero’s conclusions in

the audit were accurate. Accord ingly, we agree with plaintiff the disposition of the WPA claim is not dispositive.

However, the disposition of the breach of contract claim is re levant. In the earlier lawsuit plaintiff asserted that the allegations against her that came t o light as a result of DiPiero’s audit were false, and, thus, the SHC breached her employment contract by firing her without just

cause. The arbitrator found that the SHC had just cause to fir e plaintiff on the basis of the

information contained in DiPie ro’s audit. Although the arbitra tor did not expressly state that DiPiero’s report was factually tr ue when addressing the breach of contract claim, he necessarily reached this conclusion given his determination that the SHC ha d just cause to fire plaintiff (and thus did not breach the provision of the contract requiring the SHC have just cause to fire plaintiff). The arbitrator reach ed this conclusion despite pla intiff’s arguments that DiPiero’s findings were inaccurate or untrue. Plaintiff had a full and f air opportunity to litigate this issue in the prior lawsuit. Accordingly, because the matter at issue here is the same as an issue that was essential in the first case and determined by the arbitrato r, the trial court correctly held that res judicata and collateral estoppel bar plaintiff’s claims. Estes , 481 Mich at 585; Monat , 469

Mich at 692.

In addition, from a policy sta ndpoint, we note that plaintiff is essentially attempting to relitigate the factual question of whether DiPiero’s report was f alse or the result of a wrongful or malicious act by DiPiero, and therefore by extension that no ju st cause existed for the SHC to terminate plaintiff’s employment. A conclusion that DiPiero’s report was false would be

inconsistent with and undermine the arbitrator’s findings that the SHC did not breach the employment contract because just cause existed for her terminat ion. Such an inconsistency is exactly why the doctrines of res judicata and collateral estopp el exist and what they seek to prevent. See Monat , 469 Mich at 692 (holding that th e purpose of collateral estop pel is “to relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudi cation . . . .” (citation omitted)).-4- Accordingly, we hold that plainti ff’s claims are barred and tha t the trial court did not err by granting defendants’ motion for summary disposition. 2

Affirmed. Defendants, the prevai ling parties, may tax costs. MCR 7.219.

/s/ Michael F. Gadola /s/ Kirsten Frank Kelly

/s/ Karen M. Fort Hood

2 Given our conclusion that plaintiff’s claims are barred becaus e she is estopped from asserting that DiPiero’s report was false or the result of a wrongful or malicious act by DiPiero, it is unnecessary to address plaintiff’s additional arguments on appe al.