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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

RIVERSBEND REHABILITATION, INC.,

Plaintiff-Appellant,

UNPUBLISHED

March 22, 2018

v No. 335847

Midland Circuit Court

JEFFREY ENOS, LC No. 16-003593-CK

Defendant-Appellee.

Before: SAWYER, P.J., and BORRELLO and SERVITTO, JJ.

PER CURIAM.

In this breach of contract action, plaintiff appeals as of right the order granting summary 

disposition in defendant’s favor and granting defendant’s motion for sanctions. We affirm. 

On July 10, 2006, plaintiff and defendant entered into an agreement where plaintiff 

would advance defendant a salary of $40,000 annually, reimburse defendant for his graduate 

schooling tuition and costs, and provide defendant with health and dental insurance plans. In 

exchange, defendant agreed to complete a doctoral level educational program in physical therapy 

and work for plaintiff when needed, on an occasional basis. Upon completion of the program, 

defendant promised to fully repay his advanced salary by either working for plaintiff (whereby a 

portion of his salary would be retained) or seeking employment elsewhere and making payments 

to plaintiff. In the event that defendant did not complete his educational program or if he did not 

accept employment with plaintiff, defendant would have to repay all monies received for his 

advanced salary and repay all tuition and other educational expenses covered by plaintiff.

Pursuant to the agreement, defendant attended Central Michigan University1 and plaintiff began 

paying defendant an advanced salary and repaying his educational expenses. 

In October 2011, plaintiff and defendant executed a written and signed confirmation of 

the July 10, 2006 agreement. At the same time, defendant executed a promissory note in favor of 

plaintiff. In the note, defendant promised to pay all salary advanced in the event he failed to: (1) 

graduate from his physical therapy program; (2) choose to not work at plaintiff following 

graduation from his physical therapy program; or (3) accepted employment with plaintiff

following graduation, but terminated that employment before full repayment of all advanced 

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Defendant received a doctoral degree in physical therapy in 2013.
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salary had occurred. Unlike the agreement, the promissory note did not require repayment of 

advanced education expenses.

As defendant was nearing the completion of his educational program, defendant’s 

personal relationship with the owner of plaintiff began to deteriorate. Following the breakdown, 

defendant took certain actions that plaintiff believed was evidence of his probable intent to not 

only refuse employment with plaintiff, but also to avoid repaying any of the funds forwarded as 

advance salary and educational financial assistance. To purportedly protect its interests, plaintiff 

brought suit against defendant in February 2013 to seek a determination that he had breached his 

agreement with plaintiff. 

In its complaint, plaintiff asserted claims of breach of contract, promissory estoppel, and 

unjust enrichment. On stipulated facts, the trial court issued an opinion in that case. First, the 

trial court dismissed the unjust enrichment and promissory estoppel claims because there was a 

written contract covering the same subject matter. As to the breach of contract claim, the trial 

court first stated the legal rule in Michigan that “one who first breaches a contract cannot 

maintain an action against the other contracting party for his subsequent breach or failure to 

perform.” Next, the trial court determined that plaintiff had first breached the parties’ agreement 

by rescinding its offer to employ defendant after he graduated from college, by failing to pay 

defendant’s tuition as required under the agreements, and by removing defendant from the 

payroll of plaintiff in December 2012. The trial court found that these breaches were material 

and that none of defendant’s actions amounted to anticipatory repudiation that would give 

plaintiff the option of either 1) suing immediately for the breach of the contract or 2) suspending 

its own performance and demanding a retraction of the repudiation. The trial court thus 

ultimately ruled in favor of defendant.

Plaintiff timely appealed the decision issued by the trial court. On October 29, 2015, this 

Court issued an opinion affirming the trial court’s decision. This Court held that: 

[T]he trial court’s finding was not clearly erroneous. Enos’ correspondence 

indicated that he promised to go to school and take on the debt at issue in 

significant part—and perhaps exclusively—because Riversbend promised to 

employ him after graduation. Moreover, the repeated references in the 

agreements to Enos’ employment with Riversbend strongly showed that 

Riversbend also considered this to be an essential part of the bargain. Indeed, the 

contract terms require repayment on less favorable terms if Enos chooses not to 

work for Riversbend. Enos—the nonbreaching party—did not obtain the central 

benefit of the contract that he reasonably expected to receive: he did not receive 

the promised employment at a level of compensation sufficient to meet his 

obligations. Under these circumstances, we cannot conclude that the trial court 

clearly erred when it found that Riversbend’s breach was substantial. [Riversbend 

Rehab, Inc v Jeffrey Enos, unpublished per curiam opinion of the Court of 

Appeals, issued October 29, 2015 (Docket No. 321631), p 6.]
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Additionally, this Court stated:

[a]s the trial court found, Enos was ready, willing, and able to work for 

Riversbend; it was Riversbend who prevented Enos from performing under the 

agreement. Despite having deprived Enos of his contemplated source of income 

in violation of the parties’ agreement, Riversbend now demands that Enos repay 

his debt under new terms and without any further obligations to him. But that is 

not the agreement that Riversbend made with Enos. The agreement provided that 

Riversbend would employ Enos and Enos would repay Riversbend through 

reduced compensation. If—and only if—Enos took certain specified actions 

would Enos have any obligation to repay other than by working for Riversbend. 

The trial court did not clearly err when it found that Enos did not take any of 

those actions. [Id. at 7.]

Thereafter, plaintiff acknowledged that it had a contractual obligation to offer defendant 

employment. On February 8, 2016, plaintiff extended a written offer of employment to 

defendant requesting that he respond within 21 days. Defendant did not respond, so plaintiff 

deemed the offer declined. Because defendant declined, the promissory note required defendant 

to repay the full amount of his advanced salary in equal installments over five years without 

interest, starting within 30 days following the date he declined employment (thus March 30, 

2016). Defendant failed to remit any payment to plaintiff by the due date. Following the default, 

on April 7, 2016, plaintiff submitted to defendant written notice of the default and demanded 

cure within 10 days. Defendant failed to cure; therefore, plaintiff declared the entire amount of 

advanced salary ($256,932) immediately due and payable as authorized by the promissory note.

Defendant did not pay the amount that plaintiff claimed was owed. 

On May 16, 2016, plaintiff filed the instant action alleging breach of contract of the 

agreement between plaintiff and defendant and breach of contract of the promissory note. In lieu

of answering the complaint, defendant filed a motion for summary disposition pursuant to MCR 

2.116(C)(7). Defendant argued that because the parties already litigated their dispute to a 

binding final judgment upheld on appeal, plaintiff was barred from bringing the action and 

claims pursuant to collateral estoppel and res judicata. Plaintiff responded that collateral 

estoppel is inapplicable and that the facts it bases its breach of contract claim on in this suit are 

different from, and arose after those it based its first suit on, thus defeating defendant’s res 

judicata defense.

The trial court granted summary disposition in defendant’s favor, finding that that all 

necessary criteria for res judicata and collateral estoppel were established. Immediately

thereafter, defendant filed a motion for sanctions based on his contention that the action filed by 

plaintiff was frivolous. The trial court found that there was no basis for plaintiff’s allegations in 

the new complaint and that plaintiff’s action was frivolous. It thus granted defendant’s motion 

for sanctions. This appeal followed.

Plaintiff first argues that the trial court erred in granting defendant’s motion for summary 

disposition because its claims are not barred by res judicata or collateral estoppel. We disagree. 
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“This Court reviews the grant or denial of summary disposition de novo to determine if 

the moving party is entitled to judgment as a matter of law. In making this determination, the 

Court reviews the entire record to determine whether defendant was entitled to summary 

disposition.” Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Summary 

disposition is appropriate under MCR 2.116(C)(7) if a claim is barred by a prior judgment. RDM 

Holdings, LTD v Continental Plastics Co, 281 Mich App 678, 687; 762 NW2d 529 (2008). A 

motion pursuant to MCR 2.116(C)(7) may be supported by affidavits, depositions, admissions, or 

other documentary evidence so long as the evidence would be admissible at trial. Maiden, 461 

Mich at 119. “[T]he trial court must accept the nonmoving party's well-pleaded allegations as 

true and construe the allegations in the nonmovant's favor to determine whether any factual 

development could provide a basis for recovery.” Hoffman v Boonsiri, 290 Mich App 34, 39; 

801 NW2d 385 (2010).

“The determination whether res judicata will bar a subsequent suit is a question of law 

that we review de novo.” Pierson Sand & Gravel, Inc v Keeler Brass Co, 460 Mich 372, 379; 

596 NW2d 153 (1999). Whether collateral estoppel prevents a party from raising an issue 

addressed in a prior proceeding is also a question of law that is reviewed de novo. Horn v Dep’t 

of Corrections, 216 Mich App 58, 62; 548 NW2d 660 (1996).

Res judicata is intended to prevent multiple suits litigating the same cause of action. 

Adair v State, 470 Mich 105, 121; 680 NW2d 386 (2004). The doctrine bars a second, 

subsequent action when “(1) the prior action was decided on the merits, (2) both actions involve 

the same parties or their privies, and (3) the matter in the second case was, or could have been, 

resolved in the first.” Id (citation omitted). Res judicata bars a subsequent action between the 

same parties when the facts or evidence essential to the maintenance of the two actions are 

identical. Old Kent Bank of Holland v Chaddock, Winter & Alberts, 197 Mich App 372, 379; 

495 NW2d 808 (1992). If, however, the facts change, or new facts develop, res judicata will not 

apply. In re Pardee, 190 Mich App 243, 248; 475 NW2d 870 (1991). 

Here, plaintiff argues that in the original litigation, defendant had not completed his 

education and there was no offer of employment to defendant. While plaintiff is correct in 

noting these circumstances, it is incorrect in assuming that these events qualify as new facts for

purposes of res judicata. Because plaintiff was found to have breached the agreement in the 

original litigation, it cannot now cure the defect by offering employment to defendant and then 

bring a new action against defendant. In fact, “[o]ne who first breaches a contract cannot 

maintain an action against the other contracting party for his subsequent breach or failure to 

perform.” Able Demolition v Pontiac, 275 Mich App 577, 585; 739 NW2d 696 (2007). The trial 

court correctly cited the rationale underlying this principal, stating that “the Plaintiff does not 

have the ability to resurrect the contract without agreement of the Defendant.” Defendant did not 

agree to a new contract; therefore, the contract no longer exists. 

Moreover, it is undisputed that both actions involved the same parties, the prior action 

was decided on the merits, and the decree in the prior action was a final decision. Adair, 470 

Mich at 121. Therefore, the main element at issue is for purposes of res judicata whether the 

matter contested in the second case was or could have been resolved in the first. Id. On this 

element, our Supreme Court noted that res judicata bars a subsequent action between the same 

parties when “the evidence or essential facts are identical.” Id. at 123-124 (citation omitted).
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The evidence for both actions in this matter is the same. Plaintiff’s first complaint and 

second complaint attached identical exhibits. More importantly, both complaints claimed that 

defendant breached his agreements and therefore must reimburse plaintiff for monies expended. 

A trial court and the Court of Appeals previously decided these actions. Because there was 

nothing new filed in the second complaint, res judicata bars plaintiff’s subsequent action. 

Collateral estoppel also applies to this case. Collateral estoppel precludes the relitigation 

of an issue in a subsequent action. Rental Props Owners Ass’n of Kent Co v Kent Co Treasurer, 

308 Mich App 498, 528; 866 NW2d 817 (2014). Application of collateral estoppel generally 

requires “(1) that a question of fact essential to the judgment was actually litigated and 

determined by a valid and final judgment, (2) that the same parties had a full and fair opportunity 

to litigate the issue, and (3) mutuality of estoppel.” Id. at 529 (citation omitted). 

Concerning the first requirement, the ultimate issue to be determined must be identical 

and not merely similar to that involved in the first action. Eaton Co Rd Comm’rs v Schultz, 205 

Mich App 371, 376; 521 NW2d 847 (1994). And, to be actually litigated, a question must be put 

into issue by the pleadings, submitted to the trier of fact, and determined by the trier of fact. 

VanDeventer v Mich Nat’l Bank, 172 Mich App 456, 463; 432 NW2d 338 (1988). “A decision is 

final when all appeals have been exhausted or the time available for an appeal has passed.” 

Leahy v Orion Twp, 269 Mich App 527, 530; 711 NW2d 438 (2006). 

In this case, the ultimate issue being litigated was whether defendant breached his 

contract with plaintiff. Both the defenses of a material breach of contract and whether there was 

a breach of contract by defendant were litigated in the trial court and both the trial court and this 

Court delivered valid and final judgments in favor of defendant. The first element of collateral 

estoppel was thus met. Rental Props Owners Ass’n of Kent Co, 308 Mich App at 529.

As to the second element of collateral estoppel, the parties in the second action must be 

the same as or privy to the parties in the first action. Bryan v JPMorgan Chase Bank, 304 Mich 

App 708, 715; 848 NW2d 482(2014). It is undisputed that the parties are the same in both 

actions. In determining whether the parties in the first action had a full and fair opportunity to 

litigate an issue, a court should consider numerous factors, including: whether the party against 

whom estoppel is asserted had a legal right to appeal; whether the issue is one of law and the two 

actions are substantially unrelated or an intervening change merits a new determination; whether 

a new determination is merited by differences in the procedures; whether the party against whom 

estoppel is asserted had a significantly heavier burden of persuasion as to the issue in the first 

action; and, whether there is a clear and convincing need for a new determination because of the 

effect on the interests of the public or nonparties, the unforeseeability that the issue would arise 

in a later proceeding, or because the party against whom estoppel is asserted did not have 

adequate opportunity or incentive to obtain a full and fair adjudication in the first action. Monat 

v State Farm Ins Co, 469 Mich 679, 683-684 n 2; 677 NW2d 843 (2004). In this case, plaintiff 

and defendant were both represented by counsel and had a full and fair opportunity to litigate. 

None of the above factors apply such that they would bar the use of the collateral estoppel 

doctrine. 

Finally, mutuality of estoppel is usually a necessary element of collateral estoppel. 

Rental Props Owners Ass’n of Kent Co, 308 Mich App at 528. Mutuality of estoppel exists if 
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both litigants in the second action are bound by the judgment rendered in the first action. Monat,

469 Mich at 684-685. In other words, “[t]he estoppel is mutual if the one taking advantage of the 

earlier adjudication would have been bound by it, had it gone against him.” Id. (quotation marks 

and citations omitted, alterations in original). Here, both plaintiff and defendant are bound by 

the valid and final judgments rendered by the first trial court and this Court in favor of 

defendant; therefore, the mutuality element is satisfied. 

Plaintiff next argues that the trial court erred in finding that its arguments were frivolous 

and in granting sanctions against plaintiff and its counsel. 

We review for clear error a trial court’s determinations whether a claim was frivolous and 

whether sanctions are warranted. Bronson Health Care Group, Inc v Titan Ins Co, 314 Mich 

App 577, 585; 887 NW2d 205 (2016). “A decision is clearly erroneous where, although there is 

evidence to support it, the reviewing court is left with a definite and firm conviction that a 

mistake has been made.” Kitchen v Kitchen, 465 Mich 654, 661-62; 641 NW2d 245 (2002). 

Additionally, this Court reviews for an abuse of discretion the trial court's award of attorney fees 

under MCL 600.2591. Edge v Edge, 299 Mich App 121, 127; 829 NW2d 276 (2012).

MCL 600.2591 states, 

(1) Upon motion of any party, if a court finds that a civil action or defense 

to a civil action was frivolous, the court that conducts the civil action shall award 

to the prevailing party the costs and fees incurred by that party in connection with 

the civil action by assessing the costs and fees against the nonprevailing party and 

their attorney.

(2) The amount of costs and fees awarded under this section shall include 

all reasonable costs actually incurred by the prevailing party and any costs 

allowed by law or by court rule, including court costs and reasonable attorney 

fees.

(3) As used in this section:

(a) “Frivolous” means that at least 1 of the following conditions is met:

(i) The party’s primary purpose in initiating the action or asserting the 

defense was to harass, embarrass, or injure the prevailing party.

(ii) The party had no reasonable basis to believe that the facts underlying 

that party’s legal position were in fact true.

(iii) The party’s legal position was devoid of arguable legal merit.

(b) “Prevailing party” means a party who wins on the entire record.

“[A] claim is devoid of arguable legal merit if it is not sufficiently grounded in law or fact, such 

as when it violates basic, longstanding, and unmistakably evident precedent.” Adamo 

Demolition Co v Dep’t of Treasury, 303 Mich App 356, 369; 844 NW2d 143 (2013) (quotation 
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marks and citation omitted). Furthermore, “[t]o determine whether sanctions are appropriate 

under MCL 600.2591, it is necessary to evaluate the claims or defenses at issue at the time they 

were made.” In re Costs & Attorney Fees, 250 Mich App 89, 94; 645 NW2d 697 (2002). “The 

factual determination by the trial court depends on the particular facts and circumstances of the 

claim involved.” Id. at 94-95. 

In this case, the doctrines of collateral estoppel and res judicata are basic, longstanding, 

and unmistakably precedent. In fact, a claim may be frivolous if barred by collateral estoppel 

and res judicata. See Energy Reserves, Inc v Consumers Power Co, 221 Mich App 210, 221; 

561 NW2d 854 (1997) (affirming the trial court’s decision that “specifically found that all the 

claims presented in the complaint were barred by res judicata because they had been decided, 

either expressly or by implication, in the prior litigation”). Plaintiff’s suit violated both of these 

principles; therefore, plaintiff’s claim is devoid of arguable legal merit. Furthermore, 

defendant’s counsel sent two letters to plaintiff and its counsel asking plaintiff to dismiss the 

action or sanctions would be pursued. Thus, they were on notice that the matter may be 

frivolous and sanctions would be pursued. While the first letter was sent on May 1, 2016, before 

plaintiff filed its complaint, the second letter was sent on June 8, 2016, after plaintiff filed its 

complaint. Despite being put on notice twice, plaintiff proceeded with its action against 

defendant and caused defendant to incur attorney fees.

In sum, both res judicata and collateral estoppel bar plaintiff’s current action and claims 

and the trial court properly granted summary disposition in favor of defendant. And, because 

plaintiff’s claim is devoid of arguable legal merit, the trial court did not clearly erred in awarding 

sanctions, including attorney fees, to defendant. 

Affirmed. 

/s/ David H. Sawyer 

/s/ Stephen L. Borrello 

/s/ Deborah A. Servitto