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STATE OF MICHIGAN 

COURT OF APPEALS 

GREEN TREE SERVICING, L.L.C., 

 Plaintiff-Appellant, 

UNPUBLISHED 

August 23, 2016 

v No. 326784 

Wayne Circuit Court 

MARGARET EPPERSON a/k/a MARGARET IB 

EPPERSON and THOMAS RYAN EPPERSON, 

LC No. 13-011431-CH 

 Defendant-Appellees. 

Before: JANSEN, P.J., and FORT HOOD and BOONSTRA, JJ. 

Fort Hood, J. (dissenting). 

 I dissent. I would reverse in part and affirm in part the trial court’s decision that 

plaintiff’s claims were barred by res judicata. 

 Initially, I address plaintiff’s first argument that the trial court erred when it considered 

defendants’ untimely argument that plaintiff’s claims were barred by res judicata because 

defendants were in default. I do not agree that defendants should be barred from raising their res 

judicata defense on that ground. 

 Here, defendant Thomas Epperson filed a motion to set aside the default, raising the 

defense of res judicata, but the court denied the motion. Notably, Thomas was not represented 

by an attorney, there was no hearing on the motion, and record is void of any explanation for the 

court’s denial. Later, upon obtaining an attorney, defendants appeared in court and verbally 

objected to plaintiff’s motion to enter a default judgment on the basis of res judicata. The trial 

court ordered the parties to file supplemental briefs regarding the motion to enter the default 

judgment. 

 It is true that MCR 2.603(A)(1) provides that “[o]nce the default of a party has been 

entered, that party may not proceed with the action until the default has been set aside by the 

court.” However, MCR 2.603 provides for the setting aside of defaults upon the showing of 

good cause and a meritorious defense. MCR 2.603(D)(1). Despite the labels assigned by the 

parties and the court, I would conclude plaintiff was not proceeding with the action, but 

reasserting his meritorious defense of res judicata. See Tipton v William Beaumont Hosp, 266 

Mich App 27, 33; 697 NW2d 552 (2005) (holding that the gravamen of an action is determined 

by reading the claim as a whole, and looking beyond the procedural labels to determine the exact 

nature of the claim). In my opinion, the default status of defendants could easily be clarified by 

the court on remand in full conformity with the court rules. Plaintiff also asserts that the trial 
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court could not reconsider or revisit its prior ruling, which is not correct. A trial court is always 

within its full authority to reconsider an action it previously took unless divested of that authority 

by an appeal or some other occurrence. Hill v City of Warren, 276 Mich App 299, 307; 740 

NW2d 706 (2007). For these reasons, I would conclude that the trial court properly considered 

the merits of whether res judicata applied. 

 I next address the res judicata issue. Plaintiff argues that the trial court erred when it held 

that plaintiff’s claim was barred by res judicata. As explained by the majority, “[t]he 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 action was or could have been resolved in the first, and (3) both 

actions involve the same parties or their privies.” Estes v Titus, 481 Mich 573, 585; 751 NW2d 

493 (2008) (footnotes and quotation marks omitted). While stated by the majority, it bears 

repeating that “[o]ur Supreme Court “has taken a broad approach to the doctrine of res judicata, 

holding that it bars not only claims already litigated, but also every claim arising from the same 

transaction that the parties, exercising reasonable diligence, could have raised but did not.” 

Adair v State, 470 Mich 105, 121; 680 NW2d 386, 396 (2004). 

 In the first proceeding, GMAC filed a complaint for reformation or equitable mortgage. 

In the complaint, GMAC provided primarily the same factual background stated by plaintiff in 

this action. However, GMAC did not argue that Thomas’s interest in the property was invalid, 

never referencing the fact that defendant Margaret Epperson did not sign the quit claim deed. 

Indeed, GMAC stated “Although Thomas Ryan Epperson had an interest in the Premises 

pursuant to the Quit Claim Deed, Thomas Ryan Epperson did not sign the mortgage.” GMAC 

first alleged that Thomas was not included in the mortgage because of mutual mistake, asking the 

court to reform the mortgage to include Thomas. Second, GMAC alleged that the actual intent 

of the parties was that the mortgage be secured by the property, and asked the court to impose an 

equitable mortgage over Thomas. GMAC asked for relief in the form of foreclosure, but, 

notably, never made allegations regarding the nonpayment of the mortgage. In its opinion 

following a bench trial, the court found that James Epperson and Margaret had owned the 

property as tenants in the entirety. In 1993, James conveyed the property via quit claim deed to 

Margaret and Thomas. Thomas was not a signatory to the mortgage. The court concluded that 

because Thomas’s interest in the property was recorded and GMAC failed to investigate, GMAC 

was not entitled to reformation or an equitable mortgage against Thomas. 

 Here, the primary dispute between the parties centers on whether the contested matter in 

the second action was or could have been resolved in the first proceeding. The first complaint 

was intended to solve the problem with the mortgage as it related to Thomas. The current 

complaint, on the other hand, was filed to remedy the nonpayment of the mortgage by Margaret. 

Confining the issue to whether plaintiff should be entitled to foreclose on the basis of Margaret’s 

nonpayment, I agree with the majority that res judicata does not bar the action. Margaret’s 

failure to pay on the mortgage is an ongoing action against plaintiff—one that renews itself each 

time she fails to make a payment. Since the conclusion of the first proceeding, Margaret has 

failed to make any payments. Indeed, plaintiff could not have asserted a claim for breach of 

promissory note or foreclosure in 2011 for the multiple months Margaret has failed to pay since 

that date. Res judicata should not be used to prevent foreclosure on the mortgage where 

Margaret continually fails to pay, essentially creating a new basis for a cause of action each 

month. 
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 However, plaintiff attempted to expand the court’s consideration to whether Thomas has 

an interest in the property. I would conclude that any dispute over whether Thomas has an 

interest in the property is barred by res judicata because any dispute as to the validity of the 

conveyance could certainly have been brought in the first proceeding. GMAC, plaintiff’s 

predecessor and privy, admitted that Thomas had an interest in the property and failed to 

challenge the validity of that interest. 

 Indeed, the result reached by the majority focuses on the defective deed, and I believe 

takes a result-oriented approach to this claim. While I agree that the deed does appear to be 

defective because it was unsigned by Margaret, I do not agree that plaintiff should be permitted 

to bring yet another action against Thomas, when its predecessor had previously sued Thomas 

regarding the property and was fully apprised of the relevant facts at the time of the lawsuit. 

Again, res judicata bars actions that could have been resolved in the first. Indeed, the majority 

makes no explanation for why GMAC could not have raised this issue at the time of the first 

proceeding. The majority merely states, without explanation, that the “posture of the action” was 

not one in which the issue could have been litigated. While the issue was not presented to the 

trial court in the first proceeding, I see absolutely no reason why GMAC could not have 

challenged the defective deed in its action against Thomas. 

 I further note that plaintiff was certainly not innocent as it relates to these proceedings. 

As described by the majority, plaintiff did not raise any issue regarding Thomas’s interest in its 

complaint. Only after defendants, unpresented at the time, were in default did plaintiff attempt to 

raise this argument, and then proceeded to rely primarily on technical deficiencies rather than the 

merits of the res judicata issue. Unfortunately, plaintiff techniques appear to have prevailed. 

 I would reverse in part and remand for further proceedings. As I believe that plaintiff’s 

claims for breach of promissory note and foreclosure remain viable as to Margaret, I would 

remand to the trial court for determination of plaintiff’s available remedies on remand, allowing 

the parties an opportunity to address the viability of foreclosure and partition given the unusual 

circumstances presented by the mortgage in that it only attaches to one of the property owners. 

Because my conclusion would require a determination of the extent of Thomas’s interest in the 

property before plaintiff’s remedy for Margaret’s nonpayment on the note could be determined, I 

would also remand to the trial court for that determination. Finally, I would instruct the trial 

court to clarify the default statuses of defendants. 

/s/ Karen M. Fort Hood