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STATE OF MICHIGAN 

COURT OF APPEALS 

LASALLE BANK MIDWEST, N.A., f/k/a 

STANDARD FEDERAL BANK, N.A., 

 Plaintiff/Counter-DefendantAppellee, 

and 

JAR INVESTMENT GROUP, L.L.C., 

 Intervening Plaintiff-Appellee, 

UNPUBLISHED 

April 28, 2016 

v No. 324849 

Genesee Circuit Court 

COMPUTER BUSINESS WORLD, L.L.C., 

MOTOR CONSULTANTS OF AMERICA, INC., 

and PARVIZ DANESHGARI, 

LC No. 07-087177-CH 

 Defendants/Counter-PlaintiffsAppellants. 

Before: BECKERING, P.J., and OWENS and K. F. KELLY, JJ. 

PER CURIAM. 

 Plaintiff, LaSalle Bank Midwest, N.A. (“LaSalle Bank”), originally filed this action in 

2007, alleging that defendants defaulted on some business loans. In July 2009, the trial court 

dismissed the action without prejudice to allow the parties to submit their claims to binding 

arbitration. The July 2009 order provided that a final order was to be filed by the parties within 

21 days, otherwise the court would dismiss the matter with prejudice on its own motion. The 

matter was never arbitrated, and an order of dismissal with prejudice was never filed or entered. 

In 2014, JAR Investment Group, L.L.C. (“JAR”), acquired LaSalle Bank’s rights to the 

underlying contracts and moved to substitute itself for LaSalle Bank as the party plaintiff in this 

action. JAR also requested that the court order the parties to proceed with binding arbitration, 

consistent with the July 2009 order. In September 2014, the trial court granted JAR’s motion to 

substitute as plaintiff, but denied its motion to compel arbitration and dismissed the action with 

prejudice. JAR moved for reconsideration of that order. In an opinion and order dated October 

9, 2014, the trial court granted the motion for reconsideration, granted JAR relief from its earlier 

orders pursuant to MCR 2.612(C)(1)(a), (c), and (f), ordered the parties to arbitrate their claims 
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in accordance with their prior agreement, and dismissed the case without prejudice. The trial 

court denied defendants’ subsequent motion for reconsideration of the October 2014 order. 

Defendants now appeal as of right. We affirm. 

 Defendants’ primary issue on appeal concerns whether the trial court’s July 2009 order 

dismissed this action with or without prejudice. The interpretation and meaning of a court order 

is reviewed de novo as a question of law. Silberstein v Pro-Golf of America, Inc, 278 Mich App 

446, 460; 750 NW2d 615 (2008). A dismissal without prejudice is not an adjudication on the 

merits. Yeo v State Farm Fire & Cas Ins Co, 242 Mich App 483, 484; 618 NW2d 916 (2000). 

See also McIntyre v McIntyre, 205 Mich 496, 499; 171 NW 393 (1919). Conversely, a dismissal 

with prejudice constitutes an adjudication on the merits and bars a further action based on the 

same facts. Grimmer v Lee, 310 Mich App 95, 102; 872 NW2d 725 (2015). 

 The trial court ruled, and we agree, that the July 2009 order resulted in a dismissal of the 

action without prejudice. This conclusion is supported, initially, by the language of the order 

itself. The order placed the case in binding arbitration and expressly provided that “THIS 

MATTER IS DISMISSED without prejudice pursuant to MCR 2.504(2) [sic].” The court’s 

citation to “MCR 2.504(2)” is incorrect, inasmuch as the court rule does not contain a subsection 

(2) to the principal rule. It is apparent that the court intended to cite MCR 2.504(A)(2), which 

provides: 

 (2) By Order of the Court. Except as provided in subrule (A)(1), an 

action may not be dismissed at the plaintiff’s request except by order of the court 

on terms and conditions the court deems proper. 

 (a) If a defendant has pleaded a counterclaim before being served with the 

plaintiff’s motion to dismiss, the court shall not dismiss the action over the 

defendant’s objection unless the counterclaim can remain pending for 

independent adjudication by the court. 

 (b) Unless the order specifies otherwise, a dismissal under subrule (A)(2) 

is without prejudice. [Emphasis added.] 

 The statement in the July 2009 order that the matter was being dismissed without 

prejudice is consistent with the recognition in MCR 2.504(A)(2)(b) that a dismissal under that 

rule is deemed to be without prejudice, unless the order specifies otherwise. The trial court’s 

conclusion that the July 2009 order was intended to dismiss the case without prejudice is also 

consistent with the court’s pretrial scheduling order, which provided that if the parties agreed to 

binding arbitration, this “will result in the closing of this file for administrative purposes.” 

 Defendants argue that the July 2009 order specified that the dismissal was with prejudice, 

because the order contained additional language providing that “[a] final order is to be filed by 

the parties within 21 days of today’s date or the Court, on its own motion, will dismiss this 

matter with prejudice.” It is undisputed that the parties never filed a final order, and that the trial 

court never entered a subsequent order dismissing the case with prejudice before JAR moved to 

join the action. 
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 Defendants argue that the language of the order was self-executing, meaning that if no 

order was submitted by the parties after 21 days, the case would automatically be dismissed with 

prejudice. We disagree, because the clear terms of the order required further action by the 

parties or the trial court before the case would be dismissed with prejudice. Furthermore, it 

would have been improper for the court to dismiss the case with prejudice as a sanction for one 

of the parties not filing a final order within 21 days. Defendants assert that the trial court could 

have involuntarily dismissed the case with prejudice under MCR 2.504(B) because LaSalle 

Bank, by failing to file a final order, failed to comply with the trial court’s dismissal order. 

However, the July 2009 order did not direct a particular party to file a final order. Therefore, it 

would have been inappropriate to sanction one party over the other for not complying with that 

provision. Further, to the extent that the parties’ failure to pursue arbitration or file a final order 

could be equated with a lack of progress, a dismissal for lack of progress is properly 

characterized as a closure for administrative purposes, which does not operate as an adjudication 

on the merits. See Wickings v Arctic Enterprises, Inc, 244 Mich App 125, 135; 624 NW2d 197 

(2000). See also MCR 2.502(B)(1) (a dismissal for lack of progress is without prejudice, unless 

the court specifies otherwise). 

 In sum, the trial court’s intent to dismiss the matter without prejudice while the parties 

proceeded with arbitration is reflected in both the trial court’s pretrial scheduling order and the 

July 2009 order itself, and that intent is also consistent with MCR 2.504(A)(2)(b). And while the 

July 2009 order contemplated that a dismissal with prejudice could occur if the parties filed an 

appropriate order within 21 days of the July 2009 order, or if the court thereafter dismissed the 

case with prejudice, neither of those events occurred. Accordingly, the trial court did not err in 

ruling that the case had not been dismissed with prejudice. 

 Defendants further argue that even if the trial court did not dismiss the case with 

prejudice in 2009, it should have done so in 2014, when JAR moved to join the case and compel 

arbitration. In support of this argument, defendants simply rely on the statement in the original 

July 2009 order that the court would dismiss the case on its own motion if the parties did not file 

their own final order. As indicated earlier, however, the trial court never entered an order of 

dismissal with prejudice, and it would have been improper to do so because the court dismissed 

the case for the purpose of allowing the parties to proceed with arbitration, not because of any 

adjudication on the merits. 
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 Defendants also argue that the trial court erred when it granted JAR’s motion to be 

substituted in place of LaSalle Bank as the party plaintiff.1 A trial court’s decision to allow 

substitution of a party under MCR 2.202 is discretionary. Mather Investors, Inc v Larson, 271 

Mich App 254, 260; 720 NW2d 575 (2006). We review that decision for an abuse of discretion. 

Id. 

 MCR 2.202(D) allows substitution at any stage, before or after judgment. JAR presented 

evidence that it acquired LaSalle Bank’s rights and interests in the loan agreement that was the 

basis for LaSalle Bank’s claims against defendants. This was sufficient to justify substitution 

under MCR 2.202(B). Defendants argue that substitution was improper because the case had 

been dismissed with prejudice in 2009. As explained previously, however, the trial court did not 

err in determining that the 2009 dismissal was without prejudice. Accordingly, the trial court did 

not abuse its discretion in permitting JAR’s substitution in place of LaSalle Bank. 

 We also reject defendants’ arguments that JAR’s claims are barred by collateral estoppel, 

res judicata, the statute of limitations, or laches. These arguments are dependent upon 

defendants’ incorrect position that the case was dismissed with prejudice in 2007. Collateral 

estoppel and res judicata only apply to claims or actions actually litigated. When a case has been 

dismissed without prejudice, there is no adjudication on the merits and, consequently, res 

judicata or collateral estoppel do not apply. Mable Cleary Trust v Edward-Marlah Muzyl Trust, 

262 Mich App 485, 509-510; 686 NW2d 770 (2004), overruled on other grounds in Titan Ins Co 

v Hyten, 491 Mich 547, 555 n 4; 817 NW2d 562 (2012). In addition, the statute of limitations is 

tolled when a case is dismissed without prejudice. Yeo, 242 Mich App at 484. For laches to 

apply, there must evidence of both lack of diligence on the plaintiff’s part and prejudice to the 

defendant due to the untimely claim. Regents of Univ of Mich v State Farm Mut Ins Co, 250 

 

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 We reject JAR’s argument that defendants cannot challenge the trial court’s September 5, 2014 

order in which the court granted JAR’s substitution motion because defendants did not file a 

claim of appeal from that order. To the extent that the September 5 order may have originally 

qualified as a final order under MCR 7.202(6) (defining a “final order” as “the first judgment or 

order that disposes of all the claims and adjudicates the rights and liabilities of all the parties, 

including such an order entered after reversal of an earlier final judgment or order”), it lost that 

character when, on JAR’s timely filed motion for reconsideration, the trial court vacated that 

order in part and issued a new substantive order on October 9, 2014, requiring the parties to 

arbitrate their claims. The October 9, 2014 order therefore qualifies as the final order under 

MCR 7.202(6). Under MCR 7.204(A)(1), an appeal by right must be filed within 21 days after 

entry of the order being appealed, or within 21 days after entry of an order denying a timely filed 

motion for post-judgment relief. On October 30, 2014, defendants timely filed a motion for 

reconsideration of the October 9 order. The trial court denied that motion on November 19, 

2014, and defendants timely filed their claim of appeal on December 1, 2014. Having timely 

appealed the October 9 order, defendants properly may raise issues on appeal related to prior 

orders, Green v Ziegelman, 282 Mich App 292, 301 n 6; 767 NW2d 660 (2009), including the

September 5 order. 
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Mich App 719, 734; 650 NW2d 129 (2002). Both sides contributed to the delay in this case and 

defendants have not demonstrated prejudice arising from the delay. 

 Defendants lastly argue that after having dismissed the case with prejudice in September 

2014, the trial court erred when it subsequently granted JAR’s motion for reconsideration, 

changed its decision, and granted relief from its prior orders under MCR 2.612 by requiring the 

parties to arbitrate their claims. A trial court’s decision to grant reconsideration is reviewed for 

an abuse of discretion. In re Beglinger Trust, 221 Mich App 273, 279; 561 NW2d 130 (1997). 

A trial court’s decision to grant relief from a judgment or order under MCR 2.612 is also 

reviewed for an abuse of discretion. Peterson v Auto Owners Ins Co, 274 Mich App 407, 412; 

733 NW2d 413 (2007). An abuse of discretion occurs when the court’s decision is outside the 

range of reasonable and principled outcomes. Smith v Khouri, 481 Mich 519, 526; 751 NW2d 

472 (2008). 

 MCR 2.119(F)(3) provides that the court may grant reconsideration of a decision if the 

moving party “demonstrate[s] a palpable error by which the court and the parties have been 

misled and show[s] that a different disposition of the motion must result from correction of the 

error.” The trial court stated that it misunderstood the relevant facts when it dismissed the case 

with prejudice in September 2014, and that its misunderstanding affected its previous conclusion 

that the case should be dismissed with prejudice. As explained previously, the trial court did not 

err in determining that, under the circumstances, the case was dismissed without prejudice in 

2009, and that JAR was entitled to file its motion for substitution to join the action in 2014. 

Accordingly, the trial court did not abuse its discretion in granting JAR’s motion for 

reconsideration under MCR 2.119(F)(3). 

 The trial court stated that “[t]o the extent that any of this Court’s previous orders relieved 

the parties of their agreement and obligation to arbitrate the claims of this case, those orders are 

rescinded in the interests of justice. MCR 2.612(C)(1)(a), (c), and (f).” This statement suggests 

that the court was granting relief from the July 2009 order to the extent that it purported to 

operate as a dismissal with prejudice and relieved the parties of their agreement to arbitrate their 

claims. 

 MCR 2.612(C)(1)(a) allows the court to grant relief for mistake, inadvertence, surprise, 

or excusable neglect. Subsection (C)(1)(c) allows for relief due to fraud, misrepresentation, or 

other misconduct of an adverse party. Subsection (C)(1)(f) allows relief for any other reason 

justifying relief from the operation of the judgment or order. The trial court reasoned that it 

dismissed the case in July 2009, pursuant to the parties’ agreement that they would submit their 

claims to arbitration. 

 The trial court stated that it was not its intention to reward defendants for not fulfilling 

their agreement to arbitrate, and therefore, relief was justified to the extent that its previous 

orders could be read as relieving the parties of their obligation to arbitrate their claims, in 

accordance with their agreement. To the extent that the trial court’s prior orders could be 

construed as dismissing the case with prejudice, the trial court was justified in concluding that 

this was a mistake that justified relief under subsection (C)(1)(a) because that was not the intent 

of the orders. Further, it was not inappropriate for the trial court to characterize defendants’ 

refusal to arbitrate as misconduct justifying relief under subsection (C)(1)(c), where defendants 
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expressly agreed to arbitrate the claims, that agreement succeeded in obtaining dismissal of the 

case, and defendants were now refusing to arbitrate the claims. Likewise, defendants’ agreement 

to arbitrate their claims justified relief from the prior orders to the extent that the orders unjustly 

relieved them of that obligation, thereby warranting relief under subsection (C)(1)(f). 

 Furthermore, it was not improper for the trial court to order the parties to arbitrate their 

claims. The case was originally closed so that the parties’ claims could be arbitrated. The trial 

court merely ordered the parties to proceed with arbitration, consistent with their original 

agreement. Although defendants argue that LaSalle Bank waived its claims by not pursuing 

arbitration, defendants failed to take appropriate action by submitting a final order to have the 

case properly dismissed. Because there was still an agreement to arbitrate that remained in 

place, the trial court properly ordered the parties to comply with that agreement. See also MCR 

3.602(B)(2) (on motion of a party showing an agreement to arbitrate and the opposing party’s 

refusal to arbitrate, the court may order the parties to proceed with arbitration). 

 Affirmed. 

/s/ Jane M. Beckering 

/s/ Donald S. Owens 

/s/ Kirsten Frank Kelly