UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

 

MEDILINK INSURANCE COMPANY, LIMITED,

Plaintiff/Counter-Defendant,

v. Case No. 09-CV-13692

HON. ROBERT H. CLELAND

COMERICA BANK,

Defendant/Counter-Plaintiff.

/

OPINION AND ORDER DENYING DEFENDANT/COUNTER-PLAINTIFF’S MOTION

FOR SUMMARY JUDGMENT

Pending before the court is a motion for summary judgment, filed by

Defendant/Counter-Plaintiff Comerica Bank (“Comerica” or “Defendant”) on December

17, 2009. Having reviewed the briefs, the court concludes a hearing on this motion is

unnecessary. See E.D. Mich. LR 7.1(e)(2). For the reasons stated below, the court will

deny Defendant’s motion.

I. INTRODUCTION

On August 28, 2009, Plaintiff/Counter-Defendant Medilink Insurance Company,

Ltd. (“Medilink” or “Plaintiff”), a Cayman Islands corporation, sued Defendant, a Texas

banking association, in Wayne County Circuit Court. Defendant removed the case to

this court on September 17, 2009 based on diversity jurisdiction. Plaintiff filed an

amended complaint on November 12, 2009, alleging the following counts: (1) statutory

conversion, (2) common law conversion, (3) constructive trust / third party beneficiary,

(4) negligence, (5) breach of fiduciary duty, and (6) unjust enrichment. Plaintiff seeks
1

The caption to Plaintiff’s complaint noted that a “civil action between Plaintiff and

another party arising out of some of the transactions or occurrences alleged in the

complaint has been previously filed in the U.S. District Court for the Eastern District of

Michigan, where it was given docket number 5:07-cv-15019 and was assigned to Judge

Nancy Edmunds.” It has been determined, however, that the present case will not be

reassigned as a companion case to case no. 07-cv-15019. E. D. Mich L. R. 83.11(b)(7).

2

damages in the amount of $730,193.50 plus treble damages for Counts I and II,

$1,495,241.50 for Counts III, IV, and V, and $730,193.50 for Count VI. On November

27, 2009, Defendant filed a counterclaim for breach of contract.

On December 17, 2009, Defendant filed a motion for summary judgment. It

argues that a judgment obtained by Plaintiff in an earlier case before the Honorable

Nancy G. Edmunds1

 precludes the claims brought by Plaintiff in this case.

II. BACKGROUND

In the prior action before Judge Edmunds, Medilink sued John P. Bender and two

entities, J.P. Bender and Associates, Inc. and Bender, Inc. (collectively the “Bender

Defendants”). Medilink is a reinsurance company, and from approximately 1985 to

September 2007, the Bender Defendants served as third party claims administrators

processing claims made against Medilink’s reinsureds in Michigan. (Am. Compl. ¶ 7,

Def.’s Mot. Ex. 1.) These claims arose out of litigation against hospitals and physicians

reinsured by Medilink. (Id. ¶ 8,9.)

In order to process the claims, Medilink established a trust account at Comerica,

funded by the insurance proceeds that Medilink received. (Dunleavy Aff. ¶ 3, Def.’s

Mot. Ex. 11.) When Medilink was required to pay for settlements, legal fees, and costs,

the Bender Defendants would submit indemnity payment requests and expense

payment requests to Medilink in the Cayman Islands. (Am. Comp. ¶ 18, Def.’s Mot. Ex.
3

1.) These requests would indicate how much money Bender needed in order to pay a

particular claim. (Dunleavy Aff. ¶ 4, Def.’s Mot. Ex. 11.) Then, Medilink would send a

request to Comerica Bank in Detroit authorizing release of the requested amount from

its trust account. (Id.) Comerica would then transfer money from the trust account into

one of three accounts established by the Bender Defendants, account numbers

2251007866 (“account 7866“), 1851911154 (“account 1154“) and 1851827749

(“account 7749“) (collectively the “Medilink Bender Accounts”). (Id. ¶ 3.) The Bender

Defendants would pay the claimants out of the Medilink Bender Accounts.

Beginning in 2005, the Bender Defendants “caused certain illegal, fraudulent and

inappropriate transactions to occur.” (Pl.’s Am. Compl. ¶ 22, Def.’s Ex. 1.) Specifically,

Bender submitted payment requests to Medilink in excess of the settlement amount of

the cases. (Pl.’s Am. Compl. Against the Bender Defendants, Def.’s Ex. 7.) Medilink

would approve the request and have Comerica transfer this amount into the Medilink

Bender accounts. (Id.) Bender would then pay out the actual settlement amount and

retain for himself the difference, often transferring the amounts to various personal

accounts unaffiliated with Medilink. (Id.) 

On August 29, 2007, Comerica became suspicious of one of Bender’s

transactions. (Am. Compl. ¶ 25, Def.’s Ex. 1.) Bender cashed a $318,048 check drawn

from one of the Medilink Bender Accounts which was payable to a plaintiff and law firm

and immediately deposited the money into another account unaffiliated with Medilink

that Bender maintained at Comerica, account number 1850970979 (the “Carlisle

Account”). (Id.) Comerica notified Marsh, Inc., a company that handled Medilinks’s

claims and risk management, about this transaction. (Id. ¶ 26.) Marsh, Inc. conducted
4

an investigation and sent an email to Comerica on September 12, 2007, identifying ten

disputed transactions that Bender had requested. (Id. ¶¶ 27, 28.)

Comerica froze the Medilink Bender Accounts and would not process any 

transactions from these accounts. (Id. ¶ 30.) At the time the accounts were frozen,

Medilink alleges that there was $797,000 in the three Medilink Bender Accounts. (Id. ¶

76.) In October 2007, Medilink alleges that Comerica “unfroze the three Medilink

Bender Accounts and permitted money to be transferred by John Bender for purposes

other than paying Plaintiff’s obligations.” (Id. ¶ 26.) Medilink claims that a constructive

trust was created as to the $797,000 at the time the three Medilink Bender Accounts

were frozen (id. ¶ 76), that Comerica was negligent in releasing this money to Bender in

October and November 2007 when it should have known the money was to be used

solely for the benefit of Medilink (id. ¶ 86), and that Comerica breached its fiduciary duty

by allowing Bender to empty the $797,000 remaining in the accounts (id. ¶ 98).

According to Medilink, on October 1, 2007, Comerica also applied $380,193.50

from one of Bender’s personal accounts, account number 6819014520, in order to pay

down one of Bender’s personal loans that he had with Comerica. (Id. ¶ 37; Pl.’s Resp.

Ex. 3.) A Comerica loan officer, John Ryan, who was assigned to Bender’s accounts in

September 2007, approved the transaction. (Am. Compl. ¶¶ 34, 38, Def.’s Mot. Ex. 1.). 

Comerica does not dispute that it collected one of its debts (Def.’s Ans. to Am. Compl. ¶

37); however, it disputes Medilink’s allegation that Ryan and Comerica knew the money

in account number 6819014520 “had originally been transferred improperly from one of

the three Medilink Bender accounts and was money that did not properly belong to
5

Bender but instead belonged to Plaintiff.” (Am. Compl. ¶ 38, Def.’s Mot. Ex. 1; Def.’s

Ans. to Am. Comp. ¶ 38.)

Also, on October 1, 2007, Comerica sent Bender a notice of default and

demanded payment in full of various outstanding liabilities. (Pl.’s Resp. Ex. 4 at 8.) On

October 16, 2007, Comerica, the Bender Defendants, and others entered into a

forbearance agreement in which Comerica agreed to forbear until January 15, 2008. 

(Id. at 1.) The forbearance agreement required Bender to “open a blocked account at

Bank, being account number 1852367687 [(the “Cash Collateral Account”)] and deposit

into the [Cash Collateral Account] the sum of $350,000.” (Id. at 2.) Medilink alleges

that Comerica “was aware that the $350,000 utilized to fund the blocked account was

money belonging to Plaintiff and not Mr. Bender or any of his affiliated entities, and that

the money debited in the account was to be utilized solely for the obligations of Plaintiff.” 

(Am Compl. ¶ 42, Def.’s Mot. Ex. 1.) Medilink further alleges that it “requested

Comerica return the $350,000 to Plaintiff, but Comerica declined to do so, and

ultimately claimed that Mr. Bender had taken the money in January 2008.” (Id. ¶ 43.)

On November 27, 2007, Medilink sued the Bender Defendants in the case

referenced above before Judge Edmunds, case number 07-cv-15019. The next day,

Judge Edmunds issued a temporary restraining order enjoining the Bender Defendants

from withdrawing funds from the Medilink Bender Accounts. However, by the time the

temporary restraining order was served on Comerica, the Medilink Bender Accounts

had been depleted to $1,239.24. (Def.’s Statement of Material Facts ¶ 12.)

Medilink sought a second temporary restraining order on January 3, 2008. 

(Def.’s Mot. Ex. 5.) In its motion, it sought to enjoin the Bender Defendants from
2

John Bender pleaded guilty to interstate transportation of property taken by

fraud, 18 U.S.C. § 2314, on December 12, 2008, before the Honorable Julian Abele

Cook. (Def.’s Mot. Ex. 13.F.)

6

withdrawing money from the Cash Collateral Account that was established pursuant to

the forbearance agreement with Comerica. (Id.) The motion described how the Bender

Defendants withdrew $120,000 from account 7749 (one of the Medilink Bender

Accounts) on October 19, 2007, and deposited the money in the Cash Collateral

Account. (Id. ¶ 6.) The motion also notes that the Bender Defendants withdrew

$230,000 from account 1154 (another of the Medilink Bender Accounts) on the same

day and deposited the money in the Cash Collateral Account. (Id. ¶ 7.) In its brief in

support of the motion, Medilink discussed the reason for the ineffectiveness of the first

temporary restraining order, stating that “[u]nfortunately, for whatever reason, Comerica

Bank lifted the ‘freeze’ on the accounts in question on either October 18 or October 19,

2007,” and allowed the Bender Defendants to transfer $350,000 into the Cash Collateral

Account. (Id. at 2-3.) At the time, Medilink did “not know the explanation for the

creation of the new cash collateral account on October 18, 2007,” but that it was

“tempted to speculate that Comerica Bank required the creation of this account and the

payment of the funds into this account by the [Bender] Defendants for some reason that

may not be associated with the Plaintiff.” (Id. at 3.) Judge Edmunds issued a second

temporary restraining order on January 17, 2008, enjoining the Bender Defendants from

withdrawing funds from the Cash Collateral Account. (Def.’s Mot. Ex. 6.)

On March 18, 2008, Judge Edmunds granted in part Bender’s motion to stay the

proceedings, which he filed because of the pending criminal investigation against him.2
7

(Def.’s Mot. Ex. 8.) Judge Edmunds granted the motion as to discovery but allowed

Medilink to “proceed with third party discovery from Comerica Bank, including deposing

Comerica employees.” (Id.) 

After discovery, Medilink filed an amended complaint against the Bender

Defendants on July 22, 2008. (Def.’s Mot. Ex. 7.) The complaint alleged eleven counts:

(1) embezzlement, (2) common law conversion, (3) fraudulent misrepresentation, (4)

civil conspiracy, (5) breach of fiduciary duty, (6) innocent misrepresentation, (7) unjust

enrichment, (8) constructive trust, (9) negligence of corporate defendants, (10)

reinsurance recoveries, and (11) action to recover possession of funds. (Id.) Each of

the counts requested $4,556,439.87 in damages, except for counts ten and eleven. 

(Id.) In count eleven, Medilink noted the transfers to the Medilink Bender Accounts in

2007, described the freezing and unfreezing of the funds by Comerica, and sought

equitable rescission of the transfers. (Id. at 42-43). It requested that the court “order

that all of such funds up to $623,161.13 be immediately released to the Plaintiff by the

Comerica Bank” and that the Bender Defendants account for any funds missing if

$621,161.13 is not available in the accounts. (Id. at 43-44.)

On January 22, 2009, Medilink filed a motion for summary judgment “against the

[Bender] Defendants jointly and severally, in the amount of $4,749,920.00 trebled to

$14,249,760.00 based on the intentional torts and other intentional misconduct of the

[Bender] Defendants.” (Def.’s Mot. Ex. 13.A at 1.) Medilink argued that the entities

associated with Bender were liable for his actions as his alter ego, and that the Bender

Defendants were liable “based on the intentional torts of fraudulent misrepresentation,

embezzlement and conversion.” (Id. at 3, 19-21.) Medilink stated that it had
8

demonstrated that “the total amount of money which was stolen by Bender from

Medilink is $4,749,920.00,“ and it requested “summary judgment in its favor and against

the Defendant jointly and severally in that amount.” (Id. at 21.)

The Bender Defendants did not file a response to the motion for summary

judgment and were not present at the hearing on the motion, which took place on

February 25, 2009. (Def.’s Mot. Ex. 14.) At the hearing, the following exchange

occurred:

[Judge Edmunds:] Well, I don’t have any problem giving you

summary judgment with respect to the

underlying $4,700,000, and stating in the order

it’s clear that the moneys were obtained

through fraud. I am not comfortable saying

that they involve embezzlement. I think

embezzlement is a different animal. And I’m

not comfortable saying that they involve

conversion, although conversion seems a

closer case to me, but at least – well, and I

know that that may impact your ability to get

treble damages, but frankly I don’t see that it’s

likely that you’re ever going to get treble

damages in this.

[Medilink’s Counsel:] The ability to collect, I agree with that, is very

marginal, Your Honor.

[Judge Edmunds:] So why don’t you submit an order granting your

motion with respect to the $4,700,000 and

change that you articulate in here, with specific

findings that the amounts were obtained by

fraud and not dischargeable in bankruptcy, and

we’ll leave out the embezzlement and

conversion points. I’m just going to not rule on

those, okay?

[Medilink’s Counsel:] All right.

[Judge Edmunds:] If you’ll submit an order, I’ll sign it.
9

(Def.’s Mot. Ex. 14 at 3-4.)

On March 5, 2009, Judge Edmunds issued an order granting Medilink’s motion

for summary judgment. The order stated:

IT IS ORDERED that judgment is entered in favor of Plaintiff, Medilink

Insurance Company Limited, and against the Defendants, John P. Bender,

J.P. Bender & Associates, Inc. and Bender, Inc., jointly and severally, in

the amount of Four Million, Seven Hundred and Forty-Nine Thousand,

Nine Hundred and Twenty ($4,749,920.00) Dollars. The Court finds

Defendants have committed fraud and obtained money from the Plaintiff in

that amount. The Court finds that this judgment is based on money

obtained by Defendants through fraud or defalcation as defined in 11

U.S.C. § 523(a). 

This is a final order disposing of all remaining claims in this case.

(Def.’s Mot. Ex. 15.) A judgment was issued on the same day. It provided:

The Court having reviewed the pleadings and having heard argument on

February 25, 2009; and for the reasons set forth on the record and in an

Order dated March 5, 2009, and filed herein;

IT IS HEREBY ORDERED AND ADJUDGED that Plaintiff’s motion for

summary judgment is GRANTED, Defendants are required, jointly and

severally, to pay Plaintiff Four Million, Seven Hundred and Forty-Nine

Thousand, Nine Hundred and Twenty ($4,749,920.00) Dollars, and the

case is hereby DISMISSED.

(Def.’s Mot. Ex. 2.)

Medilink has engaged in collection efforts in order to satisfy this judgment. (Aff.

of Gary Ley, Chairman of Medilink’s Board of Directors, Pl.’s Resp. Ex. 1.) It has

received the following property in the course of its efforts: (1) a pontoon boat sold for

$10,628.58, (2) a Ford Thunderbird not yet sold, (3) eight pieces of antique jewelry not

yet sold, and (4) 399 antique dolls previously in the possession of the U.S. Marshal

Service and sold for an unknown price at an auction house. (Id. ¶ 3.) Medilink expects

to receive significantly less than $1,000,000 for these items. (Id.) In addition, Medilink
10

has received $25 in restitution from Bender and his rights to the proceeds of the sale of

a condominium in Colorado, estimated at $100,000. (Id. ¶ 4.)

II. STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment is proper when

there is no genuine issue as to any material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c). “In deciding a motion for summary

judgment, the court must view the evidence in the light most favorable to the nonmoving party, drawing all reasonable inferences in that party’s favor.” Sagan v. United

States, 342 F.3d 493, 497 (6th Cir. 2003). “Where the moving party has carried its

burden of showing that the pleadings, depositions, answers to interrogatories,

admissions and affidavits in the record, construed favorably to the non-moving party, do

not raise a genuine issue of material fact for trial, entry of summary judgment is

appropriate.” Gutierrez v. Lynch, 826 F.2d 1534, 1536 (6th Cir. 1987) (citing Celotex

Corp. v. Catrett, 477 U.S. 317 (1986)).

The court does not weigh the evidence to determine the truth of the matter, but

rather, to determine if the evidence produced creates a genuine issue for trial. Sagan,

342 F.3d at 497 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). 

The moving party discharges its burden by “‘showing’ –that is, pointing out to the district

court– that there is an absence of evidence to support the nonmoving party’s case.”

Horton v. Potter, 369 F.3d 906, 909 (2004) (citing Celotex, 477 U.S. at 325). The

burden then shifts to the nonmoving party, who “must do more than simply show that

there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co.

v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must put forth
11

enough evidence to show that there exists “a genuine issue for trial.” Horton, 369 F.3d

at 909 (citing Matsushita, 475 U.S. at 587 (1986)). Summary judgment is not

appropriate when “the evidence presents a sufficient disagreement to require

submission to a jury.” Anderson, 477 U.S. at 251-52.

III. DISCUSSION

Defendant argues that, based on the prior litigation against the Bender

Defendants, it is entitled to summary judgment on Plaintiff’s claims pursuant to Mich

Comp. Laws §§ 600.2956, 600.2957, 600.6304 (the “Michigan Tort Reform Statutes”),

and the doctrines of judicial estoppel, res judicata, and collateral estoppel.

A. Michigan Tort Reform Statutes

Defendant argues that the prior judgment obtained by Plaintiff against the Bender

Defendants constituted an allocation of 100% of the fault for Plaintiff’s damages and

therefore Plaintiff is precluded from attempting to reallocate those damages against

Defendant. (Def.’s Mot. Br. at 3.) Defendant relies on the Michigan Tort Reform

Statutes, which abolished joint and several liability in most situations. (Id. at 4.) Plaintiff

contends that the Michigan statutes requiring an allocation of fault are not applicable in

this case. (Pl.’s Resp. at 3.) Specifically, Plaintiff argues that no allocation of fault was

or could have been made against Defendant in the prior case, that Plaintiff’s claim for

damages are different than those sought in the prior case, and that even assuming a

single indivisible injury, the judgment against the Bender Defendants has not been

satisfied. (Id. at 3-12.) Plaintiff also contends that even if the Michigan Tort Reform

Statutes are generally applicable, these statutes would not apply to its claim for

conversion and unjust enrichment. (Id. at 12-16.)
12

Michigan’s Tort Reform Statutes “generally abolished joint and several liability

and replaced it with ‘fair share liability’ where each tortfeasor only pays the portion of

the total damages award that reflects that tortfeasor’s percentage of fault.” Bell v. RenPharm, Inc., 713 N.W.2d 285, 287 (Mich. Ct. App. 2006) (quoting Markley v. Oak Health

Care Investors of Coldwater, Inc., 660 N.W.2d 344 (Mich. 2003)); see also Mich. Comp.

Laws § 600.2956 (“Except as provided in section 6304, in an action based on tort or

another legal theory seeking damages for personal injury, property damage, or wrongful

death, the liability of each defendant for damages is several only and is not joint.”). The

tort reform statutes, Mich. Comp. Laws §§ 600.2957 and 600.6304, “generally provide

that the trier of fact in a tort action shall determine the comparative negligence of each

person who contributed to the plaintiff’s injury, regardless of whether that person is, or

could have been, named as a party.” Barnettt v. Hidalgo, 732 N.W.2d 472, 481 (Mich.

2007). Mich. Comp. Laws § 600.2957 states:

(1) In an action based on tort or another legal theory seeking damages for

personal injury, property damage, or wrongful death, the liability of each

person shall be allocated under this section by the trier of fact and, subject

to section 6304, in direct proportion to the person’s percentage of fault. In

assessing percentages of fault under this subsection, the trier of fact shall

consider the fault of each person, regardless of whether the person is, or

could have been, named as a party to the action. 

(2) Upon motion of a party within 91 days after identification of a nonparty,

the court shall grant leave to the moving party to file and serve an

amended pleading alleging 1 or more causes of action against that

nonparty. . . .

(3) . . . Assessments of percentages of fault for nonparties are used only

to accurately determine the fault of named parties. If fault is assessed

against a nonparty, a finding of fault does not subject the nonparty to

liability in that action and shall not be introduced as evidence of liability in

another action.
13

Under Mich. Comp. Laws § 600.6304, a court sitting without a jury is required to

make findings as to the total amount of each plaintiff’s damages and the “percentage of

the total fault of all persons that contributed to the death or injury . . . regardless of

whether the person was or could have been named as a party to the action.” Id. §

600.6304(1). “Fault” is defined as “an omission, conduct, including intentional conduct,

a breach of warranty, or a breach of a legal duty, or any conduct that could give rise to

the imposition of strict liability, that is a proximate cause of damage sustained by a

party.” Id. § 600.6304(8).

In Judge Edmunds’ order granting Medilink’s unopposed motion for summary

judgment, she entered judgment against the Bender Defendants “jointly and severally,

in the amount of Four Million, Seven Hundred and Forty-Nine Thousand, Nine Hundred

and Twenty ($4,749,920.00) Dollars.” (Def.’s Mot. Ex. 15.) She found that “Defendants

have committed fraud and obtained money from the Plaintiff in that amount.” (Id.) In

the judgment, Judge Edmunds ruled that “Defendants are required, jointly and severally,

to pay Plaintiff Four Million, Seven Hundred and Forty-Nine Thousand, Nine Hundred

and Twenty ($4,749,920.00) Dollars.” (Def.’s Mot. Ex. 2.) Defendant argues that this

prior judgment constitutes a 100% allocation of the fault for Plaintiff’s damages,

precluding the present claims against Defendant. (Def.’s Mot. Br. at 3.) The court

disagrees. 

Judge Edmunds’ order does not expressly allocate fault. A finding that the

Bender Defendants were jointly and severally liable for approximately $4.7 million based

on the fraud means that Plaintiff could recover $4.7 million from either John P. Bender,

J.P. Bender and Associates, Inc., or Bender, Inc. It does not necessarily mean that
3

For instance, Defendant states that Judge Edmunds’ “order and Judgment

constitutes the U.S. District Court’s express finding based on the record established by

Medilink that only the three (3) Bender Defendants were at fault for the entirety of

Medilink’s damages, and that their fault is to be apportioned among these parties, jointly

and severally.” (Def.’s Mot. Br. at 9 (emphasis added).) Only the second part of this

assertion is a correct statement. Although Judge Edmunds found the Defendants jointly

and severally liable for the $4.7 million fraud, a review of the record reveals no mention

of the word only in Judge Edmunds’ findings.

14

100% of the fault in this case was allocated to the Bender Defendants.3

 Indeed, Judge

Edmunds could not have allocated fault to any other party because the Bender

Defendants never provided a notice of nonparty at fault. Under Michigan Court Rule

2.112(K), a defendant must provide a nonparty with “notice of a claim that a nonparty is

wholly or partially at fault.” M.C.R. 2.112(K)(3)(a). Unless notice has been provided,

“the trier of fact shall not assess the fault of a nonparty.” M.C.R. 2.112(K)(2). This rule

would have applied to the prior case before Judge Edmunds because it is substantive,

rather than procedural, under the Erie doctrine. Greenhich Ins. Co. v. Hogan, 351 F.

Supp. 2d 736, 739 (W.D. Mich. 2004). Thus, Judge Edmunds could not have assessed

fault against any other entity besides the Bender defendants. Because Judge Edmunds

could not have allocated fault to another party and because the judgment does not state

the percentage of fault that was allocated, the prior judgment does not necessarily

mean that Judge Edmunds determined the Bender Defendants to be 100% at fault and

Comerica Bank 0% at fault.

Moreover, even if Judge Edmunds did make a finding regarding nonparty

Comerica’s fault, it would not be binding in future litigation. Mich. Comp. Laws §

600.2957(3) states that “[a]ssessments of percentages of fault for nonparties are used

only to accurately determine the fault of named parties.” If the court assesses fault
15

against a nonparty, this “finding of fault does not subject the nonparty to liability in that

action and shall not be introduced as evidence of liability in another action.” Id. The

statute contemplates future lawsuits and makes any prior determination of fault

inadmissible. Thus, any finding of fault against Comerica in Judge Edmunds’ case

could not be used in the present case. It would be a strange result if the implicit finding

of no fault against Comerica in the prior case, as argued by Defendant, could be used

as evidence in this case and preclude this litigation, when an express finding of fault in

the prior action would not be admissible and would not subject Comerica to liability.

Nonetheless, while the precise actions that give rise to the present action differ

from those in the previous action, a review of Plaintiff’s complaint makes clear that a

large portion of the damages it seeks in the present case constitute part of the $4.7

million judgment in the prior case. Medilink explains that its claims are based on actions

by Comerica after the theft by Bender which “led to losses by Medilink because

Comerica made it more difficult or impossible to recover against Bender.” (Pl.’s Resp.

at 3.) It further explains that, “The total of the thefts as reflected in the judgment was

$4,749,920 . . . Medilink seeks damages for monies which had already been stolen by

Bender but which could have been returned to Medilink if Comerica had not breached

the duties alleged in Plaintiff’s Complaint.” (Pl.’s Resp. at 7.) Specifically, Medilink

seeks damages for allowing Bender to empty the Medilink Bender Accounts after they

were initially frozen ($790,000), and for accepting money that it allegedly knew rightfully

belonged to Medilink ($380,193.50 as payment on a loan and $350,000 to fund the

Cash Collateral Account). 

These amounts would have been a part of Plaintiff’s total loss from the Bender
16

fraud and included in the prior judgment amount of $4,749,920.00, and it is well-settled

that a plaintiff is generally entitled to one recovery for a single injury. Markley v. Oak

Health Care Investors of Coldwater, Inc., 660 N.W.2d 344, 346-47 (Mich. Ct. App.

2003). At common law, “while the plaintiff may pursue compensation for the injury from

any or all of the defendants, the plaintiff is entitled to only one satisfaction.” Kaminski v.

Newton, 438 N.W.2d 915, 916 (Mich. Ct. App. 1989). This “common-law prohibition

against more than one satisfaction is codified in M.C.L. § 600.2925c(5).” Id. at 917. 

This statute provides, “The recovery of a judgment for an injury of wrongful death

against 1 tort-feasor does not of itself discharge the other tort-feasors from liability for

the injury or wrongful death unless the judgment is satisfied.” Mich. Comp. Laws §

600.2925c(5); see also Gerling Konzern Allgemeine Versicherungs AG v. Lawson, 693

N.W.2d 149 (Mich. 2005). In this case, Plaintiff has presented evidence, which

Defendant does not dispute, that it has not recovered, or even nearly recovered, the full

amount of the prior judgment. Thus, the prior judgment has not been satisfied, and a

potential judgment in this case would not lead to Plaintiff being compensated for more

than it was injured.

Moreover, there is an additional amount of damages at stake in this case that

was not determined in the prior case. One of Plaintiff’s causes of action is for statutory

conversion. Under Mich. Comp. Laws § 600.2919a:

(1) A person damaged as a result of either or both of the following may

recover 3 times the amount of actual damages sustained, plus costs and

reasonable attorney fees:

(a) Another person’s stealing or embezzling property or

converting property to the other person's own use.
17

(b) Another person’s buying, receiving, possessing,

concealing, or aiding in the concealment of stolen,

embezzled, or converted property when the person buying,

receiving, possessing, concealing, or aiding in the

concealment of stolen, embezzled, or converted property

knew that the property was stolen, embezzled, or converted.

(2) The remedy provided by this section is in addition to any other right or

remedy the person may have at law or otherwise. 

“Actual damages” is defined as “the actual loss a complainant suffered as a result of a

defendant's criminal conduct.” Alken-Ziegler, Inc. v. Hague, 767 N.W.2d 668, 671

(Mich. Ct. App. 2009).

Plaintiff seeks actual damages in the amount of $730,193.50 ($380,193.50 which

paid down the Bender loan and $350,000 which funded the Cash Collateral Account

pursuant to the forbearance agreement). Even if this amount was included in the prior

judgment, if a jury was to find that Plaintiff suffered these damages as a result of

Defendant’s conversion, then Plaintiff would be eligible to recover three times that

amount, $2,190,580.50. The statute expressly states that this remedy is in addition to

any other right or remedy. Mich. Comp. Laws § 600.2919a. Further, this amount was

not included in the prior judgment as Judge Edmunds did not rule on the conversion

count. Plaintiff is potentially liable for conversion because the statute imposes liability

on one who receives stolen, embezzled, or converted property when that person knew it

was stolen, embezzled, or converted. Mich. Comp. Laws § 600.2919a. Thus, Plaintiff

could be awarded damages in this case that were not included in the prior judgment.

Defendant argues that “Judge Edmunds denied Medilink summary judgment on

its conversion and other claims against Bender, thus adjudicating, among other things,

that funds debited from Bender’s accounts did not constitute conversion even though
18

the disbursements were made to Bender and third parties.” (Def.’s Reply at 3

(emphasis in original).) First, Judge Edmunds did not deny Medilink’s motion for

summary judgment on its conversion claim. She stated, “And I’m not comfortable

saying that they involve conversion, although conversion seems a closer case to me . . .

we’ll leave out the embezzlement and conversion points. I’m just going to not rule on

those . . . .” (Def.’s Mot. Ex. 14 at 4 (emphasis added).) Second, even if she did deny

Medilink’s motion for summary judgment on the conversion claim, it would not constitute

an adjudication that Bender was not liable for conversion. Instead, it would merely

mean that, in viewing the evidence in the light most favorable to Bender, Medilink was

not entitled to judgment as a matter of law on that claim. See Fed. R. Civ. P. 56. If the

case had proceeded to trial, Bender could have still been found liable for conversion.

Both parties also focus on whether the fault allocation under the Michigan Tort

Reform Statutes applies to statutory conversion claims. Plaintiff cites John Hancock

Financial Servs., Inc. v. Old Kent Bank, 346 F.3d 727 (6th Cir. 2003), in which the Sixth

Circuit held that Michigan’s Tort Reform Statutes did not apply to UCC conversion

claims. 346 F.3d at 732. The UCC conversion statute in Old Kent Bank expressly

provided for a fault allocation in cases of forged instruments, placing it in conflict with

the fault allocation of the Michigan Tort Reform Statutes. Id. The conversion statute at

issue in this case, however, does not have a provision allocating fault, but instead

provides for an additional amount of damages that can be awarded; thus, it is not in

conflict with the Michigan Tort Reform Statutes. See Mike’s Train House, Inc. v. Lionel,

L.L.C., 472 F.3d 398, 414 (6th Cir. 2006) (statutory misappropriation case) (“Old Kent

Bank does not govern the outcome of this claim . . . because [the Michigan Tort Reform
4

On December 18, 2009, Defendant filed a notice of nonparty fault naming the

Bender Defendants, among others, as non-parties who may be wholly or partially at

fault for the damages sought by Plaintiff in this case.

19

Statutes] concern[] the allocation of liability, as opposed to the kinds of damages a

misappropriation plaintiff can recover.”). The issue of whether fault can be allocated

under a statutory conversion claim would be relevant to whether Defendant could

lessen its liability by having fault allocated to other parties.4 It does not go to the

threshold issue of whether Plaintiff’s statutory conversion claim is precluded based on

the prior judgment. Because Judge Edmunds did not rule on the conversion claim and

because additional damages could be awarded if Defendant was found liable for

conversion, the court concludes that the prior judgment does not preclude Plaintiff’s

claim.

Plaintiff also brings claims for unjust enrichment and constructive trust, and the

court finds that these claims would not be precluded by the prior judgment. The

elements of unjust enrichment are “(1) the receipt of a benefit by the defendant from the

plaintiff and (2) an inequity resulting to the plaintiff because of the retention of the

benefit by the defendant.” Hudson v. Mathers, 770 N.W.2d 883, (Mich. Ct. App. 2009)

(citing Belle Isle Grill Corp. v. Detroit, 666 N.W.2d 271 (Mich. 2003)). If these elements

are met, then a contract will be implied in order to prevent unjust enrichment. Id. A

constructive trust is an equitable remedy and may be imposed “when necessary to do

equity or avoid unjust enrichment.” Morris Pumps v. Centerline Piping, Inc., 729 N.W.2d

898, 907 (Mich. Ct. App. 2006) (citing Kammer Asphalt Paving Co., Inc. v. East China

Tp. Schools, 504 N.W.2d 635 (Mich. 1993)). “A constructive trust may thus be imposed
20

under any circumstance that renders it unconscionable for the holder of legal title to

retain and enjoy the property.” Id. “The constructive trust, as it was put by Mr. Justice

Cardozo, ‘is the formula through which the conscience of equity finds expression. 

When property has been acquired in such circumstances that the holder of the legal title

may not in good conscience retain the beneficial interest, equity converts him into a

trustee. . . .’” Kent v. Klein, 91 N.W.2d 11, 14 (Mich. 1958).

As an initial matter, these claims would not be subject to the Michigan Tort

Reform Statutes. They are not tort actions or actions based on “another legal theory

seeking damages for personal injury, property damage, or wrongful death.” Mich.

Comp. Laws § 600.2957. Moreover, a prior fraud judgment against another party would

not preclude these claims. For instance, suppose A commits fraud against B, and then

C, knowing that A obtained property from B as a result of fraud, accepts the property. B

should be entitled to obtain a judgment against the person who committed the fraud, A,

for the full amount of the fraud. However, often times, the fraud perpetrator has

disappeared or is judgment-proof. The law therefore permits B to recover its property

from C, who “may not in good conscience retain the beneficial interest of the property”

that he knew was obtained by fraud. Id. Although as discussed above, B is entitled to

recover only once for the amount of his loss, equitable principles allow him to pursue C.

Defendant relies on two unpublished decisions from the Michigan Court of

Appeals, Stanke v. Stanke, No. 263446, 2008 WL 216071 (Mich. Ct. App. Jan, 24,

2008) and K-Mart Corp. v. Logan, No. 232393, 2003 WL 21583385 (Mich. Ct. App. July

10, 2003). In K-Mart, a former real estate lawyer for K-Mart embezzled money

conducting real estate transactions. 2003 WL 21583385, at *2. The real estate lawyer
21

pleaded guilty to embezzlement, and K-Mart sued him in a civil action, which was

dismissed. Id. K-Mart then sued the real estate lawyer as well as persons it alleged

assisted him, including his ex-wife and members of his family. Id. Summary judgment

was granted as to the real estate lawyer, and the Court of Appeals therefore held the

case against the remaining defendants must be dismissed. Id. at *3. It stated,

“Because plaintiff has already received a judgment against [the real estate lawyer]

assessing all liability to him for plaintiff’s damages, there is no liability to be apportioned

among defendants; therefore, this case must be dismissed.” Id. 

In Stanke, the plaintiff filed a lawsuit against a trustee and the law firm that

drafted the trust documents. 2008 WL 216071, at *2. The trustee never appeared, and

the plaintiff “obtained a default judgment against her for the full amount of the funds she

wrongfully depleted from the trust.” Id. The trial court then granted the law firm’s

motion for summary judgment. Id. at *2. On appeal, the plaintiff argued that the clerk’s

entry of default judgment “did not meet the statutory requirement that the trial court

‘allocate’ fault as between [trustee] and [law firm] as required by statute.” Id. at *5. The

court rejected this argument, finding that the trial judge was not required to allocate fault

because the parties waived that requirement by agreeing otherwise. Id. The court then

held that: “Plaintiff affirmatively requested that the court enter judgment against [trustee]

for the full amount alleged in its complaint. When the trial court did so, there remained

no more fault to be apportioned to the [law firm].” Id.

The court finds that K-Mart and Stanke do not preclude Plaintiff’s claims in this

case. In both K-Mart and Stanke, unlike in this case, the party who was allocated 100%

of the fault was actually in the case, and thus a finding that this party was completely
22

responsible for the damages in the complaint necessarily meant that the other parties to

the case were not responsible for those same damages under comparative fault

principles. An example of a valid argument under K-Mart and Stanke would be if Judge

Edmunds had found that John Bender was responsible for 100% of the damages in the

earlier case, in which case J.P. Bender Associates, Inc. and Bender, Inc. could have

successfully argued that there were no more damages to award against them. In

contrast, no damages could have been assessed against Comerica in the earlier case

in which it was not a party. Moreover, the damages assessed against the Bender

Defendants for their fraud do not encompass the full amount of damages Plaintiff seeks

in this case because it requests treble damages based on statutory conversion, which

was not ruled upon in the prior case. The court thus finds that Plaintiff’s claims are not

precluded by the earlier judgment against the Bender Defendants for fraud.

B. Judicial Estoppel

Defendant argues that Plaintiff “judicially admitted that only the three (3) Bender

Defendants are 100% ‘jointly and severally’ at fault for Medilink’s damages” and they

are judicially estopped from taking a “wholly inconsistent position.” (Def.’s Mot. Br. at 12

(emphasis added).)

“Under the doctrine of judicial estoppel, a party that has unequivocally and

successfully set forth a position in a prior proceeding is estopped from setting forth an

inconsistent position in a later proceeding.” Detroit Intern. Bridge Co. v. Commodities

Export Co., 760 N.W.2d 565, 572 (Mich. Ct. App. 2008). This doctrine is “is intended to

maintain the consistency of court rulings and to keep litigants from playing ‘fast and

loose’ with the legal system.” Morales v. State Farm Mut. Auto. Ins. Co., 761 N.W.2d
5

 Indeed, when the court searches Defendant’s brief for factual support in this

regard, it finds nothing more than unsupported assertions. For example, Defendant’s

statement that “Medilink judicially admitted and argued in 07-cv-15019 that only the

three (3) Bender Defendants are liable for its damages, and that 100% of the fault

should be allocated between and among those parties only, jointly and severally,” Def.’s

Mot. Br. at 12 (emphasis added), is accompanied by absolutely no citation to the record. 

Nor is there any citation supporting Defendant’s statement that “Medilink clearly,

unequivocally and successfully argued to the satisfaction of a federal district court judge

that only the three (3) Bender Defendants were jointly and severally liable for the

entirety of Medilink’s damages based on uncontested facts” Def.’s Mot. Br. at 14

(emphasis added). Defendant comes closer in its statement of fact # 18, in which it

asserts that “Medilink’s First Amended Complaint alleged that it was only ‘John P.

23

454, 464 (Mich. Ct. App. 2008). It is “an equitable doctrine that the Court may raise to

preclude inconsistent judicial rulings.” Wolverine Power Coop v. Dep’t of Environ.

Quality, --- N.W.2d ----, 285 Mich. App. 548 (Mich. Ct. App. 2009). The doctrine is

applied “to prevent a party ‘from abusing the judicial process through cynical

gamesmanship, achieving success on one position, then arguing the opposing to suit an

exigency of the moment.’” Opland v. Kiesgan, 594 N.W.2d 505, 511-12 (Mich. Ct. App.

1999) (quoting Griffith v. Wal-Mart Stores, Inc., 135 F.3d 376, 380 (6th Cir. 1998)).

In its motion for summary judgment in the prior case, Plaintiff requested summary

judgment “against the [Bender] Defendants jointly and severally, in the amount of

$4,749,920.00 trebled to $14,249,760.00“ based on “fraudulent misrepresentation,

embezzlement and conversion.” (Def.’s Mot. Ex. 13.A at 1, 21.) Contrary to

Defendant’s repeated assertions, Plaintiff never stated that only the Bender Defendants

were liable. Nor did Plaintiff ever state that the Bender Defendants were 100% liable for

its overall damages. The court does not find Plaintiff’s position in this case inconsistent

with the prior case or that Plaintiff is “playing ‘fast and loose’ with the legal system.” 

Morales, 761 N.W.2d at 464.5

 Accordingly, the court will not apply the equitable
Bender,’ ‘J.P. Bender And Associates, Inc.’ and ‘Bender, Inc.’ as the ‘Defendants’ who

were ‘jointly and severally’ liable for all of Medilink’s damages.” [Appdx. Ex-7, pg. 1, pg.

2, ¶2; see also ¶¶8-19], Def. Stmt of Fact #18 (emphasis added), but even there

Defendant tellingly omits the pivotal term, “only,” from the quoted material while citing in

support nothing more than Plaintiff’s complaint against the Bender defendants (which,

as earlier noted, does not use the word “only” or any equivalent concept of exclusive

liability that Defendants here purport). 

The court imagines a parallel situation in a criminal case in which a

subsequently-identified and charged defendant tries to argue that the government

cannot properly proceed against him because it had originally charged that defendant

#1 also was guilty. The possibility must be recognized, in criminal and civil law, that

there may be multiple theories of proceeding against varied individuals within the same

general factual setting. While there is no support for the proposition that Plaintiff is

“playing fast and loose,” the court is less sure about Defendant.

24

doctrine of judicial estoppel.

C. Res Judicata and Collateral Estoppel

Defendant argues that the doctrines of res judicata and collateral estoppel bar

Plaintiff’s action. (Def.’s Mot. Br. at 14-18.)

1. Res Judicata

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 action was or could

have been resolved in the first, and (3) both actions involve the same parties or their

privies.” Estes v. Titus, 751 N.W.2d 493, 499 (Mich. 2008) (quoting Dart v. Dart, 597

N.W.2d 82 (Mich. 1999)). Res judicata “bars all matters that with due diligence should

have been raised in the earlier action.” Id.

Defendant’s res judicata argument is without merit. Defendant makes no claim

that it is a privy to the Bender Defendants. Thus, res judicata does not apply to this

case because it does not “involve the same parties or their privies” as the previous

action. Estes, 751 N.W.2d at 499. 
25

2. Collateral Estoppel

The doctrine of collateral estoppel “bars relitigation of an issue in a new action

arising between the same parties or their privies when the earlier proceeding resulted in

a valid final judgment and the issue in question was actually and necessarily determined

in that prior proceeding.” Leahy v. Orion Township, 711 N.W.2d 438, 441 (Mich. Ct.

App. 2006) (per curiam). The elements are: “(1) a question of fact essential to the

judgment was actually litigated and determined by a valid and final judgment, (2) the

same parties had a full and fair opportunity to litigate the issue, and (3) there was

mutuality of estoppel.” Estes, 751 N.W.2d at 499. However, “where collateral estoppel

is being asserted defensively against a party who has already had a full and fair

opportunity to litigate the issue, mutuality is not required.” Monat v. State Farm Ins. Co.,

677 N.W.2d 843, 852 (Mich. 2004).

Defendant conclusively states that “elements one and two are easily

established,” and devotes the majority of its discussion of the collateral estoppel issue

to the mutuality requirement. (Def.’s Mot. Br. at 16-18.) But as held by the Michigan

Supreme Court in Monat, mutuality of estoppel is not required when collateral estoppel

is being asserted defensively, as in this case. Monat, 677 N.W.2d at 852. 

On the issue of a question of fact essential to the judgment that was “actually

litigated and determined,” Defendant appears to argue that three questions of fact have

been actually litigated and determined in the prior action. First, Defendant states that

“Medilink created an extensive record in 07-cv-15019 with its summary judgment motion

that requested, inter alia, that damages be allocated against the Bender Defendants

only.” (Def.’s Mot. Br. at 16 (emphasis added).) As explained above, Plaintiffs never
26

used “only” when requesting an allocation of damages. The issue that was litigated and

determined in the earlier case was that the Bender Defendants committed fraud and

were liable for approximately $4.7 million in damages.

Second, Defendant states that “Judge Edmunds denied Medilink summary

judgment on its conversion and other claims against Bender, thus adjudicating, among

other things, that funds debited from Bender’s accounts did not constitute conversion

even though the disbursements were made to Bender and third parties.” (Def.’s Reply

at 3.) It argues that “[i]f Bender, the admitted thief, cannot be liable for conversion and

the other theories of liability alleged against him,” then the preclusion doctrines bar this

action. (Id.) Both of these statements are incorrect – Judge Edmunds never explicitly

denied Medilink’s motion for summary judgment and Bender, “the admitted thief,” could

have been liable for conversion if the case proceeded to trial. As discussed above,

even if Judge Edmunds had denied Medilink’s motion for summary judgment on the

conversion claim, it would not constitute an adjudication given the summary judgment

standard under Federal Rule of Procedure 56. Thus, the conversion issue was not

litigated and determined in the prior case.

Third, Defendant argues that because Plaintiff never accused Defendant of

violating the temporary restraining orders in the prior case, the court must “assume that

. . . there had been no such violation.” (Id. at 4.) The court need not make this

assumption and finds that whether or not the temporary restraining orders were violated

was not “actually litigated and determined” in the prior case. It simply was never raised. 

The only claim that was litigated and determined in the prior case was that the Bender

Defendants committed fraud and were required to pay approximately $4.7 million based
6

 Moreover, it does not appear that Plaintiff is asserting any violation of the

temporary restraining orders in this case. Defendant states that “the act of Comerica

not ‘returning’ the money to Medilink would have constituted a violation of one or both

T.R.O.s (It is undisputed that by the time Medilink belatedly obtained and served the

T.R.O.s, Bender’s accounts were almost empty.)” (Id.) Defendant’s parenthetical

negates its argument. If the Bender accounts were practically empty when the

temporary restraining orders were served, then it would appear that Plaintiff is alleging

that the breaches alleged in this case occurred before the temporary restraining orders

were entered, and thus the orders would not have been violated. Plaintiff’s conversion

claims are premised on the transfers in October 2007, before the case against the

Bender Defendants was filed.

S:\Cleland\JUDGE'S DESK\C1 ORDERS\09-13692.MEDILINK.SJ.npk.2.wpd

27

on that fraud.6

IV. CONCLUSION

 For the reasons above, IT IS ORDERED that Comerica Bank’s motion for

summary judgment [Dkt. # 18] is DENIED. 

 S/Robert H. Cleland 

ROBERT H. CLELAND

UNITED STATES DISTRICT JUDGE

Dated: February 17, 2010

I hereby certify that a copy of the foregoing document was mailed to counsel of record

on this date, February 17, 2010, by electronic and/or ordinary mail.

 S/Lisa Wagner 

Case Manager and Deputy Clerk

(313) 234-5522