Title: DANIEL ADAIR V STATE OF MICHIGAN
Citation: N/A
Docket Number: 121536
State: Michigan
Issuer: Michigan Supreme Court
Date: June 9, 2004

_______________________________ 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan Supreme Court 
Lansing, Michigan 
Chief Justice  
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Stephen J. Markman 
Opinion 
FILED JUNE 9, 2004 
DANIEL ADAIR, a taxpayer of
the Fitzgerald Public
Schools, and FITZGERALD
PUBLIC SCHOOLS, et al., 
Plaintiffs-Appellants, 
v 
 
No. 121536 
STATE OF MICHIGAN, DEPARTMENT
OF EDUCATION, DEPARTMENT OF
MANAGEMENT AND BUDGET, and
TREASURER OF THE STATE OF 
MICHIGAN, 
Defendants-Appellees. 
BEFORE THE ENTIRE BENCH 
TAYLOR, J.  
This Court is once again called on to decide if the 
state has met its constitutional mandate to adequately fund 
public education. 
Plaintiffs are taxpayers and school 
districts seeking a declaratory judgment that the state 
failed to meet its funding responsibility mandated by Const 
1963, art 9, § 29, a section of our Constitution that is 
commonly known as the “Headlee Amendment.” 
The complaint 
 
 
                                                 
 
asserts that the state did not provide funding to school 
districts in Michigan for the necessary increased costs of 
providing activities and services that are new or mandated 
at an increased level since December 23, 1978. 
The Court 
of Appeals found that claims plaintiffs did raise or could 
have raised in earlier suits were barred pursuant to the 
doctrine of res judicata.1  As to those issues that were not 
subject to res judicata analysis, the Court of Appeals held 
that they were otherwise barred because of releases the 
parties executed or the activities2 were not new or were not 
increased activities within the meaning of Const 1963, art 
9, § 29. We affirm in part, reverse in part, and remand. 
I. CONSTITUTIONAL PROVISIONS 
Under Michigan’s Headlee Amendment,3 as of 1978, the 
state is forbidden from reducing funding levels for the 
necessary costs of existing activities or services mandated 
by the Legislature, and is to completely fund the necessary 
costs of new or increased activities or services mandated 
by the Legislature: 
1 Adair v Michigan, 250 Mich App 691; 651 NW2d 393
(2002). 
2 
Throughout 
this 
opinion, 
for 
brevity’s 
sake,
“activities and services” are frequently referred to as
simply “activities.” 
3 Const 1963, art 9, §§ 25-34. 
2  
 
 
 
The state is hereby prohibited from reducing
the state financed proportion of the necessary
costs 
of 
any 
existing 
activity 
or 
service 
required of units of Local Government by state
law. A new activity or service or an increase in
the [level] of any activity or service beyond
that required by existing law shall not be 
required by the legislature or any state agency
of units of Local Government, unless a state
appropriation is made and disbursed to pay the
unit of Local Government for any necessary
increased costs. The provision of this section
shall not apply to costs incurred pursuant to
Article VI, Section 18. 
[Const 1963, art 9, §
29.] 
These two different provisions in art 9, § 29 have 
been described by this Court as follows: 
The 
first 
sentence 
of 
this 
provision
prohibits reduction of the state proportion of
necessary costs with respect to the continuation
of state-mandated activities or services. 
The 
second sentence requires the state to fund any
additional necessary costs of newly mandated 
activities or services and increases in the level 
of such activities or services from the 1978 base 
year. 
[Judicial Attorneys Ass’n v Michigan, 460
Mich 590, 595; 597 NW2d 113 (1999), quoting 228
Mich App 386, 396; 597 NW2d 378 (1998).] 
To assist the public in understanding the different 
thrusts of these two sentences, this Court has described 
the first sentence as a “maintenance of support” (MOS) 
provision and the second sentence as a “prohibition on 
unfunded mandates” (POUM) provision. See id.  Accordingly, 
to establish a Headlee violation under the MOS clause, the 
plaintiffs must show “(1) that there is a continuing state 
mandate, (2) that the state actually funded the mandated 
activity at a certain proportion of necessary costs in the
3 
 
 
base year of 1978-1979, and (3) that the state funding of 
necessary costs has dipped below that proportion in a 
succeeding year.” 
Oakland Co v Michigan, 456 Mich 144, 
151; 566 NW2d 616 (1997)(opinion by Kelly, J.). 
Under the 
POUM clause, they must show that the state-mandated local 
activity was originated without sufficient state funding 
after the Headlee Amendment was adopted or, if properly 
funded 
initially, 
that 
the 
mandated 
local 
role 
was 
increased by the state without state funding for the 
necessary increased costs. 
However, not all activity changes established pursuant 
to statute or rule constitute “new or increased” activity 
requiring state funding. 
MCL 21.234(5) explains what the 
POUM provision excludes: 
(a) A requirement imposed on a local unit of
government by a state statute or an amendment to
the state constitution of 1963 adopted pursuant
to an initiative petition, or by a state law or
rule enacted or promulgated to implement such a
statute or constitutional amendment. 
(b) A requirement imposed on a local unit of
government by a state statute or an amendment to
the state constitution of 1963, enacted or 
adopted pursuant to a proposal placed on the
ballot by the legislature, and approved by the
voters, or by a state law or rule enacted or
promulgated to implement such a statute or 
constitutional amendment. 
(c) A court requirement. 
(d) A due process requirement. 
(e) A federal requirement. 
4  
 
 
 
(f) An implied federal requirement. 
(g) A requirement of a state law which 
applies 
to 
a 
larger 
class 
of 
persons 
or 
corporations and does not apply principally or
exclusively 
to 
a 
local 
unit 
or 
units 
of 
government. 
(h) A requirement of a state law which does
not require a local unit of government to perform
an activity or service but allows a local unit of
government to do so as an option, and by opting
to perform such an activity or service, the local
unit of government shall comply with certain 
minimum standards, requirements, or guidelines. 
(i) A requirement of a state law which 
changes the level of requirements, standards, or
guidelines of an activity or service that is not
required of a local unit of government by
existing law or state law, but that is provided
at the option of the local unit of government. 
(j) A requirement of a state law enacted
pursuant to section 18 of article 6 of the state
constitution of 1963. 
Thus, under a POUM analysis, not every required change in 
school activities requires state funding under the Headlee 
Amendment. 
Judicial Attorneys Ass’n, supra at 603. 
Headlee, at its core, is intended to prevent attempts by 
the Legislature “to shift responsibility for services to 
the local government . . . in order to save the money it 
would have had to use to provide the services itself.” Id. 
at 602-603. 
Taxpayers 
alleging 
a 
violation 
of 
the 
Headlee 
Amendment may file a request for declaratory relief in the 
5  
 
 
                                                 
Court of Appeals under Const 1963, art 9, § 32.4  In this 
case, plaintiffs have brought suit under art 9, § 32, 
alleging that the Legislature violated the second provision 
of art 9, § 29 by requiring new activities and increases in 
existing activities without providing sufficient additional 
funding. 
Because of the extensive history of similar 
litigation between these parties, a brief review of the 
earlier suits is required. 
II. HISTORY 
Many of these plaintiffs have brought allegations of 
underfunding against these defendants in earlier suits. In 
1980, the first of these suits was filed; it was not 
resolved until seventeen years later. 
Durant v Michigan, 
456 Mich 175; 566 NW2d 272 (1997) (Durant I). 
Chiefly at 
issue in Durant I was a reduction in state funding for 
special education activities. 
Ultimately, this Court not 
only granted declaratory relief for the plaintiffs, but 
also, in an award that deeply divided the Court on the 
issue of the Court’s authority, awarded money damages. 
In 
4 The remedy provision reads:
Any 
taxpayer 
of 
the 
state 
shall 
have 
standing to bring suit in the Michigan State
Court of Appeals to enforce the provisions of
Sections 25 through 31, inclusive, of this 
Article and, if the suit is sustained, shall
receive from the applicable unit of government
his costs incurred in maintaining such suit. 
6  
 
 
 
 
this case, there is no claim for damages and we need not 
revisit the issue of the propriety of a damages award, but 
would note that even the proponents of money damages in 
Durant I described it as “atypical” and predicated the 
claim for the award on the prolonged duration of Durant I. 
Subsequently, the Legislature, perhaps taken aback by the 
monetary damages award, undertook to work statewide equity 
by making available similar relief to those local and 
intermediate school districts that were not plaintiffs in 
Durant I. As the legislation described it, it was to be in 
“settlement and compromise of any claim or claims that were 
or could have been asserted by these districts and 
intermediate districts” in the Durant I litigation. 
MCL 
388.1611f(1), (2), (4). 
To receive the settlement funds, 
however, a school district had to provide the State 
Treasurer with a board resolution 
waiving any right or interest the district or
intermediate district has or may have in any
claim or litigation based on or arising out of
any claim or potential claim through September 3,
1997 that is or was similar to the claims 
asserted by the plaintiffs in the consolidated
cases known as Durant v State of Michigan. 
[MCL
388.1611f(1). Similarly, see MCL 388.1611f(2).] 
Three hundred eighty-two of the local and intermediate 
school districts named as plaintiffs in the instant suit 
adopted the statutorily prescribed resolution, timely sent 
7  
 
 
 
 
 
 
                                                 
the executed resolutions to the State Treasurer, and 
received settlement payments.5 
Several months later, in 1998, plaintiffs taxpayers 
and school districts brought a second suit, alleging that 
the system the state used for distributing funds resulted 
in an underfunding of the schools for the years 1997-1998 
through 2000-2001 in violation of the Headlee Amendment. 
Durant v Michigan (On Remand), 238 Mich App 185; 605 NW2d 
66 (1999) (Durant II). 
The Court of Appeals granted 
declaratory relief largely in the plaintiffs’ favor. 
This 
Court denied leave on the substantive issues of the case. 
462 Mich 882 (2000). 
A year later, similar plaintiffs returned to file two 
suits. 
In the first, Durant v Michigan, 251 Mich App 297; 
650 NW2d 380 (2002) (Durant III), the plaintiffs alleged 
that 2000 PA 297, which had been enacted in response to 
Durant II to cure the deficiencies the Court had found in 
the State School Aid Act, MCL 388.1601 et seq., was 
constitutional. 
However, the Court of Appeals found this 
system was constitutional, and this Court denied leave. 
467 Mich 900 (2002). 
The second lawsuit, which is the 
subject of this appeal, was similar to Durant I except, 
5 For further discussion of the settlement and 
resolution, see the Court of Appeals opinion in this case,
Adair, 250 Mich App 691. 
8  
 
 
                                                 
unlike Durant I, which focused on the first sentence of art 
9, § 29, the MOS clause, this action focused on the second 
sentence, the POUM clause. Thus, plaintiffs claim that the 
state did not provide sufficient funding for activities 
that were new or were mandated to be provided at increased 
levels, causing a Headlee-prohibited unfunded mandate. 
Specifically, plaintiffs alleged in count I that, 
through seven administrative rules,6 the state mandated that 
the school districts provide a variety of new special 
education activities and services7 and then failed to fund 
those activities. In count II, they alleged that, pursuant 
to MCL 380.1284, school districts were required to increase 
annually the hours of pupil instruction without increased 
state funding.8
 Count III alleged that, through twelve 
6 These are: 1999 AC, R 340.1721e, R 340.1738, R
340.1740, R 340.1744, R 340.1745, R 340.1750, and R 
340.1758. 
7 These include provisions for transitional services, a
lower student-teacher ratio in four different situations, a
classroom aide, adaptive devices, a director of special
education, and autistic services. 
8 In 1978, local school districts were required to
provide a minimum of 900 hours of pupil instruction a year;
the statute increased this incrementally, requiring 1134
hours by 2006-2007. 
9  
 
 
                                                 
 
statutes9 and Executive Order No. 2000-9, the state mandated 
local districts to provide activities and services not 
required in 1978,10 again without providing funding. 
9 MCL 380.622, 380.1169, 380.1272a, 380.1277, 380.1278,
380.1279, 
380.1280, 
380.1282, 
380.1282a, 
380.1527,
388.1752, and 257.1851. 
10 The Court of Appeals opinion succinctly described
these as 
(1) an annual financial records audit by a 
certified 
public 
accountant 
for 
intermediate 
school districts; (2) the instruction of students
regarding dangerous communicable diseases; (3) 
specialized training for teachers regarding human
immunodeficiency virus infection and acquired
immunodeficiency syndrome; (4) the provision of a
breakfast program; (5) the annual development and
implementation of a three- to five-year school
improvement plan [the “school improvement plan”
obligation]; (6) the development of a continuing
school improvement process; (7) the provision of
a 
core 
academic 
curriculum; 
(8) 
the 
administration of state assessment tests to high
school pupils; (9) the provision of remedial 
educational services and periodic retesting for
pupils who fail the required assessment tests;
(10) the accreditation of school buildings; (11)
the provision of “learning processes” and special
and sufficient assistance to each pupil in order
to enable each pupil to achieve a state-endorsed
diploma [the “special assistance” obligation];
(12) the provision of summer school classes for
pupils who fail to meet standards for basic 
literacy skills or basic mathematics skills by
the end of the third grade year; (13) the 
provision of a minimum of four days of “teacher
professional development” in the 2000-01 school
year and a minimum of five days in the 2001-02
school year and each subsequent school year; (14)
the 
creation 
and 
maintenance 
of 
data 
on 
“essential 
student 
data 
elements” 
and 
the 
transmission of this data through the Internet in
a 
standardized 
form 
to 
the 
Department 
of 
(continued…)
10 
 
 
 
 
                                                 
Defendants moved for summary disposition of all counts 
pursuant to MCR 2.116(C)(7) (claim barred as a matter of 
law) and C(8) (failure to state a claim on which relief can 
be granted), as well as summary disposition of count I 
pursuant to C(10) (no genuine issue of material fact). 
Defendants argued chiefly that, under C(7), plaintiffs 
were barred by the doctrine of res judicata because of the 
Durant I litigation and by release and waiver because of 
the statutorily required release they had executed pursuant 
to 
the 
Legislature’s 
post-Durant 
I 
enactment, 
MCL 
388.1611f. 
Defendants further argued that the claims 
failed either as a matter of law under C(8) or as a matter 
of fact under C(10) because plaintiffs did not sufficiently 
allege the type or the extent of the necessary increased 
costs of new activities. See Oakland Co, 456 Mich 166. 
Plaintiffs responded that res judicata did not apply 
because Durant I resolved only issues relating to the first 
sentence of art 9, § 29, whereas this action concerns the 
second sentence. 
Furthermore, they asserted that res 
judicata was inapplicable because the relief they sought 
(continued…)
Education 
. 
. 
. 
[the 
“record-keeping”
obligation]; 
and 
(15) 
the 
provision 
of 
compensation to school bus drivers for time spent
attending various training and tests. 
[250 Mich
App 699-701.] 
11  
 
 
 
 
 
was prospective and covered a different period than that 
covered by Durant I. 
With regard to those plaintiffs who 
signed the statutory release, they claimed they should not 
have lesser rights than the actual litigants and that 
furthermore the release permits claims arising after the 
release 
date. 
Regarding 
the 
C(10) 
factual 
issues, 
plaintiffs asserted that their proofs would show sufficient 
factual support for their claims. 
The Court of Appeals majority ruled for defendants on 
all counts. 
250 Mich App 715. 
It found that, under MCR 
2.116(C)(7), all the plaintiffs who were also plaintiffs in 
Durant I were barred by res judicata because the present 
claims, except for one activity alleged in count III, could 
have been raised in the earlier suit. 
250 Mich App 706. 
Reinforcing this point, the Court found that because some 
plaintiffs had raised POUM claims, all plaintiffs were 
barred because those raising POUM issues effectively 
represented the interests of the others. The majority also 
found that the districts that had signed releases were 
similarly barred under C(7) because the release expressly 
applied to “any claim or potential claim . . . similar to 
the claims asserted by the plaintiffs in [Durant I],” and 
the alleged underfunding predated the releases. 
250 Mich 
App 
708, 
710. 
Thus, 
the 
majority 
reasoned, 
these 
plaintiffs had no more rights than the parties who had
12 
 
 
 
 
 
                                                 
actually litigated Durant I, and all claims, with the one 
exception discussed below, were disposed of pursuant to MCR 
2.116(C)(7). 
The 
remaining 
claim, 
that 
the 
record-keeping 
requirements found in MCL 388.1752 and EO 2000-9 imposed a 
new or increased mandate, was found by the Court of Appeals 
not to violate the Headlee Amendment. 
The majority 
concluded that these requirements predated Durant I and 
thus could have been raised in Durant I. 
In considering 
MCL 388.1752, it pointed out that the obligations imposed 
by the statute already existed in 1978. Further, any later 
amendments of the statute simply renumbered it11 and defined 
the scope of the obligation.12
 250 Mich App 712. 
Accordingly, it was the Court’s view that the amendment did 
not violate Headlee because “[c]larifying nonsubstantive 
changes in an earlier, existing state law does not 
constitute a new activity or service or increase in the 
level of an existing activity or service. 
MCL 21.233(7).” 
Id. With regard to EO 2000-9 and its standards for uniform 
reporting of information, the majority found that they were 
merely designed to streamline a process that had existed 
before Headlee and thus did not mandate new activity. 
250 
11 1979 PA 94, § 512.  
12 1989 PA 197, § 152.  
13  
 
 
 
 
 
Mich App 713-714, citing Judicial Attorneys Ass’n, supra at 
605. 
Therefore, with regard to these record-keeping 
requirement issues, the Court granted defendants’ motion 
for summary disposition pursuant to MCR 2.116(C)(10). 
Reinforcing this last holding, the Court of Appeals 
noted 
that 
the 
record-keeping 
activities 
were 
administrative functions that “constitute the essence of 
the state’s constitutional obligation to ‘maintain and 
support a system of free public education and secondary 
schools . . . .’ Const 1963, art 8, § 2,” and accordingly 
fell outside the restrictions of the Headlee Amendment. 
250 Mich App 714. 
Plaintiffs sought leave to appeal to this Court, 
raising the same arguments they brought in the Court of 
Appeals 
to 
challenge 
defendants’ 
motion 
for 
summary 
disposition. We granted leave. 467 Mich 919 (2002). 
III. STANDARD OF REVIEW 
The question whether res judicata bars a subsequent 
action is reviewed de novo by this Court. 
Pierson Sand & 
Gravel, Inc v Keller Brass Co, 460 Mich 372, 379; 596 NW2d 
153 (1999). 
Whether the Court of Appeals properly 
determined that release barred those plaintiffs pursuant to 
MCR 2.116(C)(7) is likewise reviewed de novo. 
Maskery v 
Univ of Michigan Bd of Regents, 468 Mich 609, 613; 664 NW2d 
165 (2003). 
14 
 
 
 
 
 
 
                                                 
We also review de novo the Court’s decision to grant 
or deny summary disposition. 
Maiden v Rozwood, 461 Mich 
109, 118; 597 NW2d 817 (1999). 
“A motion under MCR 
2.116(C)(8) tests the legal sufficiency of the complaint. 
All well-pleaded factual allegations are accepted as true 
and construed in a light most favorable to the nonmovant.” 
Maiden, supra at 119. 
The motion “may be granted only 
where the claims alleged are ‘so clearly unenforceable as a 
matter of law that no factual development could possibly 
justify recovery.’” 
Id. (citation omitted). 
We discussed 
this pleading requirement as it pertains to Headlee claims 
in Oakland Co, supra at 166 (opinion by Kelly, J.): 
Under Durant  [I], future plaintiffs must 
allege the type and extent of the harm so that
the court may determine if a § 29 violation
occurred for purposes of making a declaratory
judgment. 
In that way, the state will be aware
of the financial adjustment necessary to allow
for future compliance.[13] 
In a C(10) motion, testing the factual sufficiency of 
the complaint, we consider “the substantively admissible 
evidence actually proffered in opposition to the motion.” 
Maiden, supra at 121. Thus, when such a motion is properly 
brought, the nonmovant must, under MCR 2.116(G)(3)(b) and 
13 Although Oakland Co dealt with MOS claims, as we
noted in Judicial Attorneys Ass’n, supra at 598 n 2, that
does not make it “inapplicable to an analysis of the second
sentence of § 29.” 
Thus, the requirements of POUM claims
are, in this respect, similar to MOS claims. 
15  
 
 
 
2.116(G)(4), produce admissible support for its opposition 
in order to defeat the motion. 
IV. ANALYSIS 
A. Res judicata 
In discussing res judicata in the context of a Headlee 
claim, it is important to begin by asking how the 
constitutional ratifiers of Headlee, the citizens of 
Michigan, would have envisioned the handling of repeated 
relitigation of the same issue. 
We ask this because it is 
their understanding that must control. As we have observed 
many times: 
A constitution is made for the people and by
the people. The interpretation that should be
given it is that which reasonable minds, the
great mass of the people themselves, would give
it. “For as the Constitution does not derive its 
force from the convention which framed, but from
the people who ratified it, the intent to be
arrived at is that of the people, and it is not
to be supposed that they have looked for any dark
or abstruse meaning in the words employed, but
rather that they have accepted them in the sense
most obvious to the common understanding, and
ratified the instrument in the belief that that 
was 
the 
sense 
designed 
to 
be 
conveyed.”
[American Axle & Mfg, Inc, v Hamtramck, 461 Mich
352, 363; 604 NW2d 330 (2000), quoting 1 Cooley,
Constitutional Limitations (8th ed), p 143.] 
We consider it apparent that the people would have 
thought, as with all litigation, there would be the 
traditional rules that would preclude relitigation of 
similar issues by similar parties: that is, the area of law 
we describe formally as encompassed by the doctrine of res
16 
 
 
judicata. 
We must then consider res judicata and apply it 
to this unique Headlee situation. 
The doctrine of res judicata is employed to prevent 
multiple suits litigating the same cause of action. 
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. 
Sewell v Clean Cut Mgmt, Inc, 463 Mich 569, 
575; 621 NW2d 222 (2001). 
This 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. Dart v Dart, 460 Mich 573, 586; 597 NW2d 82 (1999). 
Examining the Sewell factors, we note that it is 
uncontested that Durant I was decided on its merits. 
In 
Durant I we resolved the question of the state’s ability 
under Headlee to reduce funding, in the circumstances there 
presented, for existing programs. 
With respect to the second res judicata requirement, 
that the parties in the later suit be the same or be those 
in privity with them, plaintiffs acknowledge that there is 
some overlap among the school districts, but assert it is 
not complete and the individual taxpayers are also not
17 
 
 
 
identical. 
This defense implicates the scope of the 
concept of “privity.” 
To be in privity is to be so identified in interest 
with another party that the first litigant represents the 
same legal right that the later litigant is trying to 
assert. Baraga Co v State Tax Comm, 466 Mich 264, 269-270; 
645 NW2d 13 (2002). 
The outer limit of the doctrine 
traditionally requires both a “substantial identity of 
interests” and a “working functional relationship” in which 
the interests of the nonparty are presented and protected 
by the party in the litigation. 
Id., quoting Baraga Co v 
State Tax Comm, 243 Mich App 452, 456; 622 NW2d 109 (2000), 
citing Phinisee v Rogers, 229 Mich App 547, 553-554; 582 
NW2d 852 (1998). 
In litigation concerning the MOS or POUM 
provisions of the Headlee Amendment, Const 1963, art 9, § 
29, where a taxpayer or a local unit of government is suing 
the state, the issue is whether the Legislature’s act is 
unconstitutional as it applies not just to a single local 
unit of government, but to all local units affected by the 
legislation. 
In such cases, the interests of all similar 
local units of government and taxpayers will almost always 
be identical. 
If the relief sought by one plaintiff to 
remedy a challenged action is indistinguishable from that 
sought by another, such as when declaratory relief is 
sought concerning an act of the Legislature establishing 
18 
 
 
 
 
                                                 
 
 
the proportion of state funding for local government units, 
the interests are identical. 
Thus, for the purposes of the second Sewell factor, a 
perfect identity of the parties is not required, only a 
“substantial identity of interests” that are adequately 
presented and protected by the first litigant. 
We find 
that the interests of the current plaintiffs were, for 
Headlee purposes, adequately represented by the plaintiffs 
in Durant I. 
The taxpayer parties all have the same 
interest: that mandated activities are funded as they are 
required to be under the Headlee Amendment. 
These 
interests were presented and protected by the extensive and 
thorough litigation that occurred in Durant I.14  Thus, we 
find the current taxpayer plaintiffs are in privity with 
the Durant I plaintiffs.15 
14 We find Justice Kelly’s implication (post at 4 n 2)
that any taxpayer moving to the state after 1997 could
relitigate any Durant I claim unreasonable not merely
because it would be burdensome to the parties and the
courts but also because it would preclude ever having a
final answer upon which state and local governments could
confidently act. 
It is indeed such concerns that have 
animated the judicial utilization of the doctrine of res
judicata. As we said in In re MCI, 460 Mich 396, 431 n 7;
596 NW2d 164 (1999), “The doctrine of res judicata was
judicially created in order to ‘relieve parties of the cost
and vexation of multiple lawsuits . . . .’” 
15 This is not to say, as Justice Weaver suggests (post
at 6), that these plaintiffs lack standing. 
Any taxpayer
may bring a claim—that is, any taxpayer has standing. 
If 
(continued…)
19 
 
 
                                                 
We find the school districts, again for Headlee 
purposes, also have the same legal interest protected by 
the Durant I plaintiffs and are similarly in privity. 
In 
this case, particularly because only declaratory relief, 
not damages, was sought, it is evident that all school 
districts have the same interest. 
Finally, concerning the last element of res judicata, 
we must decide whether the matter in the second case was or 
could have been resolved in the first. 
Res judicata bars 
every claim arising from the same transaction that the 
parties, exercising reasonable diligence, could have raised 
but did not. 
Sewell, supra at 575-576. 
This Court has 
noted that “[r]es judicata bars a subsequent action between 
the same parties when the evidence or essential facts are 
identical.” 
Dart, supra at 586. This statement refers to 
what is generally called the “same evidence” test. Because 
there 
appears 
to 
be 
some 
confusion 
regarding 
the 
relationship between the “same transaction” test and the 
“same evidence” test, we take this opportunity to provide 
clarification. 
The “same transaction” test and the “same evidence” 
test are alternative approaches used in determining the 
(continued…) 
the claim concerns an issue that has already been the 
subject of litigation, it is subject to the doctrine of res 
judicata.  
20  
 
 
 
applicability of res judicata. 
As stated by the Illinois 
Supreme Court in River Park, Inc v Highland Park, 184 Ill 
2d 290, 307-309, 703 NE2d 883 (1998) (citations omitted): 
Under the "same evidence" test, a second
suit is barred "if the evidence needed to sustain 
the second suit would have sustained the first,
or if the same facts were essential to maintain 
both actions." The "transactional" test provides
that 
“the 
assertion 
of 
different 
kinds 
or 
theories of relief still constitutes a single
cause of action if a single group of operative
facts give rise to the assertion of relief.” 
* * * 
[U]nder 
the 
same 
evidence 
test 
the 
definition of what constitutes a cause of action 
is narrower than under the transactional test. 
As explained in the Restatement (Second) of 
Judgments, the same evidence test is tied to the
theories of relief asserted by a plaintiff, the
result of which is that two claims may be part of
the same transaction, yet be considered separate
causes of action because the evidence needed to 
support the theories on which they are based
differs. By contrast, the transactional approach
is more pragmatic. Under this approach, a claim
is viewed in “factual terms” and considered 
“coterminous with the transaction, regardless of
the number of substantive theories, or variant
forms of relief flowing from those theories, that
may be available to the plaintiff; * * * and
regardless of the variations in the evidence 
needed to support the theories or rights.” 
Because this Court has accepted the validity of the 
broader transactional test in Michigan, we need not 
consider as dispositive plaintiffs’ assertions that the 
evidence needed to prove this case is different than was 
needed in Durant I. 
Although that fact may have some 
relevance, the determinative question is whether the claims 
21  
 
 
 
 
 
  
 
in the instant case arose as part of the same transaction 
as did the claims in Durant I.  “Whether a factual grouping 
constitutes a ‘transaction’ for purposes of res judicata is 
to be determined pragmatically, by considering whether the 
facts are related in time, space, origin or motivation, 
[and] whether they form a convenient trial unit . . . .” 
46 Am Jur 2d, Judgments § 533, p 801 (emphasis added). 
With the limited exception of several count III claims 
discussed below, the statutory and regulatory requirements 
complained of in this case, and alleged to be “new” or 
“increased” activities since Headlee was enacted, existed 
during 
the 
pendency 
of 
Durant 
I. 
Moreover, 
the 
requirements, like those in Durant I, have been imposed by 
the Legislature and executive bodies on local school 
districts for the purpose of providing public education. 
Thus, they are related to one another in “time, space [and] 
origin.” 
Further, because the allegations in both this 
case and Durant I concern the Headlee Amendment, the claims 
are related by “motivation” as well. 
As pleaded, we find 
no indication that plaintiffs, with due diligence, could 
not have asserted these claims during the pendency of 
22  
 
 
 
  
                                                 
Durant I.  Indeed, some of the claims in this case were 
actually claimed in Durant I.16 
Therefore, with the several count III exceptions 
discussed below, we agree with the Court of Appeals that 
plaintiffs’ claims in this case arose from the same 
transactions 
as 
did 
the 
Durant 
I 
claims 
and 
that 
plaintiffs, exercising due diligence, could have filed them 
during the pendency of Durant I.17  Thus, plaintiffs’ claims 
are barred by res judicata. 
Moreover, we note that, were this Court to adopt the 
approach of Justice Kelly’s dissent, which essentially 
removes Headlee declaratory judgment actions from the 
general rules of res judicata, we would be subjecting the 
state to litigate and relitigate a potentially endless 
barrage of repetitive claims with only the plaintiffs 
16 Although plaintiffs’ brief to this Court asserts
that their complaint specifically claimed that the state 
failed to meet its funding obligation “by operation of the
2000 amendment to the Act, 2000 PA 297,” no such claim or
enactment was alleged in the complaint. 
Contrary to 
Justice Cavanagh’s assertion, we do not create here a “new
requirement” for pleading. 
Post at 5. 
We simply note
that, 
as 
pleaded 
(including 
plaintiffs’ 
response 
to 
defendant’s motions to dismiss), plaintiffs’ claims were
indistinguishable from those of Durant I. 
17 Plaintiffs offer no evidence that, during the 
pendency of Durant I, they made any effort to add these
claims under MCR 2.118(E). We thus find no basis for their 
assertion that they could not have litigated the claims in
the earlier suit. 
23  
 
 
                                                 
changing.18  Justice Kelly would address this problem using 
stare decisis rather than res judicata. While she does not 
explain how this would work,19 we deduce that she prefers an 
outcome where only those issues actually litigated would be 
barred, because stare decisis would not apply to claims 
that could have been brought in the first suit, but were 
not. 
See Brown v Manistee Co Rd Comm, 452 Mich 354, 365­
366; 550 NW2d 215 (1996). Her approach using stare decisis 
would allow each individual taxpayer in the state a chance 
to bring a separate suit alleging similar, but not 
identical, claims. 
It is, in short, an invitation to a 
total paralysis of government, both state and local, as it 
would deprive state and local officials, as well as 
citizens, of the ability to know with finality what the law 
is. 
Such an approach would surely bring the Headlee 
protections into disrepute and thus jeopardize them. 
We 
18 For example, under the approach of Justice Kelly’s
dissent, an individual taxpayer from the Saginaw School
District could file a particular claim on Monday that is
resolved, then a taxpayer from the Bay City School District
could file an identical claim on Tuesday that is resolved,
and a taxpayer from the Midland School District could file
an identical claim on Wednesday that is resolved, and so
on. 
19 Indeed, stare decisis apparently would not work 
here, as can be seen by Justice Kelly’s conclusion that all
the claims of the non-Durant I individual litigants would
be allowed by that doctrine, where we would find them
barred by res judicata. 
24  
 
 
 
 
decline to convert Headlee into such a Frankensteinian 
monster because we see nothing in the Headlee Amendment 
that suggests to us that the people, in passing the 
Amendment, also planned to effectively sabotage it by 
disregarding well-established rules of res judicata that 
could make it workable. 
B. Release and waiver 
In enacting MCL 388.1611f, the Legislature created a 
contract and a release with the local units of government. 
The release states that the school district 
waives any right or interest it may have in any
claim or potential claim through September 30,
1997 relating to the amount of funding the 
district or intermediate district is, or may have
been, entitled to receive under the state school
aid act of 1979, 1979 PA 94, MCL 388.1601 to
388.1772, or any other source of state funding,
by reason of the application of section 29 of
article IX of the state constitution of 1963,
which claims or potential claims are or were
similar to the claims asserted by the plaintiffs
in the consolidated cases known as 
[Durant I].
[MCL 388.1611f(8).] 
The scope of a release is controlled by the language 
of the release, and where, as here, the language is 
unambiguous, we construe it as written. 
Batshon v Mar-Que 
Gen Contractors, Inc, 463 Mich 646, 650; 624 NW2d 903 
(2001). 
After Durant I was finally resolved, the Legislature 
wanted to produce an outcome relating to the nonlitigating 
districts equivalent to those that litigated.  Thus, funds 
25 
 
 
 
 
 
were appropriated, conditioned on the recipient executing a 
release, which would place the recipient in a position 
comparable to that of the Durant I litigants. Accordingly, 
the recipients, having executed the release, are also 
barred from raising not only claims actually asserted in 
Durant I, but also all claims or potential claims through 
September 30, 1997, that are similar to those that were 
asserted. 
That being the case, we agree with the Court of 
Appeals that, pursuant to MCR 2.116(C)(7), those districts 
agreeing to the release are barred from raising the claims 
of counts I and II, and all but three claims of count III, 
because those claims existed before September 30, 1997, and 
they are similar to the claims asserted in Durant I. 
C. Claims arising after 1997 
Of 
all 
plaintiffs’ 
claims 
concerning 
the 
seven 
administrative rules, thirteen statutes, and one executive 
order, only a few involve post-Durant I mandates. 
Of the 
seven administrative rules identified in count I, six were 
promulgated in 1987 and one in 1983. 
Thus, none postdates 
Durant I, and the analysis in the res judicata and release 
sections of this opinion applies to bar these claims. 
Regarding count II, it concerns MCL 380.1284, for which the 
last amendment making substantive changes to mandated 
activities was 1995 PA 289. 
Thus, it similarly is barred. 
With regard to count III, one claim was withdrawn and one
26 
 
 
 
                                                 
of the identified statutes was repealed.20  Of the remaining 
ten statutes,21 only two, MCL 380.1277 and 380.1282, include 
changes regarding activities added after Durant I. 
The 
executive order also postdates Durant I, having been issued 
in 2000. 
This leaves, then, these three claims that arguably 
are based on post-Durant I mandates. 
The first we turn to 
is the record-keeping activity claimed by plaintiffs to 
result from the interaction of MCL 388.1752 and EO 2000-9. 
We determine that the Court of Appeals erred in concluding 
that the statute and the order do not mandate new 
activities within the meaning of the Headlee Amendment. At 
the time the Headlee Amendment became effective, the 
statute required the school districts to “furnish to the 
department [of education] those reports as the department 
considers necessary for the determination of the allotment 
of funds under this act.”22
 1977 PA 90, § 152. 
This 
provision was further amended by 1989 PA 197, § 152, which 
20 The claim concerning MCL 380.622 was withdrawn, and
MCL 380.1282a was repealed. 
21 These are: MCL 380.1169, 380.1272a, 380.1277,
380.1278, 380.1279, 380.1280, 380.1282, 380.1527, 388.1752,
and 257.1851. 
22 As noted above, this provision was, in 1978,
codified at MCL 388.1552, and renumbered by 1979 PA 94, §
152, and amended by 1989 PA 197, § 152. 
27  
 
 
 
required schools to provide information “necessary for the 
administration of this act and for the provision of reports 
of educational progress . . . .” Thus, during the pendency 
of Durant I, plaintiffs were already under a broad 
obligation to report to the state whatever information it 
required pursuant to its statutory duties. 
The Headlee 
Amendment is not necessarily implicated when the state 
increases or changes what information it requires because 
the schools’ obligation to provide that information has 
existed since before the time Headlee was effective. 
See 
Judicial Attorneys Ass’n, 460 Mich 599-600. 
However, the executive order, which established the 
Center 
for 
Educational 
Performance 
and 
Information, 
empowered the Center to incorporate or implement two 
statewide databases: the Michigan Education Information 
System and the Database for Educational Performance and 
Information. 
Plaintiffs alleged that this requires school 
districts to create and maintain student data on an ongoing 
basis following state-specified data-gathering procedures 
and to transmit those data over the Internet to the state. 
The allegation here is that the state is not merely 
requiring different data from the school districts, but 
also requiring the districts to actively participate in 
maintaining data that the state requires for its own 
purposes. An off-loading of state funding responsibilities
28 
 
 
 
 
 
 
                                                 
 
onto local units of government without the provision of 
funds presents a colorable claim under Headlee. 
See 
Judicial Attorneys Ass’n, supra at 603. 
In short, 
plaintiffs here alleged new requirements that were not 
funded at all. 
Accepting plaintiffs’ allegations as true, 
we find, at this stage in the proceedings, they have 
sufficiently stated a claim on which relief can be granted 
and thus this POUM claim survives defendants’ C(8) motion. 
Oakland Co, supra, at 166.23
 Furthermore, we note that, 
while the Court of Appeals granted summary disposition on 
this claim pursuant to MCR 2.116(C)(10), defendants’ motion 
actually sought only C(7) and C(8) dismissal with regard to 
count III. 
If defendants had argued under a C(10) motion, 
plaintiffs would have been obliged to provide evidentiary 
support for their claims. However, under a C(8) motion, no 
such support is required. 
Thus, concerning the record­
keeping activity, we find plaintiffs sufficiently stated a 
claim on which relief could be granted, and we reverse the 
Court of Appeals dismissal of this claim. 
On remand, the 
parties may explore the factual support for plaintiffs’ 
23 The dissenting opinion in the Court of Appeals urges
the taking of testimony and fact-finding by a special
master before a decision is made on defendants’ motion. 
250 Mich App 715-716. 
We find that unauthorized because a 
C(8) motion is based on the pleadings alone. 
MCR 
2.116(G)(5). 
29  
 
 
 
 
  
                                                 
 
allegations that this constitutes a new, unfunded mandate 
in violation of the Headlee Amendment. 
The second post-Durant I activity involves special 
assistance to students having academic difficulty and is 
embodied in MCL 380.1282, last amended by 1997 PA 181. The 
amendment, added to the existing statute after Durant I, 
was permissive. 
That is, it identified special assistance 
a school district “may” provide to pupils experiencing 
academic 
difficulties. 
Such 
optional 
programs 
are 
expressly 
excluded 
from 
being 
“requirements” 
by 
MCL 
21.234(5)(h), and thus are beyond the scope of the Headlee 
POUM clause as a matter of law.24 
Similarly, the statute setting forth the third “new” 
activity, MCL 380.1277, was amended in 1997 to change the 
elements that must be included in a school improvement 
plan. That amendment added some elements and removed some, 
but the changes in essence simply reworded the criteria 
24 Justice Kelly’s dissent, correctly pointing out that
MCL 380.1282 includes a “meeting” activity that is merely
permissive in that statute but mandated in MCL 380.1279,
asserts that when these two statutes are read together, the
result is a new, mandatory activity. 
Post at 5. 
We 
disagree. 
The mandate of MCL 380.1279 was effective in 
1993 and thus any claim that the meeting is a new mandate
is barred for the same reasons as the other pre-Durant I 
claims. 
The meeting guidelines set forth in MCL 380.1282
are, indeed, new to that statute, but they existed verbatim
in the pre-Durant I version of MCL 380.1279. 
They,
therefore, are not new. 
30  
 
 
                                                 
 
that existed before 1997.25
 We therefore find that these 
changes 
did 
not 
impose 
any 
“new” 
or 
“increased” 
requirements on the schools as a matter of law. 
25 
For 
example, 
before 
the 
amendment, 
school 
improvement plans had to include:
(a) Identification of the adult roles for 
which graduates need to be prepared. 
(b) Identification of the education and 
skills that are needed to allow graduates to
fulfill those adult roles. 
(c) A determination of whether or not the 
existing school curriculum is providing pupils
with the education and skills needed to fulfill 
those adult roles. 
(d) Identification of changes that must be
made in order to provide graduates with the 
necessary 
education 
and 
skills 
and 
specific
recommendations for implementing those changes. 
(e) Development of alternative measures of
assessment that will provide authentic assessment
of 
pupils' 
achievements, 
skills, 
and 
competencies. 
(f) Methods for effective use of technology
as a way of improving learning and delivery of
services 
and 
for 
integration 
of 
evolving
technology in the curriculum. 
(g) Ways to make available in as many fields
as practicable opportunities for structured on­
the-job learning, such as apprenticeships and 
internships, combined with classroom instruction. 
The 1997 amendment changed these to include:
(a) Goals centered on improving student 
academic learning. 
(b) Strategies to accomplish the goals. 
(c) Evaluation of the plan. 
(continued…)
31 
 
 
 
                                                 
In sum, we find plaintiffs sufficiently stated a cause 
of action regarding the record-keeping requirement, but 
that neither of the other two post-Durant I mandates 
identified by plaintiffs imposes POUM requirements on the 
schools. These two requirements are either not “new” or are 
permissive and thus not “mandates.” 
Thus, neither runs 
afoul of the POUM funding requirement. 
VI. CONCLUSION 
Except for the record-keeping claim, we affirm the 
decision of the Court of Appeals, concluding that, except 
for three activities, the claims presented in the present 
action are barred by res judicata or release. 
Regarding 
the three post-Durant I activities, two are not “new 
unfunded mandates” because, as pleaded, the activities are 
simply not new or are merely permissive. 
With regard to 
the record-keeping requirement set forth in MCL 388.1752 
(continued…)
(d) Development of alternative measures of
assessment that will provide authentic assessment
of 
pupils' 
achievements, 
skills, 
and 
competencies. 
(e) Methods for effective use of technology
as a way of improving learning and delivery of
services 
and 
for 
integration 
of 
evolving
technology in the curriculum. 
(f) Ways to make available in as many fields
as practicable opportunities for structured on­
the-job learning, such as apprenticeships and 
internships, combined with classroom instruction. 
32  
 
 
 
and EO 2000-9, we find plaintiffs have sufficiently stated 
a claim on which relief may be granted.  We reverse the 
Court of Appeals grant of summary disposition regarding 
this claim, and remand the case to that Court for further 
proceedings consistent with this opinion. 
Clifford W. Taylor
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman 
33  
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
                                                 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
DANIEL ADAIR, a taxpayer of the
Fitzgerald Public Schools, and
FITZGERALD PUBLIC SCHOOLS, et al., 
Plaintiffs-Appellants, 
No. 121536 
STATE OF MICHIGAN, DEPARTMENT
OF EDUCATION, DEPARTMENT OF
MANAGEMENT AND BUDGET, and
TREASURER OF THE STATE OF MICHIGAN, 
Defendants-Appellees. 
KELLY, J. (concurring in part and dissenting in part). 
I agree with the reasoning of the majority in part 
IV(C) of its opinion as it relates to: (1) the analysis of 
the record-keeping activity resulting from the interaction 
of MCL 388.1752 and Executive Order No. 2000-9 and (2) the 
claims 
regarding 
what 
must 
be 
included 
in 
school 
improvement plans under MCL 380.1277. 
I further agree with the conclusion of part IV(B) of 
the majority opinion. The releases signed by the plaintiff 
school districts not involved in Durant I1 in 1997 were 
designed to place those districts in a position similar to 
that of the Durant I plaintiffs. 
1Durant v Michigan, 456 Mich 175; 366 NW2d 272 (1997). 
 
 
 
 
 
 
 
However, I cannot agree that the "post-Durant I" 
activities involving special assistance to students having 
academic difficulty were solely permissive activities in 
MCL 380.1282 as amended by 1997 PA 181. 
I respectfully 
dissent from the majority’s holding and would remand the 
case for further factual development of the claim involving 
those activities. 
Moreover, because I cannot agree with much of the 
majority’s 
analysis 
concerning 
plaintiffs' 
remaining 
claims, I respectfully dissent from the conclusion that 
those claims were barred by res judicata. I would remand 
the remainder of plaintiffs' claims to the Court of Appeals 
for further substantive review. 
I. Plaintiffs' "Post-Durant I Claims" 
Involving Special Assistance. 
The majority has chosen to find all but three of 
plaintiffs' claims barred by res judicata. I will discuss 
the three before proceeding to the remaining claims. 
As 
stated above, I agree with the majority's treatment of the 
alleged obligations under MCL 388.1752 and EO 2000-9, and 
those under MCL 380.1277. 
However, 
I 
cannot 
join 
the 
majority's 
decision 
regarding the activities required by the 1997 changes to 
MCL 380.1282, 1997 PA 181. The majority maintains that a 
substantial number of the activities mandated in the 
2  
 
 
 
 
 
  
 
  
                                                 
amendment are permissive activities, not included as "state 
requirements" as described in MCL 21.234(5)(h). 
However, 
MCL 380.1279, the statute outlining the requirements for 
state endorsed diplomas mentioned in MCL 380.1282(2), 
contains language that affects the review of the meeting 
discussed 
by 
the 
majority 
concerning 
MCL 
380.1282. 
Specifically, one of the mandated activities in MCL 
380.1279 is the meeting that the majority found to be 
merely permissive in MCL 380.1282. 
Ante at 30. See MCL 
380.1279(4). 
When the two statutes are read together, it 
becomes 
clear 
that 
the 
allegedly 
new 
or 
increased 
activities in MCL 380.1282 are mandatory, despite the 
permissive language in MCL 380.1282.2 
2The particularities of MCL 380.1279 also provide an
example of the problem created by the majority's decision
to use the issuance date of Durant I as the cutoff date for 
preclusion under res judicata. 
The first 1997 revision of 
MCL 380.1279 made a number of changes to the language of
the state-endorsed high school diploma provision. However,
they did not become effective until June 16, 1997, which
was after Durant I was argued, but before the opinion was
issued. 
A litigant should not be expected to amend a
complaint after oral argument while this Court's decision
is pending at the risk of having his claim barred by res
judicata. 
Moreover, 
only 
a 
mandate 
coupled 
with 
underfunding will give rise to a Const 1963, art 9, § 29
claim. 
Therefore, a cause of action concerning these
particular 1997 changes could arguably not accrue until at
least the 1997-1998 school year when the state failed to
fund the mandated activities. 
3  
 
 
 
 
   
                                                 
 
 
 
II. Plaintiffs' Remaining "Pre-Durant I" Claims 
I 
next 
address 
plaintiffs' 
claims 
that 
involve 
activities mandated by statute or otherwise in existence 
before this Court's Durant I decision on July 31, 1997. 
I 
first question whether res judicata can be properly 
applicable to these claims under the circumstances. 
In 
order to invoke res judicata, a court must find that the 
parties were in privity. 
In concluding here that the 
nonparticipating school districts were in privity, the 
majority focuses on the nature of the declaratory relief 
sought in Durant I.3 
3The majority concludes that a taxpayer in a non-Durant 
I school district stands in privity with Durant I school 
district or nonschool district plaintiffs for res judicata
purposes. 
I disagree. 
As the majority notes, ante at 17­
18, the outermost limit of the doctrine requires both a
"'substantial identity of interests'" and a "'working
functional relationship,'" quoting Baraga Co v State Tax 
Comm, 466 Mich 264, 269-270; 645 NW2d 13 (2002). 
The 
taxpayer plaintiffs who were not involved in Durant I may
have interests similar to those of the other plaintiffs.
But I fail to see how they have a working functional
relationship with the Durant I plaintiffs. 
Moreover, some
of the taxpayers may not have been in the school districts
during the years preceding the majority's 1997 cutoff date.
Could they be bound by the actions of either set of school
district plaintiffs? Accordingly, given that the taxpayers
are the real parties in interest here, I particularly
question the application of res judicata to the non-Durant 
I 
taxpayers. 
The 
majority 
expresses 
concern 
that 
recognizing the lack of privity here will open the 
floodgates to repeated litigation of exactly the same claim
with different plaintiffs. 
I acknowledge these concerns.
However, rather than rely on a strained application of
privity and res judicata, I would address them using the
(continued…)
4 
 
 
 
 
                                                 
However, 
I 
believe 
that 
the 
majority 
fails 
to 
adequately discuss the proper application of res judicata 
to declaratory judgments. I would find that our judgment in 
Durant I does not preclude the claims that plaintiffs 
allegedly "failed" to raise in that case. 
I reach this conclusion in part through the language 
of Durant I itself. 
The majority there gave a money 
judgment to plaintiffs. 
But all justices agreed that 
relief in future cases should be solely of a declaratory 
nature. 
See Durant I, 205-206. 
In fact, the majority 
clearly anticipated the continuing need for review and 
declaratory relief in light of the fact that school 
mandates and funding are ever changing: 
[Const 
1963, 
art 
9, 
§ 
32] 
authorizes 
taxpayers to file suit in the Court of Appeals to
enforce the provisions of § 29. As arduous as the
proceedings in this case have been, we have 
succeeded in deciding many points of law that
will guide future decisions. Thus, there is every
reason to hope that future cases will be much
more straightforward. We anticipate that taxpayer
cases filed in the Court of Appeals will proceed
to rapid decision on the issue whether the state
has an obligation under art 9, § 29 to fund an
activity or service. The Court of Appeals would
give declaratory judgment on the obligation of
the state. If there was such an obligation, we
anticipate that the state would either comply
with that obligation no later than the next 
ensuing fiscal year, unless it could obtain a 
(continued…) 
principle of stare decisis, along with possible sanctions 
pursuant to MCR 2.114.  
5  
 
 
 
 
 
 
stay from this Court, or remove the mandate.
[Durant I, 456 Mich 205-206.] 
The Durant I majority correctly recognized that, because of 
the nature of the relief sought, res judicata would not bar 
future claims concerning alleged mandates similar to those 
actually reviewed in Durant I. 
Also pertinent here is the discussion in Restatement 
2nd, Judgments, § 33, p 332: 
A valid and final judgment in an action
brought 
to 
declare 
rights 
or 
other 
legal
relations of the parties is conclusive in a 
subsequent action between them as to the matters 
declared, and, in accordance with the rules of 
issue preclusion, as to any issues actually
litigated by them and determined in the action. 
[Emphasis added.] 
Thus, the general rule concerning declaratory relief is 
that res judicata applies only to "matters declared” and 
“any issues actually litigated . . . and determined in the 
action.” 
A comment to the Restatement, § 33 continues: 
c. Effects as to matters not declared. 
When a plaintiff seeks solely declaratory relief,
the weight of authority does not view him as
seeking to enforce a claim against the defendant.
Instead, he is seen as merely requesting a 
judicial declaration as to the existence and 
nature of a relation between himself and the 
defendant. The effect of such a declaration,
under this approach, is not to merge a claim in
the 
judgment 
or 
to 
bar 
it. 
Accordingly,
regardless of outcome, the plaintiff or defendant
may pursue further declaratory or coercive relief
in a subsequent action. [Id., § 33, comment c, p
335.] 
6  
 
 
  
 
                                                 
 
Hence, a declaration coupled with no other relief does not 
bar a later claim or merge with it. 
The problem with trying to apply a doctrine to 
circumstances outside the norm is well illustrated by the 
troublesome application of res judicata to the facts of 
this case. Here, the majority concludes that all the "pre-
Durant I" mandates could have been raised in the earlier 
Durant I litigation. Ante at 22-23. 
I disagree that the claims here arose out of the same 
"transaction" for the purpose of applying res judicata.4 
The majority contends that a decision whether factual 
grouping constitutes a "transaction" for the purposes of 
res judicata involves a consideration of whether the facts 
are related in "'time, space, origin, or motivation.'" 
Ante at 22 (citation omitted; emphasis added in majority 
opinion). 
As the majority recognizes, a number of the 
claims in this case involve statutorily mandated activities 
that came into existence only while the Durant I litigation 
4Although it is tangential to my analysis of the issues
here, I disagree with the majority's holding that "this
Court 
has 
accepted 
the 
validity 
of 
the 
broader 
transactional test in Michigan . . . ." 
Ante at 21. 
It 
cites Sewell v Clean Cut Mgmt, Inc, 463 Mich 569, 575-576;
621 NW2d 222 (2001), and Dart v Dart, 460 Mich 573, 586;
597 NW2d 82 (1999), for this proposition. However, in both
Sewell and Dart, we applied the "transactional" test and
the "same elements" test simultaneously. Id. 
7  
 
 
 
 
 
   
 
                                                 
 
 
 
 
was pending. 
Yet the majority finds that these claims are 
related in time, space, and origin. I disagree. 
The statutory language at issue in a number of these 
claims did not exist when plaintiffs filed suit in Durant 
I. This fact is an illustration of the unfortunate snail’s 
pace of much appellate process. 
However, I would not tie 
the appellate courts' lack of speed to a finding that 
claims arising from later statutory enactments were part of 
the original "transaction."5 
The new claims may be related to each other in 
"motivation" and perhaps in "origin". 
But a finding that 
they are related in "time" essentially requires the use of 
the courts' lengthy Durant I deliberations as a vehicle for 
time 
travel. 
Although 
interesting 
from 
a 
quantum 
mechanic's perspective, I would not find that res judicata 
can be applied to claims by the Durant I plaintiffs that 
5I think a more simple analogy may be useful.  In year
one, plaintiff is involved in a vehicle accident with
defendant. 
Plaintiff files suit and defendant responds
that he was not negligent. 
That claim begins working its
way through our court system. It takes a year to reach the
appellate stage. 
Ironically, in year two, while the 
appellate court ponders the initial question of negligence,
plaintiff and defendant are involved in a second accident.
The same cars, now repaired and on the roadway, are 
involved. The first case is decided in favor of plaintiff.
However, plaintiff then brings a second suit for negligence
arising from the second accident. I doubt the majority
would find that the second claim is barred by res judicata.
Yet that is essentially what it decides here regarding the
Durant I plaintiffs. 
8  
 
 
 
 
 
 
                                                 
 
involve statutory enactments effective after Durant I was 
filed. 
Res judicata should not be ruled to bar these 
"later" causes of action. 
It took our courts seventeen years to decide the 
limited issues actually before them in Durant I. 
In light 
of that fact, I question that the piecemeal amalgamation of 
claims suggested by the majority would have actually 
created a "'convenient trial unit.'" 
Id. 
The majority 
faults plaintiffs for failing to move to add claims under 
MCR 2.118(E),6 to an ongoing declaratory judgment action 
begun 
seventeen 
years 
before 
this 
Court's 
ultimate 
decision. I do not. It would serve no useful purpose to 
require plaintiffs to try to add these claims solely to 
preserve their right to bring them later. 
Plaintiffs raise an argument against ever applying res 
judicata to claims arising from statutes in existence at 
the time the Durant I complaint was filed. 
They assert 
that a new "transaction" arises whenever the Legislature 
amends statutory funding vehicles, such as 2000 PA 297, and 
fails to include adequate funding to meet its obligations 
under § 29. I find the argument persuasive. 
Two requirements must be met in a § 29 action: 
a 
mandate and a failure to fund. 
The proposal of a mandate 
6 Ante at 23 n 17. 
9  
 
 
 
 
 
alone does not form the basis of a claim.  It is only when 
the mandate is unfunded, or underfunded, that the state has 
violated § 29. 
It is inappropriate to preclude the litigation of all 
claims relating to changes over time in the funding levels 
of a mandated program. 
. 
Such a preclusion would have 
required the Durant I plaintiffs to become mind-readers and 
to have anticipated all future funding decisions concerning 
"pre-Durant I" mandates. 
The majority fails to recognize that a § 29 claim 
involves both a mandate and a funding decision. 
In so 
doing, it focuses too narrowly on the specific language 
pleaded in the complaint, rather than on the substance of 
the underlying claims. 
The majority effectively concedes that plaintiffs' 
counsel in fact made such an assertion. 
During oral 
arguments and in his appellate brief, counsel argued that 
the state decreased its proportion of funding levels of a 
mandated program after Durant I. Ante at 23 n 16. However, 
the majority relegates this actual claim to a footnote, 
10  
 
 
   
 
 
 
                                                 
without even a discussion of why plaintiffs were required 
to plead with more specificity.7 
I question what the purpose of plaintiffs' claims in 
this declaratory action would be, if not to gain a 
declaration that the state failed to meet its current 
funding obligations. 
Language to this effect is included 
in plaintiffs’ prayer for relief in the second amended 
complaint. 
The only logical conclusion from the pleadings 
is 
that 
plaintiffs 
sought 
relief 
because 
the 
state 
decreased the funding levels of a mandated program from 
that required under § 29. 
In addition, the majority intimates that plaintiffs 
could amend their pleadings to include such a claim. 
But 
rather than simply recognizing the actual substance of 
plaintiffs' claims, the majority forces plaintiffs to jump 
through yet another hoop. It requires plaintiffs to make a 
motion on remand under MCR 2.118(A)(2) or (E) to add the 
claims to those that this Court has already directed the 
Court of Appeals to entertain. I find this action contrary 
to the purpose of res judicata generally and of no service 
to the parties in this dispute. 
7I am not aware of any declaration by this Court that
there are pleading requirements particular to an action
claiming relief pursuant to the Headlee Amendment. 
11  
 
 
 
 
 
III. Conclusion 
In conclusion, I agree with the majority's ruling that 
the school district plaintiffs who were not involved in 
Durant I agreed to be treated similarly to those who 
participated in Durant I. 
However, I dissent from the 
majority's disposition of plaintiffs' "pre-Durant I" claims 
for the reasons stated. I would not hold that these claims 
were barred by res judicata. Instead, I would remand them 
to the Court of Appeals for review on the merits. 
To 
the 
extent 
that 
the 
majority 
has 
reviewed 
plaintiff's three "post-Durant I" claims, I agree with the 
result reached regarding the alleged mandatory activities 
under MCL 388.1752, EO 2000-9, and MCL 380.1277. However I 
dissent from the majority's analysis of the activities 
required under MCL 380.1282. I would instead remand this 
claim to the Court of Appeals for further factual findings. 
Marilyn Kelly 
12  
 
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
                                                 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
DANIEL ADAIR, a taxpayer of
the Fitzgerald Public
Schools, and FITZGERALD
PUBLIC SCHOOLS, et al., 
Plaintiffs-Appellants, 
No. 121536 
STATE OF MICHIGAN, DEPARTMENT
OF EDUCATION, DEPARTMENT OF
MANAGEMENT AND BUDGET, and
TREASURER OF THE STATE OF 
MICHIGAN, 
Defendants-Appellees. 
WEAVER, J. (dissenting in part and concurring in part). 
I respectfully dissent from the majority’s conclusion 
that plaintiffs’ claims are barred by res judicata. 
The 
majority’s broad application of res judicata to cases 
arising 
under 
the 
Headlee 
Amendment1 
eviscerates 
the 
standing granted to taxpayers under art 9, § 32 of the 
constitutional amendment and precludes suits in subsequent 
years for subsequent funding violations of art 9, § 29. 
Additionally, I dissent from the majority’s conclusion 
that the release bars claims by those plaintiffs that 
1 Const 1963, art 9, §§ 25-32. 
 
 
                                                 
 
signed releases after Durant I2 to receive a portion of the 
money damages. 
More fact-finding is required to determine 
which claims might be barred by the release. 
While I disagree with the majority’s analysis of res 
judicata and the release, I concur with the majority’s 
conclusion that plaintiffs’ claim based on record-keeping 
activities, MCL 388.1752 and Executive Order No. 2000-9, 
should not be dismissed because plaintiffs have alleged new 
activities that were not funded as Const 1963, art 9, § 29 
requires. 
For these reasons, I would reverse the decision of the 
Court of Appeals and remand this case to that Court for 
proceedings consistent with this opinion. 
I. The Headlee Amendment and Res Judicata 
Const 1963, art 9, § 29 provides in part: 
The state is hereby prohibited from 
reducing the state financed proportion of the
necessary costs of any existing activity or 
service required of units of Local Government by
state law. 
A new activity or service or an
increase in the [level] of any activity or 
service beyond that required by existing law 
shall not be required by the legislature or any
state agency of units of Local Government, unless
a state appropriation is made and disbursed to
pay 
the 
unit 
of 
Local 
Government 
for 
any
necessary increased costs. 
2 Durant v Michigan, 456 Mich 175; 566 NW2d 272 (1997). 
2  
 
 
  
 
   
Standing to pursue violations of this section, as well as 
other sections of the Headlee Amendment, is given to all 
taxpayers in the state. Const 1963, art 9, § 32 provides: 
Any taxpayer of the state shall have 
standing to bring suit in the Michigan State
Court of Appeals to enforce the provisions of
Sections 
25 
through 
31, 
inclusive, 
of 
the 
Article, and, if the suit is sustained, shall
receive from the applicable unit of government
his costs incurred in maintaining such suit. 
[Emphasis added.] 
Constitutional 
provisions, 
including 
those 
that 
comprise the Headlee Amendment, are interpreted according 
to the “common understanding” that the people would give 
the provision. As explained by Justice Cooley: 
“A constitution is made for the people
and by the people. 
The interpretation that 
should be given it is that which reasonable 
minds, the great mass of people themselves, would
give it.
 ‘For as the Constitution does not 
derive its force from the convention which 
framed, but from the people who ratified it, the 
intent to be arrived at is that of the people,
and it is not to be supposed that they have
looked for any dark or abstruse meaning in the
words 
employed, 
but 
rather 
that 
they 
have 
accepted them in the sense most obvious to the
common understanding, and ratified the instrument 
in the belief that that was the sense designed to
be conveyed.’” 
[Traverse City School Dist v
Attorney General, 384 Mich 390, 405; 185 NW2d 9
(1971), quoting Cooley’s Const Limitations, p 81
(emphasis in original).] 
Additionally, 
courts 
may 
consider 
the 
circumstances 
surrounding the adoption of the provision and the purpose 
sought to be accomplished. Id. 
3  
 
 
 
 
The majority cites the rule of common understanding 
and opines that under the rule, the people would have 
expected 
that 
the 
broad 
principles 
of 
res 
judicata 
articulated in the majority opinion apply to cases seeking 
enforcement of the provisions of the Headlee Amendment. 
But the majority’s application of the rule is disingenuous 
and its conclusion is unsupported by the language or 
purpose of the amendment. 
Art 9, § 32 gives “any taxpayer of the state” standing 
to enforce the provisions of the Headlee Amendment. 
This 
grant of standing is consistent with the amendment’s 
purpose, which, as explained by this Court, is to limit the 
expansion of legislative requirements placed on local 
governments: 
The Headlee Amendment was “part of a
nationwide ‘taxpayers revolt’ . . . to limit
legislative expansion of requirements placed on
local government, to put a freeze on what they
perceived was excessive government spending, and
to lower their taxes both at the local and state 
level.” 
[Airlines Parking, Inc v Wayne Co, 452 
Mich 527, 532; 550 NW2d 490 (1996), quoting 
Durant v State Bd of Ed, 424 Mich 364, 378; 381
NW2d 662 (1985).] 
Consequently, it is extremely doubtful that the people of 
this state would have expected their ability to enforce the 
Headlee Amendment to be hampered by the broad application 
of res judicata that the majority imposes. 
Rather, as 
4  
 
 
 
explained below, a “common understanding” of the people 
would 
suggest 
the 
opposite 
conclusion—that 
the 
Constitution’s grant of standing under art 9, § 32 to “any 
taxpayer” is just that—a broad grant of standing that 
permits any taxpayer to pursue actions necessary to enforce 
the provisions of the Headlee Amendment. 
Traditionally, 
res 
judicata 
requires 
establishing 
three elements: 
“(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.” Sewell 
v Clean Cut Mgmt, Inc, 463 Mich 569, 575; 621 NW2d 222 
(2001), quoting Dart v Dart, 460 Mich 573, 586; 597 NW2d 82 
(1999). 
The majority applies this doctrine so broadly as 
to eviscerate the standing that art 9, § 32 provides to 
“any taxpayer” to pursue Headlee violations. 
First, the majority’s analysis of “privity” is overly 
broad when applied to Headlee cases. 
Privity examines the 
interests of the parties and considers whether there is a 
substantial identity of interests between the parties such 
that 
the 
interests 
of 
the 
current 
plaintiffs 
were 
adequately represented by parties in a prior suit—in this 
case, the plaintiffs in Durant I. 
The majority reasons 
that the interest of one taxpayer or local unit of 
5  
 
 
 
government “will almost always be identical” to “the 
interests of all similar local units of government and 
taxpayers,” ante at 19; consequently, the majority finds 
privity between the plaintiffs in Durant I and the 
plaintiffs in this case. 
Under the majority’s analysis, 
any time that a school district or a taxpayer in a school 
district raises a Headlee claim, there will be privity 
between that plaintiff and all other school districts in 
the state and taxpayers in those school districts. 
Thus, 
one taxpayer’s decision to pursue a particular Headlee 
claim may foreclose suit by any other taxpayer who wishes 
to bring suit to enforce the Headlee Amendment. 
This 
erodes the standing granted to any taxpayer in art 9, § 32 
of the Headlee Amendment. 
Second, when examining whether the claims raised in 
this case could have been raised in Durant I, the majority 
opines 
that 
almost 
all 
the 
claims 
could 
have, 
and 
consequently should have, been raised in Durant I. 
This 
conclusion is problematic for at least two reasons. First, 
it is unrealistic to expect the plaintiffs in Durant I to 
add new Headlee claims that arose as Durant I dragged its 
way through the court system for seventeen years. 
Second, 
as Justice Cavanagh notes in his dissent, the majority 
focuses solely on one question when addressing this element 
6  
 
 
 
 
of res judicata: 
when the mandate being challenged was 
enacted. 
However, in addition to considering when the 
mandate was enacted, one must also consider when the lack 
of funding occurred because, as Justice Cavanagh explains, 
the lack of funding may not occur until some time after the 
mandate was created . 
By applying overly broad privity analysis and by 
failing to consider when the lack of funding occurred, the 
majority will bar suits by plaintiffs that seek to raise 
yet unchallenged Headlee violations or to raise Headlee 
violations 
occurring 
in 
subsequent 
years. 
This 
is 
inconsistent with art 9, §§ 29 and 32 and contrary to the 
people’s 
understanding 
that 
any 
taxpayer 
would 
have 
standing to enforce the Headlee Amendment. 
While the 
people may have understood that a specific taxpayer who 
raised a specific claim and received a decision on that 
specific claim could not pursue that claim a second time 
once that claim had been decided by the courts, the people 
could not have understood the broad grant of standing to 
“any taxpayer” to mean that one taxpayer’s decision to 
pursue a specific claim precludes another taxpayer from 
pursuing another Headlee violation that may have existed, 
but was not raised, in the suit by the first taxpayer. 
Moreover, the people could not have understood that 
7  
 
 
                                                 
subsequent suits for funding violations under art 9, § 29 
would be barred if the mandate existed at the time another 
Headlee violation was challenged because this would be 
contrary to the very intent of that provision, which is to 
prevent the Legislature in subsequent years from reducing 
funding or from adding new activities or increasing the 
level of activities without providing funding. 
The majority surmises that its broad application of 
res judicata is necessary to prevent a “total paralysis of 
government,” ante at 25, and to provide finality in the 
law. 
However, the majority fails to consider other facts 
that will provide finality and discourage frivolous law 
suits. 
First, as Justice Kelly notes in her dissent, if a 
second claim by a different taxpayer raises an issue that 
has already been decided by the Court of Appeals or this 
Court in a previous suit, courts will be bound or guided by 
stare decisis to apply the previous decision to the current 
claim, and the case will quickly be resolved.3  Second, as 
we all know, litigation is expensive, and plaintiffs only 
have an opportunity to recover their costs if they prevail 
3 Moreover, it seems unlikely that attorneys will 
pursue a Headlee claim that has already been clearly
resolved by prior case law, unless they are arguing that a
change in the law is warranted. 
8  
 
 
 
 
                                                 
 
on the merits of their suit. 
Thus, the cost of litigation 
will discourage frivolous suits. 
Third, there is a one­
year statutory period of limitations on Headlee cases. MCL 
600.308a(3).4
 Thus, the Headlee Amendment is already 
“workable” 
without 
the 
majority’s 
imposition 
of 
an 
overbroad application of res judicata. 
II. Release 
A school district that was not a party to the Durant I 
suit was permitted to receive a portion of the money 
damages awarded in that suit, provided that the school 
district signed a release that stated that the district 
waive[d] any right or interest it may have in any
claim or potential claim through September 30,
1997 relating to the amount of funding the 
district or intermediate district [was], or may
have been, entitled to receive under the state 
school aid act of 1979, 1979 PA 94, MCL 388.1601
to 388.1772, or any other source of state 
funding, by reason of the application of section
29 of article IX of the state constitution of 
1963, which claims or potential claims are or
were similar to the claims asserted by the 
plaintiffs in the consolidated cases known as
[Durant I]. [MCL 388.1611f(8).] 
4 MCL 600.308a(3) provides: 
A taxpayer shall not bring or maintain
an action under this section [Const 1963, art 9,
§ 32] unless the action is commenced within 1
year after the cause of action accrued. 
9  
 
 
 
 
 
 
Thus, the issue regarding any district that signed a 
release after Durant I is whether any of the claims 
asserted by that district in this case are barred by the 
release. 
As the majority notes, the scope of the release is 
controlled by the language of the release, ante at 26. The 
language of the release in the present case is very broad. 
By it, the district waives “any right or interest it may 
have in any claim or potential claim through September 30, 
1997,” MCL 388.1611f(8), relating to the amount of funding 
it may have been entitled to receive under the school aid 
act of 1979 or any other source of state funding. 
Thus, 
under the language of the release, there may be claims that 
are barred by the release. 
However, I would not dismiss 
any claims at this time. 
Additional fact-finding is 
required to determine which plaintiffs in the present suit 
signed releases in Durant I and to determine which claims, 
if any, arose before September 30, 1997. 
When addressing 
this latter question, one must consider not only when the 
mandate being challenged was enacted, but also when the 
failure to fund occurred. 
While this may potentially lead to disparate results 
between districts that were parties to the suit in Durant I 
and districts that were not parties to the suit, but, 
10  
 
 
 
 
 
 
                                                 
instead, participated in the damages award by signing a 
release, these disparate results can be tolerated in the 
present case because the circumstances are highly unusual 
in two regards. 
First, money damages were awarded in 
Durant I despite the fact that damages are not provided for 
in § 29 or § 32 of the Headlee Amendment. 
See Durant I, 
456 Mich 221-233 (opinions of Brickley, J., and Weaver, J., 
each concurring in part and dissenting in part).5  Second, 
the school districts that signed releases were not actual 
parties to the law suit, but were, nonetheless, allowed to 
receive a portion of the damages if they signed a release. 
Thus, they should be bound by the release that they signed. 
III. Conclusion 
I 
dissent 
from 
the 
majority’s 
conclusion 
that 
plaintiffs’ claims are barred by res judicata. 
Such a 
conclusion is contrary to the “common understanding” that 
the people would give the Headlee Amendment, as well 
contrary to the purpose or the language of the amendment. 
The majority’s application of overbroad res judicata 
principles to plaintiffs’ Headlee claims eviscerates the 
standing granted to taxpayers under art 9, § 32 and will 
5 I would have concluded that money damages were not
authorized 
by 
the 
Headlee 
Amendment 
and 
that 
only
declaratory judgment was appropriate. 
Durant I, 456 Mich 
232-233. 
11  
 
 
 
preclude suits for subsequent funding violations of art 9, 
§ 29. Further, at this time, I would not conclude that the 
claims of plaintiffs that signed the release are barred by 
the release because more fact-finding is required before 
that determination can be made. 
Consequently, I would 
reverse the decision of the Court of Appeals and remand 
this case to that Court for proceedings consistent with 
this opinion. 
Elizabeth A. Weaver 
12  
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
DANIEL ADAIR, a taxpayer of
the Fitzgerald Public
Schools, and FITZGERALD
PUBLIC SCHOOLS, et. al., 
Plaintiffs-Appellants, 
No. 121536 
STATE OF MICHIGAN, DEPARTMENT
OF EDUCATION, DEPARTMENT OF
MANAGEMENT AND BUDGET, and
TREASURER OF THE STATE OF 
MICHIGAN, 
Defendants-Appellees. 
CAVANAGH, J. (dissenting). 
Although I agree with the majority that Michigan uses 
the same transaction test to determine whether claims are 
barred by res judicata, I disagree with the majority’s 
application of that test to the facts of this case. 
The 
majority holds that plaintiffs’ claims are barred by res 
judicata because they arose from the same transaction as 
the claims in Durant v Michigan, 456 Mich 175; 566 NW2d 272 
(1997) (Durant I), and, thus, could have been filed while 
that litigation was pending. I disagree. 
In Sewell v Clean Cut Mgmt, Inc, 463 Mich 569, 575; 
621 NW2d 222 (2001), this Court held that res judicata bars 
 
 
 
 
a second action when (1) the first action was decided on 
its merits, (2) both actions involve the same parties or 
their privies, and (3) the issue in the second case was, or 
could have been, resolved in the first case. 
I agree with 
the majority that Durant I was decided on its merits and 
that both actions involve the same parties or their 
privies. 
However, I do not agree that plaintiffs’ claims 
could have been resolved in Durant I. 
Plaintiffs’ claims are based on a lack of funding for 
certain activities and services. 
The majority examines 
each activity or service and focuses on when each activity 
or service was mandated in order to determine whether the 
claim regarding that service is barred by res judicata. 
This examination misses the point. 
Plaintiffs’ action 
challenged funding under the second sentence of Const 1963, 
art 9, § 29, frequently referred to as the “prohibition on 
unfunded mandates” (POUM) clause. 
As noted by the 
majority, the POUM clause requires the state to fully fund 
any new or increased activities or services mandated or 
increased after 1978. The POUM clause provides: 
A 
new 
activity 
or 
service 
or 
an 
increase in the [level] of any activity or 
service beyond that required by existing law 
shall not be required by the legislature or any
state agency of units of Local Government, unless
a state appropriation is made and disbursed to
pay 
the 
unit 
of 
Local 
Government 
for 
any 
2  
 
 
 
 
 
                                                 
 
necessary increased costs. [Const 1963, art 9, §
29.] 
A challenge under the POUM clause is to the funding 
for the mandate, not to the mandate itself. Thus, when the 
activity was mandated is important to determine whether it 
was enacted after the 1978 base year, but it is not useful 
in determining whether the current funding challenge is 
barred by res judicata. 
The majority’s approach examines 
whether each mandate existed while Durant I was pending; 
that is not the operative question. 
The controlling 
question is whether the alleged funding deficiency relating 
to that mandate existed while Durant I was pending.1 
Plaintiffs’ claims could not have been raised while 
Durant I was pending because the claims are based on the 
funding established in 2000 PA 297, which was not enacted 
1 Although not necessary to my analysis, I note that
the majority asserts that the Durant I plaintiffs could
have amended their pleadings at any time during the 
seventeen-year pendency of their suit. 
While MCR 2.118(E)
provides 
for 
liberal 
amendment 
of 
pleadings, 
it 
is 
nonsensical to suggest that parties should move for leave
to amend their pleadings because of a change in the law
after judgment has been entered. 
Before today’s opinion,
this Court had not recognized the possibility that a trial
court may grant leave to amend pleadings after judgment has
been entered. 
Nor had this Court examined whether a party
may amend the pleadings while a case is pending on appeal.
I do not agree with the majority’s holding that a party may
amend its pleadings at any time before this Court issues a
final decision. 
3  
 
 
until three years after the resolution of Durant I. 
The 
majority fails to recognize that plaintiffs pleaded that 
the state decreased its proportion of funding levels of a 
mandated program after Durant I. 
Because the funding 
challenge arose after Durant I, plaintiffs’ claims are not 
barred by res judicata. 
Although it would have been helpful had plaintiffs’ 
complaint directly referred to 2000 PA 297, explicit 
reference to the funding statute is not required in an 
action in this state. Plaintiffs’ second amended complaint 
contained three counts, each alleging, “Defendant state has 
failed to pay plaintiff school districts for the necessary 
increased costs of providing [the/these/said] activities 
and services [set forth in subparagraphs 15 A-H, 19 A-G, or 
22 A-L above].” 
This is clearly sufficient to satisfy 
Michigan’s fact-pleading requirements. 
MCR 2.111(B) requires a complaint to contain the 
following: 
(1) A statement of the facts, without 
repetition, on which the pleader relies in 
stating the cause of action, with the specific
allegations necessary reasonably to inform the
adverse party of the nature of the claims the
adverse party is called on to defend . . . . 
This rule does not require, nor has this Court ever 
required, a complaint to specifically state the statute 
4  
 
 
 
 
under which the cause of action arises. 
MCR 2.111(B) only 
requires that the complainant provide the facts and “the 
allegations necessary reasonably to inform the adverse 
party of the nature of the claims . . . .”  The second 
amended complaint in this case did exactly that, it 
outlined activities and services that were mandated under 
specific statutory sections and then alleged that the state 
failed to fund these activities and services. 
Further, there are no specific pleading requirements 
for claims filed under the Headlee Amendment. 
This Court 
recently examined the pleading requirements for Headlee 
Amendment cases and issued an order vacating the Court of 
Appeals order and allowing the plaintiffs to amend their 
pleadings. 
Duverney v Big Creek-Mentor Utility Auth, 677 
NW2d 886 (2004). 
Because today’s majority opinion creates 
a new requirement that complaints specifically refer to the 
statute on which the claim is based, plaintiffs in this 
case should certainly be allowed to amend their pleadings. 
Because I do not agree that a party must specifically refer 
to the funding statute in question, I would not dismiss 
plaintiffs’ claims on this technicality. 
Therefore, I 
respectfully dissent. 
Michael F. Cavanagh 
5  
 
 
 
6