Court Opinion

ID: 9535186
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:46:21.319495+00
Date Added: 2024-06-11T13:33:11.062803
License: Public Domain

Hoekstra, J.
(dissenting). I respectfully dissent.
The majority opinion sets forth the three requirements of res judicata. That two of the three have been met is not disputed. First, the state and federal suits shared the same parties and privities. Second, the dismissal of the federal claims by the federal court constituted a ruling on the merits. The analysis *629in this case turns on the remaining third requirement, i.e., whether the claims raised in the state litigation were or could have been resolved in the federal litigation. The precise issue in this case requires us to determine the preclusive effect of a federal court summary judgment rejecting a plaintiffs federal claim on the plaintiffs subsequent state court action to enforce related state claims.
As a threshold matter, I note my areas of agreement with the majority. The majority correctly decides that the federal claims and the state claims arise out of the same factual transaction. The majority also correctly demonstrates that plaintiffs could have tried all their claims in the federal court, although no federal rule of civil procedure prohibited plaintiffs from filing two actions. Last, the majority correctly finds no merit in plaintiffs’ argument about consolidation, which was that the doctrine of res judicata did not apply to this case because the dismissal of the federal claim was actually only a partial dismissal of a single action.1
*630I believe that the proper legal conclusion to draw from the facts in this case is that the lower court erred in denying defendants’ motion for summary disposition because the dismissal of plaintiffs’ federal action with prejudice, which was a suit separate from the state action, requires dismissal of the state action by operation of the doctrine of res judicata. This Court in Brownridge v Michigan Mut Ins Co, 115 Mich App 745; 321 NW2d 798 (1982), reached a similar conclusion where the plaintiff commenced an action against the defendant in both federal and state courts. See also Carter v Southeastern Michigan Transportation Authority, 135 Mich App 261, 263; 351 NW2d 920 (1984); Ingham Co Employees’ Ass’n v Ingham Circuit Court, 170 Mich App 118, 122; 428 NW2d 7 (1988). In Brownridge, supra at 748, both of the plaintiff’s actions arose out of the same transaction, involved points that properly belonged to the subject of the litigation, and involved the same matter in issue. Emphasizing the origins of the plaintiff’s claims, this Court stated that it saw no reason why the existence of the federal court’s discretion in exercising pendent jurisdiction over the plaintiff’s state claims should limit the res judicata effect of a federal judgment where the plaintiff had not given the federal court an opportunity to exercise its jurisdiction. Id. at 749.
Here, too, plaintiffs failed to give the federal court an opportunity to exercise jurisdiction over both its federal and state-law claims. Instead, plaintiffs chose to split their cause of action and file two separate *631complaints, one in federal court and one in state court, thereby creating multiple litigation from the same operative facts. Therefore, on the principles espoused in Brownridge, this Court should find that application of the doctrine of res judicata in this case bars plaintiffs’ claims in state litigation because the state claims could have been resolved in the federal litigation. However, the majority declines to follow the holding in Brownridge, despite conceding that plaintiffs’ two suits arose from the same factual transaction, that plaintiffs’ two suits could have been joined in one federal action, and that plaintiffs’ two suits retained their individual character at the federal level. Indeed, the majority appears to overrule this Court’s holding in Brownridge without explicitly stating so.
The majority instead attempts to fit this case within an exception to the doctrine of res judicata found in the Restatement Judgments, 2d. Specifically, the majority relies on a caveat within comment e to § 25 of the Restatement, which states that a second action is not precluded by operation of the doctrine of res judicata where the court having jurisdiction of the first action would clearly have declined to exercise jurisdiction over the second as a matter of discretion. For support, the majority quotes the Supreme Court’s language on pendent jurisdiction in United Mine Workers v Gibbs, 383 US 715, 725-727; 86 S Ct 1130; 16 L Ed 2d 218 (1966), and cites a line of cases from other state courts deciding what facts will satisfy the determination that the court in the first action would “clearly have declined” to exercise jurisdiction over the entire cause of action, see Parks v City of Madison, 171 Wis 2d 730; 492 NW2d 365 (1992); Satt*632ler v Bailey, 184 W Va 212; 400 SE2d 220 (1990); Merry v Coast Community College Dist, 97 Cal App 3d 214; 158 Cal Rptr 603 (1979).
Like the majority in this case, these state courts interpret the caveat to mean that it is “clear” that a federal court would have declined pendent jurisdiction over a state claim when the federal court decides the federal claim by summary judgment. Parks, supra at 739; Sattler, supra at 218-219; Merry, supra at 225-227. Moreover, this line of cases holds that res judicata would not bar a subsequent state action even where the plaintiff did not seek the federal court’s pendent jurisdiction over the state claim, which is what occurred in this case. Parks, supra at 739, n 4; Sattler, supra at 218-219; Merry, supra at 226-230. With little discussion of the “clarity” ostensibly required by the Restatement in this case, the majority therefore concludes in this case that application of the doctrine of res judicata does not bar litigation of plaintiffs’ state claims because the federal judge dismissed the federal action.
I am unpersuaded by the majority’s reliance on this interpretation of the caveat in comment e. In my opinion, the majority’s interpretation depends on the precarious proposition that the decision of the federal judge to dismiss plaintiffs’ federal claims and decline supplemental jurisdiction of plaintiffs’ state claims “clearly” indicates that the federal court would not have jointly resolved plaintiffs’ state and federal issues had they been originally filed as one suit in the federal court. In contrast, I perceive no factual basis upon which to believe that, at the outset of this litigation, plaintiffs’ decision to file separate lawsuits in the state and federal courts was predicated upon a belief *633that the federal court would decline to exercise jurisdiction over their state-law claims. Here, the federal court unhesitatingly assumed jurisdiction when defendants petitioned for removal of plaintiffs’ separately filed state claims. Only after all the federal claims had been resolved by either voluntary dismissal or summary judgment did the federal court decline supplemental jurisdiction over plaintiffs’ state claims and order them remanded to the state court.
Other courts have likewise been critical of this interpretation of the caveat in comment e. Specifically, courts have found the interpretation unworkable because it requires a court to engage in “speculative gymnastics,” Nwosun v General Mills Restaurants, Inc, 124 F3d 1255, 1258 (CA 10, 1997), “pure speculation,” Gilles v Ware, 615 A2d 533, 541 (DC App, 1992), or “prognosticative futility,” Anderson v Phoenix Investment Counsel, Inc, 387 Mass 444, 451; 440 NE2d 1164 (1982). The District of Columbia Court of Appeals emphasized that “[a] federal court is not obliged automatically to dismiss a pendent state claim if it grants summary judgment on a federal claim.” Gilíes, supra at 541. The court also pointed out the inherently contradictory concept of “predicting that a court will ‘clearly’ decline to do something that is a matter of ‘discretion.’ ” Id. Similarly, the majority relies on the holding in Gibbs, supra at 726 where the Supreme Court stated, “[c]ertainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.” However, the Supreme Court has since clarified this statement in Gibbs and held that it “does not establish a mandatory rule to be applied inflexibly in all cases.” Carnegie-Mellon Univ *634v Cohill, 484 US 343, 350, n 7; 108 S Ct 614; 98 L Ed 2d 720 (1988).
Indeed, a second line of cases proffers an interpretation of the caveat in comment e different from and more persuasive than the post hoc analysis proposed by the majority. This second line of cases holds that in order to show that the court in the first action would “clearly have declined” to exercise jurisdiction over the whole action, a plaintiff must file the state claim in federal court, invoke the court’s pendent jurisdiction, and thus build a record reflecting the court’s exercise of discretion over pendent jurisdiction.2 This interpretation of the caveat is aptly *635expressed within the reporter’s notes to § 25, which state that “in cases of doubt, it is appropriate for the rules of res judicata to compel the plaintiff to bring forward his state theories in the federal action, in order to make it possible to resolve the entire controversy in a single lawsuit.” Restatement Judgments, 2d, § 25, p 228.
Therefore, if plaintiffs wished to preserve their state claims, then they were obligated to plead them in the federal court because there is no reason to believe that it was “clear” at the outset of this litigation that the district court would have declined to exercise pendent jurisdiction over the state claims. FR Civ P 18; Federated Dep’t Stores, Inc v Moitie, 452 US 394, 404; 101 S Ct 2424; 69 L Ed 2d 103 (1981) (Blackmun, J., concurring); Gilles, supra at 543.
The reason for this rule is evident. The rule of res judicata is designed to forestall a plaintiff from getting “two bites at the apple.” We cannot countenance a plaintiff’s action in failing to plead a theory in a Federal court with the hope of later litigating the theory in a State court because it was possible, or even probable, that the Federal court would have declined to exercise its pendent jurisdiction. Rather, such a plaintiff should plead his State claim in the Federal court and if that court fails to hear the claim the plaintiff may then ordinarily file suit in a State court. [Anderson, supra at 452.]
I would therefore reject plaintiffs’ contention that they were not required to plead related state claims in *636their federal complaint because defendants subsequently sought removal of the state claims to the federal court and the federal court granted summary judgment with regard to the federal claims.
In essence, my disagreement with the majority stems from a differing opinion about which point in the litigation is relevant to the analysis of the three requirements for applying the doctrine of res judicata. The majority’s point of convergence is the federal court’s disposition of plaintiffs’ claims, whereas I believe the focus should be on the origin of plaintiffs’ claims. By focusing its analysis on the federal court’s dismissal of plaintiffs’ claims, the majority overlooks an important characteristic of the doctrine of res judicata. The doctrine does not apply when a court itself splits a cause of action, either by dismissing a claim without prejudice attributed to the litigant, Wildfong v Fireman’s Fund Ins Co, 181 Mich App 110; 448 NW2d 722 (1989), or by declining jurisdiction on a pendent state claim, King v Michigan Consolidated Gas Co, 177 Mich App 531; 442 NW2d 714 (1989). Rather, the doctrine applies when the litigant splits the cause of action. See, e.g., Aquatherm Industries, Inc v Florida Power & Light Co, 84 F3d 1388, 1395 (CA 11, 1996).
Ironically, the majority acknowledges the strong public policies at work in this case. In its first footnote, the majority quotes our Supreme Court’s statements in Krolik & Co v Ossowski, 213 Mich 1, 7; 180 NW 499 (1920), that “[t]he law abhors multiplicity of suits” and that “[a]ttempts to split a claim into separate causes of action have often met with disfavor.” It cannot be disputed that plaintiffs in this case split their cause of action, even though, by exercising reasonable diligence, plaintiffs could have brought all *637issues arising from the allegedly erroneous investment advice in a single proceeding. This result is precisely what the doctrine of res judicata seeks to avoid. See, e.g., Detroit v Nortown Theatre, Inc, 116 Mich App 386; 323 NW2d 411 (1982).
Because all requirements for applying the doctrine of res judicata in this case have been met, I would reverse the order of the trial court and remand for entry of an order dismissing plaintiffs’ claims against defendants.

 Arguably, consolidation never occurred in this case because no formal order of consolidation was entered in the federal case as required by FR Civ P 42(a). However, even assuming that consolidation occurred because the proceedings in the federal court were consistent with consolidation, federal courts have consistently held that consolidation does not merge separate lawsuits. No Michigan case addresses whether consolidation merges two individual causes of action, but the language of the Michigan court rule on consolidation, MCR 2.505, is indistinguishable from the federal rule, FR Civ P 42(a). Therefore, the reasoning of the federal rule logically applies with equal force to consolidation issues raised in state litigation. See 3 Martin, Dean & Webster, Michigan Court Rules Practice, pp 80-81. In addition to the cases cited by the majority for this proposition, see also Red Lake & Pembina Bands v Turtle Mountain Band of Chippewa Indians, 355 F2d 936, 938, n 8 (Ct Cl, 1965) (noting that consolidation does not cause actions to lose their separate identity), and Zdanok v Glidden Co, Durkee Famous Foods Div, 327 F2d 944, 950, n 6 (CA 2, 1964) (same). Accordingly, neither defendants’ removal of the state action to the *630federal court nor the federal court’s subsequent de facto consolidation of the two actions effaces the individual nature of plaintiffs’ separately filed federal and state lawsuits.

 See Nwosun, supra at 1258 (“We are persuaded that uncertainty over whether a federal court would have exercised pendant jurisdiction does not justify a conclusion that a plaintiff was denied a full and fair opportunity to litigate a claim.”); Gilles, supra at 541; Reeder v Succession of Palmer, 623 So 2d 1268, 1274 (La, 1993) (“In view of the breadth of the federal trial courts’ discretion and the necessary indeterminancy of the discretionary standards, in order for a subsequent court to say that a federal district court clearly would have declined its jurisdiction of a claim not filed, the subsequent court must find that the previous case was an exceptional one which clearly and unmistakably required declination. The rules do not countenance a plaintiff’s action in failing to plead a theory in a federal court with the hope of later litigating the theory in a state court as a second string to his bow.”); Anderson, supra at 1169 (holding that it is not enough that federal court possibly or probably would have dismissed the pendent state claims); Hayes v Town of Orleans, 39 Mass App Ct 682, 686; 660 NE2d 383 (1996) (“Their voluntary choice of timing and their failure to amend cannot be permitted to subvert the strong policy underlying the doctrine of res judicata.”); Blazer Corp v New Jersey Sports & Exposition Authority, 199 NJ Super 107, 112; 488 A2d 1026 (1985) (holding that a plaintiff who does not raise state claims in a federal court action will be barred from thereafter asserting them in state court); Rennie v Freeway Transport, 294 Or 319, 327; 656 P2d 919 (1982) (“We are convinced that the better rule, the one more consonant with the policies behind res judicata, is that a plaintiff must attempt to have all claims against a defendant arising out of one transaction adjudicated in one court in one proceeding, at least insofar as possible, despite the fact that the various claims may be based on different sources of law.”); Mohamed v Exxon Corp, 796 SW2d 751, 756-757 (Tex App, 1990) (holding that when no effort was made to present state claims to federal court, state court *635must presume that federal judgment is res judicata). For a reverse set of facts, see also Heyliger v State Univ & Community College System of Tennessee, 126 F3d 849, 854 (CA 6, 1997) (citing comment e as authority for holding that pursuant to doctrine of claim preclusion, the plaintiff’s earlier title VII suit in state court bars him from bringing a subsequent title VH action in federal court).