Court Opinion

ID: 4293845
Source: CourtListenerOpinion
Date Created: 2018-07-13 09:07:21.492326+00
Date Added: 2024-06-11T14:39:09.421254
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

SURE WORK, LLC,                                                     UNPUBLISHED
                                                                    July 12, 2018
               Plaintiff-Appellant,

v                                                                   No. 339280
                                                                    Oakland Circuit Court
JEFFREY CRAWFORD and JOSEPHINE                                      LC No. 2017-156878-CZ
CRAWFORD,

               Defendants-Appellees.

Before: O’BRIEN, P.J., and METER and RIORDAN, JJ.

PER CURIAM.

       In this contract action, plaintiff appeals as of right the trial court’s order granting
summary disposition to defendants. We vacate and remand to the trial court for further
proceedings consistent with this opinion.

        On May 27, 2014, the parties contracted for plaintiff to remodel defendants’ basement.
After plaintiff completed the work, a disagreement between the parties ensued related to
plaintiff’s workmanship and licensing. On January 29, 2015, defendant Jeffrey Crawford filed a
complaint with the State of Michigan Department of Licensing and Regulatory Affairs (LARA),
alleging various violations related to plaintiff’s workmanship and failure to follow relevant
permitting and licensing requirements. On April 28, 2015, plaintiff filed a complaint in the trial
court, alleging breach of contract. The trial court dismissed that case without prejudice under
MCR 2.116(C)(6) “pursuant to the doctrine of primary jurisdiction.” The trial court reasoned
that “[t]he issues in the administrative complaint [with LARA] and those raised in this action fall
within the agency’s specialized knowledge and the Court would interfere with the uniform
resolution of similar issues and upset the regulatory scheme of the agency by deciding this case
before a determination is made by the agency.”

       On March 8, 2016, LARA and plaintiff entered into a consent order and stipulation,
which fined plaintiff $5,000 for violating a rule of conduct of an occupation, MCL 339.604(c).

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        On January 17, 2017, plaintiff filed a second complaint with the trial court, again alleging
breach of contract.1 In lieu of filing an answer, defendants filed a motion for summary
disposition under MCR 2.116(C)(7). Relevant to this appeal, defendants argued that plaintiff’s
stipulations in its consent order with LARA collaterally estopped it from contesting the
workmanship issue of the complaint. Specifically, defendants contended that by stipulating to
violating MCL 339.604(c), plaintiff had conceded that it failed to comply with the relevant
building code. Defendants concluded that, because the workmanship issue was an element of
plaintiff’s claim and the issue was decided by the consent order, plaintiff’s claim was barred by
collateral estoppel.

        Without oral argument, the trial court issued an order and opinion granting defendants’
motion for summary disposition. The trial court stated that the present lawsuit was “identical” to
the prior action and concluded as follows:

       Plaintiff’s stipulation to its violation of MCL 339.604(c) provides collateral
       estoppel effect to the administrative order. The administrative consent order
       affirmatively incorporates as true the allegations contained in the Formal
       Complaint, that Plaintiff failed to obtain a building permit, electrical permit or
       mechanical permit prior to construction, failed to obtain required inspections,
       failed to install fire blocking, under-stair protection and proper vapor retarder.
       Plaintiff’s failure to complete the remodeling of Defendants[’] basement in a
       workmanlike manner was conclusively established in the administrative consent
       order. Completion of the remodeling contract in a workmanlike manner is a pre-
       requisite for obtaining any relief sought in Plaintiff’s Complaint.

        On appeal, plaintiff argues that collateral estoppel was inapplicable in this case and the
trial court erred by granting defendants’ motion for summary disposition. We agree.

       “This Court reviews the grant or denial of summary disposition de novo to determine if
the moving party is entitled to judgment as a matter of law.” Maiden v Rozwood, 461 Mich. 109,
118; 597 NW2d 817 (1999). We also review de novo a trial court’s decision regarding the
applicability of the principle of collateral estoppel. Estes v Titus, 481 Mich. 573, 578-579; 751
NW2d 493 (2008), vacated in part on other grounds 481 Mich. 573 (2008).

        Defendants brought the motion for summary disposition under MCR 2.116(C)(7).
Collateral estoppel is basis for summary disposition under this rule. Alcona Co v Wolverine
Environmental Prod, Inc, 233 Mich. App. 238, 246; 590 NW2d 586 (1998). A motion pursuant to
MCR 2.116(C)(7) may be supported by affidavits, depositions, admissions, or other documentary
evidence so long as the evidence would be admissible at trial. Maiden, 461 Mich. at 119. “[T]he
trial court must accept the nonmoving party’s well-pleaded allegations as true and construe the
allegations in the nonmovant’s favor to determine whether any factual development could

1
  Plaintiff also made various other allegations, all stemming from defendants’ alleged breach of
the parties’ contract.

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provide a basis for recovery.” Hoffman v Boonsiri, 290 Mich. App. 34, 39; 801 NW2d 385
(2010).

        “Collateral estoppel bars relitigation of an issue in a new action arising between the same
parties or their privies when the earlier proceeding resulted in a valid final judgment and the
issue in question was actually and necessarily determined in that prior proceeding.” Leahy v
Orion Twp, 269 Mich. App. 527, 530; 711 NW2d 438 (2006). “In the subsequent action, the
ultimate issue to be concluded must be the same as that involved in the first action,” and that
issue “must have been both actually and necessarily litigated.” Rental Properties Owners Ass’n
of Kent Co v Kent Co Treasurer, 308 Mich. App. 498, 529; 866 NW2d 817 (2014). “To be
actually litigated, a question must be put into issue by the pleadings, submitted to the trier of fact,
and determined by the trier.” Id.

        In this case, the trial court applied the doctrine of collateral estoppel to a consent
judgment. In Rzepka v Michael, 171 Mich. App. 748, 756; 431 NW2d 441 (1988), this Court
stated, “Because claims are settled rather than actually adjudicated in a consent judgment, the
doctrine of collateral estoppel does not apply to such judgments.” In Van Pembrook v Zero Mfg
Co, 146 Mich. App. 87, 102-103; 380 NW2d 60 (1985), this Court explained in detail why
“collateral estoppel may not be applied to consent judgments in Michigan,” stating:

       First, collateral estoppel rules do not require that a consent judgment bind a party
       to facts which were originally in issue in the action that was settled. A consent
       judgment reflects primarily the agreement of the parties. The action of the trial
       judge in signing a judgment based thereon is ministerial only. The parties have
       not litigated the matters put in issue, they have settled. The trial judge has not
       determined the matters put in issue, he has merely put his stamp of approval on
       the parties’ agreement disposing of those matters. But a judgment can be given
       collateral estoppel effect only as to those issues which were actually and
       necessarily adjudicated. It follows that because the issues involved in the settled
       case were not actually adjudicated, one of the prerequisites to giving a judgment
       collateral estoppel effect is not satisfied. Thus, the answer to the question posed
       above is: Nothing is adjudicated between two parties to a consent judgment.
       [Quotation marks and citations omitted].

        We agree with the reasoning from Rzepka and Van Pembrook, and conclude that
collateral estoppel did not apply to plaintiff’s consent judgment with LARA. In entering the
consent judgment with LARA, plaintiff did not “actually and necessarily” litigate any issues
because no issues were “submitted to” or “determined by” a trier of fact. Rental Properties
Owners, 308 Mich. App. at 529; see also People v Zitka, ___ Mich App ___, ___; ___ NW2d ___
(2018) (Docket Nos. 338064; 338065); slip op at 4 (concluding that a consent judgment in a civil
case did not bar prosecution of a criminal case under collateral estoppel because, in part, “no
issue in the civil litigation was submitted to or determined by the factfinder”). Instead, the
consent judgment was an agreement between the parties, and the issues relevant to that
agreement were never adjudicated. See Van Pembrook, 146 Mich. App. at 103; see also Zitka,
___ Mich App at ___; slip op at 4 (concluding that the parties to the consent judgment
“negotiated and stipulated to dismissal of the action” without deciding the issues). This is clearly
evidenced by the language of the consent judgment, in which plaintiff neither admitted nor

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denied the facts alleged in the complaint, but instead agreed to permit “the Board [to] treat the
allegations [in the complaint] as true for purposes of this Order.” (Emphasis added). Therefore,
we conclude that collateral estoppel did not apply to plaintiff’s consent order with LARA, and
plaintiff’s claims in this case were not barred by collateral estoppel.2

        Plaintiff further requests this Court to hold that there were genuine issues of material fact
that precluded summary disposition and that plaintiff was entitled to a jury trial. However, the
trial court never addressed whether summary disposition was precluded on other grounds, and
we decline to do so on appeal. See Smit v State Farm Mut Auto Ins Co, 207 Mich. App. 674, 685;
525 NW2d 528 (1994) (“As a general rule, this Court declines to consider an issue that was not
decided by the trial court.”). On remand, the trial court should address the remaining issues in
defendants’ motion for summary disposition.

       We vacate the grant of summary disposition and remand to the trial court for further
proceedings consistent with this opinion. We do not retain jurisdiction.

                                                              /s/ Colleen A. O'Brien
                                                              /s/ Patrick M. Meter
                                                              /s/ Michael J. Riordan

2
  Defendants briefly contend that collateral estoppel applies to the trial court’s original ruling
under MCR 2.116(C)(6) and barred this action. However, as stated, collateral estoppel cannot
apply if the issues were not actually and necessarily litigated. Rental Properties Owners, 308
Mich. App. at 529. Defendants do not contend that the issues in this case were actually and
necessarily litigated by the trial court in its order dismissing the case without prejudice. Indeed,
the trial court’s reasoning for dismissing the original case was to have the issues decided by
LARA. But, as explained, the consent order between plaintiff and LARA did not actually and
necessarily litigate any issues. Therefore, defendants’ argument fails.

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