Court Opinion

ID: 4466284
Source: CourtListenerOpinion
Date Created: 2019-12-20 10:13:08.248844+00
Date Added: 2024-06-11T14:53:43.098149
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
              revision until final publication in the Michigan Appeals Reports.

                         STATE OF MICHIGAN

                         COURT OF APPEALS

LOUIS JACKSON, MICHAEL C. BIRAC, LEE                           UNPUBLISHED
CRAFT, GAYLYNN CRAFT, RONALD                                   December 19, 2019
HAYES, EVERTT HODGE, STEFANIE BOYD,
LISA SMITH, and MALIK LOWRY,

           Plaintiffs-Appellants/Cross-
           Appellees,

and

SMFJ and DONALD SWINNEY,

           Plaintiffs,

v                                                              No. 344058
                                                               Oakland Circuit Court
SOUTHFIELD NEIGHBORHOOD                                        LC No. 2018-162877-NZ
REVITALIZATION INITIATIVE, FRED ZORN,
ETOILE LIBBETT, MICHAEL A.
MANDELBAUM, CITY OF SOUTHFIELD, KEN
SIVER, OAKLAND COUNTY TREASURER,
SOUTHFIELD NON-PROFIT HOUSING
CORPORATION, SUSAN WARD WITKOWSKI,
also known as SUSAN WARD or SUSAN
WITKOWSKI, and GERALD WITKOWSKI,

           Defendants-Appellees/Cross-
           Appellants,

and

ANDREW MEISNER,

           Defendant-Appellee.

                                           -1-
Before: RIORDAN, P.J., and JANSEN and STEPHENS, JJ.

PER CURIAM.

        In this putative class action regarding tax-foreclosure sale procedures, plaintiffs appeal as
of right the trial court’s order granting summary disposition in favor of defendants under MCR
2.116(C)(7), (C)(8), and (C)(10). Defendants also cross-appeal that same order in which the trial
court also denied their requests for sanctions under MCR 2.114(E).1 We affirm.

                                 I. FACTUAL BACKGROUND

        This case arises out of alleged irregularities in the tax-foreclosure sale procedures and
later conveyances of tax-foreclosed properties. The named plaintiffs owned real property in the
city of Southfield and were delinquent on their property taxes in 2012, 2013, and 2014. The
Oakland County Treasurer began the tax-foreclosure process against those delinquent properties,
as he was legally required to do under the General Property Tax Act (GPTA), MCL 211.1 et seq.
There is no dispute in this case that the Oakland County Treasurer complied with the notice
requirements of the GPTA with respect to tax-foreclosure. In a separate action in the circuit
court, a judgment of foreclosure was entered against plaintiffs’ properties on February 8, 2017.
The judgment noted that the right to redeem the properties by paying all applicable taxes,
interest, and fees expired March 31, 2017. If not redeemed, the properties would vest title
absolutely in the Oakland County Treasurer.

      After entry of that judgment, however, the Oakland County Treasurer then entered into
payment plans with several of the named plaintiffs in this case.2 Plaintiff Louis Jackson’s
payment plan is representative of all of the payment plans involved in this case:

1
  We recently explained the applicability of MCR 2.114 in Pioneer State Mut Ins Co v Michalek,
___ Mich App ___, ___; ___ NW2d ___ (2019) (Docket Nos. 344567 and 344577); slip op at 5 n
8: “MCR 2.114 was repealed effective September 1, 2018. Administrative Order No. 2002-31,
501 Mich. cxx, cxxxvii (2018). The substantive provisions of MCR 2.114 have been
incorporated into MCR 1.109. Because MCR 2.114 was in effect at the time the trial court
[addressed] sanctions, we make reference to that rule.”
2
  Because this case was decided before discovery took place, the record regarding plaintiffs’
payment plans is limited. However, it is clear that plaintiffs Louis Jackson, Evertt Hodge, Lisa
Smith, Stefanie Boyd, Michael Birac, and Malik Lowry did enter into payment plans between
February 15, 2017, and March 31, 2017, during the foreclosure redemption period.

                                                -2-
The record is unclear regarding what payments were made under these payment plans, although
plaintiffs’ provided evidence that Jackson made significant payments on March 24, 2017, and
March 31, 2017.

        All plaintiffs who had entered into payment plans defaulted on those plans by failing to
make timely payments. Subsequently, the Oakland County Treasurer perfected title to the
subject properties. It is undisputed that the Oakland Country Treasurer did not send plaintiffs
any further notice regarding a default under the payment plans, the effect of that default, and that
plaintiffs no longer had title to their properties.

        In 2016 and 2017, the city began a process where it would exercise its right of first
refusal under MCL 211.78m(1) and purchase tax-foreclosed properties, from the Oakland
County Treasurer, within the city limits, for the minimum bid. At the June 20, 2016 Southfield
City Council meeting, defendant Zorn, who was the Southfield city administrator, made a
recommendation for the counsel to enter into an agreement with defendants Southfield Non-
Profit Housing Corporation (SNPHC). The agreement would require the city to exercise its
statutory right of first refusal under MCL 211.78m(1) for 45 properties that had been foreclosed
and had title taken by the Oakland County Treasurer. Under the language of MCL 211.78m(1),
the city had the ability to purchase the tax-foreclosed properties “for a public purpose . . . by
payment to the foreclosing governmental unity of the minimum bid.” The terms of the
agreement between SNPHC and the city, as reflected in the meeting minutes, required SNPHC to
“assume all costs in connection with the acquisition undertaken by the City from the Oakland

                                                -3-
County Treasurer regarding the 45 properties. . . .” Stated simply, SNPHC would be supplying
money to the City of Southfield in order for the city to exercise its rights under MCL
211.78m(1).

       The minutes from the June 20, 2016 meeting further explain the proposed purpose behind
the deal with SNPHC:

       The purpose of the acquisition is to rehabilitate and renovate these homes and
       then return them to productive use and purchase by individuals and families
       seeking housing opportunities within the City of Southfield. The program is
       designed to make available more owner-occupied housing opportunities within
       the City of Southfield and to revitalize and stabilize neighborhoods. In
       conjunction with the acquisition of these properties[,] the City intends to contract
       with [SNPHC], which will acquire the properties from the City, rehabilitate and
       renovate them, and, subsequently, make them available for purchase by
       financially qualified individuals and families. Staff has negotiated a contract with
       [SNPHC], pursuant to which [SNPHC] will accept title to the forty-five (45) 2016
       tax-foreclosed properties from the City, renovate, repair, and rehabilitate the
       properties, and subsequently market them for sale to qualified individuals and
       families.

Defendant Zorn testified at the meeting that he and the city were concerned about individuals
and companies purchasing tax-foreclosed properties for the sole purpose of turning them into
rental properties. Defendant Zorn explained that owners of rentals do not care for the properties
in the same manner that owner-occupiers do. Thus, increasing the number of rentals in
Southfield was causing blight and concerns regarding public safety and health.

       Under the terms of the agreement, SNPHC would not only provide the funds for the city
to exercise their right of first refusal, but would also pay for all fees and costs to rehabilitate the
properties once title was transferred to SNPHC. Notably, defendant Zorn went on to testify that
he was a board member and the vice president of SNPHC. Defendant Ken Siver, Southfield’s
mayor, was president of SNPHC and sat on the board of directors. Defendant Michael
Mandelbaum also sat on the board of directors of SNPHC.3 Following a vote, the
recommendation was adopted by the Southfield City Council, and the agreement was formed
between the city of Southfield and SNPHC on June 20, 2016.

        On June 21, 2016, defendant, Southfield Neighborhood Revitalization Initiative (SNRI),
was registered as a limited liability company (LLC) with the Department of Licensing and
Regulatory Affairs (LARA). The document filed with LARA listed defendant Zorn as the
resident agent for SNRI. On August 23, 2016, SNRI executed their “Operating Agreement,”
which reflected that the sole member of SNRI was SNPHC. Defendant Siver, as president of

3
  We also note that the June 20, 2016 city council meeting minutes reflect that defendant
Mandelbaum made the motion to approve the agreement between the city and SNPHC, for which
he then voted in favor.

                                                 -4-
SNPHC, signed the Operating Agreement. The document also listed SNRI’s “managers,” which
included defendant Zorn and defendant Etoile Libbett, who is a real estate broker working in the
city of Southfield.

       The Operating Agreement also described SNRI’s purpose as an organization:

       1.3 Purpose (or Purposes). [SNRI] has been formed for the purpose of
       purchasing tax foreclosed and other properties, improving such properties, selling
       such properties to persons of low and moderate income when possible and
       improving housing and homeownership opportunities in the City of Southfield.
       The Company shall have all the powers necessary or convenient to effect any
       purpose for which it is formed, including all powers granted by the Act.
       [emphasis added.]

It is undisputed that the tax-foreclosed properties to which the Oakland County Treasurer gained
title on March 31, 2016, were deeded to the city, and then to SNRI that same year. Throughout
2016 and 2017, the city used funds given to it from SNPHC to exercise its first refusal right to
101 properties. Once it obtained title to the properties by deed from the Oakland County
Treasurer on July 31, 2017, the city conveyed the properties to SNRI via quitclaim deeds.

         Once plaintiffs became aware that they no longer had title to their properties, the instant
litigation was initiated against the Oakland County Treasurer and Andrew Meisner, who held the
position of treasurer (“the treasury defendants”); the city, Siver, Zorn, city Mandelbaum, city
attorney Susan Ward Witkowski, and Gerald Witkowski, who was the former code director for
the city (“the city defendants”); and SNPHC, SNRI, and Libbett (“the private defendants”).
Plaintiffs made a wide array of allegations, including alleged violations of their constitutional
rights to procedural due process, substantive due process, and equal protection. Plaintiffs also
claimed that the actions of the governmental entities violated the Just Takings Clauses of the
Michigan and United States Constitutions. In addition to those constitutional claims, plaintiffs
also asserted claims for a violation of the GPTA, and civil damages under the Racketeer
Influence and Corrupt Organizations Act (RICO), 18 USC 1961 et seq. Plaintiffs requested
relief included damages for their lost equity in the properties (treble damages under the relevant
portion of RICO), declaratory and injunctive relief, and to quiet title to their properties in their
favor.

        In lieu of responding to the complaint, defendants moved for summary disposition of all
of plaintiffs’ claims, and for sanctions. Defendants argued that plaintiffs’ lawsuit was not
permitted under the GPTA because it was an attempt to collaterally attack the judgment of
foreclosure. Under the statutory scheme, having failed to timely redeem their properties or
appeal the judgment, plaintiffs were limited in their available relief to a suit for damages arising
out of a lack of any notice before the Court of Claims. Defendants further argued that plaintiffs
were barred from asserting those claims under the doctrine of res judicata, plaintiffs lacked
standing to bring the lawsuit considering their interest in the properties had been extinguished,
and the trial court lacked jurisdiction to hear the lawsuit. Defendants made significant arguments
that plaintiffs remaining claims, even if properly before the trial court, lacked legal and factual
merit. For that same reason, defendants argued that plaintiffs’ lawsuit was frivolous and
defendants were entitled to sanctions in the form of attorney fees and costs.

                                                -5-
         The trial court agreed with defendants that it lacked jurisdiction to hear the lawsuit,
plaintiffs lacked standing to bring it, and that res judicata barred the lawsuit, thereby summarily
disposing of the entire complaint. Despite granting summary disposition in favor of defendants,
the trial court denied their requests for sanctions, citing that plaintiffs’ lawsuit, while unlikely to
succeed, was not frivolous. This appeal followed.

                                  II. STANDARDS OF REVIEW

        The trial court’s order granting summary disposition indicates that it was entered under
MCR 2.116(C)(7), (C)(8), and (C)(10). “We review de novo a circuit court’s summary
disposition decision.” Packowski v United Food & Commercial Workers Local 951, 289 Mich
App 132, 138; 796 NW2d 94 (2010). “A motion for summary disposition brought pursuant to
MCR 2.116(C)(7) requires this Court to accept as true the well-pleaded allegations of plaintiffs
and to construe those allegations in favor of plaintiffs unless the allegations are specifically
contradicted by the affidavits or other appropriate documentation submitted by the movant.”
Adair v Michigan, 317 Mich. App. 355, 363; 894 NW2d 665 (2016). “If the pleadings
demonstrate that a party is entitled to judgment as a matter of law, or if the affidavits or other
documentary evidence show that there is no genuine issue of fact, judgment must be rendered
without delay.” Id. at 363-364 (quotation marks and citation omitted).

        “A court may grant summary disposition under MCR 2.116(C)(8) if the opposing party
has failed to state a claim on which relief can be granted.” Dalley v Dykema Gossett, 287 Mich
App 296, 304; 788 NW2d 679 (2010) (quotation marks and brackets omitted). “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.”
Adair v Michigan, 470 Mich. 105, 119; 680 NW2d 386 (2004), quoting Maiden v Rozwood, 461
Mich. 109, 119; 597 NW2d 817 (1999). “Summary disposition on the basis of subrule (C)(8)
should be granted only when the claim is so clearly unenforceable as a matter of law that no
factual development could possibly justify a right of recovery.” Dalley, 287 Mich. App. at 305
(quotation marks omitted).

        “This Court [] reviews de novo decisions on motions for summary disposition brought
under MCR 2.116(C)(10).” Pace v Edel-Harrelson, 499 Mich. 1, 5; 878 NW2d 784 (2016). A
motion for summary disposition under MCR 2.116(C)(10) “tests the factual sufficiency of the
complaint . . . .” Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 206; 815 NW2d 412 (2012). “In
evaluating a motion for summary disposition brought under this subsection, a trial court
considers affidavits, pleadings, depositions, admissions, and other evidence submitted by the
parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion.”
Maiden, 461 Mich. at 120. Summary disposition is proper where there is no “genuine issue
regarding any material fact.” Id. “A genuine issue of material fact exists when reasonable minds
could differ on an issue after viewing the record in the light most favorable to the nonmoving
party.” Auto-Owners Ins Co v Campbell-Durocher Group Painting & Gen Contracting, LLC,
322 Mich. App. 218, 224; 911 NW2d 493 (2017) (quotation marks and citation omitted).

       “Questions of statutory interpretation are also reviewed de novo.” Rowland v Washtenaw
Co Road Comm, 477 Mich. 197, 202; 731 NW2d 41 (2007). “Whether a party has standing is
reviewed de novo as a question of law.” Wilmington Savings Fund Society, FBS v Clare, 323

                                                 -6-
Mich App 678, 684; 919 NW2d 420 (2018). “Additionally, the application of a legal doctrine,
such as res judicata, presents a question of law that we review de novo.” Washington v Sinai
Hosp of Greater Detroit, 478 Mich. 412, 417; 733 NW2d 755 (2007). Lastly, “this Court reviews
de novo questions of constitutional law.” Sheardown v Guastella, 324 Mich. App. 251, 255; 920
NW2d 172 (2018).

        “This Court reviews for clear error a trial court’s decision regarding whether to impose
sanctions under MCR 2.114.” Kelsey v Lint, 322 Mich. App. 364, 379; 912 NW2d 862 (2017).
“A decision is clearly erroneous when, although there may be evidence to support it, we are left
with a definite and firm conviction that a mistake has been made.” Id. (quotation marks and
citation omitted).

                              III. PROCEDURAL DUE PROCESS

        Plaintiffs first argue that the trial court erred when it granted summary disposition based
on its alleged lack of jurisdiction, plaintiffs’ alleged lack of standing, and res judicata. For the
reasons discussed herein, we agree that the plaintiffs were not denied procedural due process, but
not for the reasons articulated by the trial court. Because the trial court reached the correct
result, albeit for the wrong reasons, reversal is not warranted, and we therefore affirm summary
disposition. Lewis v Farmers Ins Exch, 315 Mich. App. 202, 217; 888 NW2d 916 (2016).

       “Under the GPTA, a ‘foreclosing governmental unit shall file a single petition with the
clerk of the circuit court of that county listing all property forfeited and not redeemed to the
county treasurer under [MCL 211.78g] to be foreclosed under [MCL 211.78k] . . . .’ ” In re
Wayne Co Treasurer Petition, 478 Mich. 1, 9; 732 NW2d 458 (2007), quoting MCL 211.78h(1).
“Before the hearing on the petition, the foreclosing governmental unit must provide proof of
service of the notices required under the statute, as well as proof of the personal visit to the
property and publication.” Wayne Co Treasurer Petition, 478 Mich. at 6, citing MCL
211.78k(1). MCL 211.78k(5) then requires the following:

               The circuit court shall enter final judgment on a petition for foreclosure
       filed under [MCL 211.78h] at any time after the hearing under this section but not
       later than the March 30 immediately succeeding the hearing with the judgment
       effective on the March 31 immediately succeeding the hearing for uncontested
       cases or 10 days after the conclusion of the hearing for contested cases. All
       redemption rights to the property expire on the March 31 immediately succeeding
       the entry of a judgment foreclosing the property under this section, or in a
       contested case 21 days after the entry of a judgment foreclosing the property
       under this section.

Next, under MCL 211.78k(6), except in situations not applicable to this case,

       fee simple title to property set forth in a petition for foreclosure filed under [MCL
       211.78h] on which forfeited delinquent taxes, interest, penalties, and fees are not
       paid on or before the March 31 immediately succeeding the entry of a judgment
       foreclosing the property under this section, or in a contested case within 21 days
       of the entry of a judgment foreclosing the property under this section, shall vest

                                                -7-
       absolutely in the foreclosing governmental unit, and the foreclosing governmental
       unit shall have absolute title to the property . . . .

“The statute also provides for an appeal to the Court of Appeals within 21 days of the judgment
of foreclosure . . . [and] provides property owners who claim they did not receive any notice an
action for monetary damages in the Court of Claims.” Wayne Co Treasurer Petition, 478 Mich.
at 7, citing MCL 211.78k(7) and MCL 211.78l(1).

        In analyzing that statutory scheme, this Court held that “MCL 211.78l(1) incorporates
MCL 211.78k, and § 78k(6) vests absolute title in the foreclosing governmental unit if there is no
redemption or timely appeal following judgment . . . thereby depriving the court of jurisdiction to
alter the foreclosure judgment.” Gillie v Genesee Co Treasurer, 277 Mich. App. 333, 352; 745
NW2d 137 (2007). “The Court noted that MCL 211.78k(6) reflects a ‘legislative effort to
provide finality to foreclosure judgments and to quickly return property to the tax rolls.’ ” In re
Tuscola Co Treasurer Petition, 317 Mich. App. 688, 698; 895 NW2d 569 (2016), quoting Wayne
Co Treasurer Petition, 478 Mich. at 4.

        The first question to consider, is whether the trial court had jurisdiction to consider the
case, and in a similar vein, whether plaintiffs had standing to bring the present lawsuit. In this
case, it is undisputed that plaintiffs were delinquent in their property tax payments, received
notice as prescribed by the GPTA before foreclosure took place, did not timely redeem the
properties, and did not timely appeal the judgment of foreclosure. Thus, under the terms of the
GPTA, the trial court was divested of jurisdiction and plaintiffs’ interest in the property had been
extinguished, resulting in a loss of standing.

        However, a narrow exception to the general rule exists. In Wayne Co Treasurer Petition,
our Supreme Court held that there was one exception to the GPTA’s system of tax foreclosure
resulting in a loss of jurisdiction for the circuit court and a loss of interest and standing for
former property owners. The Court noted that, under the terms of the GPTA, situations could
arise where a circuit court would be left “impotent to provide a remedy for [a] blatant deprivation
of due process.” Id. at 10. “That interpretation, allowing for the deprivation of due process
without any redress would be patently unconstitutional.” Id. Therefore, the “portion of the
statute purporting to limit the circuit court’s jurisdiction to modify judgments of foreclosure is
unconstitutional and unenforceable as applied to property owners who are denied due process.”
Id. at 10-11. Plaintiffs argue that they fall into that category of property owners who were
denied their constitutional rights to procedural due process. We disagree.

        “Due process is a flexible concept, the essence of which requires fundamental fairness.”
Al-Maliki v LaGrant, 286 Mich. App. 483, 485; 781 NW2d 853 (2009). Despite its flexibility, “at
a minimum, due process of law requires that deprivation of life, liberty, or property by
adjudication must be preceded by notice and an opportunity to be heard.” Bonner v City of
Brighton, 495 Mich. 209, 235; 848 NW2d 380 (2014). “The United States Supreme Court
recently has held that ‘due process requires the government to provide “notice reasonably
calculated, under all the circumstances, to apprise interested parties of the pendency of the action
and afford them an opportunity to present their objections.” ’ ” Wayne Co Treasurer Petition,
478 Mich. at 9, quoting Jones v Flowers, 547 U.S. 220, 226; 126 S. Ct. 1708; 164 L. Ed. 2d 415

                                                -8-
(2006), quoting Mullane v Central Hanover Bank & Trust Co, 339 U.S. 306, 314; 70 S. Ct. 652; 94
L. Ed. 2d 865 (1950).

       The treasury defendants assert that they complied with procedural due process
requirements by citing the fact that they fulfilled all of the preforeclosure notice requirements of
the GPTA. Indeed, plaintiffs do not contend that the treasury defendants failed to do so, and do
not argue on appeal that they were denied procedural due process before the judgment of
foreclosure was entered. Rather, plaintiffs argue that they were denied adequate notice
afterward, when they had entered into payment plans for redemption of their properties
following the entry of judgments of foreclosure on February 8, 2017. Plaintiffs in this case
entered into the payment plans at issue after the judgment of foreclosure was entered on
February 8, 2017, but before the time for redemption had expired and title to their properties had
absolutely vested with the Oakland County Treasurer on March 31, 2017. 4

         In their complaint, plaintiffs allege that after entering those payment plans, they did not
receive any further notice from the treasury defendants. Specifically, plaintiffs did not receive
notice that they had defaulted on the payment plans, that title had vested with the Oakland
County Treasurer, and that the properties had been sold to the city after it exercised its right of
first refusal under MCL 211.78m(1). However, under the GPTA, no further notice was required.
The Oakland County Treasurer, having complied with all notice requirements, did not deprive
plaintiffs of their right to due process.

        Moreover, the payment plans themselves were clear that failure to comply with terms of
the agreement would result in a loss of property. Specifically, the payment plans read, “If I do
not make consistent and timely payments every month I will lose my property[,]” and “This is
not a legal contract, though failure to comply will result in property tax foreclosure and loss of
property.” Additionally, the payment plans were clear that “This property will be withheld from
auction if all payments are made. This plan is valid until February 2018[,]” which allowed
plaintiffs one year to redeem their properties. These warnings were clear that plaintiffs were
required to make consistent and timely payments to avoid losing their properties. 5 Accordingly,
defendants were entitled to summary disposition.

4
  The circuit court’s judgment of foreclosure indicated that plaintiff Jackson’s property would be
removed from the foreclosure judgment if he paid $6,387.60 by March 31, 2017. The record
below provides that Jackson did comply with that order by paying $6,387.60, in two payments,
by March 31, 2017. However, there is no evidence to suggest that Jackson continued to make
timely payments as required by the payment plan. Thus, because Jackson defaulted on the
agreement, pursuant to the terms of the payment plan, the Oakland County Treasurer was entitled
to perfect title.
5
 We also note that these payment plans are not foreclosure avoidance agreements under MCL
211.78q(5). Indeed, they do not require a down payment of 10% of the delinquent tax bill.
Rather, they are installment payment plans, entered into by plaintiffs during the redemption
period. Thus, we do not address the parties’ arguments regarding the applicability of MCL
211.78q(5).

                                                -9-
        Briefly, we note that the trial court relied on the doctrine of res judicata to grant summary
disposition in favor of defendants, and defendants urge this Court to affirm on that ground.
However, we disagree with the trial court that res judicata bars plaintiffs’ claims.

         “The doctrine of res judicata is employed to prevent multiple suits litigating the same
cause of action.” Adair, 317 Mich. App. at 365 (quotation marks and citation omitted). “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.” Washington, 478 Mich. at 418 (citation omitted).
“The doctrine 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.”
Adair, 317 Mich. App. at 365 (quotation marks omitted). Michigan courts “use[] a transactional
test to determine if the matter could have been resolved in the first case.” Washington, 478 Mich.
at 420. “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.” Id. (quotation marks and citation omitted). “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 . . . .” Adair, 317 Mich. App. at 366-367 (quotation marks and
citation omitted; alterations in original).

        The trial court relied heavily on a term in the judgment of foreclosure, which provided
“that those parties entitled to notice and an opportunity to be heard have been provided that
notice and opportunity.” The trial court reasoned that, because plaintiffs did not appeal that
decision or otherwise challenge it, the doctrine of res judicata barred them from arguing a
procedural due process violation in the instant case. The trial court’s reliance on res judicata is
misplaced because the situation does not fulfill the third requirement of a res judicata
argument—that “the matter in the second case was, or could have been, resolved in the first.”
Washington, 478 Mich. at 418 (citation omitted). In plaintiffs’ lawsuit before the trial court, they
argued that they were not provided adequate notice and an opportunity to be heard, resulting in a
procedural due process violation, after they had entered into payment plans with the Oakland
County Treasurer. The judgment of foreclosure, which the trial court relied on for the
application of res judicata, was entered before any of the payment plans existed. Thus, it would
have been impossible for plaintiffs to have argued, and the circuit court to have decided, whether
there was a lack of notice resulting in a violation of procedural due-process rights occurring after
entry of the judgment of foreclosure. Consequently, the claims in this case were not and could
not have been “resolved in the first.” Id.

                              IV. SUBSTANTIVE DUE PROCESS

       Plaintiffs also argue that the trial court improperly granted summary disposition of their
substantive due process claim. We disagree.

         “The Due Process Clause provides that ‘[n]o State shall . . . deprive any person of life,
liberty, or property, without due process of law[.]’ ” Mettler Walloon, LLC v Melrose Twp, 281
Mich. App. 184, 197; 761 NW2d 293 (2008), quoting US Const, Am XIV, § 1 (alteration in
Mettler Walloon). “But despite the clause’s reference to process, the United States Supreme

                                                -10-
Court has interpreted this clause to guarantee more than fair process and to cover a substantive
sphere as well, barring certain government actions regardless of the fairness of the procedures
used to implement them . . . .” Mettler Walloon, 281 Mich. App. at 197 (quotation marks,
citations, and alterations omitted). Similarly, our Supreme Court has held “that analysis of
substantive and procedural due process involves two separate legal tests.” Bonner, 495 Mich. at
223-224. In analyzing a substantive due process claim, the “first and most essential [question is]
. . . whether the interest allegedly infringed by the challenged government action . . . comes
within the definition of life, liberty or property.” Id. at 225 (quotation marks omitted). Here, the
“interest alleged infringed” by the city defendants and the treasury defendants was plaintiffs’
interests in their private properties. Id. The parties do not disagree that such an interest falls
under the definition of “life, liberty or property.” Id. (quotation marks and citation omitted).
Moreover, “[e]xplicit in our state and federal caselaw is the recognition that an individual’s
vested interest in the use and possession of real estate is a property interest protected by due
process.” Id. at 226. “In disputes over municipal actions, the focus is on whether there was
egregious or arbitrary governmental conduct.” Mettler Walloon, 281 Mich. App. at 197. “Thus,
when evaluating municipal conduct vis-à-vis a substantive due process claim, only the most
egregious official conduct can be said to be arbitrary in the constitutional sense.” Id.

         Plaintiffs’ substantive due process claim is that the treasury defendants and the city
defendants engaged in a fraudulent scheme resulting in plaintiffs’ loss of property rights. The
crux of the argument, therefore, is that they were misled about redeeming their properties. In
other words, they were not provided adequate notice regarding the effect of the payment plans on
their rights. In making that argument, plaintiffs attempt to infer a nefarious intent on the part of
the governmental entities, suggesting that the misleading notice was done for the purpose of
defrauding plaintiffs out of the equity in their homes. Even in light of that argument by
plaintiffs, their substantive due process claim is founded on a lack of proper notice.

        The substantive portion of due process “bar[s] certain government actions regardless of
the fairness of the procedures used to implement them . . . .” Mettler Walloon, 281 Mich. App. at
197 (quotation marks and citation omitted). Thus, it is necessarily true that, where a party’s
argument relies on the absence of appropriate notice and an opportunity to be heard, it is actually
a claim of the denial of procedural due process. Id. After all, there is no allegation by plaintiffs
that there is any problem with Michigan’s tax-foreclosure system as it relates to due process.
The premise of any such argument—that the government violates substantive due-process rights
by foreclosing on the property owned by individuals who do not pay their property taxes—defies
logic. Plaintiffs have not cited any legal support for such an argument, nor is there any. Instead,
plaintiffs have attempted to reiterate their procedural due process arguments as substantive due
process arguments, which our Supreme Court has explicitly held are separate claims. Bonner,
495 Mich. at 223-224. Thus, the trial court properly granted summary disposition of plaintiffs’
substantive due process claim.6

6
  Although we find no basis for plaintiffs’ substantive due process claims, we can appreciate
their suspicion surrounding defendants’ behavior. While the record before us does not provide
evidentiary support for plaintiffs’ claim that defendants sought to defraud these plaintiffs out of

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                                         V. SANCTIONS

        Defendants, in their cross-appeals, argue that the trial court clearly erred when it denied
their requests for sanction where plaintiffs’ lawsuit was frivolous. We disagree.

        This Court has recently held that “MCR 2.114(E), MCR 2.625(A)(2), and MCL
600.2591(1), not only authorize but require a court to sanction an attorney or party that files a
frivolous action or defense.” Meisner Law Group PC v Weston Downs Condo Ass’n, 321 Mich
App 702, 731; 909 NW2d 890 (2017). “Under this rule, an attorney is under an affirmative duty
to conduct a reasonable inquiry into both the factual and legal basis of a document before it is
signed.” Kelsey, 322 Mich. App. at 379 (quotation marks and citation omitted). “The
reasonableness of the attorney’s inquiry is determined by an objective standard, not the
attorney’s subjective good faith.” Meisner Law Group, 321 Mich. App. at 731. “To determine
whether sanctions are appropriate under MCL 600.2591, it is necessary to evaluate the claims or
defenses at issue at the time they were made, and [t]he factual determination by the trial court
depends on the particular facts and circumstances of the claim involved.” DC Mex Holdings,
LLC v Affordable Land, LLC, 320 Mich. App. 528, 548; 907 NW2d 611 (2017) (quotation marks
and citation omitted; alteration in original).

        The trial court did not clearly err in holding that plaintiffs’ lawsuit was not frivolous. We
agree with the trial court that although plaintiffs’ claims have no legal merit, there is no
indication that plaintiffs’ lawsuit was initiated for an improper purpose. Moreover, plaintiffs’
claims that they had wrongly been deprived of their equity in their homes were not frivolous.
Indeed, our Supreme Court recently granted leave to consider just that issue. Thus, defendants
are not entitled to sanctions. Kelsey, 322 Mich. App. at 379.

                                                              /s/ Michael J. Riordan
                                                              /s/ Kathleen Jansen
                                                              /s/ Cynthia Diane Stephens

equity in their homes, the fact that elected officials were using their political status for private
financial gain by obtaining properties before they could go to auction following tax foreclosure
is, at a minimum, troubling. Clearly, defendants, particularly the elected officials, have even
attempted to avoid the appearance of impropriety, as a clear conflict of interest exists regarding
their involvement with SNPHC and SNRI. This type of behavior is not only shocking to the
conscious, but also rightfully breeds distrust among their electorate. Regardless, the instant
lawsuit is regrettably the incorrect vehicle to further explore the legality of defendants’ actions.

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