Court Opinion

ID: 9739373
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:13:17.896673+00
Date Added: 2024-06-11T07:24:11.888891
License: Public Domain

Taylor, P.J.
Defendants appeal as of right from a judgment granting rescission of a land contract *312and damages in the amount of $6,000 for plaintiff. We reverse and remand.
Plaintiff entered into a land contract with defendants for the purchase of six rental units. The land contract was in the amount of $49,000, with a $6,000 down payment, and the balance of $43,000 to be paid at the rate of $600 a month for ten years.
After plaintiff took possession, she learned that two units had been condemned by the City of Port Huron. Unable to make the land contract payments, she stopped her monthly payments. Defendants filed in the district court an action for summary possession, to which plaintiff did not respond. The land contract was forfeited by order of the district court, and a writ of restitution was issued conveying the property back to defendants.
Plaintiff then filed this cause of action in the St. Clair Circuit Court, seeking rescission of the land contract on the basis of fraud, misrepresentation, and innocent misrepresentation. In particular, plaintiff alleged that defendants had not informed her that a portion of the premises had been condemned because of code violations.
Defendants filed a motion for summary disposition pursuant to MCR 2.116(0(10), arguing that the circuit court action was barred pursuant to the doctrine of res judicata inasmuch as plaintiff’s claims of fraud and misrepresentation could have been raised in the district court action as a counterclaim for rescission. Accordingly, defendants asserted that plaintiff’s failure to raise those issues barred her circuit court litigation. Plaintiff responded, claiming that because this suit was based upon fraud and misrepresentation, it survived the forfeiture lawsuit. The trial court denied defendants’ motion, and the matter proceeded to trial. *313Following the presentation of proofs, the court entered a judgment for plaintiff.
On appeal, defendants argue that the trial court erred in failing to grant their motion for summary disposition. We agree.
The alleged fraud and misrepresentation clearly could have been raised as a counterclaim to the summary possession proceedings in the district court. MCR 4.201(G)(l)(a)(ii). Further, as defenses or affirmative defenses, plaintiffs claims must have been raised in the earlier proceeding or are waived. MCR 2.111(F)(2) and (F)(3)(a). Thus, under this state’s broad rule of res judicata, plaintiffs claims are barred. As this Court stated in Courtney v Feldstein, 147 Mich App 70, 75; 382 NW2d 734 (1985):
Michigan follows a broad rule of res judicata which bars not only claims actually litigated in the prior action, but every claim arising out of the same transaction which the parties, exercising reasonable diligence, could have raised but did not. Gose v Monroe Auto Equipment Co, 409 Mich 147, 160; 294 NW2d 165 (1980); Curry v Detroit, 394 Mich 327, 332; 231 NW2d 57 (1975); Gursten v Kenney, 375 Mich 330, 333-335; 134 NW2d 764 (1965).
However, plaintiff asserts that this general rule of res judicata does not apply when fraud is. pleaded. In part, plaintiff is correct, but this exception is drawn more narrowly than plaintiff acknowledges. The fraud exception to res judicata pertains only if the fraud is characterized as extrinsic fraud. Extrinsic fraud is fraud outside the facts of the case: "fraud which actually prevents the losing party from having an adversarial trial on a significant issue.” Rogoski v Muskegon, 107 Mich App 730, 736; 309 NW2d 718 (1981). An *314example of such fraud would be fraud with regard to filing a return of service.
Extrinsic fraud must be distinguished from intrinsic fraud, which is a fraud within the cause of action itself. An example of intrinsic fraud would be perjury, id. at 737, discovery fraud, fraud in inducing a settlement, or fraud in the inducement or execution of the underlying contract. In Triplett v St Amour, 444 Mich 170, 175-176; 507 NW2d 194 (1993), our Supreme Court declined to recognize an independent action at law to recover damages for intrinsic fraud. The Court held that the remedy in the intrinsic fraud circumstance is exclusively in a motion for relief from judgment pursuant to MCR 2.612(C). Triplett, supra. As Justice Levin pointed out in his concurring opinion, this state is committed to the rule stated in Pomeroy’s Equitable Remedies (2d ed), § 656, published as Pomeroy’s Equity Jurisprudence (4th ed), §2077, id. at 184, citing Columbia Casualty Co v Klettke, 259 Mich 564, 566; 244 NW 164 (1932):
[T]he fraud which warrants equity in interfering with such a solemn thing as a judgment must be fraud in obtaining the judgment, and must be such as prevents the losing party from having an adversary trial of the issue.
Because plaintiff alleges only intrinsic fraud in this case, she cannot seek relief by independent action. Rogoski, supra at 737. There is not a separate cause of action. Plaintiff’s remedy is to move to reopen the judgment pursuant to MCR 2.612(C). Nederlander v Nederlander, 205 Mich App 123, 126; 517 NW2d 768 (1994).
Therefore, we conclude that plaintiff’s claim is barred and that summary disposition should have been granted pursuant to MCR 2.116(C)(7).
*315Reversed and remanded for the entry of an order of dismissal. We do not retain jurisdiction.
Marilyn Kelly, J., concurred.