Court Opinion

ID: 9673907
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:20:21.698278+00
Date Added: 2024-06-11T18:16:24.704303
License: Public Domain

*627Kavanagh, J.
(concurring in reversal). I concur in the result reached by Justice Williams but write separately in order to rest decision solely on the court rule. The central concern of GCR 1963, 203.1 is simply whether the plaintiff has split a cause of action and whether defendant has objected. The outcome of the first suit is irrelevant. But, because there was no objection by defendant here, it has waived any res judicata defenses it may have had, thus making discussion of the doctrine unnecessary.
Ryan, J.
We granted plaintiff Blanche Rogers’ application for leave to appeal to review the trial court’s decision to grant accelerated judgment in favor of Colonial Federal Savings & Loan Association of Grosse Pointe Woods’ (Colonial) motion for accelerated judgment on the basis of res judicata.
We are required to determine not only the applicability of the res judicata doctrine to the facts of this case, but the effect, if any, upon that doctrine of GCR 1963, 203.1.
I
On or about May 17, 1972, Ms. Rogers conveyed her home to one Louis Tibolla by warranty deed. In September of 1972, Tibolla mortgaged the home to Colonial as security for a loan of $15,000.
Later that year, Ms. Rogers filed suit against Tibolla and joined Colonial as a party. The final amended complaint in the suit alleged that Ms. Rogers had contracted with Tibolla to repair some fire damage to her home and that the repairs were to be financed under the contract by Ms. Rogers giving a warranty deed to Tibolla in exchange for a land contract under which she would repurchase *628the premises. The land contract contained a clause stating that Tibolla could mortgage the property.
Ms. Rogers’ complaint prayed that the deed, land contract and mortgage be set aside on the grounds that the repairs were not made in compliance with the agreement to repair, resulting in a failure of consideration. No wrongful conduct on the part of Colonial was alleged.
In its answer to the suit, Colonial denied being a party to the repair agreement or to any fraudulent conduct and, by way of affirmative defense, asserted that it was without "any knowledge of any wrongful or fraudulent conduct on the part of defendant” and that it had acted in good faith reliance upon Tibolla’s record title and authority under the land contract to mortgage the property.
The suit was concluded on January 8, 1975, when Rogers obtained a default judgment against Tibolla and agreed to a dismissal "with prejudice” as to Colonial. Tibolla thereafter apparently left the jurisdiction, leaving the plaintiffs judgment unsatisfied.
Ms. Rogers filed the instant suit nine days later, alleging that the transaction with Tibolla was subject to the Federal Truth-in-Lending Act,1 that Tibolla failed to make the disclosures required by that act, and that Rogers had a statutory right to rescind the agreement with him and recover the security. She alleged that Colonial knew that the act applied to the transaction and that the required disclosures were never made and prayed that Colonial’s interest in the premises be declared void.
Colonial moved for accelerated judgment pursuant to the provisions of GCR 1963, 116, claiming, inter alia, that under the doctrine of res judicata, *629entry of judgment adverse to the plaintiff in the original action was a bar to the second suit.2 The trial court agreed and granted the motion. The Court of Appeals affirmed in a memorandum opinion dated June 22, 1976.
We would affirm.
II
Under traditional notions of res judicata, a final valid judgment taken in a case terminates all litigation between the parties on the cause of action sued upon. Where a judgment is rendered 'in favor of the plaintiff the cause of action upon which the judgment is based is said to be merged in the judgment and the plaintiff cannot thereafter maintain another action on the original cause of action. If the judgment is rendered in favor of the defendant on the merits, the original cause of action is barred by the judgment.3 Clements v Constantine, 344 Mich 446; 73 NW2d 889 (1955); Restatement Judgments, §§47, 48, pp 181, 191. The term "cause of action” has been defined rather broadly in terms of all claims against the defendant arising out of the same transaction or occurrence.4
*630Application of these rules seeks to protect parties from vexatious litigation and to promote judicial economy by encouraging the settlement of all rights between parties arising out of a single transaction in one suit. Clements v Constantine, supra; 1 Honigman and Hawkins, Michigan Court Rules Annotated (2d ed), Committee Notes, p 472. A party may not, then, "split a cause of action” by dividing a single or indivisible cause of action into several claims or demands and bringing several actions thereon. Tuttle v Everhot Heater Co, 264 Mich 60; 249 NW 467 (1933); Dutton v Shaw, 35 Mich 431 (1877).
The rule against splitting may therefore, through the doctrine of merger, operate to prevent a plaintiff, who has successfully litigated to completion part of a cause of action, from seeking complete recovery by maintaining successive actions on the unlitigated claims. See, e.g., Arnold v Masonic Country Club, 268 Mich 430; 256 NW 472 (1934).
Analogously, and more fundamentally, rules of res judicata operate to require a party to bring forth all of the grounds and theories available to support the cause of action or be barred from raising them in a subsequent suit. We have repeatedly applied our holding that:
" 'The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.’ ” Harrington v Huff & Mitchell Co, 155 Mich 139, 142; 118 NW 924 (1908) quoting from Henderson v Henderson, 3 Hare 100, 115 (67 Eng Rep 313).
*631See, e.g., Gursten v Kenney, 375 Mich 330, 335; 134 NW2d 764 (1965); Shank v Castle, 357 Mich 290, 295; 98 NW2d 579 (1959); Prawdzik v Heidema Brothers, Inc, 352 Mich 102; 89 NW2d 523 (1958). See also Restatement Judgments, § 63, p 257.5
Where, however, a subsequent suit asserts a different cause of action it will not be barred by a prior judgment. Clements v Constantine, supra; Hewett Grocery Co v Biddle Purchasing Co, 289 Mich 225; 286 NW 221 (1939); Creek v Laski, 248 Mich 425; 227 NW 817 (1929).
*632Ill
Colonial claims that Ms. Rogers has attempted to split a single cause of action and bring separate suits upon it and that she is barred from doing so by reason of the aforementioned principles of res judicata.
Ms. Rogers replies that her instant truth-in-lending claim is a cause of action separate and distinct from the claim she first litigated, but that even if it is not, she is permitted to split her claim and bring this second suit by reason of the waiver provision of GCR 1963, 203.1.
We conclude that the plaintiff has indeed improperly split a single cause of action and that, in consequence, her instant suit is barred by application of the res judicata rule. We reach that conclusion despite the provisions of GCR 1963, 203.1, because we are persuaded that although Rule 203.1 has modified the traditional res judicata doctrine somewhat, it has not done so in ways determinative of the case before us.
Prior to instituting her original suit, Ms. Rogers had a single cause of action against Colonial for cancellation of the mortgage lien in question. That cause of action arose out of a single transaction or occasion; her scheme to finance repairs to her home.
In her first suit Ms. Rogers alleged no wrongful conduct on Colonial’s part but merely claimed entitlement to a cancellation of the mortgage held by Colonial which she alleged had been "fraudulently” executed by the then codefendant Tibolla. In response, and by way of affirmative defense, Colonial denied "any knowledge of any wrongful or fraudulent conduct on the part of defendant Tibolla * * In this, the second suit, the plain*633tiff again seeks cancellation of the mortgage, but this time on the theory that Colonial had knowledge of Tibolla’s failure to make certain disclosures under the Federal Truth-in-Lending Act. In so doing she has split her single or indivisible cause of action into two claims by advancing alternate grounds or theories of relief.
The first suit was brought to a conclusion by a dismissal with prejudice pursuant to an agreement of the parties. A dismissal with prejudice operates as an adjudication on the merits and will bar a subsequent action on the same matter. Waddell v Waddell, 335 Mich 498; 56 NW2d 257 (1953); Edgar v Buck, 65 Mich 356; 32 NW 644 (1887). A judgment dismissing a suit with prejudice, entered pursuant to an agreement of the parties, is given similar effect for purposes of res judicata. See Shank v Castle, supra; Prawdzik v Heidema Bros, Inc, supra; Smoot v Fox, 340 F2d 301 (CA 6, 1964); Anno: Res judicata as affected by fact that former judgment was entered by agreement or consent, 2 ALR2d 512. Consequently, since the judgment entered in the original litigation was a final adjudication on the merits, under traditional res judicata principles the instant action would be barred.
The plaintiff claims, however, that the innovative waiver provision of the. second sentence of GCR 1963, 203.1 modifies the traditional res judicata doctrine in a way which permits her to maintain her second suit. The rule provides:
"Claims. A complaint shall state as a claim every claim either legal or equitable which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject-matter of the action and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. *634Failure by motion or at the pretrial conference to object to improper joinder of claims or to a failure to join claims required to be joined constitutes a waiver of the required joinder rules and the judgment shall not merge more than the claims actually litigated.” (Emphasis supplied.)
According to plaintiff, Colonial’s failure "by motion or at the pretrial conference to object * * * to a failure to join [the truth-in-lending claim] * * * constitutes a waiver of the required joinder” and, in effect, permitted her to split her cause of action. We disagree.
Prior to the adoption of Rule 203.1, the rule was unqualified that a party may not split a cause of action by dividing a single or indivisible cause of action into several claims or demands and bring several actions thereon. Tuttle v Everhot Heater Co, supra; Dutton v Shaw, supra.
The language of GCR 203.1 indicates a purpose that certain claims that might otherwise be concluded by a judgment will not become extinguished by a final adjudication in the absence of an opposing party’s objection in the former suit. That is accomplished by the provisions of the second sentence of the rule, particularly the so-called waiver provision. The rule is a unique one and application of it is a question of first impression in this Court.
The drafting Committee Notes to Rule 203.1 indicate the extent to which the waiver provision of the second sentence of the rule was intended to apply. Its narrow purpose, according to its authors, is to alleviate the harshness of the "merger” doctrine. The Committee Notes recite in part:
"The harshness of the present practice as it relates to the enforcement of compulsory joinder provisions (this *635is sometimes referred to as the rule against splitting causes of actions) is the fact that it almost always is enforced after the fact, through the doctrine of merger.
"In other words, the scope of the action that will be merged will be determined in the first litigation when it can be corrected rather than in the second litigation when it cannot be corrected.” 1 Honigman and Hawkins, supra, Committee Notes, Rule 203, pp 472-473. (Emphasis added.)
A careful reading of the rule, together with the Committee Notes, indicates an intention by the -drafters to preclude in certain cases the merger into a prior judgment of claims not actually litigated in the case although arising out of the same cause of action. It is merger which is precluded by the waiver provision of the rule, not bar.
But the merger doctrine is inapplicable to the case before üs. There can be no merger of a subsequent claim into a prior judgment unless the claimant prevailed in the prior case and obtained a judgment into which the cause of action can merge. Merger is the label traditionally assigned to describe the result which obtains when a claimant, usually but not always a plaintiff, splits a cause of action and prevails in the first suit. Bar is the label traditionally assigned to the situation in which a claimant who has split a cause of action and suffered an adverse judgment in the first suit is foreclosed from bringing a subsequent suit upon the same cause of action for the remainder of his claim.
We agree that Ms. Roger’s truth-in-lending claim did not merge into the judgment entered in the first case, not because of the waiver provisions of Rule 203.1 but because, although she indeed split her cause of action, she did not prevail.
*636Instead, in the language of the traditional res judicata doctrine, Ms. Rogers’ subsequent suit seeking recovery on alternate grounds is barred by the prior determination on the merits in Colonial’s favor.
We are convinced that the drafters of Rule 203.1 chose to use the merger language of the traditional res judicata doctrine for a particular reason. The language of the rule does not refer to bar and we are hesitant to conclude that the drafters sought to work a sweeping change of that doctrine without even alluding to it. On. the contrary, we are convinced that the drafters sought to provide relief from harshness in a narrow category of cases and did not intend to create a situation in which claimants who suffer an adverse judgment on those claims first advanced can hold back alternate grounds and theories for later use and then proceed upon them if another theory has failed. If that was permitted in the case before us, and Ms. Rogers were allowed to proceed upon her instant claim and lose, she could sue Colonial still again, alleging knowledge of lack of delivery of the deed, or incompetency, or some other theory.
In summary, an unsuccessful party may not bring a series of successive suits raising claims arising out of a single transaction or occurrence by each time alleging some variation in the facts and corresponding legal theory.
While the waiver provisions of Rule 203.1 affords the successful claimant some relief from the harsh effects of the merger doctrine, an unsuccessful party, such as Ms. Rogers, who has litigated a portion of her cause of action to a final adjudication, will continue to have further claims arising out of the same cause of action barred by the judgment.
*637We would affirm, with no costs.
Coleman, C.J., and Fitzgerald, J., concurred with Ryan, J.
ORDER DISMISSING APPEAL
October 18, 1979
On order of the Court, a stipulation signed by the attorneys for the parties agreeing to dismissal of this appeal is considered. The stipulation for dismissal is treated as a stipulation to terminate proceedings on the rehearing granted by this Court’s order of May 7, 1979 (406 Mich 1121) and it is hereby ordered that the order of May 7, 1979 in this cause is vacated and the motion for rehearing is dismissed with prejudice and without costs. To accommodate the desire of the parties that this matter be concluded by this order, it is further ordered that the Clerk shall refrain from issuing the judgment order entered pursuant to this Court’s opinion of February 8, 1979.

 15 USC 1601 et seq.

 GCR 1963, 116 provides in part:
".1 Grounds. In a party’s first responsive pleading, or by motion filed not later than his first responsive pleading, a party may demand that service of process be quashed or that judgment be entered dismissing 1 or more claims asserted against him upon any of the following grounds:
"(5) the claim is barred because of * * * prior judgment * * *.”

 As will be explained more fully infra, the words merger and bar are terms of art when employed in the context of the plea of res judicata. There is a significant distinction between the effect of a subsequent claim being “merged” in a prior judgment and such a claim being “barred”, particularly in light of GCR 1963, 203.1.

 1 Honigman and Hawkins, Michigan Court Rules Annotated (2d ed), Authors’ Comments, Rule 203, p 474.

 Comment d to § 63 of the Restatement is particularly instructive to the case at bar. It provides:
"Where an action is brought for the cancellation of a contract or deed, and the plaintiff in his complaint alleges certain grounds for cancellation, and at the trial he is unable to prove these grounds and a verdict and judgment are given for the defendant, the plaintiff is precluded from maintaining a subsequent action for cancellation of the contract or deed, although in that action he alleges other grounds for cancellation not alleged in the first action although then existing.

"Illustrations:

"6. A brings an action against B for the cancellation of a contract made between A and B, alleging that the contract was procured by the undue influence and fraud of B. After a verdict and judgment for B, A brings a new action for the cancellation of the contract, alleging mental incompetency of A. The prior judgment is a bar to the action.
"7. A brings an action against B for the cancellation of a deed by which A conveyed land to B. In his complaint A alleges that he had never executed or delivered the deed. After a verdict and judgment for B, A brings a new action for the cancellation of the deed, alleging that it was procured by the fraud of B. The prior judgment is a bar to the action.
"8. An action is brought by the United States to have a certain patent of land declared void on the ground that the patentee in violation of a condition in the grant had failed to construct roads. After a verdict and judgment for the defendant, the United States brings a new action to have the patent declared void on the ground that the land was within an Indian reservation. The prior judgment is a bar to the action.
"9. A brings an action against B to cancel a deed, alleging that the conveyance was procured by the fraud of B. After a verdict and judgment for B, A brings an action for cancellation of the deed on the ground that it was invalid for indefiniteness. The prior judgment is a bar to the action.”
Accord, Restatement Judgments, 2d (Tentative Draft No 5, 1978), §61.1.