Olivia King v. US Bank National Association ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
OLIVIA KING, UNPUBLISHED
May 10, 2016
Plaintiff-Appellant,
v No. 325927
Kalamazoo Circuit Court
U.S. BANK NATIONAL ASSOCIATION, LC No. 2014-000470-CH
Defendant-Appellee.
Before: RIORDAN, P.J., and SAAD and MARKEY, JJ.
PER CURIAM.
Plaintiff appeals by right the trial court’s order granting defendant U.S. Bank National
Association’s motion for summary disposition pursuant to MCR 2.116(C)(7). We affirm.
Plaintiff executed a mortgage on September 23, 2005, in favor of Mortgage Electronic
Registration Systems, Inc. (MERS), with regard to residential real property located in Portage,
Michigan. In April 2008, Countrywide Home Loans, the loan servicer, notified plaintiff that the
loan was in “serious default.” In July 2009, plaintiff attempted to modify her loan through the
Home Affordable Mortgage Program (HAMP). On January 25, 2010, MERS assigned its
interest in the mortgage to defendant. In February and March 2010, notice was published in the
local newspaper and posted on the real property at issue that plaintiff defaulted on the mortgage
and that a foreclosure sale would occur on April 1, 2010. On March 8, 2010, plaintiff received a
letter from Bank of America (BOA), who apparently replaced Countrywide as the servicer of the
loan. The March 8, 2010 letter stated that plaintiff might be eligible for a loan modification
through the HAMP and that the foreclosure sale would not occur while plaintiff’s HAMP
eligibility was being determined. Plaintiff received letters from BOA in May and June 2011
stating that she failed to submit certain documents that were required to process her HAMP
application. She received letters in July and September 29, 2011, stating that she was ineligible
for a modification under the HAMP because she failed to submit required documents. On
November 3, 2011, the property was foreclosed and sold to defendant.
Defendant commenced summary proceedings on May 15, 2012, in case no. 12-01233-LT
to evict plaintiff from the property. Plaintiff filed a counterclaim against defendant. In count
one of plaintiff’s counterclaim, plaintiff alleged that, contrary to BOA’s letters, she did in fact
submit all of the required documents with regard to her HAMP application; consequently,
defendant violated statutory provisions with regard to the foreclosure sale, and the foreclosure
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sale should be set aside. Defendant moved for summary disposition with regard to plaintiff’s
counterclaim. The district court granted defendant’s motion, concluding that plaintiff provided
no evidence that she submitted the required documents. The district court ordered that defendant
was entitled to possess the property. Plaintiff appealed to the circuit court on June 24, 2013.
The circuit court affirmed the district court’s grant of summary disposition to defendant
regarding plaintiff’s counterclaim. We denied plaintiff’s application for leave to appeal that
decision. US Bank Nat’l Ass’n v King, unpublished order of the Court of Appeals, entered June
25, 2014 (Docket No. 320436).
On September 2, 2014, plaintiff filed a complaint against defendant alleging that
defendant misrepresented to plaintiff that she failed to submit required documents for her HAMP
application when, in fact, she had submitted the documents.1 Plaintiff alleged that this
misrepresentation violated various statutory provisions and constituted grounds to set aside the
foreclosure sale and bar defendant’s taking title to the property. Defendant moved for summary
disposition under MCR 2.116(C)(7), arguing that because plaintiff’s claims were argued in case
No. 12-01233-LT, res judicata and collateral estoppel barred her current action. The trial court
agreed that plaintiff’s claims were barred by res judicata and collateral estoppel and granted
defendant’s motion for summary disposition. Plaintiff now appeals by right.
“The applicability of legal doctrines such as res judicata and collateral estoppel are
questions of law to be reviewed de novo.” Husted v Auto-Owners Ins Co, 213 Mich App 547,
555; 540 NW2d 743 (1995). Summary disposition is proper under MCR 2.116(C)(7) if entry of
judgment is appropriate because of a prior judgment. “We review summary dispositions de
novo.” Nuculovic v Hill, 287 Mich App 58, 61; 783 NW2d 124 (2010).
Res judicata “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.” Adair v Michigan, 470 Mich 105,
121; 680 NW2d 386 (2004). With regard to the first element, we note that unless otherwise
specified in the order, a dismissal “operates as an adjudication on the merits.” MCR
2.504(B)(3); see also Washington v Sinai Hosp of Greater Detroit, 478 Mich 412, 419; 733
NW2d 755 (2007). With regard to the second element, it is sufficient that both actions involved
the same parties regardless whether one party was a plaintiff in the first action and that same
party was a defendant in the second action. See Bd of Co Road Comm’rs for Co of Eaton v
Schultz, 205 Mich App 371, 376; 521 NW2d 847 (1994). With regard to the third element and
summary proceedings, MCL 600.5750 states in relevant part: “The remedy provided by
summary proceedings is in addition to, and not exclusive of, other remedies, either legal,
equitable or statutory. A judgment for possession under this chapter does not merge or bar any
other claim for relief, except” with regard to enumerated exceptions inapplicable in this case.
1
We note that plaintiff never attempted to explain how defendant could be responsible for
alleged misrepresentations that—if such misrepresentations existed—were apparently
perpetrated by BOA, not defendant. This matter was never addressed in the trial court, and the
parties do not address it on appeal.
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Our Supreme Court has stated that “in light of the first sentence of” MCL 600.5750 “it is evident
that judgment in these summary proceedings, no matter who prevails, does not bar other claims
for relief.” JAM Corp v AARO Disposal, Inc, 461 Mich 161, 170; 600 NW2d 617 (1999)
(footnote omitted). Claims “actually litigated in the summary proceedings” are barred by res
judicata in subsequent proceedings, MCL 600.5750 notwithstanding. Sewell v Clean Cut Mgt,
Inc, 463 Mich 569, 576-577; 621 NW2d 222 (2001).
Similar to res judicata, “[t]he doctrine of collateral estoppel precludes relitigation of an
issue in a different, subsequent action 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.” Dearborn Hts Sch Dist No 7 v Wayne Co
MEA/NEA, 233 Mich App 120, 124; 592 NW2d 408 (1998). For collateral estoppel to apply, the
following three elements must be satisfied: “(1) ‘a question of fact essential to the judgment
must have been actually litigated and determined by a valid and final judgment’; (2) ‘the same
parties must have had a full [and fair] opportunity to litigate the issue’; and (3) ‘there must be
mutuality of estoppel.’ ” Monat v State Farm Ins Co, 469 Mich 679, 682-684; 677 NW2d 843
(2004), quoting Storey v Meijer, Inc, 431 Mich 368, 373 n 3; 429 NW2d 169 (1988) (footnote
omitted).
With regard to the first requirement, “[a] final judgment or order in a civil case means
‘the first judgment or order that disposes of all the claims and adjudicates the rights and
liabilities of all the parties, including such an order entered after reversal of an earlier final
judgment or order.’ ” Baitinger v Brisson, 230 Mich App 112, 116; 583 NW2d 481 (1998),
quoting MCR 7.202(8)(a)(i). With regard to the second requirement, our Supreme Court has
held that collateral estoppel does not preclude relitigation in circumstances such as where “[t]he
party against whom preclusion is sought could not, as a matter of law, have obtained review of
the judgment in the initial action . . . .” Monat, 469 Mich at 683 n 2, quoting 1 Restatement
Judgments, 2d, ch 3, § 29, p 273. With regard to the third requirement, “[m]utuality of estoppel
requires that in order for a party to estop an adversary from relitigating an issue that party must
have been a party, or in privy to a party, in the previous action.” Id. at 684 (citations and
quotation marks omitted).
Here, the first element of res judicata—the prior action was decided on the merits—was
satisfied because the district court in case No. 12-01233-LT granted defendant’s motion for
summary disposition with regard to count one in plaintiff’s counterclaim. See MCR
2.504(B)(3); Washington, 478 Mich at 419. There is no dispute that the second element of res
judicata was satisfied because the action in case No. 12-01233-LT and this action “involve the
same parties”—plaintiff and defendant. Adair, 470 Mich at 121. And, the third element was
satisfied because plaintiff’s claims in this case were in fact litigated and disposed of in case No.
12-01233-LT. In this case, plaintiff alleged in count one that defendant violated numerous
statutory provisions regarding the foreclosure sale because defendant’s internal documents
showed that plaintiff complied with the document requests in connection with plaintiff’s HAMP
application, yet defendant misrepresented that plaintiff did not submit the required documents
and foreclosed on the property. In count two, plaintiff again alleged violations of various
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statutory provisions, presumably relying on defendant’s allegedly fraudulently misleading
plaintiff with regard to the HAMP application process.2 Plaintiff alleged that this was grounds to
set aside the foreclosure sale. This is precisely what was litigated in count one of plaintiff’s
counterclaim in case No. 12-01233-LT. Specifically, in count one of plaintiff’s counterclaim in
case No. 12-01233-LT, plaintiff argued that defendant engaged in statutory violations because
plaintiff submitted the documents required as part of her HAMP application, contrary to the
numerous letters from BOA stating otherwise. Plaintiff argued that this was grounds for setting
aside the foreclosure sale. Therefore, the matter asserted in this action was resolved in the first
case, and the third element of res judicata was satisfied. Id. Because plaintiff’s claims were
“actually litigated in the summary proceedings” in case No. 12-01233-LT, MCL 600.5750 does
not bar the application of res judicata. Sewell, 463 Mich at 576. Therefore, the trial court
properly concluded that res judicata barred plaintiff’s action. Adair, 470 Mich at 121.
With regard to collateral estoppel, we find that the first requirement was satisfied
because, as discussed above, plaintiff alleged in case No. 12-01233-LT that defendant violated
statutory provisions because despite the fact that plaintiff submitted the required HAMP
documents, defendant stated that she did not. Plaintiff asserted the same allegations in this case.
The question of whether defendant actually engaged in such conduct was determined in case No.
12-01233-LT when the district court concluded that plaintiff submitted no evidence of such
conduct and granted summary disposition in favor of defendant. Therefore, the question of
whether defendant engaged in fraudulent misconduct with regard to plaintiff’s HAMP
application was litigated and determined by a valid and final judgment. Monat, 469 Mich at 682.
The second element of collateral estoppel was satisfied because there is no indication that
plaintiff was denied a full and fair opportunity to litigate the issue of defendant’s alleged
fraudulent misconduct in case No. 12-01233-LT. Id. at 682-683. And, because the parties in
case No. 12-01233-LT and in this case were the same, the third requirement for collateral
estoppel—mutuality—is satisfied. Id. at 683-684.
Plaintiff nevertheless argues that neither res judicata nor collateral estoppel applies
because in case No. 12-01233-LT she alleged misrepresentations with regard to the assignment
of the mortgage and defendant’s alleged incapacity to accept assets into the trust, whereas in this
case she alleged fraud with regard to plaintiff’s HAMP application. Although it is true that
plaintiff alleged misrepresentation with regard to the mortgage assignment and defendant’s
alleged incapacity in counts four and five of her counterclaim in case No. 12-01233-LT, count
one of that counterclaim alleged that defendant engaged in statutory violations with regard to
plaintiff’s HAMP application, as discussed above.
Plaintiff also argues in this appeal that in case No. 12-01233-LT, she was unable to
obtain evidence of defendant’s fraudulent scheme because seven affidavits which she submitted
to the trial court in this case after the trial court granted defendant’s motion for summary
disposition were unavailable in case No. 12-01233-LT, even through the exercise of reasonable
2
Plaintiff also brought a third count, which was essentially a motion to stay the district court’s
eviction order. This count is not at issue on appeal.
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diligence. Because these affidavits were submitted to the trial court after the trial court granted
defendant’s motion, we will not consider them. Wormsbacher v Seaver Title Co, 284 Mich App
1, 4-5; 772 NW2d 827 (2009). Moreover, this argument misapprehends the doctrine of res
judicata. “Res judicata bars every claim arising from the same transaction that the parties,
exercising reasonable diligence, could have raised but did not.” Adair, 470 Mich 123 (emphasis
added). As discussed above, plaintiff raised the claim in case No. 12-01233-LT that defendant
engaged in fraud with regard to plaintiff’s HAMP application, which was grounds to set aside the
foreclosure sale. On appeal, plaintiff appears to argue that because she lacked evidence to
support her claim in case No. 12-01233-LT, res judicata and collateral estoppel did not apply.
Plaintiff cites no authority to support her argument, thus abandoning it. Spires v Bergman, 276
Mich App 432, 444; 741 NW2d 523 (2007).
Plaintiff further argues that in case No. 12-01233-LT, defendant prevented her from
obtaining evidence with regard to the alleged scheme concerning HAMP applications. As with
plaintiff’s argument regarding the seven affidavits discussed supra, we find this argument lacks
merit because a lack of evidence supporting plaintiff’s allegations was not at issue when the trial
court dismissed plaintiff’s claims in this case under MCR 2.116(C)(7). Rather, as discussed, the
trial court granted defendant’s motion for summary disposition because plaintiff’s claim that
defendant engaged in misconduct regarding the HAMP application had already been litigated.
Next, plaintiff argues that the trial court prematurely granted defendant’s motion for
summary disposition. This argument lacks merit because there was not a fair likelihood that
further factual development would have supported plaintiff’s position that her claims were not
previously litigated, which was the basis of granting defendant summary disposition. See
Liparoto Constr, Inc v Gen Shale Brick, Inc, 284 Mich App 25, 33-34; 772 NW2d 801 (2009).
Finally, plaintiff makes the unpreserved argument that the trial court improperly granted
defendant’s motion for summary disposition because plaintiff alleged extrinsic rather than
intrinsic fraud. Indeed, extrinsic fraud is an exception to res judicata. Sprague v Buhagiar, 213
Mich App 310, 313; 539 NW2d 587 (1995). “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.’ ” Id., quoting Rogoski v Muskegon, 107 Mich App 730, 736; 309 NW2d 718
(1981). There is absolutely no indication that the fraud that plaintiff alleged in this case falls
“outside the facts of the case.” Id. at 313. Plaintiff’s attempt to characterize the fraud alleged in
this case as extrinsic fails, and plaintiff has not established plain error in that regard. Richard v
Schneiderman & Sherman, PC (On Remand), 297 Mich App 271, 273; 824 NW2d 573 (2012).
We affirm.
/s/ Michael J. Riordan
/s/ Henry William Saad
/s/ Jane E. Markey
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