Square Lake Hills Association v. Russell Garland

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
SQUARE LAKE HILLS ASSOCIATION, UNPUBLISHED
November 12, 2020
Plaintiff/Counterdefendant-Appellee,
v No. 350403
Oakland Circuit Court
RUSSELL GARLAND, LC No. 2018-163007-CH
Defendant/Counterplaintiff/Third-
Party Plaintiff-Appellant,
and
HIGHLANDER GROUP MMC, INC., TINA
SIGLER, SANDRA DONIA, and CYRIL CORNAK,
Third-Party Defendants-Appellees.
Before: BOONSTRA, P.J., and CAVANAGH and BORRELLO, JJ.
PER CURIAM.
Defendant/counterplaintiff/third-party plaintiff Russell Garland (Garland) appeals by right
the circuit court’s order granting summary disposition in favor of plaintiff/counter-defendant
Square Lake Hills Association (the association) and third-party defendants Highlander Group
MMC, Inc. (Highlander), Tina Sigler (Sigler), Sandra Donia (Donia), and Cyril Cornak (Cornak).
We affirm in part, reverse in part, and remand for further proceedings.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
The association is the condominium association for Square Lake Hills Condominium in
Bloomfield Hills. Cornak was president of the association, and Donia was a board member.
Highlander is a property management company, and Sigler is a Highlander employee who is the
property manager for the association. Garland was co-owner of one of the units in the
condominium who purchased the unit on a land contract from the association.
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Owners of units in the condominium are required to abide by the condominium’s bylaws.
One of those bylaws prohibits the parking of boats or trailers on any part of the condominium’s
premises. It is not disputed that Garland parked a boat and trailer on the premises and continued
to do so despite several warnings. Eventually, the association filed suit in Oakland circuit court
(the circuit court action), seeking an injunction permanently restraining and enjoining Garland
from violating the applicable bylaws and ordering him to remove the boat or trailer from the
premises.
Garland filed a counterclaim and third-party complaint, alleging: (1) breach of contract
against the association; (2) negligence against the association and Highlander; (3) breach of
contract against Cornak, Highlander, and Sigler; and (4) defamation against Highlander, Sigler,
and Donia. Garland’s breach-of-contract claim against the association alleged that it had breached
the condominium bylaws by failing to repair or replace damaged “venting, insulation, and pipes”
in his building. Garland’s negligence claim against the association and Highlander alleged that
they had breached their duty to inspect, repair, and remediate common elements within the walls
of the condominium units. Garland’s breach of contact claim against Cornak, Sigler, and
Highlander was premised on an alleged oral promise made to Garland that he would be able to
turn his carport into an enclosed garage that would be suitable to store his boat. Garland’s
defamation claim alleged that Highlander, Sigler, and Donia “made several false allegations and
defamatory statements in an effort to destroy [Garland’s] reputation and professional standing,
including but not limited to announcing to the members attending the Board Meeting that
[Garland] had a gun, was violent, and that [Garland] was going to harm someone.”
While these competing claims were pending in the circuit court, the association filed a
complaint in district court (the district court action) against Garland for possession of property
after a land contract forfeiture, alleging that Garland had materially breached the land contract by
being in arrears on payments under the contract, by failing to remove his boat and trailer from the
carport and premises, and by failing to pay condominium assessments. The district court entered
a judgment of possession and ordered Garland to pay $4,402 in costs and attorney fees within 90
days in order to retain possession.
Garland appealed the decision to the circuit court, arguing in pertinent part that the district
court erred by determining that the land contract had been forfeited because, by the time the
judgment was entered, he had remedied all of the issues that led to the commencement of the
action. The circuit court disagreed and affirmed the judgment of possession.
Subsequently, in the circuit court action, the association and all third-party defendants
moved for summary disposition of Garland’s claims and counterclaims, arguing that all of
Garland’s claims were barred by the doctrine of res judicata, because the claims had been or could
have been resolved by the district court. The association and third-party defendants also argued
that Garland could not prove actual malice with respect to his defamation claim, which was needed
because the alleged publishers—Sigler and Donia—had a qualified privilege.
Garland responded to the motion and argued that the doctrine of res judicata was not
applicable because his claims were not and could not have been actually litigated in the district
court action. In support of his defamation claim, Garland attached to his response the unsworn
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affidavit of Benjamin Esquivel,1 which stated that Sigler had told Garland to “shut the hell up and
sit down” at a homeowners’ meeting and had stated that Garland had a gun, was violent, and was
going to harm someone.
The circuit court granted the association’s and third-party defendants’ motion for summary
disposition, stating with regard to Garland’s breach-of-contract and negligence claims:
The contract and negligence claims against Square Lake Hills were already litigated
in the District Court case, which found that the land contract had been forfeited and
Square Lake Hills was entitled to possession of the subject property. On appeal,
[the circuit court] affirmed this finding. Because these claims were actually
litigated in the summary proceedings and decided by the District Court on the
merits, res judicata bars the re-litigation of these claims in the instant case.
With regard Garland’s defamation claims, the court stated:
[T]he Court finds that [Garland] has failed to overcome the affirmative defense of
qualified privilege because he has not shown that the alleged defamatory statements
were made with actual malice.
This appeal followed.
II. NEGLIGENCE AND BREACH-OF-CONTRACT CLAIMS
Garland argues that the circuit court erred when it granted the association’s and third-party
defendants’ motion for summary disposition with respect to his third-party claims for negligence
and breach of contract. We agree. We review de novo a trial court’s decision on a motion for
summary disposition. Gyarmati v Bielfield, 245 Mich. App. 602, 604; 629 NW2d 93 (2001). We
review de novo as a question of law the application of the doctrine of res judicata. Washington v
Sinai Hosp of Greater Detroit, 478 Mich. 412, 417; 733 NW2d 755 (2007).
Although the motion for summary disposition and the order granting summary disposition
cited MCR 2.116(C)(7), (8), and (10), the circuit court held that Garland’s claims were barred by
res judicata. A party is entitled to summary disposition under MCR 2.116(C)(7) if, among other
things, a “prior judgment” has been entered. MCR 2.116(C)(7). See Limbach v Oakland Co Bd
of Co Rd Comm’rs, 226 Mich. App. 389, 395 n 3; 573 NW2d 336 (1997).
A party may support a motion under MCR 2.116(C)(7) by affidavits, depositions,
admissions, or other documentary evidence. If such material is submitted, it must
be considered. Moreover, the substance or content of the supporting proofs must
be admissible in evidence. Unlike a motion under subsection (C)(10), a movant
under MCR 2.116(C)(7) is not required to file supportive material, and the
opposing party need not reply with supportive material. The contents of the
1
While the document is titled an “affidavit” and signed by Esquivel, it is not a sworn statement or
notarized.
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complaint are accepted as true unless contradicted by documentation submitted by
the movant. [Maiden v Rozwood, 461 Mich. 109, 119; 597 NW2d 817 (1999)
(citations omitted).]
“The doctrine of res judicata is employed to prevent multiple suits litigating the same cause
of action.” Adair v Michigan, 470 Mich. 105, 121; 680 NW2d 386 (2004). “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.” Id. Michigan law takes a broad approach to res judicata—the doctrine
not only bars claims already litigated, “but also every claim arising from the same transaction that
the parties, exercising reasonable diligence, could have raised but did not.” Id.; see also Adam v
Bell, 311 Mich. App. 528, 531; 879 NW2d 879 (2015).
Here, the association and third-party defendants argued that the prior action was the district
court action, which was resolved before the circuit action—although, as Garland notes, it was
actually filed after the circuit court action. This fact alone raises some question about the
applicability of the doctrine in favor of the association and third-party defendants. However, we
need not decide the issue on that basis, because we conclude that Garland’s claims could not have
been, and were not, actually litigated in the district court action.
Although the circuit court ruled that Garland’s breach-of-contract and negligence claims
had been actually litigated in the district court, the record shows that the only claim that was
actually litigated in the district court action was the association’s claim for possession of property
after a land contract forfeiture. The basis for the judgment was that Garland had forfeited the land
contract by breaching its terms by failing to pay sums owed on the land contract and by failing to
adhere to the condominium’s bylaws. None of the claims that Garland raised in circuit court
involved a claim for possession after a land contract forfeiture. Nor did Garland raise any
counterclaims or third-party claims in the district court involving negligence or breach of contract.
Notwithstanding the above, the association and third-party defendants argue that a single
footnote from the circuit court’s appellate opinion in the district court action shows that Garland’s
claims were actually litigated in the district court action. We disagree. The footnote states:
The Court acknowledges that Defendant continuously argues that Plaintiff
failed to remedy certain issues with the property. However, to the extent that
Defendant is arguing that Plaintiff’s alleged failure to make certain repairs to the
property excused him from making payments and complying with the land contract,
his argument is entirely unsupported by law and the plain language of the land
contract. See MCL 559.239.
This footnote is hardly a resolution of Garland’s negligence and breach of contract claims—it
merely states that “to the extent” Garland argued that the association’s failure to remedy “certain
issues” with the property was a defense to the association’s claim of possession, the district court
did not find it a valid one. Nor does the footnote mention third-party defendants at all. We
conclude that the circuit court erred by holding that Garland’s breach of contract and negligence
claims were actually litigated in the district court action. Adair, 470 Mich. at 121.
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The association and third-party defendants nonetheless argue that the circuit court reached
the correct result, because Garland’s claims could have been raised in the district court. We
disagree. Only claims that arose out of the same transaction are barred by the res judicata doctrine.
Adair, 470 Mich. at 121; see also Begin v Mich Bell Tel Co, 284 Mich. App. 581, 600; 773 NW2d
271 (2009), overruled in part on other grounds by Admire v Auto-Owners Ins Co, 494 Mich. 10;
831 NW2d 849 (2013). Michigan courts use a “transactional” test to determine if a matter could
have been resolved in the first case. Washington, 478 Mich. at 420; Adair, 470 Mich. at 124-125.
“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[s] rise to the assertion
of relief.” Adair, 470 Mich. at 124 (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 . . . .” Id. at 125 (citation omitted).
In the circuit court case, Garland’s claims for breach of contract and negligence against the
association and Highlander were premised on those parties’ alleged failure to perform required
repairs and maintenance on the building that housed his unit, which Garland alleged resulted in
him being displaced from the unit and suffering damages. The association’s complaint in the
district court, on the other hand, was based on Garland’s forfeiture of the land contract by virtue
of Garland failing to make his payments as required on the contract, and additionally on Garland’s
failure to abide by certain bylaws, including illegally parking his boat. These claims involve
different, tenuously related facts, and would not have formed a convenient trial unit. Adair, 470
Mich. at 125.
Garland’s additional claim for breach of contract was premised on the allegation that
Cornak had made an oral promise to allow Garland to perform work on his carport to turn it into
an enclosed unit (so that it would be suitable to store his boat), but that Cornak, Highlander, and
Sigler had not authorized or permitted Garland to perform the work. Although the existence of
such a promise was arguably relevant to whether Garland had breached the association’s bylaws,
the breach of that alleged promise arose out of an entirely different transaction than the
association’s claims regarding Garland’s forfeiture under the land contract. Id.
In sum, the facts underlying Garland’s claims in the circuit court action did not arise out of
the same transaction or set of operative facts as the facts underlying the association’s claims in the
district court. The circuit court therefore erred by relying on the doctrine of res judicata to dismiss
Garland’s counterclaims of negligence and breach of contract. Consequently, we reverse the
portion of the circuit court’s order granting the association’s and third-party defendants’ motion
with respect to Garland’s breach-of-contract and negligence claims, and remand for further
proceedings.2
2
Our ruling is limited solely to whether the claims are barred by the doctrine of res judicata. We
express no opinion about whether these claims could survive other potential challenges under
MCR 2.116(C)(8) or MCR 2.116(C)(10).
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II. DEFAMATION CLAIM
Garland also argues that the circuit court erred by granting summary disposition in favor
of third-party defendants on his defamation claim. We disagree. When deciding whether summary
disposition is proper under MCR 2.116(C)(10),3 a court must consider the pleadings, affidavits,
depositions, admissions, and other documentary evidence submitted by the parties in a light most
favorable to the party opposing the motion. MCR 2.116(G)(5); Greene v A P Prod, Ltd, 475 Mich.
502, 507; 717 NW2d 855 (2006). A motion brought under MCR 2.116(C)(10) is properly granted
when there are no genuine issues of material fact and the moving party is entitled to judgment as
a matter of law. Michalski v Bar-Levav, 463 Mich. 723, 730; 625 NW2d 754 (2001).
In the circuit court, third-party defendants argued that Garland could not establish a prima
facie case of defamation because he could not show that any third-party defendant made any
defamatory statement and because he could not prove any damages. Alternatively, third-party
defendants argued that assuming a prima facie case was established, Garland could not prove
actual malice, which is needed because third-party defendants had qualified immunity. The circuit
court did not address third-party defendants’ principal arguments, but granted third-party
defendants’ motion for summary disposition because it found that Garland had “failed to overcome
the affirmative defense of qualified privilege because he has not shown that the alleged defamatory
statements were made with actual malice.”
The elements of defamation are as follows:
(1) a false and defamatory statement concerning the plaintiff, (2) an unprivileged
communication to a third party, (3) fault amounting at least to negligence on part
of the publisher, and (4) either actionability of the statement irrespective of special
harm (defamation per se) or the existence of special harm caused by publication.
[Ghanam v Does, 303 Mich. App. 522, 544; 845 NW2d 128 (2014) (quotation marks
and citation omitted).]
“A communication is defamatory if, under all circumstances, it tends to so harm the reputation of
an individual that it lowers the individual’s reputation in the community or deters other from
associating or dealing with the individual.” Kefgen v Davidson, 241 Mich. App. 611, 617; 617
NW2d 351 (2000). However, if the one defending against a claim of defamation had a qualified
privilege to make the statement, then the one bringing the suit can overcome that privilege “only
3
As stated, the association and third-party defendants brought their motion under
MCR 2.116(C)(7), (8), and (10). The circuit court ruled that Garland had “failed to overcome the
affirmative defense of qualified privilege because he has not shown that the alleged defamatory
statements were made with actual malice,” and appears to have considered material beyond the
pleadings themselves; we therefore treat the circuit’s ruling as having been made under
MCR 2.116(C)(10). See Lowrey v LMPS & LMPJ, Inc, 500 Mich. 1, 7; 890 NW2d 344 (2016)
(stating that in context of a motion brought under MCR 2.116(C)(10), the nonmovant has the
burden to bring forth evidence to show that there is a genuine issue of material fact).
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by showing that the statement was uttered with actual malice.” Smith v Fergan, 181 Mich. App.
594, 597; 450 NW2d 3 (1989).
“It is undisputed that Michigan law recognizes a qualified privilege as applying to
communications on matters of ‘shared interest’ between parties.” 360 Constr Co, Inc v Atsalis
Bros Painting Co, 915 F Supp 2d 883, 894 (ED Mich, 2012), citing Rosenboom v Vanek, 182 Mich
App 113, 117; 451 NW2d 520 (1989). A qualified privilege exists for bona fide communications
concerning “any subject-matter in which the party communicating has an interest, or in reference
to which he has a duty to a person having a corresponding interest or duty.” Timmis v Bennett,
352 Mich. 355, 366; 89 NW2d 748 (1958) (quotation marks and citation omitted). “The elements
of a qualified privilege are (1) good faith, (2) an interest to be upheld, (3) a statement limited in its
scope to this purpose, (4) a proper occasion, and (5) publication in a proper manner and to proper
parties only.” Prysak v R L Polk Co, 193 Mich. App. 1, 15; 483 NW2d 629 (1992). Whether that
privilege applies is a question of law for the court to decide. Id. at 14-15.
In this case, third-party defendants argued before the circuit court that they had a qualified
privilege to make the alleged defamatory statements. In responding to their motion, Garland
asserted that the affidavit of Esquivel established that genuine issues of material fact existed
concerning whether the statements were false, made with malice, constitute defamation, or were
privileged. However, Esquivel’s affidavit was not properly considered when deciding the motion
for summary disposition because, while it was signed by Esquivel, it was not signed under oath or
notarized. See Liparoto Constr, Inc v Gen Shale Brink, Inc, 284 Mich. App. 25, 33; 772 NW2d 801
(2009) (“[U]nsworn statements . . . are not sufficient to create a genuine issue of material fact to
oppose summary disposition under MCR 2.116(C)(10).”), citing Marlo Beauty Supply, Inc v
Farmers Ins Group of Cos, 227 Mich. App. 309, 321; 575 NW2d 324 (1998).
“A party opposing a motion brought under MCR 2.116(C)(10) may not rest upon the mere
allegations or denials in that party’s pleadings, but must by affidavit, deposition, admission, or
other documentary evidence set for specific facts showing that there is a genuine issue for trial.”
Marlo Beauty Supply, 227 Mich. App. at 321-322. In this case, because the affidavit was the only
“evidence” Garland presented and relied on in opposing the motion for summary disposition and
because the affidavit cannot properly be considered, Garland failed to make the requisite showing
to oppose the motion. Accordingly, the circuit court did not err by granting summary disposition
in favor of third-party defendants on Garland’s defamation claim.4
4
In any event, the motion also could have been granted on the basis of the movants’ arguments
that Garland could not show that any statements were defamatory and that Garland could not show
that he suffered any damages, as Garland failed to create a genuine issue of material fact on these
elements. See Washburn v Michailoff, 240 Mich. App. 669, 678 n 6; 613 NW2d 405 (2000) (stating
that this Court will affirm the decision of the lower court when it reached the right result, although
for a different reason).
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Affirmed in part, reversed in part, and remanded for further proceedings. We do not retain
jurisdiction.
/s/ Mark T. Boonstra
/s/ Mark J. Cavanagh
/s/ Stephen L. Borrello
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