Daily Development for Wednesday, October 13,
1999
By:
Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu
LANDLORD TENANT; EVICTION; PROCEDURE; RES
JUDICATA: District court (limited jurisdiction
trial court) has jurisdiction to resolve possession actions, but can resolve
damages claims only in connection with possession actions, and, despite very
inclusive res judicata doctrine in Michigan, neither stipulations nor findings in
district court are not res judicata concerning issues relating solely to unjust
enrichment claim or other claims for relief other than possession.
J.A.M. Corporation v. AARO Disposal, Inc.,
1999 WL 777554 (Mich. 9/23/99)
Plaintiff brought suit in district court for
possession under a lease agreement. It did not seek money damages, although
Michigan clurts have held that district courts have the power to combine money
damages claims or equitable relief claims wiht an action for possession.
In the district court, the defendant
tenant's lawyer argued that the landlord was not authorized to do business in
Michigan. The defendant's lawyer offerred a stipulation that if the corporation
was authorized to do business, he would stipulate to a write of restitution,
but if not, we wanted the plaintiff to stipulate that the lease agreement was
null and void. It is unclear whether the plaintiff's counsel really agreed to
this stipulation or simply to a stipulation that if he could not show that the
corporation was authorized to do business, the complaint would be dismissed.
Plainitff's counsel found, to his chagrin,
that although his client had been filing annual reports and paying fees in
Michigan, it was not formally authorized to do business. He corrected this
through a statutory procedure, but nevertheless the District Court entered a
judgment with prejudice against his client together with a finding that the
lease was "null and void from its inception."
Plaintiff then filed papers in circuit court
(trial court of general jurisdiction) seeking remedies sounding in reformation,
mistake, breach of lease, breach of implied contract, guaranty and unjust
enrichment.
The court found plaintiff barred by res
judicata on the lease count and collateral estoppel on all other counts, since
plaintiff could have raised these claims in the district court and failed to do
so. The Court of Appeals affirmed:
On apapeal to the Michigan Supreme Court:
held: Reversed, as to the claims based upon implied contract and unjust
enrichment.
The Supreme Court noted that the legislature
had set forth a special action for possession specifically so that parties
could obtain rapid relief on the possession issue and still be free to pursue
other remedies. The court therefore held that whether or not plaintiff
prevailed in an action for possession in District Court, it was not precluded
from seeking other remedies based upon the same facts and circumstances in
Circuit Court. The Supreme Court did not comment upon the Court of Appeals
conclusion that parties in the District Court proceeding had the power to
attach other legal or equitable claims to their action. It apparently rested
its position on the fact that the plaintiff in this case did not attach any
other claims for relief, and sought possession only.
Comment: Lots of lessons for counsel here. First
is: don't go to court with a corporate plaintiff without ascertaining its
status to do business in the state. Second is: watch out for the breadth of
stipulations - note that plaintiff's counsel attempted to limit the scope of
the stipulation, but apparently failed to get the attention of the District
Court judge. Third, of course, is to be cautious about issue preclusion. Even
though it didn't bite the plaintiff in this case, there is nothing in the case
to indicate that if the plaintiff had sought further remedies in the District
Court it would not have been risking collateral estoppel.
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development or the editor's comments about it.
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