1300 LaFAYETTE EAST COOP. v. SAVOY

PER CURIAM.

In Docket No. 281577, plaintiff, 1300 LaFayette East Cooperative, Inc., appeals as of right the circuit court's order denying its motion for summary disposition and granting summary disposition in favor of defendant Steven Savoy.1 In Docket No. 282128, defendants appeal the circuit court's post-judgment order denying their motion for sanctions. We affirm in part, reverse in part, and remand for further proceedings.

This case arises from defendant's breach of his occupancy agreement with plaintiff for unit 2707-C at the 1300 LaFayette East Cooperative. Plaintiff brought this action in circuit court to recover unpaid rent allegedly due under the agreement. The circuit court determined that the issues in the case were resolved in prior summary proceedings in district court and, therefore, denied plaintiff's motion for summary disposition and granted summary disposition in favor of defendant.

I. STANDARD OF REVIEW

We review de novo a trial court's decision to grant or deny summary disposition. Maiden v. Rozwood, 461 Mich. 109, 118, 597 N.W.2d 817 (1999). Plaintiff moved for summary disposition under MCR 2.116(C)(7), (9), and (10). Defendant moved for summary disposition under MCR 2.116(C)(10) and (I)(2).

MCR 2.116(C)(7) allows a trial court to grant summary disposition when a claim is barred by a prior judgment or disposition. In this case, plaintiff was the only party asserting a claim; it did not seek, nor could it logically argue for, dismissal of its own claims. Therefore, subrule C(7) is not applicable.

MCR 2.116(C)(9) allows a court to grant summary disposition when a party fails to state a valid defense to a claim. A motion under this subrule tests the sufficiency of the pleadings, and all well-pleaded allegations must be accepted as true. Slater v. Ann Arbor Pub. Schools Bd. of Ed., 250 Mich.App. 419, 425, 648 N.W.2d 205 (2002). In this case, however, both parties relied on documentary evidence to support their arguments. Therefore, subrule C(9) also is not applicable.

A motion under MCR 2.116(C)(10) tests the factual support for a claim. When reviewing a motion under MCR 2.116(C)(10), the court must examine the documentary evidence presented and, drawing all reasonable inferences in favor of the nonmoving party, determine whether a genuine issue of material fact exists. Quinto v. Cross & Peters Co., 451 Mich. 358, 362, 547 N.W.2d 314 (1996). The nonmoving party has the burden of establishing through affidavits, depositions, admissions, or other documentary evidence that a genuine issue of disputed fact exists. Id. A question of fact exists when reasonable minds can differ on the conclusions to be drawn from the evidence. Glittenberg v. Doughboy Recreational Industries (On Rehearing), 441 Mich. 379, 398-399, 491 N.W.2d 208 (1992). Only "the substantively admissible evidence actually proffered" may be considered. Maiden, supra at 121, 597 N.W.2d 817; see also MCR 2.116(G)(6). If there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law, summary disposition is properly granted. Maiden, supra at 120, 597 N.W.2d 817.

Summary disposition may be granted in favor of an opposing party under MCR 2.116(I)(2) if there is no genuine issue of material fact and the opposing party is entitled to judgment as a matter of law.

II. DOCKET NO. 281577

A. PRELIMINARY MATTERS

Initially, defendant argues, as he did below, that plaintiff was not entitled to summary disposition under MCR 2.116(C)(10), irrespective of the merits of its motion, because its motion was not properly supported. We disagree.

A motion under subrule C(10) must be supported by affidavits, depositions, admissions, or other documentary evidence. See MCR 2.116(G)(4) and (6). Under subrule G(6), the submitted evidence may be considered in a C(10) motion only to the extent that it would be substantively admissible. However, the Maiden Court noted:

Thus, documentary evidence that would be "plausibly admissible" at trial if a proper foundation is laid is sufficient to survive a C(10) motion. See id. at 124-125, 597 N.W.2d 817. Defendant is incorrect in arguing that documents cannot be used to establish a question of fact unless they are supported by affidavits, depositions, or admissions.

Next, plaintiff argues that the circuit court's decision was improperly based on a superseded local court rule. We disagree.

MCR 4.201(G)(1)(c) provides, "A court with a territorial jurisdiction which has a population of more than 1,000,000 may provide, by local rule, that a money claim or counterclaim must be tried separately from a claim for possession unless joinder is allowed by leave of the court pursuant to subrule (G)(1)(e)." In 1985, the 36th District Court adopted such a rule, LCR 4.201(G)(1)(c), but that rule was later rescinded effective June 9, 2004. See 470 Mich. lxxvii (2004). Thus, as plaintiff argues, it would have been improper for the circuit court to rely on a superseded local rule. However, as will be discussed later, plaintiff did not assert a claim for money damages in the earlier district court proceedings. Thus, even if the local rule had been in effect, it would not have applied to this case. Further, there is no indication that the circuit court relied on this local rule. Therefore, we need not consider this issue further.

B. SUMMARY EVICTION PROCEEDINGS

Chapter 57 of the Revised Judicature Act (RJA), MCL 600.5701 et seq., allows for summary eviction proceedings to be brought in district court to recover possession of a rented or leased residence and to obtain ancillary relief. In this case, Article 13 of the parties' occupancy agreement provides that these summary procedures apply.

1. JOINDER OF DAMAGES CLAIMS

Plaintiff argues that the circuit court erred by ruling that its action for damages was precluded by the prior summary eviction proceedings in the district court. We agree.

With regard to joinder of claims in summary eviction proceedings, MCL 600.5739(1) provides:

See also MCR 4.201(G)(1)(a)(i). Thus, a party may join a claim for damages in a summary eviction proceeding up to the district court's jurisdictional limits, but it is not required to do so.

We agree with plaintiff that the circuit court erred by seemingly concluding that the district court's actions included a claim for damages that was conclusively settled when the trial court issued the two consent judgments. Regarding a judgment in a summary eviction proceeding, MCL 600.5741 provides:

Thus, a summary eviction judgment must state the amount of past-due rent that, if timely paid, will allow a defendant to remain in possession of the premises. See also MCL 600.5744(1), (4), and (6). But unlike an ordinary damages award, and unlike the award of costs expressly authorized by this section, the amount of past-due rent is not a judgment for damages enforceable by a writ of execution. Gregor v. Olde, 209 Mich. 43, 48, 176 N.W. 580 (1920); see also Armstrong v. Grimm, 268 Mich. 437, 438, 256 N.W. 475 (1934).

Here, neither district court complaint contained a request for money damages, and neither consent judgment contained an award of money damages. Rather, both consent judgments contained a statement of the amount of past-due rent that, if timely paid, would allow defendant to remain in possession of the residence.

We agree with plaintiff that the district court proceedings did not preclude a subsequent action for damages. MCL 600.5750 states:

Thus, it is clear that a subsequent action for damages was not precluded by plaintiff's decision to institute summary eviction proceedings. As the Supreme Court explained in JAM Corp. v. AARO Disposal, Inc., 461 Mich. 161, 168-169, 600 N.W.2d 617 (1999), "[p]lainly the Legislature took [summary eviction] cases outside the realm of the normal rules concerning merger and bar [of related claims] in order that attorneys would not be obligated to fasten all other pending claims to the swiftly moving summary proceedings." Accordingly, the circuit court erred by ruling that plaintiff's action for damages was precluded by the prior district court summary eviction proceedings.

2. RES JUDICATA

Plaintiff argues that the circuit court erred by ruling that the prior district court consent judgments barred its circuit court action for damages. Plaintiff argued below that the district court consent judgments were conclusive on all issues, including defendant's liability for future damages, except the amount of damages due. That is incorrect.

In Sewell v. Clean Cut Management, Inc., 463 Mich. 569, 576-577, 621 N.W.2d 222 (2001), our Supreme Court stated that although a summary eviction judgment does not bar other claims and remedies, it is "conclusive on the narrow issue whether the eviction was proper." In other words, a district court judgment is res judicata on the issue of who has the right to possess the premises, because that question is actually litigated in the district court. Id. at 574-577, 621 N.W.2d 222. Thus, where, as in this case, no claim for damages is asserted in the district court, the district court judgment is conclusive only on the question of who has a right to possess the premises.

C. DEFENDANT'S CONTINUING OBLIGATION TO PAY RENT

Plaintiff argues that it was entitled to summary disposition because there is no question of material fact that defendant remained obligated to pay occupancy fees pursuant to his membership in the cooperative. Plaintiff adds that defendant's membership in the cooperative, which defendant failed to properly terminate, is different from defendant's tenancy, i.e., his right to possession of the dwelling unit. Conversely, defendant argues that he was entitled to summary disposition instead of plaintiff because there is no question of material fact that the consent judgments provided proper notice of the termination of the occupancy agreement.

Article 4 provides that after its initial three-year term, the occupancy agreement would be subject to automatic renewal for another three-year period, unless

As a corollary to Article 4, Article 13 states:

Article 13 also specifies that these remedies are cumulative and are not waived by plaintiff's initial failure to assert them.

Defendant claims that the district court's consent judgments constituted written notice of termination under Article 4 and that this was sufficient to end his obligations under the occupancy agreement. It is undisputed, however, that defendant never indorsed his stock certificate to plaintiff, as required by Article 4. Defendant argues that the bank took possession of the certificate at the closing and, therefore, he could not have indorsed it to plaintiff. However, this argument raises a factual dispute, thereby precluding summary disposition.

We note, however, that it is undisputed that plaintiff instituted summary eviction proceedings, as permitted by Article 13, after defendant defaulted on his obligation to pay carrying charges under Article 1. Further, it is undisputed that the parties signed a consent judgment entitling plaintiff to possess the unit unless defendant paid his past-due amount in full by a certain date. It is also undisputed that defendant never paid the amount due. Under Sewell, the two consent judgments were conclusive on the issue of who was entitled to possession of the dwelling unit, i.e. plaintiff. Moreover, it is undisputed that plaintiff knew that defendant had moved out of the residence. These circumstances raise the question whether plaintiff terminated the occupancy agreement under Article 13, such that rent would not have continued to accrue after December 2003 at the latest and the agreement would not have automatically renewed in November 2004. However, the parties did not address the effect of Article 13 below, nor have they done so on appeal, and the trial court did not consider this issue. Therefore, we remand this case for further proceedings regarding the effect, if any, of Article 13.

II. DOCKET NO. 282128

Defendants argue that the trial court erred by denying their motion for sanctions on plaintiff for filing a frivolous proceeding. We disagree.

A trial court's findings with regard to whether a claim or defense was frivolous, and whether sanctions may be imposed, will not be disturbed unless it is clearly erroneous. Kitchen v. Kitchen, 465 Mich. 654, 661, 641 N.W.2d 245 (2002). "A decision is clearly erroneous where, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made." Id. at 661-662, 641 N.W.2d 245.

MCR 2.625(A)(2) provides that "if the court finds on motion of a party that an action or defense was frivolous, costs shall be awarded as provided by MCL 600.2591." Similarly, MCL 600.2591 provides:

In light of our decision to reverse the trial court's grant of summary disposition in favor of defendant, defendants no longer qualify as prevailing parties and, for that reason, are not entitled to sanctions under MCL 600.2591.2 The trial court did not err by denying defendants' request for sanctions.

With regard to MCL 600.2591(3)(a)(i), there is no evidence that plaintiff's primary purpose in bringing this action was to embarrass, harass, or injure defendants. Further, most of the underlying facts were undisputed, so MCL 600.2591(3)(a)(ii) also is not applicable. Finally, with regard to MCL 600.2591(3)(a)(iii), because the district court's summary eviction proceedings did not preclude a subsequent circuit court action for damages as a matter of law, plaintiff's legal position was not devoid of arguable legal merit. Moreover, merely because a plaintiff might not ultimately prevail does not mean that the plaintiff's complaint was frivolous. Kitchen, supra at 662, 641 N.W.2d 245. In this case, the trial court did not clearly err by determining that plaintiff's action was not frivolous. Thus, the trial court did not err by denying defendants' request for sanctions.

Affirmed in part, reversed in part, and remanded for further proceedings not inconsistent with this opinion. We do not retain jurisdiction.