BOARD OF COUNTY ROAD COMMISSIONERS FOR THE COUNTY OF EATON v SCHULTZ
Docket No. 141588
Michigan Court of Appeals
Submitted December 7, 1993. Decided May 17, 1994.
205 Mich App 371
The Court of Appeals held:
1. The circuit court erred in granting summary disposition pursuant to
2. The circuit court erred in granting summary disposition
3. The board‘s assertion that the stipulation constitutes a contract is not so clearly unenforceable that no factual development could justify its right to recover. The circuit court erred in granting summary disposition pursuant to
Reversed and remanded.
REILLY, J., concurring, stated that the breach of contract action was not barred by res judicata or collateral estoppel because the district court‘s interpretation of the stipulation in the intrusive nuisance case was only dicta, not being necessary for the resolution of the controlling issue upon which summary disposition was granted, i.e., governmental immunity, and is not binding on the parties in this action.
- MOTIONS AND ORDERS — SUMMARY DISPOSITION — SUBJECT-MATTER JURISDICTION — APPEAL.
Whether subject-matter jurisdiction exists is a question of law for the court, and is subject to review de novo by the Court of Appeals (
MCR 2.116[C][4] ). - ACTIONS — RES JUDICATA — CAUSES OF ACTION — DEFENSES.
Causes of action and defenses are not interchangeable for purposes of the doctrine of res judicata.
- ESTOPPEL — COLLATERAL ESTOPPEL.
For collateral estoppel to apply, the ultimate issue to be concluded in the second action must be the same as that involved in the first action; the issues must be identical, not merely similar, and the ultimate issues must have been both actually and necessarily litigated in the first action; to be necessarily
determined in the first action, the issue must have been essential to the resulting judgment; a finding upon which the judgment did not depend cannot support collateral estoppel. - ESTOPPEL — COLLATERAL ESTOPPEL.
A party who loses on one defense but ultimately is successful on another defense in the same proceeding is not obligated to appeal the unfavorable disposition regarding the losing defense in order to avoid being bound by it in subsequent proceedings pursuant to the doctrine of collateral estoppel.
- CONTRACTS — STIPULATIONS FOR THE SETTLEMENT OF PENDING LAWSUITS — JUDICIAL CONSTRUCTION.
An agreement or stipulation for the settlement of a pending lawsuit properly is construed in the same manner as a contract and is governed by the legal principles applicable to the construction and interpretation of contracts.
REFERENCES
Am Jur 2d, Courts § 87; Judgments §§ 404, 406-418, 430-437; Stipulations § 7.
See ALR Index under Jurisdiction; Motions; Res Judicata.
Foster, Swift, Collins & Smith, P.C. (by Webb A. Smith and Frank A. Fleischmann), for the plaintiff.
UAW-GM Legal Services Plan (by Karen T. Nichols), for the defendant.
Before: TAYLOR, P.J., and REILLY and M. J. TALBOT,* JJ.
PER CURIAM. Plaintiff appeals as of right a May 21, 1991, circuit court order granting summary disposition to defendant Schultz pursuant to
The facts are essentially undisputed. On June 3, 1988, defendant Schultz filed a negligence suit in the district court against plaintiff board of road commissioners, seeking damages for injuries his horse sustained as a result of its stepping into a
NOW COME the parties by their respective counsel and hereby stipulate and agree, that in exchange for not pursuing Plaintiff [defendant Schultz herein] for costs, Plaintiff has agreed to dismiss with prejudice and without cost his claims against Board of County Road Commissioners of the County of Eaton.
Accordingly, Schultz’ suit was dismissed with prejudice. Thereafter, Schultz filed another suit in the district court against the board, alleging that the hole in the culvert constituted an “intrusive nuisance.” The board moved for summary disposition on the ground that the suit was barred by the doctrine of res judicata. When the court denied that motion, the board moved for summary disposition for failure to state a claim in avoidance of governmental immunity, which the district court granted, and Schultz’ “intrusive nuisance” suit was dismissed.
Then the board filed a complaint against Schultz in the circuit court, alleging breach of contract and seeking recovery of the costs incurred in having to defend the initial suit as well as the subsequent one. Schultz moved for summary disposition, claiming that the court lacked subject-matter jurisdiction, that the suit was barred because of res judicata, and that the board had failed to state a claim. The court granted the motion on all the above-stated grounds. It is from this May 21, 1991, order granting summary disposition that the board now appeals.
Plaintiff board first argues that the trial court erred in granting summary disposition under
There is nothing in the facts of this case, the statutes, or the case law presented by Schultz that precludes the circuit court from exercising jurisdiction over the board‘s action. The claim was for breach of contract, and the alleged damages exceeded $10,000. The circuit court is the court of general jurisdiction in this state and its jurisdiction was not expressly preempted by the jurisdiction of another court. Accordingly, the claim was properly filed in the circuit court. See
Plaintiff board also argues that the court erred in granting summary disposition under
Res judicata bars a subsequent action between the same parties when the evidence or essential facts are identical. Jones v State Farm Mutual Automobile Ins Co, 202 Mich App 393, 401; 509 NW2d 829 (1993). This doctrine requires that (1)
To treat the defense of release as identical to an action for breach of contract for purposes of res judicata, as Schultz would have us do, overlooks their fundamental differences. Causes of action and defenses are not interchangeable. Here, for example, the fact of a breach and the question of damages are irrelevant in the release defense. We conclude that res judicata does not bar the boards’ breach of contract action.
Nor does the doctrine of collateral estoppel operate to bar the board‘s suit. For collateral estoppel to apply, the ultimate issue to be concluded in the second action must be the same as that involved in the first. Detroit v Qualls, 434 Mich 340, 357; 454 NW2d 374 (1990). The issues must be identical, and not merely similar, Wilcox v Sealey, 132 Mich App 38, 47; 346 NW2d 889 (1984), and the ultimate
To hold differently would be to establish a policy that when a party loses on one defense (release) but ultimately is successful on another (governmental immunity), that party is nevertheless obligated to appeal the unfavorable disposition, despite having prevailed, in order to avoid being bound by it in subsequent proceedings. This is an ill-advised policy, and one that is inconsistent with the doctrines of both res judicata and collateral estoppel. Res judicata is designed to avoid relitigation of claims, and to prevent vexation, confusion, chaos, and the inefficient use of judicial resources. Ozark v Kais, 184 Mich App 302, 308; 457 NW2d 145 (1990); Bhama v Bhama, 169 Mich App 73, 81; 425 NW2d 733 (1988). Collateral estoppel is designed to relieve parties of multiple litigation, conserve judicial resources, and encourage reliance on adjudication. Qualls, supra at 357, n 30. Requiring the prevailing party to appeal unfavorable rulings would foster excessive litigation, vexation, and waste judicial resources, and we decline to do
The trial court also granted summary disposition under
In this case, Schultz claimed that no cause of action for breach of contract could be stated because the stipulation was not a contract, stressing that, unlike a traditional contract, a stipulation needs the express consent and approval of a court in order to take effect. The trial court agreed and granted the motion.
While it is true that there are characteristics unique to trial stipulations, the conclusion that they are not contracts or that no claim lies for a breach thereof does not necessarily follow as a matter of law. Stipulations have been defined as follows:
A “stipulation,” ... is an agreement, admission, or concession made in a judicial proceeding by the parties or their attorneys, respecting some matter
incident thereto. Its purpose is generally stated to be the avoidance of delay, trouble, and expense. Stipulations differ in character, some being mere admissions of fact relieving a party from the inconvenience of making proof, while others embody all the essential characteristics of a contract. [73 Am Jur 2d, Stipulations, § 1, p 536.]
Our Supreme Court has distinguished between stipulations of fact, which are binding, Dana Corp v Michigan Employment Security Comm, 371 Mich 107, 110; 123 NW2d 277 (1963), and stipulations of law, which are not binding, In re Finlay Estate, 430 Mich 590, 595; 424 NW2d 272 (1988). Indeed, this Court has previously held that an agreement to settle a pending lawsuit, which is what the stipulation at issue was, is a contract, and is to be governed by the legal principles applicable to the construction and interpretation of contracts. Gojcaj v Moser, 140 Mich App 828, 834; 366 NW2d 54 (1985); Scholnick‘s Importers-Clothiers, Inc v Lent, 130 Mich App 104, 109; 343 NW2d 249 (1983).4 As this Court has previously pointed out:
“It is important that parties be able to settle cases fairly and finally ... and such settlements should not be upset because of any subjective hesitation or secret reservation on the part of either party.” [Meyer v Rosenbaum, 71 Mich App 388, 393; 248 NW2d 558 (1976), quoted in Scholnick‘s Importers, supra at 110-111, n 1.]
The United States Supreme Court and a federal court of appeals have also stated that settlement stipulations and consent decrees are construed in the same manner as a contract. United States v ITT Continental Baking Co, 420 US 223, 238; 95 S Ct 926; 43 L Ed 2d 148 (1975); Republic Resources Corp v ISI Petroleum West Caddo Drilling Program, 836 F2d 462, 465 (CA 10, 1987).
The stipulation at issue states that in exchange for the board not pursuing costs, Schultz agreed to dismiss “with prejudice and without costs his claims against Board of County Road Commissioners of the County of Eaton.” The board‘s assertion that this stipulation constitutes a contract is not so clearly unenforceable that no factual development could justify its right to recover. In fact, the wording of the stipulation clearly reflects that all claims, i.e., more than one claim, against the board were being dismissed. Because Schultz had only one claim (i.e., negligence) in his initial pleading, the wording of the stipulation must be read as a fail-safe device to encompass more, if indeed there may have been more, than that which was pleaded in the initial suit. The plain reading of this sentence discloses no ambiguity whatsoever. Further, it is a reading consistent with
The board has stated a claim upon which it may recover. Therefore, we reverse the grant of summary disposition and remand for reinstatement of the contract claim and further proceedings. We do not retain jurisdiction.
REILLY, J. (concurring). The majority holds that the trial court erred in ruling that defendant Schultz was entitled to summary disposition under
In order for the trial court in the intrusive nuisance action to decide whether the defense of release was valid, it was necessary for the trial court to determine the meaning of the stipulation and, in particular, whether the stipulation of the dismissal of Schultz’ claims meant that Schultz would not sue the board on any basis, including a nuisance theory, for damages sustained by Schultz when his horse was injured by stepping into a hole in a culvert. The trial court interpreted the agreement and ruled that the stipulation only related to the negligence claims raised in the initial lawsuit. On the basis of that ruling, the trial court rejected the defense of release. That ruling, interpreting the stipulation, was not a final order, and could not be appealed as of right.
The intrusive nuisance case was eventually dismissed when the trial court granted the board‘s motion for summary disposition on the basis of governmental immunity. When the final order granting summary disposition was entered, there was no reason for the board to appeal the earlier interpretation of the stipulation and the order denying its defense of release. The interpretation of the stipulation must be considered only dicta, because it was not necessary for the resolution of the controlling issue upon which summary disposition was granted. Cree Coaches, Inc v Panel Suppliers, Inc, 384 Mich 646; 186 NW2d 335 (1971).
Had the interpretation of the stipulation determined the outcome of the intrusive nuisance case, the result would have been different. In that situation, I believe the issue would have been res judicata, and the parties would have been bound by the ruling in future litigation. Under the present circumstances, however, the trial court‘s interpretation of the stipulation was merely dicta, and is not binding on the parties in this action.
* Circuit judge, sitting on the Court of Appeals by assignment.