ABB Paint Finishing, Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa

• Decision Date: 16 May 1997
• Docket Number: Docket No. 192855
• Citation: 567 N.W.2d 456,223 Mich.App. 559
• Parties: ABB PAINT FINISHING, INC., f/k/a ABB Flakt, Inc., f/k/a Flakt, Inc., Plaintiff-Appellee, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 456

567 N.W.2d 456

223 Mich.App. 559

ABB PAINT FINISHING, INC., f/k/a ABB Flakt, Inc., f/k/a Flakt, Inc., Plaintiff-Appellee, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA Defendant-Appellant.

Docket No. 192855.

Court of Appeals of Michigan.

Submitted Feb. 4, 1997, at Lansing.

Decided May 16, 1997, at 9:35 a.m.

Released for Publication Aug. 22, 1997.

Sallen Sallen Seymour and Sallen by Robert V. Seymour, Southfield, and Saxe Eustace & Vita by Tracy Alan Saxe and Jeffrey J. Vita, New Haven, CT, for Plaintiff-Appellant.

Davis and Fajen, P.C. by James A. Fajen and Nelson P. Miller, Ann Arbor, for Defendant-Appellant.

Before O'CONNELL, P.J., and MARKMAN and M.J. TALBOT ^*, JJ.

MICHAEL J. TALBOT, Circuit Judge.

Plaintiff manufactures painting equipment. This suit arises out of an action brought in the federal district court against plaintiff for damages arising out of a painting system it had supplied. In the course of that suit, plaintiff apparently violated a court order and was found to be in contempt. The federal district court indicated that plaintiff would have to pay a fine to purge its contempt. Apparently, the amount of the fine has not yet been determined.

On November 4, 1994, plaintiff filed this action in the circuit court in an attempt to require defendant, plaintiff's general liability insurer, to pay the contempt fine. On October 27, 1995, defendant filed a motion for summary disposition pursuant to MCR 2.116(C)(8). In December, while defendant's motion was pending, plaintiff filed another suit in the federal district court. This new federal action contained a claim identical to the circuit court claim, along with additional claims. Plaintiff then filed a motion for voluntary dismissal in the circuit court.

On January 3, 1996, the trial court heard both defendant's motion for summary disposition pursuant to MCR 2.116(C)(8) and plaintiff's motion for voluntary dismissal. The trial court granted both motions without prejudice. Defendant refused to stipulate an order, arguing that summary disposition under C(8) should be with prejudice. Despite defendant's objections, the trial court entered an order granting both motions without prejudice. Defendant appeals, arguing that a grant of summary disposition under MCR 2.116(C)(8) must necessarily be with prejudice.

Proper resolution of this appeal requires an understanding of MCR 2.116(C)(8). This court rule allows the court to grant summary disposition where "[t]he opposing party has failed to state a claim on which relief can be granted." MCR 2.116(C)(8). "A motion for summary disposition brought pursuant to MCR 2.116(C)(8) tests the legal sufficiency of the plaintiff's complaint and should be granted only if the claims are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery." Int'l Brotherhood of Electrical Workers, Local 58 v. McNulty, 214 Mich.App. 437, 443-444, 543 N.W.2d 25 (1995). Where a motion is brought under C(8), the trial court should liberally permit the parties to amend their pleadings unless amendment "would not be justified." MCR 2.116(I)(5).

The question whether a motion for summary disposition under C(8) should be granted with or without prejudice has rarely been addressed in Michigan. This Court has affirmed a number of cases where a C(8) motion was granted with prejudice but did not comment on this question. See Kauffman v. Shefman, 169 Mich.App. 829, 831, 426 N.W.2d 819 (1988); Smith v. Pontiac, 169 Mich.App. 559, 561, 426 N.W.2d 704 (1988); Simonds v. Tibbitts, 165 Mich.App. 480, 481, 419 N.W.2d 5 (1987). In the only case in which this issue was expressly addressed, Gardner v. Stodgel, 175 Mich.App. 241, 437 N.W.2d 276 (1989), this Court held that a motion for summary disposition under MCR 2.116(C)(8) was properly granted with prejudice on the basis of the facts of that case. Gardner, supra at 251, 437 N.W.2d 276. Unfortunately, this Court gave no insight into its reasoning in Gardner. ¹

The decision whether to grant dismissal with or without prejudice, by definition, determines whether a party may refile a claim or whether the claim is permanently barred. Thomas v. Michigan Employment Security Comm., 154 Mich.App. 736, 742, 398 N.W.2d 514 (1986). Thus, in deciding whether dismissal should be with or without prejudice, the trial court should consider whether the doctrine of res judicata would bar subsequent actions involving the same claim. "The doctrine of res judicata is a manifestation of the recognition that interminable litigation leads to vexation, confusion, and chaos for the litigants, resulting in the inefficient use of judicial time." Schwartz v. Flint, 187 Mich.App. 191, 194, 466 N.W.2d 357 (1991). "For [res judicata] to apply, (1) there must have been a prior decision on the merits, (2) the issues must have been resolved in the first action, and (3) both actions must be between the same parties or their privies." Moore v. Wicks, 184 Mich.App. 517, 519-520, 458 N.W.2d 653 (1990). Where a trial court dismisses a case on the merits, the plaintiff should not be allowed to refile the same suit against the same defendant and dismissal should therefore be with prejudice.

In the instant case, the trial court specifically indicated that it was not making a decision on the merits. However, it is logically inconsistent to grant a motion for summary disposition under C(8) "not upon the merits." That is the equivalent of saying that "without looking at the merit, the complaint is legally without merit." Thus, summary disposition under C(8) is necessarily a decision on the merits. ² To grant such a motion "without prejudice" is equally incongruous. That is the equivalent of saying that the plaintiff's claim is without legal merit but he may refile the exact same claim. Logically, then, a grant of summary disposition under subrule C(8) should always be with prejudice.

This conclusion does not, of course, preclude a plaintiff from requesting leave to amend its complaint before the trial court rules on a motion under C(8). In fact, under MCR 2.116(I)(5), the trial court should normally allow such amendments. When the trial court in the instant case granted defendant's motion, plaintiff had two options: (1) seek permission to amend its complaint or (2) appeal the trial court's decision to grant the motion. The granting of a C(8) motion is an immediately appealable decision although often an amendment of defective pleadings is granted. However, even during this interim period, the decision to grant a motion pursuant to C(8) should be characterized as with prejudice. MCR 2.116(I)(5), relating to the opportunity to amend pleadings in response to summary disposition motions, is an exception to the general rule concerning rehearings. MCR 2.119(F)(3). What plaintiff cannot do is simply allow the dismissal to go unchallenged and later refile his complaint in the same court. ³

The other issue necessarily raised by defendant's appeal is whether the trial court could properly grant both plaintiff's motion for voluntary dismissal and the defendant's motion for summary disposition. Obviously, it could not. The trial court's grant of defendant's motion for summary disposition under MCR 2.116(C)(8) would bar plaintiff from refiling this claim. On the other hand, plaintiff was requesting voluntary dismissal for the express purpose of litigating this claim in another forum. Thus, the trial court could grant one motion or the other, but not both. While it may have been a trial court's past practice to grant a C(8) motion without prejudice, this option is not properly available to it.

Accordingly, the trial court's order is vacated. This matter is remanded for reconsideration of both motions in a manner consistent with this opinion. ⁴ We do not retain jurisdiction.

MARKMAN, J., concurred.

O'CONNELL, Presiding Judge, dissenting.

I concur with the majority opinion to the extent that the trial court erred in referencing the wrong court rule in this case. However, this error is not fatal to plaintiff's case because this Court may proceed under the appropriate court rule as long as neither party has been misled. Cf. Blair v. Checker Cab Co., 219 Mich.App. 667, 670-671, 558 N.W.2d 439 (1996). ¹ I also conclude that the trial court properly dismissed this case pursuant to MCR 2.504(A)(2).

With respect to defendant's motion for summary disposition brought pursuant to MCR 2.116(C)(8), the trial court stated, "[T]he Court would find, based on the arguments and the pleadings relating to this motion, and not upon the merits of this case, the Court is satisfied ... the (C)(8) should be granted" (emphasis supplied). As the majority correctly notes, such a statement is nonsensical. A motion for summary disposition brought pursuant to MCR 2.116(C)(8) is properly granted or denied only on the merits. Because of the trial court's statement, which evinces a marked misunderstanding of the nature of MCR 2.116(C)(8), I would consider the order purporting to grant this motion as void ab initio and of no legal effect.

My review of the record indicates that the court's action in granting defendant's motion was little more than a sop meant to appease defendant. While the majority does not mention this, the hearing regarding defendant's motion for summary disposition below was actually a consolidated hearing in which plaintiff's motion for voluntary dismissal pursuant to MCR 2.504(A)(2) was also addressed. The court granted plaintiff's motion as well as defendant's, both without prejudice. Even a cursory reading of the transcript of this hearing reveals that it was the intent of the court to allow plaintiff to have its case heard in the federal district court, where plaintiff had refiled the action. Only the court's misapprehension of the import of granting defendant's motion for summary disposition caused it to make this conciliatory gesture. The final words of the court at the...