Peterson Novelties, Inc. v. City of Berkley

• Decision Date: 14 August 2003
• Docket Number: Docket No. 239895.
• Parties: PETERSON NOVELTIES, INC. and Harold Barman, Plaintiffs-Appellants, v. CITY OF BERKLEY and Raymond Anger, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

672 N.W.2d 351

259 Mich. App. 1

PETERSON NOVELTIES, INC. and Harold Barman, Plaintiffs-Appellants, v. CITY OF BERKLEY and Raymond Anger, Defendants-Appellees.

Docket No. 239895.

Court of Appeals of Michigan.

Submitted August 6, 2003, at Detroit.

Decided August 14, 2003.

Approved for publication October 7, 2003, at 9:00 a.m.

Released for Publication December 11, 2003.

Constitutional Litigation Associates, P.C. (by Hugh M. Davis, Jr.), Detroit, for the plaintiffs.

O'Connor, DeGrazia & Tamm, P.C. (by Julie McCann O'Connor), Bloomfield Hills, for the defendants.

Before: JANSEN, P.J., and NEFF and KIRSTEN FRANK KELLY, JJ.

PER CURIAM.

Plaintiffs¹ Peterson Novelties, Inc. (Peterson), and Harold Barman appeal as of right from an order granting defendants² city of Berkley and Raymond Anger's motion for summary disposition and dismissing plaintiffs' claims. We affirm.

I

Sometime in 1995, Peterson, a seasonal seller of fireworks, applied for a permit to sell fireworks in the city of Berkley, but was denied. On June 14, 1995, Peterson filed suit in the Oakland Circuit Court, requesting that the court order the city to grant the permit to sell fireworks.³ The circuit court issued a temporary restraining order for the 1995 season, ordering the city to grant a permit to Peterson. On April 24, 1996, while the 1995 case was still pending, Peterson filed a motion for a writ of mandamus and injunctive relief to compel the city to process a permit application for the 1996 season. On May 9, 1996, the circuit court issued a temporary restraining order compelling the city to issue Peterson a seasonal sales permit for the sale of fireworks not prohibited under Michigan law.

On June 24, 1996, Detective Anger and the Berkley Public Safety Department, having received information that plaintiffs were potentially selling illegal fireworks, inspected the tent where plaintiffs were conducting business. Anger purchased $91.16 worth of fireworks he believed to be illegal. An agreement was reached with Barman, whereby fireworks defendants believed to be illegal would be stored in an empty trailer at the back of the property rather than hauled away. Anger also arrested two of plaintiffs' employees for the sale of illegal fireworks.

On June 25, 1996, a state district judge issued a warrant for the search and seizure of certain fireworks in the storage bin where plaintiffs' potentially illegal fireworks were stored. Pursuant to the warrant, Anger and city officials seized fireworks they determined were offered for sale in violation of state law, and at some point obtained criminal arrest warrants for plaintiffs' employees. Also on June 25, 1996, Peterson filed an emergency motion for an order to show cause why the city should not be held in contempt of the circuit court's May 9, 1996, order and for an order for the return of the seized property. In its emergency motion, Peterson argued that it had been operating legally and within the terms of the circuit court's previous orders and that the city had intentionally acted contrary to the circuit court's order, seizing fireworks and arresting employees without a warrant. Peterson contended that the seizures were illegal. Peterson asked the circuit court to prevent the city from applying for a warrant based "on the false claim that Plaintiffs are engaged in illegal activity without attaching a copy" of the circuit court's May 9, 1996, order. The judge who issued the May 9, 1996, order was unavailable, so the parties appeared before another judge of the Oakland Circuit Court, who directed that the parties appear before the original judge on July 1, 1996. However, on June 26, 1996, presumably, in reaction to the intervening seizure and arrest, the same judge who directed that the parties appear on July 1, 1996, issued the show cause order and ordered the return of fireworks that were not needed for evidence and were not considered illegal.

The original circuit judge held the show cause hearing on July 1, 1996, and issued an order on July 3, 1996, reaffirming the May 9, 1996, order. The circuit court held that Peterson could continue to operate its business selling those fireworks not specifically enumerated as illegal by the Michigan fireworks statute, M.C.L. § 750.243a.⁴ The order further indicated that "mines and shells" are not "of like construction" as "roman candles," and that the phrase "of like construction" is unconstitutionally vague. The circuit court order does reveal that the parties agreed that "Saturn missiles" would not be sold. The circuit court did not issue an order of contempt, and did not award damages for contempt.

On July 26, 1996, Peterson filed a motion for declaratory relief, seeking a ruling that M.C.L. § 750.243a, which prohibits the sale of certain fireworks, was unconstitutionally vague. On September 6, 1996, the circuit court granted the request for declaratory relief.⁵ On May 13, 1997, in accordance with the grant of declaratory relief, the state district court dismissed the criminal charges pending against plaintiff Barman and two Peterson employees. On July 31, 1998, the prosecutor's appeal of this dismissal was finally dismissed pursuant to a "dispositive stipulation" by the parties.

On June 29, 1999, plaintiffs brought a federal action against the city and Anger pursuant to 42 U.S.C. § 1983, alleging a deprivation of property without due process of law under the Fifth Amendment and the Fourteenth Amendment, unreasonable seizure in violation of the Fourth Amendment, malicious prosecution in violation of the Fourth Amendment and the Fourteenth Amendment, First Amendment retaliation, false arrest (a state action), false imprisonment (a state action), and malicious prosecution (a state action) for constitutional violations arising from the actions that formed the basis of the 1995 circuit court suit.

On July 15, 2000, plaintiffs filed a motion with the Oakland Circuit Court in Case No. 95-498817-CZ for contempt, to reinstate the case, and to amend the complaint. The proposed amended complaint included claims nearly identical to those alleged in the federal suit.

On August 4, 2000, the federal district court granted defendants' motion for judgment on the pleadings, holding that plaintiffs' claims were "inextricably intertwined" with issues earlier presented to the state court, and thus, were precluded by the Rooker-Feldman doctrine.⁶Peterson Novelties, Inc. v. City of Berkley, 2000 WL 1279169, 2000 U.S. Dist Lexis 13028 (E.D.Mich., 2000). Subsequently, plaintiffs appealed to the United States Court of Appeals for the Sixth Circuit.

On October 19, 2000, the Oakland Circuit Court in Case No. 95-498817-CZ denied plaintiffs' motion for contempt, to show cause, to reinstate the case, and to amend the complaint. The circuit court reasoned that the issues were properly before the Sixth Circuit, and that there was no compelling reason to reopen the matter when the issues could have been raised in a timely manner. The circuit court further noted that the delay caused undue prejudice and, thus, the motion should be denied. On November 1, 2000, plaintiffs' filed a motion for reconsideration of this order.

On November 14, 2000, plaintiffs filed the present action in Oakland Circuit Court pursuant to 42 U.S.C. §§ 1983, 1988, and the federal and state constitutions.⁷ Specifically, plaintiffs brought the following claims: Count I alleged federal claims of retaliation, unreasonable search and seizure, deprivation of property without due process, and malicious prosecution; Count II alleged claims of false arrest and false imprisonment; and Count III alleged malicious prosecution.

On November 20, 2000, the Oakland Circuit Court denied plaintiffs' motion for reconsideration in Case No. 95-498817-CZ.

On November 27, 2001, the circuit court, in the present case, issued an opinion and order granting defendants' motion for summary disposition pursuant to MCR 2.116(C)(7), (8), and (10). Specifically, the circuit court found that plaintiffs' issues were barred by res judicata, and that even if the claims for false arrest, false imprisonment, and malicious prosecution were not, plaintiffs failed to state a claim. On February 6, 2002, an order was entered adopting the reasons stated in the November 27, 2001, opinion and order, and granting defendants' motion for summary disposition and dismissing plaintiffs' claims.

On October 1, 2002, the Sixth Circuit affirmed the decision of the federal district court granting defendants' motion for judgment on the pleadings. Peterson Novelties, Inc. v. City of Berkley, 305 F.3d 386, 397 (C.A.6, 2002). Although finding the Rooker-Feldman doctrine inapplicable, the Sixth Circuit determined that several of the plaintiffs' allegations were identical to the allegations made in the emergency motion in the state circuit court, and that the doctrine of claim preclusion barred consideration of plaintiffs' claims because those claims either were decided by the circuit court or could have been brought in the 1995 circuit court action. Id. at 394-397. With regard to the unreasonable search and seizure, malicious prosecution, and false arrest or false imprisonment claims, the Sixth Circuit found that these claims were precluded on the basis of the February 2, 2002, decision of the Oakland Circuit Court that resulted in this appeal.

II

Plaintiffs' first argue on appeal that their claims are not precluded. We review rulings regarding motions for summary disposition de novo. Van v. Zahorik, 460 Mich. 320, 326, 597 N.W.2d 15 (1999). The circuit court opinion indicates that summary disposition was granted "based upon MCR 2.116(C)(7), (8), and (10)."⁸ The applicability of res judicata is a question of law that is reviewed de novo on appeal. Pierson Sand & Gravel, Inc. v. Keeler Brass Co., 460 Mich. 372, 379, 596 N.W.2d 153 (1999).

Plaintiffs argue that res judicata does not apply, and that the circuit court erred in granting summary disposition on...