In late 2015, the Michigan Court of Appeals affirmed a circuit court’s decision to dismiss a case based on the fact that the matter had already been litigated. In Francis & High Properties, LLC v. Happy’s Pizza Franchise, LLC, a Happy’s Pizza franchise had fallen behind on its rent for several months. The owners of the property filed a lawsuit for unpaid rent and possession of the property.
According to Michigan law, district courts have exclusive jurisdiction over claims of possession. However, district courts in Michigan only have jurisdiction to hear cases involving $25,000 or less. The plaintiff’s complaint in this case made a claim for damages totaling nearly $140,000. The defendant challenged the district court’s jurisdiction over the matter because the plaintiff’s claim for damages exceeded the jurisdictional limit of the court. The district court held that the plaintiff had two options: 1) it could file two separate claims (one in district court for possession and the other in circuit court for money damages)or 2) it could limit its money damages sought to the jurisdictional limit of $25,000 and keep the two claims joined in one case. The plaintiff in this case elected to limit its claim for monetary damages to $25,000 and retain joinder of the two claims. It did this by express statement of the plaintiff’s counsel.
After plaintiff prevailed in district court, it filed an additional claim against the defendant in circuit court for more than $330,000, invoking the acceleration clause in the lease. The circuit court held that this action was barred by the legal principle of res judicata. Res judicata is a principle of law by which a matter which has already been adjudicated may not be pursued further. According to Michigan law, there are four elements which must be satisfied to invoke res judicata: 1) that the prior action in question was decided on the merits, 2) that the decision in the prior matter in question was a final judgment, 3) that the matter in the second case could have been resolved in the first case, and 4) the two actions involve the same parties.
In this case, the Court held that the suit in circuit court was barred by res judicata. The plaintiffs had chosen to join the two claims and reduce the amount of monetary damages to fit within the jurisdictional limits of the district court. In doing so, the plaintiff forfeited its right to pursue further money damages beyond what was allowed in the district court.
This case serves as a reminder to be aware of the jurisdictional limits of the court in which a case is being filed. In cases where a jurisdictional limit would require the reduction of the damages claimed, it may be important to file a complaint for possession in district court and the claim for money damages in circuit court. You should discuss the benefits and disadvantages of this decision with your attorney.
This article was written by Tyler Kemper, law clerk.
