The Michigan Court of Appeals recently held in Jones v. Westminster, that the doctrine of res judicata does not bar a second suit if a continuing course of wrongful conduct gives rise to a new cause of action. Res judicata typically holds that a judgment on the merits in a prior suit involving the same parties, or their privies, bars a second suit based on the same cause of action. John Michael Jones v. Westminster, LLC et al, Docket No. 334447 (May 24, 2018).
https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2018/334447.html
Plaintiffs’ first lawsuit alleged that Defendants violated a contractual agreement. The circuit court agreed and awarded Plaintiffs their damages up to the date of judgment. The court also awarded Plaintiffs injunctive relief intended to prevent future harm. However, after the judgment and injunction were entered, Defendants violated the agreement again and disregarded the injunction. Plaintiffs then filed a second suit.
The doctrine of res judicata is employed to prevent multiple suits litigating the same cause of action. The doctrine bars a second, subsequent action when (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case, was or could have been, resolved in the first case. Sewell v. Clean Cut, Inc, 463 Mich 586, 597 NW2d 82 (1999). Michigan takes a broad approach to the doctrine of res judicata, holding that it bars not only claims already litigated, but claims arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not. Dart v. Dart, 460 Mich 573, 586; 597 NW2d 82 (1999).
The Court of Appeals cited a U.S. Supreme Court case, Lawlor v. Nat’l Screen Serv Corp. 349 US 322 (1955), which ruled that the res judicata doctrine does not apply in an action for damages arising from a continuing wrong. In Jones, Plaintiff’s allegations that Defendant breached the agreement after the judgment had been entered brought the case within the reasoning of Lawlor. Although the breaches are connected in the sense that they flow from the same contract, Plaintiff’s should not be precluded from asserting new claims arising from continuing wrongful conduct. To hold otherwise would be to allow Defendants a free pass to ignore their contractual and legal obligations.
The Court of Appeals concluded by stating that the trial court issued an injunction to try to mitigate the future effects of the Defendants’ contractual breach, but the injunction did not have its intended effect and damages continued to accrue. Relief could not be granted in the previous suit because the Defendants had not violated the court’s order. Defendants allegedly did so after the previous case closed. Those fresh acts created fresh damages.
This article was written by Ryan Hansen, Law Clerk
