Michigan Appeals Court Holds Small Claims Judgment Did Not Bar Subsequent Circuit Court Action

A plaintiff appealed the lower court’s grant of summary disposition under MCR 2.116(C)(7) in favor of the defendant in a Michigan motorcycle accident case. The circuit court determined that the small claims judgment the plaintiff obtained against the defendant for damage to his motorcycle barred his subsequent circuit court action against her for bodily injuries because both claims arose from the same accident. The Michigan Court of Appeals reversed and remanded.

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In July 2013, the defendant drove through an intersection and hit the plaintiff, who was riding his motorcycle. The responding police officer determined that the defendant failed to yield. The plaintiff brought a claim in the small claims division in March 2014, stating that the accident destroyed his motorcycle and caused him bodily injuries. The plaintiff explained that he did not have collision insurance on the motorcycle, which would have cost one-fourth of the motorcycle’s estimated $1,000 value. Consequently, the plaintiff asked for $900 because he expected to sell what was left of the motorcycle for $100. He obtained a judgment of $960, including $900 in damages and $60 in costs.

The plaintiff subsequently filed a complaint in the circuit court in July 2014 against the defendants (the driver and Frankenmuth Mutual Insurance Company) for claims arising out of the collision. He alleged that the driver’s negligence caused or exacerbated a neck injury that required surgery. The plaintiff agreed to dismiss one of his two claims against Frankenmuth, and Frankenmuth later settled his remaining claim.

The defendant moved for summary disposition under MCR 2.116(C)(7) (prior judgment) and (C)(8) (failure to state a claim). The defendant argued that res judicata and collateral estoppel barred the circuit court action because the small claims action involved the same claims and the same parties. The plaintiff opposed the motion.

The circuit court granted the defendant’s motion for summary disposition under MCR 2.116(C)(7) because res judicata barred the second action against the defendant.

On appeal, the parties disputed whether the small claims judgment for damage to the motorcycle precluded the plaintiff’s subsequent circuit court action for bodily injuries against the defendant. Res judicata bars a subsequent action when the original action was decided on its merits and ended in a final decision, both the original and subsequent actions involved “the same parties or their privies,” and the issue raised in the subsequent action “was, or could have been, resolved in the first” action.

The no-fault act abolishes tort liability arising from the ownership, maintenance, or use of a motor vehicle with five exceptions under MCL 500.3135(3), commonly called the mini-tort provisions. The fifth exception permits recovery for less than $1,000 of damage to a motor vehicle if the damages are not covered by insurance.

The no-fault act excludes motorcycles from the definition of a motor vehicle. Therefore, Michigan courts have determined that a plaintiff has no right to recover for damage to a motorcycle.¬†The statute encourages litigants to bring an action for damages to a motor vehicle of up to $1,000 in the small claims division. It further provides that a judgment on this type of damages “is not res judicata in any proceeding to determine any other liability arising from the same circumstances that gave rise to the action.”

Examining the plain language of the statute, Michigan courts have determined that it signaled the legislature’s intent to separate causes of action for minor property damage from other claims arising from the same automobile accident. Accordingly, the statute did not conflict with the compulsory joinder rule, which does not apply to small claims actions.

In the current case, the parties agreed that the small claims division erred by awarding the plaintiff damages because a motorcycle is not a motor vehicle. Nonetheless, the plaintiff argued the statute precluded the circuit court from applying res judicata to bar his action for bodily injuries. The small claims division may have erred by granting the plaintiff damages, the appeals court reasoned, but that error is uncorrectable because it is not appealable.

The court concluded that the small claims judgment for damage to the motorcycle did not bar the plaintiff’s subsequent circuit court action against the defendant for bodily injuries. Therefore, the circuit court erred by granting summary disposition on the basis of a prior judgment.

The motorcycle accident attorneys at the Neumann Law Group represent people throughout Michigan from offices in Traverse City and Grand Rapids. Call us at (231) 463-0122 or at (616) 717-5666 for a free consultation.

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