Opinion
No. 4:00 cv 170
February 16, 2001.
In accordance with the court's Opinion and Order entered this same date,
IT IS ORDERED AND ADJUDGED that plaintiffs Harmark, Inc. and Mark Hotovy shall take nothing, and that the action as to all of the defendants is dismissed on the merits.
OPINION AND ORDER GRANTING DEFENDANTS ' MOTION FOR SUMMARY JUDGMENT
In this action filed under 42 U.S.C. § 1983, plaintiffs Harmark, Inc. and Mark Hotovy allege that the defendants, which include the City of Hartford, Michigan and various of its officials, violated their rights to due process and equal protection by engaging in various acts designed to interfere with plaintiffs' operation of a racetrack in the city. The matter is currently before the court on the defendants' Motion for Summary Judgment (docket no. 5). In their motion, the defendants argue that plaintiffs' action is barred by res judicata. Plaintiffs have filed a written response (docket no 6), in which they admit the basic facts but dispute the legal effect of the prior action.
For the reasons to follow, the court grants the motion.
I
The following facts, taken from the complaint, are assumed to be true for the purposes of the present motion.
Plaintiff Mark Hotovy is a resident of Kalamazoo, Michigan and the sole shareholder of Plaintiff Harmark , Inc. ("Harmark"). Harmark is a Michigan corporation which is (or was) doing business in Hartford, Michigan. Harmark was incorporated in 1992 for the purpose of owning and operating a racetrack in Hartford, at a location once known as the Hartford Fair Grounds Raceway. The track had been a public fairground and racetrack since the early 1900's, becoming a privately operated racetrack beginning in 1956.
In 1992, Harmark purchased the racetrack property from a private party and began what plaintiffs allege was a major "restoration" of the racetrack. The property, comprising approximately 44 acres, had apparently been allowed to deteriorate over the years although, according to plaintiffs, it had continued to be operated as a racetrack. Beginning in mid-1992 and continuing into 1993, 1994, and the first half of 1995, Harmark and Hotovy went through the process of renovating and repairing various parts of the grounds and facilities as well as completing the construction of new facilities. According to the complaint, all construction was done with authorized building permits and received full inspection and approval from the building inspector for the City of Hartford. Plaintiffs allege that they eventually expended in excess of $1,000,000 to complete the restoration and new construction of the racetrack.
During the first half of 1994, plaintiffs made arrangements and entered into contracts with racers and others concerning programs for the 1995 racing season. The plaintiffs also issued preseason press releases and caused other publications to be made announcing events planned for the 1995 season. News of the events apparently reached City of Hartford officials, for in the summer of 1994 plaintiffs received a letter from defendant Fred Snider, then City Manager, indicating that the plaintiffs' plans for the track might be in conflict with new zoning regulations passed in 1992.
According to plaintiffs, because these new zoning regulations were passed only after Harmark purchased the racetrack property, the prior use was "grandfathered" and thus the new restrictions could not be applied to prevent the continued operation of the track. Plaintiffs allege that the city's Planning Commission publicly acknowledged the pre-existing use, even though it disagreed with plaintiffs' plans for the property. However, plaintiffs further allege that despite the public recognition of the pre-existing use, the City of Hartford and a number of its officials "continued to harass" them in "numerous ways, including establishing arbitrary operating hours, [and] having the Chief of Police issue numerous tickets for `alleged violations of the Zoning Ordinance[.]"' Complaint at 8, ¶ 27. According to plaintiffs, these and "many other acts" were designed "to drive away customers[, J shut down, destroy and stop the operation of the racetrack . . . by whatever means at the disposal of [the City]." Id. Plaintiffs further allege that the "relentless harassment" succeeded in driving the track out of business; the racetrack closed, the lender foreclosed on the property, and the plaintiffs sought bankruptcy protection.
According to bankruptcy court records, Harmark filed a Chapter 11 petition in the United States Bankruptcy Court for the Western District of Michigan in 1996. (In re Harmark, Inc., No. 96-84125, Howard , J.) Mark Leo Hotovy and Billie Jan Hotovy filed a Chapter 7 petition in 1997. (In re Mark Leo Hotoyy and billie Jan Hotovy, No. 97-09739, Howard, J.). The status or outcome of these proceedings is not known.
Eventually, purchasers were found for the property. Plaintiffs allege that the new owners received far better treatment from the City of Hartford. According to the complaint, "[s]o-called limitations on `race time' disappeared or were extended even beyond the times requested for [plaintiffs]," and the new owners were not issued tickets by the police.Id. at 9-10, ¶ 32.
Plaintiffs allege that these and "many other instances where [they] were treated differently than the new owners" violated their rights, "as a class of one," to equal protection and due process under the Fourteenth Amendment to the United States Constitution. Id. at 10, ¶ 33.
In their complaint, plaintiffs readily acknowledge having filed a previous lawsuit against the City of Hartford and various of its officials in the Michigan courts. Id., ¶ 34. Plaintiffs also acknowledge that the Michigan court entered summary judgment against them and in favor of the defendants in that action. Id., ¶ 35. Plaintiffs allege that this ruling has effectively denied them "any opportunity or basis for redress in State Court for any damages resulting from the violation of [their] constitutional rights[.]". Id. at 11; ¶ 36. As relief in this action, plaintiffs seek compensatory and punitive damages in an unspecified amount, pursuant to 42 U.S.C. § 1983.
Plaintiffs' complaint in this federal action refers to an "enclosed order dated August 30, 2000" in which the Michigan court granted the defendants' motion for summary judgment. Complaint at 10, ¶ 35. Plaintiffs complaint as filed in fact includes no attachments or exhibits. However, the defendants have provided copies of all relevant documents from the state court action with their motion for summary judgment. These materials indicate that the defendants sought summary disposition in the state proceedings on the basis of governmental immunity, the statute of limitations, and failure to state a claim upon which relief could be granted.
II
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."' Fed.R.Civ.P. 56(c). In evaluating a motion for summary judgment, the court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The party moving for summary judgment bears the burden of establishing the non-existence of any genuine issue of material fact and may satisfy this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
"[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322-323. "In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial."Id. Although this action is in its early stages, "[t]he party opposing a motion for summary . . . possesses no absolute right to additional time for discovery[,]" Emmons v. McLaughlin, 874 F.2d 351, 356 (6th Cir. 1989), and indeed in this instance the plaintiffs do not even request additional time for discovery. The stated basis for the defendants' motion is res judicata: that the prior judgment entered in the state court action bars plaintiffs' claims in this case. In their response to the defendants' motion, plaintiffs have expressly admitted that "the same general facts apply here" and in the first case. Answer to Defendants' Motion for Summary Disposition, ¶ 1. Thus, the material facts regarding plaintiffs' prior state court action against these defendants are therefore not genuinely in dispute; rather, the parties dispute only the effect of those facts.
Under Michigan law, res judicata is an affirmative defense, and therefore the party urging it bears the burden of proof. E G Finance Co., Inc. v. Simms, 362 Mich. 592, 107 N.W.2d 911, 914 (1961). However, if the defendants are able to establish that this affirmative defense applies as a matter of law, summary judgment will be appropriate despite its harsh consequences. Sewer Alert Committee v. Pierce County, 791 F.2d 796, 799 (9th Cir. 1986).
III
"Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94 (1980). The doctrine serves to protect adversaries from the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions. United States v. Stauffer Chemical Co., 684 F.2d 1174, 1180 (6th Cir. 1982), aff'd, 464 U.S. 165 (1984). It is well established that res judicata applies to § 1983 actions. E.g.,Allen.449 U.S. at 105; Migra v.Warren City School Dist. Bd. of Educ., 465 U.S. 75, 84 (1984); Sewer Alert, 791 F.2d at 798.
Title 28 U.S.C. § 1738 requires that federal courts give state court decisions the same full faith and credit that they would receive "in the courts of such State." Thus, a prior state court adjudication has the same effect in federal court as it would in state court. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 379 (1985). "Michigan has adopted a broad application of res judicata that bars claims arising out of the same transaction that plaintiff could have brought but did not." Bergeron v. Busch, 228 Mich. App. 618, 579 N.W.2d 124, 126 (1998); see also City Communications. Inc. v. City of Detroit, 888 F.2d 1081, 1089 (6th Cir. 1989) ("Since 1980, Michigan courts have followed a broad application of res judicata, using it to bar both claims actually litigated by parties in prior actions and claims that could have been, but were not, litigated") (citations omitted). Under the doctrine, the first legal action operates as a bar to a second action if
(1) the prior action was decided on the merits, (2) the matter contested in the second case was or could have been resolved in the first, and (3) both actions involved the same parties or their privies.Bergeron, 579 N.W.2d at 126; see also Smith, Hinchman Grylls, Assocs., Inc. v. Tassic, 990 F.2d 256, 257-58 (6th Cir. 1993) (res judicata applies where (1) the parties or their privies are the same; (2) the prior judgment was rendered by a court of competent jurisdiction; (3) the prior judgment was a final judgment on the merits; and (4) the two suits involve the same cause or causes of action that were brought, or could have been brought, in the prior litigation); Fellowship of Christ Church v. Thorburn, 758 F.2d 1140, 1144-45 (6th Cir. 1985) (issues raised in the second case must have been either "resolved in the first, or, through the exercise of reasonable diligence, might have been raised and resolved in the first case"). Each of the elements of claim preclusion is present here. First, the plaintiffs in this action were also named plaintiffs in the prior action. In addition, there is no doubt that the state court was a court of competent jurisdiction for the claims which were or could have been asserted in that action, including the § 1983 claims. See Dorsey v. City of Detroit, 858 F.2d 338, 340-41 (6th Cir. 1988). Through the exercise of reasonable diligence, plaintiffs could have raised the federal issues before this court in their state court pleadings. See Department of Treasury v. Campbell, 161 Mich. App. 526, 411 N.W.2d 722, 723 ("State courts have concurrent jurisdiction over § 1983 claims"). Finally, the state court entered a final decision on the merits, for, under Michigan law, a summary judgment operates as a final adjudication on the merits. Curry v. City of Detroit, 394 Mich. 327, 231 N.W.2d 57, 59 (1975); See Carter v. Southeastern Michigan Transp. Auth. 135 Mich. App. 261, 351 N.W.2d 920, 922 (1984) (involuntary dismissal was an adjudication on the merits);Citizens Mortgage Corp. v. Second Avenue Ltd. Dividend Housing Ass'n, 72 Mich. App. 1, 248 N.W.2d 699, 701 (1976), reversed in part, 400 Mich. 836, 255 N.W.2d 203 (1977).
A copy of plaintiffs' original complaint filed in the state action indicates that the plaintiffs at one point expressly alleged that the defendants applied laws "unevenly against Plaintiff which were not enforced against others in similar positions either before or after being used to damage Plaintiff." Defendants' Motion for Summary Judgment, Exhibit A, ¶ 10.
While plaintiffs' response appears to argue that they could not have raised their federal claims in that action, plaintiffs are simply wrong. The case on which plaintiffs rely, Jones v. Powell, 462 Mich. 329, 612 N.W.2d 423 (2000), does not support their position. Jonesholds that no inferred damages remedy exists for a violation of Michigan's State Constitution. The case does not hold that § 1983 claims based on federal constitutional violations cannot be pursued in state court; indeed, had plaintiffs bothered to read Jones through to its conclusion they would have realized that rather than supporting their position, the case in fact supports the defendants' position. See id. at 427 ("A plaintiff may sue a municipality in federal or state court under 42 U.S.C. § 1983 to redress a violation of a federal constitutional right . . . . Further, a plaintiff may bring an action against an individual defendant under § 1983 and common-law tort theories"). Plaintiffs claims are clearly barred by res judicata.
Conclusion
Because plaintiffs' claims in this action are barred by res judicata, the court grants the defendants' motion. The court will enter judgment accordingly.
So ordered this 16th day of February , 2001.