GORDON GROSSMAN V ELWOOD COLLINS
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STATE OF MICHIGAN
COURT OF APPEALS
GORDON GROSSMAN,
UNPUBLISHED
April 15, 2003
Plaintiff-Appellant,
v
No. 239780
Wayne Circuit Court
LC No. 01-112954-CK
ELWOOD COLLINS,
Defendant-Appellee.
Before: Jansen, P.J. and Kelly and Fort Hood, JJ.
PER CURIAM.
Plaintiff appeals as of right from a circuit court order granting defendant’s motion for
summary disposition. We affirm. This appeal is being decided without oral argument pursuant
to MCR 7.214(E).
Plaintiff and defendant were two of several partners in a partnership which owned an
apartment complex. In the course of litigation in Oakland County, a receiver was appointed for
the business; later, the partnership was dissolved. Pursuant to agreement of the parties, the court
entered a stipulated order directing the receiver to sell the apartment complex at auction. The
order set forth rules governing the auction and the subsequent sale. One rule was that no one
other than a partner could participate in the auction. Plaintiff, defendant, and a group of other
partners all participated in the auction. Defendant was backed financially by an outsider, Peter
Cubba, who put up the good faith deposit and agreed to pay the ultimate sale price should
defendant be the successful bidder. At the time the auction closed, plaintiff was the high bidder
at $12.1 million.
Plaintiff subsequently learned of Cubba’s involvement and petitioned the court to re-open
the auction on the ground that defendant was no more than an agent for Cubba, the real party in
interest, and because Cubba was not authorized to participate in the auction, defendant’s
participation as his agent constituted a violation of the court’s order. Judge Nanci Grant
conducted an evidentiary hearing and determined that Cubba’s financial participation was not
prohibited by the terms of the auction order and issued an order denying plaintiff’s motion and
directing him to proceed with the purchase for $12.1 million.
Plaintiff subsequently filed this action, asserting that the stipulated order constituted a
contract between the parties which defendant breached by acting as Cubba’s agent when Cubba
was not allowed to participate in the auction. The trial court dismissed the action, finding that it
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was barred by the doctrine of res judicata. “Because res judicata is a question of law, we review
de novo its application as well as the court’s action on a motion for summary disposition.”
Phinisee v Rogers, 229 Mich App 547, 551-552; 582 NW2d 852 (1998).
“As a general rule, res judicata will apply to bar a subsequent relitigation based upon the
same transaction or events … .” Pierson Sand & Gravel, Inc v Keeler Brass Co, 460 Mich 372,
380; 596 NW2d 153 (1999). The doctrine “bars relitigation of claims actually litigated and those
claims arising out of the same transaction that could have been litigated.” Huggett v Dep’t of
Natural Resources, 232 Mich App 188, 197; 590 NW2d 747 (1998), aff’d 464 Mich 711 (2001).
The trial court erred in ruling that plaintiff’s complaint was barred by res judicata. The
prior suit arose out of a partnership dispute relating to the right to review the books and records
of the partnership. That claim was sent to binding arbitration and the court later confirmed the
award. The case remained under the court’s jurisdiction because of the receivership and
everything that transpired after the award was confirmed related to the dissolution of the
partnership, termination of the receivership, and disposition of the partnership’s main asset. This
case, on the other hand, involves a breach of contract action which arose in the context of the
dissolution proceedings several years after the original complaint was filed, and could not have
been added as a counterclaim years later. Nevertheless, in the context of resolving the
dissolution proceedings in the prior case, the court necessarily determined the same issue raised
in plaintiff’s complaint. Therefore, plaintiff’s claim is barred by the related doctrine of collateral
estoppel.
Where res judicata bars a subsequent action based on the same claim as a prior action,
collateral estoppel bars a subsequent action when the ultimate issue to be concluded is the same
as that litigated in a prior action. Eaton Co Bd of Co Rd Comm’rs v Schultz, 205 Mich App 371,
375-376; 521 NW2d 847 (1994). “Collateral estoppel, or issue preclusion, precludes relitigation
of an issue in a subsequent, different cause of action between the same parties or their privies
when the prior proceeding culminated in a valid final judgment and the issue was actually and
necessarily determined in the prior proceeding.” Ditmore v Michalik, 244 Mich App 569, 577;
625 NW2d 462 (2001); Porter v Royal Oak, 214 Mich App 478, 485; 542 NW2d 905 (1995).
In the prior action, plaintiff asserted that defendant had breached the auction order
relating to authorized participants by acting as Cubba’s agent and sought a $900,000 reduction in
his final purchase price. The court held an evidentiary hearing on the issue and determined on
the basis of the evidence presented that Cubba’s financial backing of defendant did not constitute
a breach of the auction order. In the present action, plaintiff’s sole claim is that defendant
breached the auction order relating to authorized participants by acting as Cubba’s agent.
Whether defendant’s participation in the auction constituted a violation of the auction order is the
same issue decided by Judge Grant, who ruled that defendant had not violated the order.
Although the court’s ruling was the result of an issue raised in a motion rather than a pleading
and the order disposing of the motion was not a final order, the doctrine of collateral estoppel is
still applicable. Keywell & Rosenfeld v Bithell, 254 Mich App 300; __ NW2d __ (2002). This
Court will not reverse where the trial court reached the right result for the wrong reason. Taylor
v Laban, 241 Mich App 449, 458; 616 NW2d 229 (2000).
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Affirmed.
/s/ Kathleen Jansen
/s/ Kirsten Frank Kelly
/s/ Karen M. Fort Hood
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