Res judicata elements; Adair v Michigan; Privity analysis; Distinguishing Wildfong v Fireman’s Fund Ins Co

The court held that res judicata did not bar plaintiff’s premises-liability and negligence claims against defendants-property owner (Alten) and contractors because neither was in privity with the sole defendant in an earlier action (nonparty-S), and therefore summary disposition was improper. Plaintiff rented a home and claimed he was injured when a railing failed. He first sued S (Alten’s sole shareholder) individually, and that case was dismissed because S was not the landlord. While that suit was pending, plaintiff filed the present case against Alten as property owner and against contractors who allegedly performed negligent repairs. The trial court initially denied Alten’s res judicata motion but then granted reconsideration and dismissed the claims against Alten and later dismissed the claims against the contractors on the same theory. On appeal, the court found that the proper standard of review was de novo because the ruling under reconsideration produced a summary-disposition decision, and noted that res judicata requires the same parties or their privies. The court held that S and Alten did not share a “substantial identity of interests” because they were “not in common potential liability.” It observed that “defendants acknowledge” as much. The court found that Wildfong did not establish a bright-line rule equating shareholders and closely-held corporations and that the interests at issue in that case involved plaintiffs, not defendants. Turning to the contractors, the court held that they likewise shared no identity of interests with S and found their privity argument “totally meritless.” The court further noted that the trial court’s concerns about plaintiff’s procedural missteps were irrelevant because res judicata “leaves no room” for such considerations. Reversed and remanded.