United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
H. CLELAND, UNITED STATES DISTRICT JUDGE
before the court is Plaintiff's Motion for Summary
Judgment. (Dkt. #14.) The motion was originally to be heard
on February 5, 2014, but a bankruptcy stay and administrative
closing have long left this case in limbo. (Dkt. #19.) The
court having now lifted the stay and reopened the case, (Dkt.
#22.), Defendants have filed a response, (Dkt. #23), and
Plaintiffs have filed a reply, (Dkt. #24). After reviewing
the briefs, the court concludes that no hearing is necessary.
See E.D. Mich. LR 7.1(f)(2). For the following
reasons, the court will grant in part and deny in part
Plaintiff's motion for summary judgment.
instant case follows a suit filed by Defendants against
several insurance companies, including Plaintiff IDS Property
Casualty Insurance Company (“IDS”). (No.
10-14896). There, Defendants alleged that IDS had wrongly
denied their claim for the loss of their home following a
fire on June 14, 2010. After this court denied the
claimants' motion for summary judgment in that
proceeding, the case continued to trial where a jury found in
favor of IDS, specifying that IDS had proved by the requisite
standard its affirmative defenses, including that the
claimants had “intentionally concealed or
misrepresented [some] material fact or circumstance, or
engaged in fraudulent conduct, or made a materially false
statement[.]” (Dkt. #14-6.) The Sixth Circuit denied
their appeal of this court's ruling on the motion for
instant suit, Plaintiff IDS seeks recovery of moneys totaling
$320, 087.34 paid out to Defendants during their pursuit of
the fraudulent claim. Defendants have not responded
point-by-point as directed in the court's scheduling
order, (Dkt. #9, Pg. ID 31, 32), but rather provided a
narrative “Counter Statement of Facts.” The
material facts are not actually in dispute. In essence they
are: 1) an intentionally-set fire destroyed Defendants'
home; 2) Plaintiff, reserving its rights, paid out sums to
Defendants and their mortgage-holder based on Defendants'
statements about their claim; 3) Plaintiff ultimately denied
the claim after completing its investigation; 4) Defendants
sued; and 5) Defendants lost in large part because the jury
determined that they had engaged in misrepresentation and
alleges here that Defendants' conduct -filing the claim
and asserting that they were not the source of the fire-
constituted fraud, and that Defendants were never entitled to
any of the amounts Plaintiff had paid out to them or others
on their behalf. Plaintiffs point to contract language that
allows them to recover such wrongly-made payments, including
those paid to the mortgagee (Aurora Bank FSB). Plaintiff also
argues that public policy requires that Defendants repay the
mortgage proceeds. Plaintiff argues that the claims are not
barred by Federal Rule 13(a) governing compulsory
counterclaims despite not having been brought in the original
suit, because the claims did not “mature” until
the jury rendered its verdict and made its finding of
fraudulent conduct. Finally, IDS argues that it is due a
declaratory judgment that it owns the subject property, all
rights title and interest in which was conveyed to IDS by
Aurora Bank FSB upon payment on the policy.
response, Defendants argue that Plaintiff's instant
claims were compulsory counterclaims to the previous suit,
and thus they are barred under Michigan rules governing
res judicata and collateral estoppel. They argue
that any claims IDS might have against them would have
“matured” when IDS denied their claims, which
preceded the filing of the first lawsuit.
reply, Plaintiff contends that Defendants' reliance on
Michigan's res judicata law is inapplicable in
cases such as this, which have been litigated exclusively in
federal District Court. It also points out that the verdict
in the underlying case turned on a determination that the
Defendants had been untruthful.
judgment is proper “if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). “In deciding a motion for summary judgment, the
court must view the evidence in the light most favorable to
the non-moving party, drawing all reasonable inferences in
that party's favor.” Sagan v. United
States, 342 F.3d 493, 497 (6th Cir. 2003). The movant
has the initial burden of showing the absence of a genuine
dispute as to a material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). “[T]hat burden
may be discharged by showing . . . that there is an absence
of evidence to support the nonmoving party's case.”
Bennett v. City of Eastpointe, 410 F.3d 810, 817
(6th Cir. 2005) (internal quotation marks omitted).
burden then shifts to the nonmovant, who must put forth
enough evidence to show that there exists “a genuine
issue for trial.” Horton v. Potter, 369 F.3d
906, 909 (6th Cir. 2004) (citation omitted). Summary judgment
is not appropriate when “the evidence presents a
sufficient disagreement to require submission to a
jury.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 243 (1986). In evaluating a summary judgment
motion, “the judge's function is not himself to
weigh the evidence and determine the truth of the matter but
to determine whether there is a genuine issue for trial . . .
credibility judgments and weighing of the evidence are
prohibited.” Moran v. Al Basit LLC, 788 F.3d
201, 204 (6th Cir. 2015) (internal quotation marks and
do not attack the pertinent facts or claims advanced by
Plaintiff in this case, but instead argue that, whatever the
merits of Plaintiff's claims, because they were not
brought in the earlier action they are barred by doctrines of
res judicata and Federal Rule 13(a) governing
compulsory counterclaims. Defendants tacitly admit that, if
the claims are not barred, Plaintiff has established
sufficient facts to warrant the grant of summary judgment.
is correct that it is Federal Rule 13(a) and not Michigan law
that controls here. The Supreme Court has established a
framework for determining whether to apply the Federal Rules
of Civil Procedure or state law when the Federal Rules
address a question. In S ...