Jon Jon's Inc et al v. Warren, City of et al

Filing 66

ORDER granting 59 Motion for Summary Judgment. Signed by District Judge Julian Abele Cook. (KDoa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JON JON’S, VICTORIA CERRITO,
MASOUD SESI and NANCY HAKIM,
Plaintiffs,
v.

Case No. 10-12516
Honorable Julian Abele Cook, Jr.

CITY OF WARREN,
Defendant.

ORDER
The controversy in this litigation stems from accusations by a private corporation, Jon Jon’s,
Inc. (“Jon Jon’s”), and three individuals, Victoria Cerrito, Masoud Sesi, and Nancy Hakim, that the
Defendant, City of Warren (“City”),1 unlawfully, unconstitutionally and without any semblance of
a legal justification denied an application to transfer stock in the above-mentioned private
corporation under the provisions of the Michigan Liquor Control Code. Although this action was
commenced in the Macomb County Circuit Court of Michigan (“Macomb Circuit”), the City
undertook steps to cause its removal to this federal court on the basis of its federal question
jurisdiction. 28 U.S.C. §§ 1331, 1441(b).
I.

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The complaint originally identified two Defendants; namely, the City and Mark Liss, a
member of its City Council. However, pursuant to the parties’ stipulation, the Court entered an
order on November 16, 2010 which dismissed Liss as a party in this case.
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Jon Jon’s is a cabaret style “gentlemen’s club” in Warren, Michigan that had been owned
and operated by Cerrito for twenty-five years. In 2008, Cerrito made an effort to sell her business
by initially transferring a small portion of the Jon Jon’s corporate stock to Sesi. However, her
subsequent application to the Michigan Liquor Control Commission for approval to sell the
remaining stock to Sesi was blocked by the City. Cerrito alleges that this denial was caused by City
Councilman Mark Liss, who acted on the basis of bias and discrimination against Sesi. She then
attempted to transfer the entirety of the stock, now owned in part by both Cerrito and Sesi, to Hakim.
Cerrito alleges that Liss once again prevented the transfer under the belief that Sesi would still be
involved in the ownership and management of Jon Jon’s. The Plaintiffs filed this lawsuit on June
1, 2010, alleging a variety of claims under the United States Constitution and Michigan law.
Several months later, the City initiated a separate action for declaratory and injunctive relief
against the Plaintiffs2 (among others) in the Macomb Circuit relating to the determination of the
Warren Board of Zoning Appeals that Jon Jon’s had lost its lawful, non-conforming use status to
operate a sexually oriented business. The Plaintiffs filed an amended counterclaim which
encompassed the adverse decision by the zoning board as well as all of the claims they have raised
in this action. The parties agreed upon the entry of a stay of these proceedings pending the final
resolution of the state action.
On February 23, 2012, the Macomb Circuit affirmed the determination by the Zoning Board
of Appeals that Jon Jon’s had lost its nonconforming use status. Shortly thereafter - on May 15, 2012
- the Plaintiffs filed an application for leave to appeal pursuant to Michigan Court Rule 7.205(F)(1),

2

For the sake of clarity and consistency, the defendants/counter-claimants in the state suit
will continue to be identified as the Plaintiffs.
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which is presently pending before the Michigan Court of Appeals. Currently before this Court is the
City’s motion for the entry of a summary judgment pursuant to Fed. R. Civ. P. 56.
II.
The purpose of the summary judgment rule, as reflected by Federal Rule of Civil
Procedure 56, “is to isolate and dispose of factually unsupportable claims or defenses . . . .”
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The entry of a summary judgment is
proper only “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). “A fact is ‘material’
for purposes of summary judgment if proof of that fact would have the effect of establishing or
refuting an essential element of the cause of action or a defense advanced by the parties.” Aqua
Grp., LLC v. Fed. Ins. Co., 620 F. Supp. 2d 816, 819 (E.D. Mich. 2009) (citing Kendall v.
Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984)). In order for a dispute to be genuine, it must
contain evidence upon which a trier of the facts could find in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Singfield v. Akron Metro. Hous.
Auth., 389 F.3d 555, 560 (6th Cir. 2004). When assessing a request for the entry of a summary
judgment, a court “must view the facts and all inferences to be drawn therefrom in the light
most favorable to the non-moving party.” 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435
(6th Cir. 1987). The entry of a summary judgment is appropriate if the nonmoving party fails to
present evidence which is “sufficient to establish the existence of an element essential to its
case, and on which it will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.
Thus, the moving party has the initial obligation of identifying those portions of the
record that demonstrate the absence of any genuine issue of a material fact. Id. at 323.

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Thereafter, the nonmoving party must “come forward with some probative evidence to support
its claim and make it necessary to resolve the differences at trial.” Boyd v. Ford Motor Co., 948
F.2d 283, 285 (6th Cir. 1991); see also Anderson, 477 U.S. at 256. The presence or the absence
of a genuinely disputed material fact must be established by (1) a specific reference to
“particular parts of materials in the record, including depositions, documents, electronically
stored information, affidavits or declarations, stipulations (including those made for purposes of
the motion only), admissions, interrogatory answers, or other materials,” or (2) a “showing that
the materials cited do not establish the absence or presence of a genuine dispute, or that an
adverse party cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1).
III.
In support of its motion for summary judgment, the City argues that (1) the Plaintiffs’
claims which pertain to their request for authority to transfer Jon Jon’s stock and liquor license
are now moot by virtue of the state court’s judgment that Jon Jon’s may not operate a sexually
oriented business, and (2) this action is barred by the doctrine of res judicata (claim preclusion)
because the claims here were addressed and rejected by the Macomb Circuit.
First, the Plaintiffs argue in their response brief - and the City concedes - that their
remaining claims for nominal and compensatory damages preclude this case from becoming
moot. In 1978, the Supreme Court declared that nominal damages are available to “vindicate[]
deprivations of certain ‘absolute’ rights that are not shown to have caused injury.” Carey v.
Piphus, 435 U.S. 247, 266 (1978). Similarly, the Sixth Circuit has established that “a claim for
nominal damages . . . is normally sufficient to establish standing, defeat mootness, and grant
prevailing party status for the purpose of attorney fees under 42 U.S.C. § 1988.” Lynch v. Leis,

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382 F.3d 642, 646 n.2 (6th Cir. 2004); see also Murray v. Bd. of Trs., 659 F.2d 77, 79 (6th Cir.
1981) (district court erred in dismissing as moot § 1983 claim for nominal damages and
attorney fees). Moreover, at least some of the Plaintiffs have remaining claims for
compensatory damages. Thus, this action is not moot.3
Addressing its second argument, the City submits that the Plaintiffs’ claims should be
barred under the principle of res judicata because the same claims had been addressed as
counterclaims to the City’s lawsuit in the Macomb Circuit. For res judicata to apply, the
following elements must be satisfied; to wit, (1) a final decision on the merits by a court of
competent jurisdiction; (2) a subsequent action between the same parties or their privies; (3) an
issue in the subsequent action which was litigated or which should have been litigated in the
prior action; and (4) an identity of the causes of action. Bragg v. Flint Bd. of Educ., 570 F.3d
775, 776 (6th Cir. 2009) (quoting Bittinger v. Tecumseh Prods. Co., 123 F.3d 877, 880 (6th Cir.
1997)).
An examination of the record reveals that all four elements have been satisfied here. The
Court initially finds that the affirmation by the Macomb Circuit of the Zoning Board of
Appeals’ determination was clearly a final decision on the merits. The fact that an appeal of this
order is currently pending in the state court action does not affect the res judicata analysis. See
Weber v. Van Fossen, 322 F. App’x 429, 434 n.3 (6th Cir. 2009) (unpublished); Chakan v. City
of Detroit, 998 F. Supp. 779 (E.D. Mich. 1998) (“Michigan and federal courts agree that an

3

The Plaintiffs argued in their response brief that the proper standard of review is the
standard applicable to a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction.
However, because the case is not moot, this Court has proper subject matter jurisdiction over the
matter, and summary judgment pursuant to Fed. R. Civ. P. 56 is the proper vehicle for this Court
to render a decision.
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appeal of a judgment does not alter the preclusive effect of the same.”); City of Troy Bldg.
Inspector v. Hershberger, 183 N.W.2d 430, 433 (Mich. Ct. App. 1970) (“The rule in Michigan
is that a judgment pending on appeal is deemed [r]es judicata.” (citing 14 Michigan Law &
Practice Judgment § 176, p. 620)).
Second, the Court rejects the Plaintiffs’ argument that, because the present action was
initiated prior to the commencement of the Macomb Circuit case, this action is not a
“subsequent action” within the meaning of res judicata. “Subsequent action” for the purposes of
res judicata refers to the action sought to be maintained after a judgment has been entered in
another action between the parties, regardless of which case was first filed. “Where two actions
involving the same issue are pending between the same parties, ‘irrespective of which action or
proceeding was first brought, it is the first final judgment rendered in one of the courts which
becomes conclusive in the other as res judicata.’” Westwood Chem. Co., Inc. v. Kulick, 656 F.2d
1224, 1227 (6th Cir. 1981) (quoting Chicago, R.I. & P.R.Co. v. Schendel, 270 U.S. 611, 616-17
(1926)); see also Restatement (Second) of Judgments § 14 (1982). There is no dispute that the
parties are the same in both actions.
Third, the Plaintiffs, while acknowledging that the claims in the present suit were also
included in the counterclaims in the state action, maintain that claim preclusion did not attach
because the Macomb Circuit determined that those claims had been waived and thus did not
render the necessary determination on the merits. However, the City is correct that - unlike
collateral estoppel - Michigan’s broad claim preclusion rule “bars litigation in a second suit of
claims that were unsuccessfully raised or that should have been raised, but were not, in the prior
suit.” Qualicare-Walsh, Inc. v. Ward, 947 F.2d 823, 826 (6th Cir. 1991); Pittman v. Mich.

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Corrs. Org., 123 F. App’x 637, 640 (6th Cir. 2005).4 Thus, there is no requirement that each
claim receive a specific determination on the merits.
Finally, there is an identity of the causes of action in this and the prior litigation because
“the facts creating the right of action and . . . the evidence necessary to sustain each action,”
Westwood Chem., 656 F.3d at 1227, are identical here and in the state action.
Inasmuch as the four elements of the res judicata analysis have been satisfied, all claims
in the present suit are barred and a summary judgment in the City’s favor is appropriate.
IV.
For the reasons that have been set forth above, the Court (1) lifts the stay that was
entered on June 2, 2011 (ECF 57) and (2) grants the City’s motion for the entry of a summary
judgment (ECF 59). In light of this disposition, the City’s pending objection (ECF 55) to an
order which granted the Plaintiffs’ request to depose Liss is denied for mootness.

IT IS SO ORDERED.
Date: August 31, 2012

s/Julian Abele Cook, Jr.
JULIAN ABELE COOK, JR.
U.S. District Judge

4

As noted by the City, the proper avenue for the Plaintiffs to seek relief from the adverse
decision of the Macomb Circuit is to appeal the judgment through the state appellate system.
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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF System to their
respective email addresses or First Class U.S. mail to the non-ECF participants on August 31, 2012.
s/ Kay Doaks
Case Manager

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