Levy Machining, LLC et al v. Hanover et al

Filing 37

OPINION and ORDER Granting Defendants' 19 MOTION for Judgment on the Pleadings Pursuant to Fed. R. Civ. P. 12(c), and Denying as MOOT Defendants' 33 MOTION for Summary Judgment Signed by District Judge Gershwin A. Drain. (TMcg)

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.711 Filed 01/19/23 Page 1 of 25

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

LEVY MACHINING, LLC, RYAN LEVY,
ROBERT LEVY, and SHERILENE LEVY,
Case No. 21-cv-12566

Plaintiffs,

U.S. District Court Judge
Gershwin A. Drain

v.
HANOVER TOWNSHIP and JEFF HEATH,
Defendants.

/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION FOR
JUDGMENT ON THE PLEADINGS (ECF No. 19) AND DENYING AS
MOOT DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
(ECF No. 33)
I.

INTRODUCTION

Plaintiff Levy Machining, LLC (“Levy Machining”) as well as Plaintiffs Ryan
Levy, Robert Levy, and Sherilene Levy (collectively the “Levy Family”) initiated
the instant action against Defendants Hanover Township (the “Township”) and Jeff
Heath on November 11, 2021. ECF No. 1. Plaintiffs allege that Defendants
selectively enforced zoning ordinances against them in retaliation for personal
disputes between Defendant Heath and the Levy Family. See generally id.
1

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.712 Filed 01/19/23 Page 2 of 25

Presently before the Court is Defendants’ Motion for Judgment on the
Pleadings Pursuant to Fed. R. Civ. P. 12(c). The motion is fully briefed, and the
Court held a hearing on the matter on December 5, 2022. Also before the Court is
Defendants’ Motion for Summary Judgment (ECF No. 33), which is also fully
briefed. For the following reasons the Court GRANTS Defendants’ Motion for
Judgment on the Pleadings Pursuant to Fed. R. Civ. P. 12(c) (ECF No. 19) and
DENIES AS MOOT Defendants’ Motion for Summary Judgment (ECF No. 33).
II.

BACKGROUND

A. Factual Background
Plaintiffs Ryan, Robert, and Sherilene Levy operate co-Plaintiff Levy
Machining, a machine fabrication business. ECF No. 1, PageID.3; ECF No. 19,
PageID.114. At all times relevant to this lawsuit, the Levy Family operated Levy
Machining on property zoned AG-1 within Defendant Hanover Township. ECF No.
1, PageID.3. Plaintiff Sherilene Levy also lived at the property with her husband,
Non-Party Michael Levy. Id.
The property is adjacent to a parcel owned by Defendant Heath. Id. at
PageID.4. Plaintiffs claim that Heath and Michael Levy have had a difficult fortyyear relationship that has occasionally devolved into screaming matches. Id. Their

2

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.713 Filed 01/19/23 Page 3 of 25

prior disputes concerned driveway use and Heath filing formal complaints accusing
Levy Machining of illegal dumping. Id. at PageID.5.
Plaintiffs allege that from 2002 to 2018, Levy Machining “operated without a
single issue.” Id. at PageID.3. Specifically, they allege that Defendant Hanover
Township did not enforce its zoning ordinance throughout the municipality except
for locations with “property line setback issues.” Id. They further claim that
Township Supervisor John Tallis and Township Attorney Bob Flack informed
Michael Levy it was unnecessary for him to procure a conditional use and/or
variance permit. Id.
However, in 2018, Defendant Heath ran for Township Supervisor. Id. at
PageID.4. On April 15, 2019, within three days of Heath’s election and after he was
appointed Zoning Administrator, Plaintiffs were given a notice to cure their
ordinance violations by September 30, 2019. Id. at PageID.4–5. Specifically they
were accused of “[o]perating a [b]usiness in an AG-1 Zoning District, in violation
of Ordinance 4.1.1,” [l]ack of site plan approval submitted to the township, in
violation of Ordinance 5.6,” [l]ack of Zoning Compliance Permit, in violation of
[O]rdinance 6.4.1,” “[l]ack of Certificate of Occupancy, in violation of [O]rdinance
6.5.1” and “[s]toring [m]aterials [o]utdoors, in violation of [O]rdinance 5.9.” Id. at
PageID.5. Plaintiffs also received Michigan Department of Environmental Quality
3

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.714 Filed 01/19/23 Page 4 of 25

letters signed by Heath that accused them of illegal dumping.1 Id. Despite the
deadline indicate in the notice letter, Defendant Hanover Township initiated zoning
enforcement proceedings in the Jackson County Circuit Court on August 23, 2019.
Id. at PageID.4.
Plaintiffs were ordered to relocate Levy Machining and did so. Id. Plaintiffs
allege that they incurred significant costs to relocate Levy Machining’s operations
and that they are now forced to pay “a sizable rental obligation each month.” Id.
They also claim to have lost several contracts due to the enforcement actions. Id.
Nevertheless, Plaintiffs contend that “approximately twenty (20) similarly situated
businesses that operate companies out of the same zoning district in Hanover Twp.
[] have never once had a zoning enforcement proceeding initiated against them.” Id.
at PageID.5.
As a result, Plaintiffs allege that Defendant Heath’s motive for running for
Township Supervisor was to initiate zoning enforcement proceedings against them.
Id. at PageID.4. Plaintiffs also claim that several conflicts of interest resulted in the
selective enforcement of the zoning ordinances against them. Id. at PageID.6. First,
Defendant Heath is employed by Lomar Machine (“Lomar”), a direct competitor to

1

The Court takes judicial notice that as of April 7, 2019, the Michigan Department
of Environmental Quality was restructured as the Department of Environment, Great
Lakes, and Energy. See Fed. R. Evid. 201(b)(1), (c)(1).
4

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.715 Filed 01/19/23 Page 5 of 25

Levy Machining. Id. at PageID.5. Second, Defendant Heath’s daughter-in-law,
Rachel Heath is a Trustee for Defendant Hanover Township. Id. at PageID.6. Third,
Defendant Heath’s son, Taylor Heath, is employed by LeMatic, Inc. a client over
which Levy Machining and Lomar compete. Id. Plaintiffs claim that Taylor Heath
channeled business to Lomar while Levy Machining’s operations were disrupted by
the zoning issues. Id. Finally, Jason Dorian, another Trustee for Defendant Hanover
Township, is a Lomar employee and is married to the daughter of Lomar’s CEO. Id.
B. Procedural Background
Plaintiffs bring claims under 42 U.S.C. § 1983 for violations of their rights to
equal protection (Count I), substantive due process (Count II), and procedural due
process (Count III) as well as under 42 U.S.C. § 1985 for conspiracy to interfere
with their civil rights (Count IV). ECF No. 1, PageID.6–12. Plaintiffs also bring
state law claims for tortious interference (Count V), defamation (Count VI),
intrusion on seclusion (Count VII), and civil conspiracy (Count VIII). Id. at
PageID.12–16.
Defendants answered the Complaint. ECF Nos. 12, 13. They subsequently
filed the instant Motion for Judgment on the Pleadings Pursuant to Fed. R. Civ. P.
12(c). ECF No. 19. In their motion, Defendants argue that Plaintiffs’ claims fail as
a matter of law under the doctrine of res judicata because all of them were, or could
5

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.716 Filed 01/19/23 Page 6 of 25

have been, decided in Hanover Twp. v. Levy Machining, LLC, No. 19-3508-CZ
(Mich. 4th Cir. Ct. 2019) (the “state court matter”), which resulted in a final
judgment on the merits in favor of the Township and against Plaintiffs and their
privies. ECF No. 19, PageID.107. Defendants further contend that Plaintiffs’ claim
for conspiracy to interfere with civil rights (Count IV) fails as a matter of law
because Plaintiffs failed to plead discrimination based on race or membership in a
class of discrete and insular minorities. Id.
Plaintiffs counter that res judicata does not apply as the parties in the instant
matter are dissimilar to those in the state court matter. ECF No. 22, PageID.319.
Specifically, they assert that Defendant Heath and Plaintiffs Ryan and Robert Levy
were not parties to the state court matter and that Ryan and Robert Levy have brought
several claims as individuals, not merely on behalf of Levy Machining.

Id.

Additionally, Plaintiffs argue that they could not have brought their claims as
counterclaims in the state court matter. Id.
III.

LAW & ANALYSIS

A. Legal Standard
The Court analyzes a motion for judgment on the pleadings under Federal
Rule of Civil Procedure 12(c) (“Rule 12(c)”) using the same standard it would
employ for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Fla.
6

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.717 Filed 01/19/23 Page 7 of 25

Power Corp. v. FirstEnergy Corp., 810 F.3d 996, 999 (6th Cir. 2015). “[A]ll wellpleaded material allegations of the pleadings of the opposing party must be taken as
true.” Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir. 2008)
(citation omitted). However, the court “need not accept as true legal conclusions or
unwarranted factual inferences.” JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d
577, 581–82 (6th Cir. 2007) (citation omitted). To survive a motion for judgment
on the pleadings, “[t]he factual allegations in the complaint need to be sufficient to
give notice to the defendant as to what claims are alleged, and the plaintiff must
plead ‘sufficient factual matter’ to render the legal claim plausible, i.e., more than
merely possible.” Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 722 (6th Cir.
2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “[T]he motion may be
granted only if the moving party is nevertheless clearly entitled to judgment.”
Winget, 510 F.3d at 581 (citation omitted).
When resolving a motion for judgment on the pleadings, a Court may consider
a document that “is referred to in the pleadings and integral to the claims” and
“public records” without converting the motion into one for summary judgment.
Com. Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007)
(citation omitted); Kostrzewa v. City of Troy, 247 F.3d 633, 644 (6th Cir. 2001).

7

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.718 Filed 01/19/23 Page 8 of 25

B. Discussion
1. Subject Matter Jurisdiction
As a threshold matter, in their Reply, Defendants “suggest[] this Court lacks
subject matter jurisdiction over Plaintiffs’ entire Complaint under the RookerFeldman doctrine.” ECF No. 24, PageID.429. The Court disagrees.
As the Sixth Circuit has explained:
The Supreme Court is vested with exclusive jurisdiction over appeals
from final state-court judgments. Lance v. Dennis, 546 U.S. 459, 126
S. Ct. 1198, 1200, 163 L. Ed.2d 1059 (2006). Thus, “[t]he Rooker–
Feldman[ ]doctrine prevents the lower federal courts from exercising
jurisdiction over cases brought by ‘state-court losers’ challenging
‘state-court judgments rendered before the district court proceedings
commenced.’” Id. at 1199 (quoting Exxon Mobil Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280, 284, 125 S. Ct. 1517, 161 L. Ed.2d 454
(2005)). The doctrine applies “only when a plaintiff complains of
injury from the state court judgment itself.” Coles v. Granville, 448
F.3d 853, 858 (6th Cir.2006). “If the source of the injury is the state
court decision, then the Rooker–Feldman doctrine would prevent the
district court from asserting jurisdiction. If there is some other source
of injury, such as a third party’s actions, then the plaintiff asserts an
independent claim.” McCormick v. Braverman, 451 F.3d 382, 393 (6th
Cir.2006). Additionally, the Rooker–Feldman doctrine “does not
prohibit federal district courts from exercising jurisdiction where the
plaintiff’s claim is merely a general challenge to the constitutionality of
the state law applied in the state action, rather than a challenge to the
law's application in a particular state case.” Hood v. Keller, 341 F.3d
593, 597 (6th Cir.2003).

8

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.719 Filed 01/19/23 Page 9 of 25

Abbott v. Michigan, 474 F.3d 324, 328 (6th Cir. 2007) (first alteration in original).
However, “Rooker–Feldman is not simply preclusion by another name.” Lance, 546
U.S. at 466.

Thus, “[t]he Rooker–Feldman doctrine does not bar actions by

nonparties to the earlier state-court judgment simply because, for purposes of
preclusion law, they could be considered in privity with a party to the judgment.”
Id.
Here, as both parties have acknowledged, neither Ryan nor Robert Levy were
parties to the zoning enforcement proceedings in the Jackson County Circuit Court.
Accordingly, the Rooker-Feldman doctrine cannot bar them from pursuing claims in
federal court.
Nor does the Rooker-Feldman doctrine serve as a bar to Plaintiffs Levy
Machining and Sherilene Levy. The Supreme Court has, in dicta, addressed the
circumstance currently before this Court:
Nor does [Rooker–Feldman] stop a district court from exercising
subject matter jurisdiction simply because a party attempts to litigate in
federal court a matter previously litigated in state court. If a federal
plaintiff “present[s] some independent claim, albeit one that denies a
legal conclusion that a state court has reached in a case to which he was
a party . . ., then there is jurisdiction and state law determines whether
the defendant prevails under principles of preclusion.”
Exxon Mobil Corp., 544 U.S. at 284 (second and third alterations in original)
(quoting GASH Assocs. v. Vill. of Rosemont, Ill., 995 F.2d 726, 728 (7th Cir. 1993)).
9

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.720 Filed 01/19/23 Page 10 of 25

The Sixth circuit has explained that a plaintiff who unsuccessfully sues his employer
in state court for violating state anti-discrimination law and Title VII can bring the
same suit in federal court without running afoul of the Rooker-Feldman doctrine.
Abbott, 474 F.3d at 329 (quoting Hoblock v. Albany County Bd. of Elections, 422
F.3d 77, 87–88 (2d Cir.2005)). This is because “he will not be alleging injury from
the state court judgment;” rather, “he will be alleging injury based on the employer’s
discrimination.” Id.
Here, Levy Machining and Sherilene Levy have “present[ed] some
independent claim” sufficient to overcome the Rooker-Feldman bar. Although
Plaintiffs’ claims in the instant case overlap with defenses raised in the state court
matter, Plaintiffs do not seek to appeal that judgment. They do not ask this Court to
reverse the state court’s finding that they violated the Township’s ordinances or that
they be permitted to move their business back to its original location. Instead, they
seek monetary damages and an injunction against any further discrimination or
retaliation based on the alleged selective enforcement. Accordingly, the Court
concludes the Rooker-Feldman doctrine does not apply.
2. Claim Preclusion
Defendants argue that Plaintiffs’ claims are barred by the doctrine of res
judicata. For the following reasons, the Court agrees.
10

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.721 Filed 01/19/23 Page 11 of 25

As the Supreme Court has explained:
The preclusive effect of a judgment is defined by claim preclusion and
issue preclusion, which are collectively referred to as “res judicata.”
Under the doctrine of claim preclusion, a final judgment forecloses
“successive litigation of the very same claim, whether or not relitigation
of the claim raises the same issues as the earlier suit.” New Hampshire
v. Maine, 532 U.S. 742, 748, 121 S. Ct. 1808, 149 L. Ed. 2d 968 (2001).
Issue preclusion, in contrast, bars “successive litigation of an issue of
fact or law actually litigated and resolved in a valid court determination
essential to the prior judgment,” even if the issue recurs in the context
of a different claim. Id., at 748–749, 121 S. Ct. 1808. By “preclud[ing]
parties from contesting matters that they have had a full and fair
opportunity to litigate,” these two doctrines protect against “the
expense and vexation attending multiple lawsuits, conserv[e] judicial
resources, and foste[r] reliance on judicial action by minimizing the
possibility of inconsistent decisions.” Montana v. United States, 440
U.S. 147, 153–154, 99 S. Ct. 970, 59 L. Ed. 2d 210 (1979).
Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (footnote omitted).
Although Defendants use the term “res judicata” in their motion, it is clear
they are only referring to “claim preclusion.” As such, the Court addresses whether
claim preclusion, in particular, is applicable.2
Michigan law governs this Court’s claim preclusion analysis. See Bus. Dev.
Corp. of S.C. v. Rutter & Russin, LLC, 37 F.4th 1123, 1129 (6th Cir. 2022). Under

2

Defendants raised issue preclusion during the oral argument. However, this was
not briefed, and issues asserted for the first time at oral argument are waived. U.S.
ex rel. Marlar v. BWXT Y-12, L.L.C., 525 F.3d 439, 450 n.6 (6th Cir. 2008).
11

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.722 Filed 01/19/23 Page 12 of 25

Michigan law, claim preclusion “bars a second, subsequent action when (1) the prior
action was decided on the merits, (2) both actions involve the same parties or their
privies, and (3) the matter in the second case was, or could have been, resolved in
the first.” Adair v. State, 470 Mich. 105, 120, 680 N.W.2d 386, 395 (2004). The
Michigan Supreme Court “has taken a broad approach to the doctrine of res judicata,
holding that it bars not only claims already litigated, but also every claim arising
from the same transaction that the parties, exercising reasonable diligence, could
have raised but did not.” Id.
i.

The state court matter

The Township brought the state court matter against Michael Levy, Sherilene
Levy, and Levy Machining (collectively the “Levy Defendants”) in 2019 to abate
nuisances stemming from their violations of the Township’s zoning ordinance. See
ECF No. 19-4. The Township brought claims for: using the property as a machine
fabrication shop in an Agricultural District in violation of Ordinance Section 4.1.1
(Count One); using the land industrially without a site plan or zoning compliance
permit in violation of Ordinance Sections 5.6 and 6.4.1, respectively (Count Two);
failing to obtain a certificate of occupancy in violation of Ordinance Section 6.5
(Count Three); failing to store equipment and materials within an enclosed building

12

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.723 Filed 01/19/23 Page 13 of 25

in violation of Ordinance Section 5.9 (Count Five [sic]); nuisance abatement and
injunctive relief (Count Six); and nuisance in fact (Count Seven). PageID.178–85.
The Township moved for summary disposition at the close of discovery, and
the Levy Defendants responded. See ECF No. 19-3. In addition to challenging all
the Township’s claims, the Levy Defendants argued the Township was “selectively
enforcing its zoning ordinance against” them.

Id. at PageID.141.

The Levy

Defendants asserted they were a “class of one” as recognized by the Supreme Court
in Village of Willowbrook v. Olech, 528 U.S. 562 (2000) and presented evidence that
the Township was aware that at least twenty other businesses were violating the
zoning ordinance without consequences, including the Township Supervisor,
Defendant Heath. Id. at PageID.142–43. The Levy Defendants also contended that
two members of the Township board that voted on their matter had conflicts of
interest due to their relationships with Lomar Machine and LeMatic, Inc. and should
have abstained. Id. at PageID.143–44.
The Jackson County Circuit Court held a hearing on the motion on June 4,
2020. During their oral arguments, the parties and court addressed the Levy
Defendants claims of conflicts of interest, ECF No. 19-5, PageID.242, 24647, and
selective enforcement, id. at PageID.247–51, 256–57. When making its ruling, the
court summarized the facts and found there was no genuine issue as to a material
13

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.724 Filed 01/19/23 Page 14 of 25

fact that the Township was entitled to summary disposition on all counts. Id. at
PageID.261–74. Notably, in determining that an injunction was proper, the court
concluded that the Township’s failure to correct the Levy Defendants “clearly nonconforming use” would constitute, or appear to constitute, selective enforcement of
the zoning ordinance that might encourage others to violate the ordinance. Id.
PageID.271–72. The court also recognized that “there may have been some other
dynamics going on that led” to the parties’ inability to agree on a timeframe for the
Levy Defendants to relocate their business but noted that it was, nonetheless,
required to make a ruling on the motion. Id. at PageID.274. Additionally, the court
seemed to find that the Levy Defendants would not be entitled to damages from
having to relocate their business because the property could be put to alternate,
lawful, use. Id. at PageID.26869.
On June 24, 2020, the Jackson County Circuit Court entered “Final Judgment”
granting the Township’s motion for summary disposition “pursuant to MCR
2.116(C)(9) (no valid defense) and 2.116(C)(10) (no issue of material fact),”
permanently enjoining the use of the property as a machine fabrication shop, and
granting the Township the right to inspect the outbuilding on the property to verify
compliance. ECF No. 19-2. The Levy Defendants did not appeal.

14

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.725 Filed 01/19/23 Page 15 of 25

ii.

The state court matter was a prior action decided on the
merits.

First, Defendants must establish that there was a prior action decided on the
merits.

“As a general rule, ‘a summary disposition ruling is the procedural

equivalent of a trial on the merits that bars relitigation on principles of res judicata.’”
Est. of Baldwin by Lee v. Est. of Davies by Heitmanus, No. 353852, 2021 WL
2026205, at *3 (Mich. Ct. App. May 20, 2021) (quoting Mable Cleary Trust v.
Edward-Marlah Muzyl Trust, 262 Mich. App. 485, 510; 686 N.W.2d 770 (2004),
overruled on other grounds by Titan Ins. Co. v. Hyten, 491 Mich. 547; 817 N.W.2d
562 (2012)). Additionally, the issuance of a permanent injunction constitutes a
decision on the merits under Michigan law. AuSable River Trading Post, LLC v.
Dovetail Sols., Inc., 874 F.3d 271, 274 (6th Cir. 2017).
Here, the state court matter involved summary disposition proceedings that
resulted in a “Final Judgment.” As part of said judgment, the Jackson County Circuit
Court issued a permanent injunction. Thus, the state court matter constitutes a prior
decision on the merits under Michigan law.
Relying on Ternes Steel Co. v. Ladney, 364 Mich. 614, 111 N.W.2d 859
(1961), Plaintiffs argue that they are not barred from raising in a subsequent suit
issues that could have been brought as a counterclaim in a prior suit. ECF No. 22,
PageID.328–29. This argument fails for two reasons. First, the portion of the
15

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.726 Filed 01/19/23 Page 16 of 25

opinion on which Plaintiffs rely is dicta. See Ternes Steel, 364 Mich. at 618, 111
N.W.2d at 861 (“Defendant’s second ground for reversal, that use of his breach of
warranty as a defense in the first case bars its use in this case as a basis for affirmative
relief, was not pleaded below nor was it argued to, or considered by the trial judge.
Although not determinative of this appeal it might be discussed profitably because
of the probability that it will be relied upon by defendant on remand.” (internal
citation omitted)). As such, it is not binding. Gonzalez v. United States, 553 U.S.
242, 256 (2008) (Scalia, J., concurring) (“[A] formula repeated in dictum but never
the basis for judgment is not owed stare decisis weight.”); see also Wright v.
Spaulding, 939 F.3d 695, 700 (6th Cir. 2019) (“[O]nly holdings are binding, not
dicta.” (emphasis in original)).
Second, even if Ternes Steel were binding, it does not support Plaintiffs’
position. In Ternes Steel, the Michigan Supreme Court held “that when a litigant’s
right to affirmative relief is independent of a cause of action asserted against him
and it is relied upon only as a defense to that action, he is barred from seeking
affirmative relief thereon in a subsequent proceeding.” Id. 364 Mich. at 619, 111
N.W.2d at 861. Here, Plaintiffs alleged their current claims as defenses in the state
court matter. As alleged in the Complaint, Plaintiffs’ equal protection claim (Count
I) is based on selective enforcement; the substantive and procedural due process
16

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.727 Filed 01/19/23 Page 17 of 25

claims (Counts II and III) are based on of Defendant Heath’s and the Township board
members’ conflicts of interest; and the § 1985 claim is based on both selective
enforcement and conflicts of interest.3 As discusses in Section III.B.2.i. supra, the
Levy Defendants raised both these issues as defenses in the state court matter, and
the Jackson County Circuit Court considered both before issuing its decision.
Plaintiffs rights to affirmative relief are independent of the causes of action that were
asserted against the Levy Defendants in the state court matter, and they raised
selective enforcement and conflicts of interest as defenses in the state court matter.
Thus, Plaintiffs would be subject to claim preclusion even under Ternes Steel.
Nevertheless, Plaintiffs argue that there has not been a “full and final”
determination on the merits of their selective enforcement and conflict of interest
claims. ECF No. 22, PageID.329. “This ignores that a claim need not be actually
litigated in the first action to be barred by res judicata—it is enough if the claim
‘could have been resolved in the first’ action.” Delinck v. Defina, No. 358094, 2022
WL 16858581, at *3 n.1 (Mich. Ct. App. Nov. 10, 2022) (quoting Verbrugghe v.
Select Specialty Hosp.-Macomb Cnty., Inc., 279 Mich. App. 741, 744, 760 N.W.2d
583, 585 (2008)) (citing Adair, 470 Mich. at 121). Accordingly, the Court concludes

3

The Court also notes that Plaintiffs’ claims for tortious interference (Count V) and
civil conspiracy (Count VIII) are based on Defendants’ conflicts of interest.
17

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.728 Filed 01/19/23 Page 18 of 25

the state court matter constitutes a prior action decided on the merits for purposes of
claim preclusion. See Adair v. State, 470 Mich. at 120.
iii.

Both actions involve the same parties or their privies.

Next, Defendants must establish that the instant action and the prior action
involve the same parties or their privies. “To be in privity is to be so identified in
interest with another party that the first litigant represents the same legal right that
the later litigant is trying to assert.” Adair, 470 Mich. at 122 (2004). The Michigan
Supreme Court has determined that “a perfect identity of the parties is not required,
only a ‘substantial identity of interests’ that are adequately presented and protected
by the first litigant.” Id.
Here, the Court concludes there is a “substantial identity of interests” between
the parties in the two actions. Hanover Township, a defendant in the instant action,
was the plaintiff in the state court matter. Likewise, Sherilene Levy and Levy
Machining, both plaintiffs in the instant action, were defendants in the state court
matter. “The fact that parties have reversed roles in subsequent suits, in the past, has
not foiled the application of res judicata.” Detroit v. Nortown Theatre, Inc., 116
Mich. App. 386, 393, 323 N.W.2d 411 (1982).
Heath, the remaining defendant in the instant action, was not a party to the
state court matter, but is an employee of Hanover Township, which was. He is thus
18

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.729 Filed 01/19/23 Page 19 of 25

in privity with Hanover Township for purposes of claim preclusion. See O'Leary v.
Charter Twp. of Flint, No. 09–13075, 2010 WL 2870400, at *8 (E.D. Mich. July 21,
2010) (finding that a Township department head sued in her individual capacity for
alleged discrimination and retaliation was in privity with the Township, which was
a party to a discrimination suit in state court on the same theory). It does not matter
that Plaintiffs bring their claims against Defendant Heath in his individual capacity.
McCoy v. Michigan, 369 F. App’x 646, 650 (6th Cir. 2010) (applying Michigan law
and finding privity where previous governmental unit party and present-case
defendant “have an employer-employee relationship, regardless of whether the
claims in the first suit were brought against the [d]efendants in the same capacity as
the claims in the second”); see also Motuelle v. Ruffini, No. 244557, 2004 WL
1254304, at *4 (Mich. Ct. App. June 8, 2004) (finding privity where individual
defendants in instant case “had an employer-employee relationship” with the
defendant-institution in the prior case, the claims against the individual defendants
involved their conduct while in performance of their duties as employees, and their
interests as employees were presented and protected in the initial suit, “which
involved the same set of facts” (citing Peterson Novelties, Inc. v. City of Berkley,
259 Mich. App. 1, 14 n.10, 672 N.W.2d 351, 360 (2003))).

19

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.730 Filed 01/19/23 Page 20 of 25

Ryan and Robert Levy, the remaining plaintiffs in this action, became coowners of Levy Machining along with Sherilene Levy in 2018, well before the
events giving rise to this action. ECF No. 19-3, PageID.138 (“[Michael Levy]
organized Levy Machining in 2002 and was the sole member until 2018, when he
transferred Levy Machining to his wife and two children, Ryan Levy and Robert
Levy.”). As co-owners of Levy Machining who worked at the company while it was
violating the Township’s ordinances, Ryan and Robert Levy stand in privity with
their parents for purposes of claim preclusion. See Twp. of Armada v. Marah, No.
268142, 2006 WL 2742061, at *2 n.1 (Mich. Ct. App. Sept. 26, 2006) (finding it
“obvious” that wife, who co-owned the property at issue and cooperated in
nonconforming use, was in privity with her husband who had been subject to an
earlier nuisance abatement suit).
Accordingly, the Court concludes the instant case and the state court matter
involve the same parties or their privies. See Adair v. State, 470 Mich. at 120.
iv.

The matter in this case was, or could have been, resolved in
the first.

Finally, Defendants must establish that the matter in the instant case was, or
could have been, resolved in the first. Claim preclusion “bars every claim arising
from the same transaction that the parties, exercising reasonable diligence, could
have raised but did not.” Adair, 470 Mich. at 123. Michigan courts “use[] a
20

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.731 Filed 01/19/23 Page 21 of 25

transactional test to determine if the matter could have been resolved in the first
case.” Washington v. Sinai Hosp. of Greater Detroit, 478 Mich. 412, 420, 733
N.W.2d 755, 760 (2007) (citing Adair, 470 Mich. at 123). “The transactional test
provides that the assertion of different kinds or theories of relief still constitutes a
single cause of action if a single group of operative facts give rise to the assertion of
relief.” Adair, 470 Mich. at 124 (quotation marks omitted) (quoting River Park, Inc.
v. Highland Park, 184 Ill.2d 290, 307–309; 234 Ill.Dec. 783, 703 N.E.2d 883
(1998)). “Whether a factual grouping constitutes a ‘transaction’ for purposes of res
judicata is to be determined pragmatically, by considering whether the facts are
related in time, space, origin or motivation.” Washington, 478 Mich. at 420 (cleaned
up). In other words, “[t]he ‘determinative question is whether the claims in the
instant case arose as part of the same transaction’ as the claims in the earlier case.”
Delinck, 2022 WL 16858581, at *2 (quoting Adair, 470 Mich. at 125).
Plaintiffs do not seem to dispute that the instant action and the state court
matter satisfy the same transaction test. See generally ECF No. 22; see also id. at
PageID.331 (stating that plaintiffs damages from the permanent injunction,
disruption of their business, and loss of business revenue “all . . . accrued as a result
of the vexatious initiation of litigation by Defendants”). Instead, they argue that,
despite raising the selective enforcement and conflict of interest issues during the
21

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.732 Filed 01/19/23 Page 22 of 25

state court matter, they could not have formally asserted their claims during that
proceeding because the damage caused by the disruption of their business was not
yet ascertainable. Id. at PageID.322, 325, 33032. Plaintiffs again rely on Ternes
Steel in arguing their claims should not be barred. Id. at PageID.330. This is
unpersuasive for the reasons discussed in Section III.B.2.i.
Regardless, the Michigan Court of Appeals recently rejected a similar
argument. Like Plaintiffs here, the plaintiffs in Defina v. Delinck, No. 351610, 2021
WL 220827 (Mich. Ct. App. Jan. 21, 2021) asserted that claim preclusion did not
bar their subsequent lawsuit because they could not be compelled to bring a
counterclaim in the prior suit where they were defendants. Id. at *2. The Court of
Appeals “disagree[d].” Id. As a different court in this District has explained:
[Plaintiff] is correct in his pleadings that federal civil rights claims are
very different legally than the township ordinance. That does not mean
they cannot be heard together in one court. [Plaintiff] has offered no
argument that the county court excluded, or would have excluded,
consideration of those claims. Also, Michigan courts can hear federal
civil rights claims. Dickerson v. Warden, Marquette Prison, 99 Mich.
App. 630, 634, 298 N.W.2d 841 (1980).
Reid v. Thetford Twp., 377 F. Supp. 2d 621, 628 (E.D. Mich. 2005) (citation
omitted).
As Plaintiffs acknowledge, their claims accrued when Defendants initiated the
state court matter. ECF No. 22, PageID.331. That they continued to suffer damages
22

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.733 Filed 01/19/23 Page 23 of 25

after the conclusion of that action is insufficient to circumvent claim preclusion. Cf.
Jones v. Westminster, LLC, No. 334447, 2018 WL 2370634, at *5 (Mich. Ct. App.
May 24, 2018) (emphasizing that exception to the same transaction test “rests on the
plaintiffs’ supported allegations that defendants[] committed additional wrongful
acts after the [prior] case concluded” because “the fact that plaintiffs suffered
additional damages, standing alone, does not entitle them to pursue a second claim”).
Notably, under Michigan law, Plaitniffs could have argued for future damages on at
least some of their claims. See MCL 600.6306. Accordingly, the Court concludes
Plaintiffs could have brought their current claims as counter claims in the state court
matter. See Adair v. State, 470 Mich. at 120.
Because the three Adair factors are satisfied, the Court finds Plaintiffs’ equal
protection (Count I), substantive due process (Count II), procedural due process
(Count III), conspiracy to interfere with civil rights (Count IV), tortious interference
(Count V), and civil conspiracy (Count VIII) are all precluded by the state court
matter.
3. Supplemental Jurisdiction
“Under 28 U.S.C. § 1367(c)(3), the district court may decline to exercise
supplemental jurisdiction over a claim if it has dismissed all claims over which it
has original jurisdiction. If the federal claims are dismissed before trial, the state
23

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.734 Filed 01/19/23 Page 24 of 25

claims generally should be dismissed as well.” Wojnicz v. Davis, 80 Fed. App’x.
382, 384–85 (6th Cir.2003) (citing Taylor v. First of Am. Bank–Wayne, 973 F.2d
1284, 1287 (6th Cir.1992)). As such, the Court declines to exercise supplemental
jurisdiction over Plaintiffs’ remaining state law claims for defamation (Count VI)
and intrusion on seclusion (Count VII).
4. Motion for Summary Judgment
Because the Court is granting Defendants’ Motion for Judgment on the
Pleadings as to Counts I through V and VIII and declining to exercise supplemental
jurisdiction over Counts VI and VII, Defendants’ Motion for Summary Judgment
(ECF No. 33) is denied as moot.
IV.

CONCLUSION

Accordingly, for the reasons articulated above, IT IS HEREBY ORDERED
that the Court GRANTS Defendants’ Motion for Judgment on the Pleadings
Pursuant to Fed. R. Civ. P. 12(c) (ECF No. 19).
IT IS FURTHER ORDERED that Defendants’ Motion for Summary
Judgment (ECF No. 33) is DENIED AS MOOT.

24

Case 2:21-cv-12566-GAD-CI ECF No. 37, PageID.735 Filed 01/19/23 Page 25 of 25

IT IS SO ORDERED.

/s/ Gershwin Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE
Dated: January 19, 2023

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
January 19, 2023, by electronic and/or ordinary mail.
/s/ Teresa McGovern
Case Manager

25