Salem Industries, Inc. v. Mooney Process Equipment Co.

Per Curiam. Plaintiff Salem Industries, Inc., appeals by leave granted from an Oakland Circuit Court order dismissing its complaint pursuant to MCR 2.116(C)(6). The circuit court ruled that plaintiffs complaint was barred by a previously filed action pending in the 52nd District Court involving the same parties and the same events. We find that plaintiff may maintain its claim in the circuit court and we therefore reverse. Plaintiff Salem builds, manufactures and sells air pollution control devices. Salem purchased from defendant Mooney Process Equipment Company $23,010 worth of valves, operators and motors which it used to manufacture and build pollution control devices. Salem paid Mooney a $10,000 deposit against the purchase price and Mooney delivered the parts to Salem. Salem, however, failed to pay Mooney the balance of the purchase price. On December 12, 1984, Mooney filed a complaint against Salem in the Oakland Circuit Court for the collection of $13,010. Salem admitted purchasing the parts from Mooney, but responded that *215 Mooney had breached certain express and implied warranties because the parts were not suitable for their intended purpose. On January 14, 1986, the matter was remanded to the 52nd District Court for trial. Salem moved for leave to file a counterclaim to allege that Mooney had breached certain expressed and implied warranties under the product liability statute. By order entered May 19, 1986, the 52nd District Court denied Salem’s motion because it was filed untimely as trial was imminent. On June 2, 1986, Salem commenced the present action against Mooney in the Oakland Circuit Court. The complaint alleged breach of contract, negligence and product liability. Mooney moved for summary disposition pursuant to MCR 2.116(C)(6). Mooney claimed that Salem’s complaint was barred because of the pending action in the 52nd District Court which involved the same parties and the same claims. The circuit court agreed with defendant Mooney and entered an order dismissing plaintiff’s claim on September 11, 1986. Plaintiff argues that the circuit court erred since MCR 2.203(E) allows a party to litigate a counterclaim in a separate action. We agree. MCR 2.203(E) states: Time for Filing Counterclaim or Cross-Claim. A counterclaim or cross-claim must be filed with the answer or filed as an amendment in the manner provided by MCR 2.118. If a motion to amend to state a counterclaim or cross-claim is denied, the litigation of that claim in another action is not precluded unless the court specifies otherwise. Generally, a counterclaim arising out of the same transaction or occurrence as the principal *216 claim must be joined in one action. MCR 2.203(A)(1); Van Pembrook v Zero Mfg Co, 146 Mich App 87; 380 NW2d 60 (1985). However, if leave to amend to state a counterclaim is denied and the ruling court does not expressly preclude a separate action, the party is not bound by the compulsory joinder rule and is free to raise the claim in another action. MCR 2.203(E). We also note that MCR 2.203(E) provides for the permissive joinder of counterclaims. Since the rule is permissive, as opposed to compulsory, it allows a party the option to maintain its counterclaim in a separate independent action. Bank of the Commonwealth v Hulette, 82 Mich App 442, 444; 266 NW2d 841 (1978). The circuit court erred in entering summary disposition in favor of defendant. Plaintiff may maintain its counterclaim, to the extent allowed by the rules of collateral estoppel and res judicata, in a separate independent action. See Rinaldi v Rinaldi, 122 Mich App 391, 399-400; 333 NW2d 61 (1983), lv den 418 Mich 861 (1983). Reversed.