Tenant who gave up leased premises in forfeiture action did not give up child's injury claim

Stephanie Lada sued the Townhouse Manor in Macomb County on behalf of her son, Logan.  She claimed that Logan suffered health problems related to mold that the landlord failed to address.  Lada began to withold rent and was sued in District Court, where the parties entered into a consent judgment that the landlord was entitled to possession of the apartment.  Lada had already re-located, claiming that the apartment was uninhabitable.

Four months later, Lada sued on behalf of her child, alleging that the apartment violated Michigan housing law and was "uninhabitable" due to inadequate maintenance.  The judge granted the Landlord's motion for summary disposition, ruling that the prior agreement to relinquish possession of the apartment precluded Lada from suing on behalf of her son for his damages.  Lada then moved for summary disposition of the Landlord's counter-claim on the same basis and her motion was also granted.  Both parties appealed.

The Court of Appeals ruled that the judge erred in both instances.  The panel concluded that the District Court action would apply to bar the parties' remaining claims related to the initial transaction, but only to the extent that those claims were actually litigated.  Existing legal precedent has establshed that a District Court forfeiture action is binding only with respect to the issue of rightful possession.  In reviewing the transcript from the lower court, the appellate court noted that the parties clearly did not intend to litigate the issues of money damages in the prior court action, and therefore it did not have binding or "res judicata" effect, precluding the subsequent money damages claims.