Attorney General of State of Mich. v. Diamond Mortg. Corp., Docket No. 46114

• Decision Date: 03 December 1980
• Docket Number: Docket No. 46114
• Citation: 102 Mich.App. 322,301 N.W.2d 523
• Parties: ATTORNEY GENERAL OF the STATE OF MICHIGAN, Plaintiff-Appellant, v. DIAMOND MORTGAGE CORP., a Michigan Corporation, Sheldon Greenberg and BartonGreenberg, Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 523

301 N.W.2d 523

102 Mich.App. 322

ATTORNEY GENERAL OF the STATE OF MICHIGAN, Plaintiff-Appellant, v. DIAMOND MORTGAGE CORP., a Michigan Corporation, Sheldon Greenberg and BartonGreenberg, Defendants-Appellees.

Docket No. 46114.

Court of Appeals of Michigan

Dec. 3, 1980.

Released for Publication Feb. 20, 1981.

Patrick F. Isom, Asst. Atty. Gen., Lansing, for plaintiff-appellant.

Ronald M. Barron, David M. Fried and Gary E. Levitt, Birmingham, for defendants-appellees.

Before V. J. BRENNAN, P. J., and ALLEN and BEASLEY, JJ.

PER CURIAM.

The Attorney General appeals of right from the June 20, 1979, dismissal of plaintiff's bill of complaint by the Circuit Court for Ingham County on the grounds that the court lacked jurisdiction.

Defendant Diamond Mortgage Corp., is a Michigan corporation licensed as a real estate broker by the Michigan Department of Licensing and Regulation under the real estate licensing act, 1919 P.A. 306, being M.C.L. § 451.201 et seq.; M.S.A. § 19.791 et seq. Sheldon and Barton Greenberg are the sole officers and directors of the corporation. Defendants assert that they engage in the business of obtaining mortgages for homeowners, a lawful business activity for real estate brokers. Plaintiff maintains that defendants engaged in various illegal business activities, including advertising the availability of loans to be secured by a mortgage between the homeowner and the defendant company and also charging a mortgage broker's fee. In a complaint filed June 13, 1979, in the Ingham County Circuit Court, plaintiff alleges that these activities constitute usury violations because a mortgage broker's fee is charged in addition to the 11% maximum legal interest rate on the loan. Plaintiff further claims that said conduct is in violation of the Michigan Consumer Protection Act (CPA), M.C.L. § 445.905; M.S.A. § 19.418(5).

Plaintiff asked the circuit court to find the defendants guilty of improper corporate activities and misuse of its corporate charter. The relief requested was a court order revoking the defendants' real estate broker's license and dissolving the corporation. Plaintiff requested that the order also reform all prior mortgages issued by the defendant company so that those mortgages would no longer be usurious. In addition to the above remedies, plaintiff requested the court to assess fines of $25,000 for violation of the CPA and $10,000 as authorized by the quo warranto statute, M.C.L. § 600.4521; M.S.A. § 27A.4521. Defendants answered, claiming (1) that the circuit court was without jurisdiction because the corporation is subject to regulation by the Department of Licensing and Regulation and (2) that the alleged offending conduct does not come within the CPA because that act does not apply to conduct authorized under laws administered by the Department of Licensing and Regulation. Following a hearing on an order to show cause why a preliminary injunction should not issue, the trial court dismissed plaintiff's complaint for lack of jurisdiction. ¹ From said dismissal, plaintiff appeals of right.

The Department of Licensing and Regulation is an administrative agency created pursuant to M.C.L. § 16.425 et seq.; M.S.A. § 3.29(325) et seq., which is authorized to deny, suspend, or revoke a license issued to a real estate broker. M.C.L. § 451.213; M.S.A. § 19.803. The Department of Licensing and Regulation is not authorized to reform previously executed mortgages or assess fines for violation of the CPA or the quo warranto statute. Thus, while plaintiff is correct in contending that the Department of Licensing and Regulation could not provide all of the relief requested, defendants are correct in stating that this does not obviate the requirement that plaintiff exhaust the available administrative remedies pursuant to the Administrative Procedures Act (hereinafter APA), being M.C.L. §§ 24.264, 24.301; M.S.A. §§ 3.560(164), 3.560(201), before the circuit court acquires jurisdiction.

Michigan courts have long recognized the importance of the doctrine of exhaustion of administrative remedies. International Business Machines Corp. v. Dep't of Treasury, 75 Mich.App. 604, 608, 255 N.W.2d 702 (1977). The relationship of the courts to administrative agencies has been one marked by judicial restraint. Judges of the 74th Judicial District v. Bay County, 385 Mich. 710, 727, 190 N.W.2d 219 (1971).

"Exhaustion of administrative remedies serves several policies: (1) an untimely resort to the courts may result in delay and disruption of an otherwise cohesive administrative scheme; (2) judicial review is best made upon a full factual record developed before the agency; (3) resolution of the issues may require the accumulated technical competence of the agency or may have been entrusted by the Legislature to the agency's discretion; and (4) a successful agency settlement of the dispute may render a judicial resolution unnecessary. See Judges of the 74th Judicial District v. Bay County, 385 Mich. 710, 727-728, 190 N.W.2d 219, 226 (1971)." IBM, supra, 75 Mich.App. 610, 255 N.W.2d 702.

Applying these factors to the present situation dictates that we affirm the lower court ruling that, until the available administrative remedies with the Department of Licensing and Regulation and the APA are exhausted, the circuit court lacks jurisdiction to entertain plaintiff's suit. If the present lawsuit were allowed in circuit court, coming without any administrative proceedings, the cohesive administrative scheme of the Department of Licensing and Regulation and the APA specifically set forth by the Legislature could be totally avoided by claiming, in addition to remedies available through the administrative process, a remedy outside of the administrative scheme. Further, the circuit court does not have before it a full factual record which could be developed by the administrative proceedings. The issues raised in the full factual record, e. g., whether a corporation has engaged in business activities beyond the scope of the license granted them by the Department of Licensing and Regulation, can be better...