Mich. Deferred Presentment Serv. Ass'n Inc. v. Comm'r Of The Office Of Financial

• Court: Court of Appeal of Michigan
• Writing for the Court: PER CURIAM.
• Citation: Michigan Deferred Presentment Serv. Ass'n, Inc. v. Comm'r of the Office of Fin. & Ins. Regulation, 287 Mich.App. 326, 788 N.W.2d 842 (Mich. App. 2010)
• Decision Date: 18 February 2010
• Docket Number: Docket No. 292685.
• Parties: MICHIGAN DEFERRED PRESENTMENT SERVICES ASSOCIATION, INC. v. COMMISSIONER OF the OFFICE OF FINANCIAL AND INSURANCE REGULATION.

287 Mich.App. 326

788 N.W.2d 842

MICHIGAN DEFERRED PRESENTMENT SERVICES ASSOCIATION, INC.

v.COMMISSIONER OF the OFFICE OF FINANCIAL AND INSURANCE REGULATION.

Docket No. 292685.

Court of Appeals of Michigan.

Submitted Jan. 6, 2010, at Detroit.

Decided Feb. 18, 2010, at 9:00 a.m.

Fried Porter, PLLC (by Louis J. Porter), for plaintiff.

Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and David W. Silver, Assistant Attorney General, for defendant.

Before: WILDER, P.J., and O'CONNELL and TALBOT, JJ.

PER CURIAM.

This civil rights dispute brought under 42 U.S.C.A. § 1983 concerns an administrative order issued by defendant, Commissioner of the Office of Financial and Insurance Regulation (OFIR), that allegedly prohibited plaintiff's members from seeking, in this state's courts, treble damages for nonsufficient funds (NSF) checks given by their customers. In its January 14, 2009, opinion and order, the lower court struck down defendant's administrative order as an unconstitutional infringement of the right of access to the courts. We reverse in part, vacate in part, and remand for proceedings consistent with this opinion.

Plaintiff is an association of companies licensed under the Deferred Presentment Service Transactions Act (DPSTA), MCL 487.2121 et seq. , which is a statute that regulates the business of payday lending and of other businesses that provide short-term advancements of money to consumers up to the statutory limit of $600. The OFIR, formerly known as the Office of Financial and Insurance Services, is part of the Michigan Department of Energy, Labor, and Economic Growth.

Before passage of the DPSTA, payday lenders who received checks that were returned to them for nonsufficient funds obtained judgments under MCL 600.2952(4), a provision of the Revised Judicature Act (RJA) that allows for treble damages for a dishonored check under some circumstances. ¹ The RJA also authorizes recovery of a small processing fee and court costs of $250. MCL 600.2952(4).

In 2005, the Legislature passed the DPSTA to regulate payday lenders and to curb abuses within the industry. The DPSTA became effective on November 28, 2005. 2005 PA 244; MCL 487.2121. Under the DPSTA, a payday loan is called a deferred presentment service transaction. MCL 487.2122(1)(g). Under such a transaction, for a fee, the payday lender gives the customer a certain amount of money in exchange for a check in repayment of the loan; the lender then holds the customer's check for a period before presentment to the drawee bank. See MCL 487.2122(1)(g), (h). The DPSTA requires that entities engaged in such lending receive a license. MCL 487.2131. According to defendant, 788 licenses had been issued under this act. The DPSTA also limits the amount that a licensee could collect for a returned check to the face amount of the check amount plus $25. MCL 487.2158.

It is undisputed that, after passage of the DPSTA, payday lenders continued to seek and obtain damages under MCL 600.2952. ² On April 3, 2008, defendant issued the administrative order at issue in this case. The administrative order explained, “To stop current practices by some licensees and to prevent the spread of these unlawful actions, it is necessary and appropriate to issue an order directing licensees to conform to the limitations in MCL 487.2158 regarding checks returned due to insufficient funds.” The administrative order also noted:

MCL 487.2167 gives the Commissioner the power to revoke licenses for violations of the [DPSTA] and his orders, such as this Order, if he finds that a licensee has done so “knowingly or through lack of due care.”

MCL 487.2168 authorizes the Commissioner to impose civil fines for violation of the [DPSTA]. If the Commissioner finds that a licensee “knew or reasonably should have known” that he or she was in violation of the Act, the Commissioner may order the licensee to pay a civil fine of not less than $5,000 or more than $50,000 for each violation.

* * *

When the staff of this agency examines the books and records of a licensee, the staff will evaluate compliance with this Order as part of its examination.

The administrative order concluded, “Therefore, it is ORDERED that licensees shall not, with respect to a check returned due to insufficient funds, recover anything other than the face amount of the check, a returned check charge of $25.00, and, in the event of a lawsuit, court costs. In particular, a licensee shall not seek any remedy under MCL 600.2952 with respect to any check returned due to insufficient funds.” The administrative order was sent to licensees and posted on the agency's website.

On May 22, 2008, plaintiff filed its cause of action asserting claims for (1) denial of the federal constitutional right of access to the courts under 42 U.S.C.A. § 1983; (2) denial of various state constitutional rights, including the right of access to the courts, the right to petition the government, freedom of speech, due process, and rights under the fair and just treatment clause; and (3) violation of the Michigan Constitution's separation of powers provision. Plaintiff sought declaratory and injunctive relief, but not damages.

Both sides moved for summary disposition. Plaintiff's motion, brought under MCR 2.116(C)(10), also sought a permanent injunction, and plaintiff requested attorney fees under 42 U.S.C.A. § 1988. Defendant's motion was brought under MCR 2.116(C)(8) and (10). In its motion, plaintiff asserted three arguments: (1) that defendant, through his administrative order, denied plaintiff's members their rights of access to the courts, freedom of speech, and due process of law; (2) that defendant usurped powers belonging to the judicial branch; and (3) that defendant has no authority over collection practices and no standing to assert the rights of borrowers or customers.

In his motion, defendant explained that before the DPSTA took effect, the payday lending service sector was known for its exorbitant fees and hardnosed collection practices, but the DPSTA changed the landscape dramatically, requiring licensure of payday lenders after July 1, 2006, and making the OFIR the state regulator with enforcement powers. Defendant argued that the DPSTA's provision authorizing the commissioner to “issue orders and rules that he or she considers necessary to enforce and implement this act,” MCL 487.2140(1), constitutes sufficient authority for defendant to issue his April 3, 2008, administrative order. Defendant argued that the DPSTA's provision in MCL 487.2158 listing the remedies available to a licensee for a returned check precluded a licensee from recovering the more ample remedies available under the RJA.

In an opinion and order dated January 14, 2009, the lower court granted plaintiff's motion for summary disposition and denied defendant's motion for summary disposition. The lower court concluded that the administrative order barred licensees from asserting a legally tenable position in court where no binding appellate decision supported the agency's interpretation of the statutory provisions in conflict, and that “such action unconstitutionally usurps the judicial function, denigrates the rule of law, and infringes upon the constitutional right of access to the courts....”

The opinion concluded that defendant's administrative order sought to overturn orders or judgments entered by courts, and that defendant lacked authority to do so. The lower court noted that it is the province of the judicial department to say what the law is, and that defendant threatened to sanction a licensee for pursuing certain legal remedies in court. The lower court stated that an administrative agency may only sanction a licensee for advocating a legal position in court when the position is legally baseless, i.e., when no reasonable litigant could realistically expect success on the merits, and that the licensees were not advocating legally baseless claims in seeking treble damages in district court proceedings. The lower court therefore concluded that defendant had infringed the licensees' First Amendment right of access to the courts. The lower court granted plaintiff's request for an injunction, stating that defendant was enjoined from enforcing or threatening to enforce the administrative order. Notably, the lower court never addressed whether the DPSTA actually precluded licensed payday lenders from seeking recovery under the RJA. ³ In so doing, the lower court failed to address the central issue in this case, namely, whether defendant's administrative order correctly interpreted the DPSTA to limit a payday lender's remedies when a borrower's check is returned for nonsufficient funds to the face amount of the check plus a $25 returned check charge, instead of the treble damages permitted by MCL 600.2952. However, this issue must be addressed because plaintiff's constitutional claims hinge on the proposition that defendant's analysis of the relationship between the DPSTA and the RJA is incorrect and, therefore, defendant is somehow precluding plaintiff's members from seeking the recovery to which they are legally entitled. ⁴ See Prudential Ins. Co. of America v. Cusick, 369 Mich. 269, 290, 120 N.W.2d 1 (1963).

We conclude that the administrative order is a correct interpretation of the applicable law. Statutory construction is a question of law that we review de novo. McManamon v. Redford Charter Twp., 273 Mich.App. 131, 134, 730 N.W.2d 757 (2006). The applicable principles of statutory construction are well established, and we begin our analysis by consulting the specific statutory language at issue. Provider Creditors Comm. v. United American Health Care Corp., 275 Mich.App. 90, 95, 738 N.W.2d 770 (2007). We give effect to the Legislature's intent, as expressed in the terms of the statute, by giving the words of the statute their plain and ordinary meaning. In re Kostin Estate, 278 Mich.App. 47, 57, 748 N.W.2d 583 (2008). “ ‘When...