Oakland County v. Dep't of Human Serv..

Citation290 Mich.App. 1,799 N.W.2d 566
Decision Date14 September 2010
Docket NumberDocket No. 288812.
CourtCourt of Appeal of Michigan (US)

290 Mich.App. 1
799 N.W.2d 566


Docket No. 288812.

Court of Appeals of Michigan.

Submitted June 23, 2010, at Detroit.Decided Sept. 14, 2010, at 9:00 a.m.

[799 N.W.2d 567]

Judith K. Cunningham, Corporation Counsel, and Mary M. Mara, Assistant Corporation Counsel, for plaintiff.Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Morris J. Klau, Assistant Attorney General, for defendant.Before: SHAPIRO, P.J., and JANSEN and DONOFRIO, JJ.JANSEN, J.

[290 Mich.App. 2] Defendant appeals by leave granted the order of the Court of Claims denying its motion for summary disposition brought pursuant to MCR [290 Mich.App. 3] 2.116(C)(4).1 We conclude that the Court of Claims relied on erroneous legal reasoning in this case. However, because the Court of Claims reached the correct result in ruling that it possessed subject-matter jurisdiction over the present controversy, we nonetheless affirm.


Defendant, as the agency responsible for the care and custody of children who are

[799 N.W.2d 568]

permanent wards of the state, has the authority to place and maintain such children who are under the control of the Michigan Children's Institute (MCI) in licensed boarding homes for children. MCL 400.207(7). Expenses related to the supervision and transportation of permanent wards are paid out of the MCI's funds subject to partial reimbursement by the county from which the public ward has been committed. Id. The county's liability for the costs associated with the care of a ward (commonly referred to as a “chargeback rate”) is determined under the Youth Rehabilitation Services Act, MCL 803.301 et seq. In general, “the county from which the public ward is committed is liable to the state for 50% of the cost of his or her care....” MCL 803.305(1).

The Michigan Administrative Code provides that the daily rate for the cost of caring for wards of the state must be established in September of the year before the rate is put into effect. Mich Admin Code, R 400.341. Thus, for example, in accordance with Rule 400.341, the cost of caring for MCI wards during 2007 should have been established in September 2006.

This action resulted after defendant sought to retroactively establish the daily rate for the cost of caring for [290 Mich.App. 4] wards in 2007. In a letter dated July 16, 2007, defendant notified plaintiff and other counties of specified “ state ward chargeback rates for calendar year 2007.” Defendant declared that the stated rates “will be effective for calendar year 2007 with a retroactive date of January 1, 2007. These rates shall remain in effect until the next scheduled revision in 2008.” Then, in a subsequent letter dated July 26, 2007, defendant informed plaintiff that the chargeback rates for 2007 would be effective on June 1, 2007, and not fully retroactive as had been stated in the earlier letter.

Thereafter, in October 2007, defendant notified plaintiff and others that it had again reviewed and revised the chargeback rates for 2007. It declared new rates, which would be retroactive to August 1, 2007, and indicated that these rates would “remain in effect until the next scheduled revision on January 1, 2008.”

In late 2007, plaintiff received certain statements from defendant that included charges of $79,248.22 (described as “prior year balance due”) and $71,517.40 (described as “current year balance due”). These disputed charges of $79,248.22 and $71,517.40 had apparently resulted from defendant's retroactive rate increases for housing Oakland County youths in state facilities during 2007. Although the statements indicated that defendant owed plaintiff an overall reimbursement of $1,394,070.62, defendant deducted the disputed amounts, totaling $150,765.62, and remitted only $1,243,305 to plaintiff.

On January 9, 2008, plaintiff sent a letter to defendant protesting the retroactive rate increases and explaining why it believed the retroactive rate increases were illegal. Plaintiff's letter demanded that defendant “either remit the $150,765.62 wrongfully withheld from the County or provide the state's legal justification/rationale for the [290 Mich.App. 5] withholding of these funds.” According to plaintiff, defendant did not respond to its letter.

In May 2008, plaintiff filed suit against defendant in the Court of Claims. Plaintiff sought a declaration that defendant was required to establish the cost of caring for MCI wards each September, that the rates established by defendant in September could not go into effect until the following year, and that defendant was not entitled to retroactively establish or increase such rates. Plaintiff also sought a refund of the monies that defendant had withheld “as a result of [its] illegal retroactive

[799 N.W.2d 569]

rate increases for the cost of MCI wards....”

In lieu of answering plaintiff's complaint, defendant moved for summary disposition pursuant to MCR 2.116(C)(4) and (8).2 Defendant argued that the Court of Claims did not have subject-matter jurisdiction over the controversy because the action had not arisen out of contract or tort. Plaintiff opposed defendant's motion, arguing that the Court of Claims had exclusive jurisdiction over the matter because only the Court of Claims would have the authority to award monetary relief against defendant. Oral argument was held on October 1, 2008, and the Court of Claims took the matter under advisement.

The Court of Claims thereafter issued a written opinion and order denying defendant's motion for summary disposition. The Court of Claims ultimately concluded that it had subject-matter jurisdiction over the controversy, reasoning in relevant part:

Plaintiff suggests Silverman [ v. Univ. of Mich. Bd. of Regents], 445 Mich. 209

[, 516 N.W.2d 54]

(1994) [overruled in part on other grounds by [290 Mich.App. 6] Parkwood Ltd. Dividend Housing Ass'n v. State Housing Dev. Auth., 468 Mich. 763, 664 N.W.2d 185 (2003) ], is the supporting authority for the conclusion that the Court of Claims has exclusive jurisdiction over a declaratory action that includes monetary relief against the State.... Based on previous case law and MCL 600.6419(4) this Court finds that if the plaintiff seeks monetary damages from the state, jurisdiction belongs exclusively with the Court of Claims. The exception to this finding is if jurisdiction over the controversy has been specifically provided or conferred upon another court or tribunal.

Defendant's contention that this court lacks jurisdiction because the Plaintiff's claim lies neither in tort nor contract, is inaccurate. The Court of Claims [sic] exclusive jurisdiction is not limited to those actions that arise in contract or tort, it also has jurisdiction over claims that are both grounded in declaratory relief and monetary damages. If this Court adopted Defendant's position of only granting jurisdiction over contract and tort claims, many plaintiffs, including Plaintiff in this case, would be left without any appropriate venue to bring their claim. This Court cannot adopt such a view. Therefore, jurisdiction over this controversy lies exclusively with the Court of Claims and Defendant's motion for summary judgment for lack of subject matter jurisdiction is denied.

Defendant sought leave to appeal in this Court, arguing that the Court of Claims had erred by ruling that it possessed subject-matter jurisdiction over the controversy. We granted defendant's application for leave to appeal, limited to the issues raised in the application. Oakland Co. v. Dep't of Human Servs., unpublished order of the Court of Appeals, entered February 27, 2009 (Docket No. 288812).


Summary disposition is proper when, among other things, “[t]he court lacks jurisdiction of the subject [290 Mich.App. 7] matter.” MCR 2.116(C)(4). We review de novo a motion for summary disposition brought pursuant to subrule (C)(4). Weishuhn v. Catholic Diocese of Lansing, 279 Mich.App. 150, 155, 756 N.W.2d 483 (2008).

[799 N.W.2d 570]

Whether a court has subject-matter jurisdiction is a question of law that we review de novo. Jamil v. Jahan, 280 Mich.App. 92, 99–100, 760 N.W.2d 266 (2008). We likewise review de novo issues of statutory interpretation. Toll Northville Ltd. v. Northville Twp., 480 Mich. 6, 10–11, 743 N.W.2d 902 (2008).


We conclude that the Court of Claims relied on erroneous legal reasoning in this case. However, we also conclude that the Court of Claims reached the correct result in ruling that it possessed subject-matter jurisdiction over the present controversy.

The Court of Claims is a legislatively created court of limited jurisdiction, and its jurisdiction is entirely statutory. Parkwood, 468 Mich. at 767, 664 N.W.2d 185; Bays v. Dep't of State Police, 89 Mich.App. 356, 362, 280 N.W.2d 526 (1979). The exclusive subject-matter jurisdiction of the Court of Claims is defined by MCL 600.6419, which provides in relevant part:

(1) Except as provided in [MCL 600.6419a] and [MCL 600.6440], the jurisdiction of the court of claims, as conferred upon it by this chapter, shall be exclusive.... The court has power and jurisdiction:

(a) To hear and determine all claims and demands, liquidated and unliquidated, ex contractu and ex delicto, against the state and any of its departments, commissions, boards, institutions, arms, or agencies.

(b) To hear and determine any claims or demands, liquidated or unliquidated, ex contractu or ex delicto, which may be pleaded by way of counterclaim on the part [290 Mich.App. 8] of the state or any department, commission, board, institution, arm, or agency of the state against any claimant who may bring an action in the court of claims....

* * *

(4) This chapter shall not deprive the circuit court of this state of jurisdiction over ... proceedings for declaratory or equitable relief, or any other actions against state agencies based upon the statutes of this state in such case made and provided, which expressly confer jurisdiction...

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