Parkwood Ltd. Dividend Housing Ass'n v. State Housing Dev. Auth.

• Decision Date: 09 July 2003
• Docket Number: Docket No. 120410,Docket No. 120411,Docket No. Calendar No. 3.
• Citation: 664 N.W.2d 185,468 Mich. 763
• Parties: PARKWOOD LIMITED DIVIDEND HOUSING ASSOCIATION, Plaintiff-Appellee, v. STATE HOUSING DEVELOPMENT AUTHORITY, Defendant-Appellant.
• Court: Michigan Supreme Court

664 N.W.2d 185

468 Mich. 763

PARKWOOD LIMITED DIVIDEND HOUSING ASSOCIATION, Plaintiff-Appellee, v. STATE HOUSING DEVELOPMENT AUTHORITY, Defendant-Appellant.

Docket Nos. 120410, 120411, Calendar No. 3.

Supreme Court of Michigan.

Argued March 11, 2003.

Decided July 9, 2003.

Kemp, Klein, Umphrey, Endelman & May, P.C. (by Richard Bisio), Troy, for plaintiff-appellee.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Terrence P. Grady and Matthew H. Rick, Assistant Attorneys General, Lansing, and Miller, Canfield, Paddock & Stone, PLC (by Carl H. von Ende, Frederick A. Acomb, and Robert E. Gilbert, Special Assistant Attorneys General), Detroit, for defendant-appellant.

MARKMAN, J.

We granted leave to appeal to consider the jurisdiction of the Court of Claims over this case, which involves a contractual claim for declaratory judgment against a state agency. The Court of Appeals, relying on Silverman v. Univ. of Michigan Bd. of Regents, 445 Mich. 209, 516 N.W.2d 54 (1994), determined that the Court of Claims lacked subject-matter jurisdiction because the complaint did not request monetary damages. Because we conclude that the Court of Claims has exclusive jurisdiction over the claim, we reverse the judgment of the Court of Appeals.

I. FACTS AND PROCEDURAL HISTORY

In 1973, plaintiff, a limited dividend housing association, received a mortgage from defendant Michigan State Housing Development Authority to finance the construction of an apartment complex for lowincome and moderate-income residents. In September 1998, plaintiff informed defendant of its intention to pay off the mortgage on October 1, 1998, and requested a payoff letter showing the amount due. Plaintiff also inquired whether the balances in all escrow and reserve accounts would be applied against the amount due or paid directly to plaintiff. In response, defendant indicated that it would retain any amounts remaining in the accounts after payment of the full limited dividend to which plaintiff was entitled.¹ Plaintiff then filed a "Complaint for Declaratory Relief" in the Wayne Circuit Court, seeking a declaration that the money contained in certain escrow accounts belonged to plaintiff and that plaintiff would be entitled to possession of the accounts when plaintiff paid the full balance due under the mortgage. The circuit court dismissed the case, finding that the claim was within the exclusive jurisdiction of the Court of Claims.

Plaintiff appealed from the circuit court's dismissal, and refiled its complaint in the Court of Claims. Both parties filed motions for summary disposition. The Court of Claims granted summary disposition for defendant. Plaintiff appealed from the Court of Claims judgment.

The Court of Appeals consolidated plaintiff's two appeals and, in a split decision, reversed.² The majority determined that, because plaintiff's complaint sought only a declaratory judgment concerning the ownership of certain money, contingent on certain circumstances, and did not seek monetary damages, the circuit court possessed subject-matter jurisdiction. Additionally, the majority concluded that because the Court of Claims only has jurisdiction over claims for monetary damages, and because plaintiff's complaint did not seek monetary damages, the Court of Claims lacked subject-matter jurisdiction and its rulings were void.

The dissenting Court of Appeals judge concluded that the claim would ultimately result in money damages if plaintiff were granted the relief requested in the complaint, and, therefore, that the case was properly before the Court of Claims.

Defendant filed an application for leave to appeal, and plaintiff filed an application for leave to cross-appeal the Court of Claims decision on its merits. We denied plaintiff's application and granted defendant's application, directing the parties to address the jurisdictional question in the context of the relevant statutes, M.C.L. §§ 600.6419 and 600.6419a, and this Court's decision in Silverman.³

II. STANDARD OF REVIEW

In order to resolve this jurisdictional issue, we must consider the Court of Claims Act. This is a question of statutory construction, which is reviewed de novo as a question of law. Cruz v. State Farm Mut. Automobile Ins. Co., 466 Mich. 588, 594, 648 N.W.2d 591 (2002).

III. DISCUSSION

A. STATUTORY PROVISIONS

The jurisdiction of the Court of Claims is provided by statute. The main statutory provision, M.C.L. § 600.6419, grants the Court of Claims exclusive jurisdiction over certain claims against the state and its subparts:

(1) Except as provided in sections 6419a and 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.

In regard to the jurisdiction of the circuit courts, M.C.L. § 600.6419 provides:

(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 thereof upon the circuit court....

Additionally, M.C.L. § 600.6419a, which was added in 1984, gives the Court of Claims concurrent jurisdiction with the circuit courts over any claim for equitable and declaratory relief that is ancillary to a claim filed under § 6419:

In addition to the powers and jurisdiction conferred upon the court of claims by section 6419, the court of claims has concurrent jurisdiction of any demand for equitable relief and any demand for a declaratory judgment when ancillary to a claim filed pursuant to section 6419. The jurisdiction conferred by this section is not intended to be exclusive of the jurisdiction of the circuit court over demands for declaratory and equitable relief conferred by section 605.[⁴]

B. CASE LAW

Michigan courts have interpreted § 6419(1)(a) "as limiting the jurisdiction of the Court of Claims to actions for money damages." AuSable Manistee Action Council, Inc. v. Michigan, 182 Mich.App. 596, 598, 452 N.W.2d 832 (1989) (citations omitted). This interpretation was first set forth in Taylor v. Auditor Gen., 360 Mich. 146, 151, 103 N.W.2d 769 (1960), which was decided before the 1984 amendment, when this Court, noting that the Court of Claims was created as a court of limited jurisdiction having "no `equity side' as that term is employed in respect of the jurisdiction of Michigan courts," concluded that the Court of Claims did not possess jurisdiction over declaratory-judgment actions.

Relying on Taylor, Michigan courts have since adhered to the view that the Court of Claims lacks jurisdiction over a claim that is solely for declaratory relief. See, e.g., AuSable, supra at 598, 452 N.W.2d 832; 77th Dist. Judge v. Michigan, 175 Mich.App. 681, 699, 438 N.W.2d 333 (1989). However, in Greenfield Constr. Co., Inc. v. Dep't of State Hwys., 402 Mich. 172, 261 N.W.2d 718 (1978), six participating justices agreed, in five separate opinions, that the circuit court lacked jurisdiction over the plaintiff's suit for declaratory judgment against a state department.⁵ Id. at 198, 261 N.W.2d 718 (opinion by RYAN, J., COLEMAN and FITZGERALD, JJ., concurring), 202, 261 N.W.2d 718 (opinion by LEVIN, J., KAVANAGH, C.J., concurring), 231, 261 N.W.2d 718 (WILLIAMS, J., concurring that the circuit court lacks jurisdiction over a citizen suit against a government agency for a declaratory judgment).

After the addition of § 6419a, the Court of Appeals noted that, "The holding in Taylor, premised on the absence of an equity side to the Court of Claims, was discredited in view of the subsequent abolition of procedural distinctions between the law and equity sides of a court docket." 77th Dist Judge, supra at 699, 438 N.W.2d 333. Nonetheless, the Court in 77th Dist Judge concluded "declaratory judgment is appropriate in the Court of Claims only if the underlying dispute or controversy is of a nature lending itself to an eventual remedy in money damages against the state or one of its branches." Id. at 700, 438 N.W.2d 333.

In 1994, this Court in Silverman, supra at 216-217, 516 N.W.2d 54, noted the uncertainty regarding the Court of Claims jurisdiction over declaratory claims before the addition of § 6419a. According to Silverman, with the enactment of § 6419a, "the Legislature authorized the Court of Claims to exercise jurisdiction over claims for declaratory and equitable relief against the state, provided that the plaintiff's suit also seeks money damages from the state or one of its agencies." Id. at 217, 516 N.W.2d 54. Significantly, Silverman also noted that the actual "nature of the claim," not how the plaintiff phrases the request for relief, controls whether the Court of Claims possesses jurisdiction. Id. at 216 n. 7, 516 N.W.2d 54.

C. ANALYSIS

Plaintiff concedes that this case involves a contract-based claim. However, plaintiff argues that, inasmuch as the complaint sought declaratory relief only, the Court of Claims did not possess jurisdiction, because M.C.L. § 600.6419(1)(a), interpreted in light of M.C.L. § 600.6419a, only grants the Court of Claims exclusive jurisdiction over complaints that request monetary damages. Defendant, on the other hand, argues that, because this is a contract-based claim against a state agency, it comes squarely within the exclusive jurisdiction of the Court of Claims under § 6419(1)(a).

In order to resolve the jurisdictional question presented, we must first consider the "nature of the claim." Plaintiff's prayer for relief states:

WHEREFORE, Plaintiff requests that the court adjudicate and declare that the accounts which are the subject of this complaint are assets belonging to Plaintiff,

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