Pomann, Callanan & Sofen, P.C. v. Wayne County Dept. of Social Services

Decision Date14 March 1988
Docket NumberNo. 91666,91666
Citation419 N.W.2d 787,166 Mich.App. 342
CourtCourt of Appeal of Michigan — District of US
PartiesPOMANN, CALLANAN & SOFEN, P.C., Plaintiffs-Appellees, v. WAYNE COUNTY DEPARTMENT OF SOCIAL SERVICES, Defendant-Appellant. and Ethel Christian, Defendant. 166 Mich.App. 342, 419 N.W.2d 787, 21 Soc.Sec.Rep.Ser. 269

[166 MICHAPP 343] John J. Pomann, Westland, for plaintiffs-appellees.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and L. Kim Hoagland and Rosendo Asevedo, Jr., Asst. Attys. Gen., for defendant-appellant.

[166 MICHAPP 344] Before WALSH, P.J., and WAHLS and GIDDINGS, * JJ.

WALSH, Presiding Judge.

Defendant Wayne County Department of Social Services appeals from the March 20, 1986, order of the Wayne Circuit Court granting summary judgment in favor of plaintiff, the law firm of Pomann, Callanan & Sofen, P.C., in the amount of $2,787.65. We reverse and enter summary disposition for defendant.

Plaintiff, through Evan H. Callanan, Jr., represented Ethel Christian before the Social Security Administration following Christian's application for Supplemental Security Income (SSI) benefits under Title XVI of the Social Security Act. 42 U.S.C. Sec. 1381 et seq. In a December 15, 1983, notice, Ms. Christian was informed that she was eligible to receive continuing monthly SSI benefits. The award was retroactive to July, 1981. Her first SSI check, representing past-due benefits in the amount of $8,814.20, was sent directly to defendant so that defendant could be reimbursed for the general assistance funds it had paid to Ms. Christian during the pendency of her SSI application. Ms. Christian had previously agreed to this procedure. 1 On December 9, 1983, after deducting $7,342 for the interim assistance it had advanced to Ms. Christian, defendant forwarded to her the balance of $1,472.20. Future monthly SSI checks in the amount of $338.30 were to be sent directly to Ms. Christian.

On April 17, 1984, the Social Security Administration authorized Mr. Callanan to charge Ms. Christian $2,950 for services he rendered on her [166 MICHAPP 345] behalf before the Social Security Administration. 2 He was informed, however, that only $162.35 had been withheld from Ms. Christian's award and that he must look to Ms. Christian for the balance of the fee. 3

On April 19, 1985, plaintiff law firm commenced this action, seeking its fee from defendant. 4 Plaintiff alleged Ms. Christian's agreement to pay plaintiff the sum authorized by the Social Security Administration. According to plaintiff, defendant benefitted from plaintiff's labor and had been unjustly enriched in the amount of the approved attorney fee. Plaintiff also claimed that an attorney charging lien or equitable lien existed in its favor against the award which had been sent to defendant. Plaintiff requested judgment in its favor in the amount of $2,950. Plaintiff also asked that defendant provide an accounting and that defendant be ordered to pay $2,950 into a special account pending outcome of the case.

In its answer and motion for summary disposition, defendant claimed that the circuit court lacked subject matter jurisdiction. MCR 2.116(C)(4). Exclusive jurisdiction, according to defendant, lay in the Court of Claims. Defendant also argued that plaintiff had failed to state a claim upon which relief could be granted. See MCR 2.116(C)(8).

Plaintiff filed a motion for summary judgment, claiming that there was no genuine issue of fact [166 MICHAPP 346] concerning the attorney fee and that there was an equitable lien in the amount of the attorney fee against the award which had been sent to defendant. See MCR 2.116(C)(10).

The circuit court disagreed with defendant on both the jurisdiction and substantive issues, ruling that, in the exercise of "its equitable powers to secure payment for Plaintiff from" the SSI award which had been sent directly to defendant, summary judgment was granted to plaintiff in the amount of $2,950, less the $162.35 which, according to the Social Security Administration, had been withheld. We reverse.

Defendant argues that exclusive jurisdiction over plaintiff's complaint lay in the Court of Claims.

The subject matter jurisdiction of the Court of Claims is defined entirely by statute. Littsey v. Bd. of Governors of Wayne State University, 108 Mich.App. 406, 412, 310 N.W.2d 399 (1981), lv. den. 413 Mich. 882 (1982); Rangel v. University of Michigan, 157 Mich.App. 563, 403 N.W.2d 836 (1987), lv. den. 428 Mich. 907 (1987).

The Court of Claims has exclusive jurisdiction:

"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." M.C.L. Sec. 600.6419(1)(a); M.S.A. Sec. 27A.6419(1)(a).

This exclusive jurisdiction encompasses all claims against the state and its instrumentalities for money damages. Paquin v. Northern Michigan University, 79 Mich.App. 605, 607, 262 N.W.2d 672 (1977).

The Court of Claims has concurrent jurisdiction of any demand for equitable relief which is ancillary[166 MICHAPP 347] to a claim filed pursuant to M.C.L. Sec. 600.6419; M.S.A. Sec. 27A.6419. M.C.L. Sec. 600.6419a; M.S.A. Sec. 27A.6419(1). The Court of Claims Act affirms the continued availability of circuit court jurisdiction over proceedings for strictly equitable relief. M.C.L. Sec. 600.6419(4); M.S.A. Sec. 27A.6419(4), M.C.L. Sec. 600.6419a; M.S.A. Sec. 27A.6419(1).

In this case, review of plaintiff's complaint discloses that, notwithstanding the equitable theories advanced, its claim is one for money damages. Plaintiff bases its claim both on Ms. Christian's agreement to pay the authorized attorney fee and on the alleged unjust enrichment of defendant. This latter theory sounds in quasi-contract, or contract implied-in-law, Moll v. Wayne County, 332 Mich. 274, 278-279, 50 N.W.2d 881 (1952), overruled on other grounds Brown v. Dep't of Military Affairs, 386 Mich. 194, 201, 191 N.W.2d 347 (1971), cert. den. 405 U.S. 990, 92 S.Ct. 1256, 31 L.Ed.2d 457 (1972); Hollowell v. Career Decisions, Inc., 100 Mich.App. 561, 570, 298 N.W.2d 915 (1980). Plaintiff's claim is thus a claim for money damages ex contractu and was within the exclusive jurisdiction of the Court of Claims. 5

In the interest of judicial economy, we also address defendant's remaining argument that plaintiff did not state a claim upon which relief could be granted.

Incorporated into Title XVI of the Social Security Act, 42 U.S.C. Sec. 1383(d)(1), is Sec. 207(a) of the act, which provides:

"The right of any person to any future payment under this subchapter shall not be transferable or [166 MICHAPP 348] assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law." 42 U.S.C. Sec. 407(a).

In Kerlinsky v. Massachusetts, 17 Mass.App. 501, 459 N.E.2d 1240 (1984), the plaintiff, an attorney who had represented two persons in their successful pursuit of SSI benefits, sued the State Department of Public Welfare asserting an attorney's lien. As in the instant case, the claimant's initial SSI checks had been sent by the Social Security Administration directly to the state pursuant to the interim assistance reimbursement program. 42 U.S.C. Sec. 1383(g). Summary judgment was entered for the state and the attorney appealed. After reviewing 20 C.F.R. Sec. 416.1500 et seq., see ns. 2 and 3, supra, the Massachusetts Court of Appeals turned to 42 U.S.C. Sec. 407 and concluded:

"SSI funds in the hands of the Commonwealth are not subject to attachment or lien by creditors and no exception was carved out in the statute for an attorney's lien." 459 N.E.2d 1242.

Under similar facts, the California Court of Appeals affirmed a judgment denying an attorney's claim for fees against the county in Neal v. Stanislaus County, 141 Cal.App.3d 534, 190 Cal.Rptr. 324 (1983). Rejecting the attorney's unjust enrichment/common fund argument, the Neal court found "no contractual relation or overriding equitable rationale of unfairness to plaintiff which supports an allowance of fees." 141 Cal.App.3d 539, 190 Cal.Rptr. 324. The court relied in part on this Court's analysis of the interim assistance reimbursement program in Inman v. Dep't of Social Services, 98 Mich.App. 266, 271, 296 N.W.2d 232 (1980):

[166 MICHAPP 349] " 'Section 1383(g) was enacted to encourage states to provide interim assistance where there is no duty to so provide. Congress was aware that between the time an individual applies for SSI benefits and the time they are received, considerable time may elapse. In the present case, Mrs. Inman was required to wait approximately six months. Although the first SSI check includes retroactive benefits from the time of filing, this cannot satisfy those persons who are in immediate and constant need. To help these persons, many states provide interim assistance.

" 'As a condition for assistance in Michigan, a recipient must agree to have the first SSI payment sent directly to the state. See French v Dep't of Social Services, 92 Mich App 701; 285 NW2d 427 (1979). This practice is consistent with Sec. 1383(g) and the regulations promulgated thereunder. 20 C.F.R. Sec. 416.1901 et seq.

" 'We find that the effect of Sec. 1383(g)(1) and (2) is to make a state which supplies interim assistance a preferred creditor as to the first SSI payment.' " 141 Cal.App.3d 539-540, 190 Cal.Rptr. 324 (emphasis in original).

See also McCarthy v. Secretary of Health & Human Services, 793 F.2d 741 (CA 6, 1986), where the plaintiff, an attorney who successfully represented two SSI claimants, challenged the interim assistance reimbursement procedures, arguing that the Secretary of Health and Human Services should have deducted his...

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