Universal Am-Can Ltd. v. Attorney General

• Decision Date: 17 November 1992
• Docket Number: AM-CAN,Docket No. 127145
• Citation: 494 N.W.2d 787,197 Mich.App. 34
• Parties: UNIVERSALLIMITED, Plaintiff-Appellant, v. Frank J. Kelly, ATTORNEY GENERAL of the State of Michigan, William E. Long, Chairperson of the Michigan Public Service Commission, Steven M. Fetter, Commissioner of the Michigan Public Service Commission, Ronald E. Russell, Commissioner of the Michigan Public Service Commission, Thomas R. Lonergran, Director of Motor Carrier Regulation of the Michigan Public Service Commission, and Captain Anthony Philipps, Commander of the Motor Carrier Division of the Michigan State Police, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 787

494 N.W.2d 787

197 Mich.App. 34

UNIVERSAL AM-CAN LIMITED, Plaintiff-Appellant, v. Frank J. Kelly, ATTORNEY GENERAL of the State of Michigan William E. Long, Chairperson of the Michigan Public Service Commission, Steven M. Fetter, Commissioner of the Michigan Public Service Commission, Ronald E. Russell, Commissioner of the Michigan Public Service Commission, Thomas R Lonergran, Director of Motor Carrier Regulation of the Michigan Public Service Commission, and Captain Anthony Philipps, Commander of the Motor Carrier Division of the Michigan State Police, Defendants-Appellees.

Docket No. 127145.

Court of Appeals of Michigan.

Submitted Dec. 11, 1991, at Detroit.

Decided Nov. 17, 1992, at 9:45 a.m.

Released for Publication Feb. 17, 1993.

Farhat, Story & Kraus, P.C. by Richard C. Kraus, East Lansing, and McFarland & Bullard by Robert E. McFarland, Bloomfield Hills, for plaintiff.

Frank J. Kelley, Atty. Gen., Thomas L. Casey, Sol. Gen., and Don L. Keskey and Richard M. Karoub, Asst. Attys. Gen., for defendants.

Before MICHAEL J. KELLY, P.J., and SULLIVAN and CONNOR, JJ.

CONNOR, Judge.

The trial court granted defendants' motion for summary disposition, MCR 2.116(C)(4) and (7), in its order of January 19, 1990. Plaintiff appeals as of right from that order. We reverse the trial court's decision and remand this matter to the trial court for additional proceedings.

Plaintiff is a common and contract motor carrier with its principal place of business in Sterling Heights, Michigan. Plaintiff operates primarily in interstate commerce, with only 4.8 percent of its 1988 revenues being generated from intrastate operations in Michigan. It is plaintiff's custom and practice to enter into contracts with independent contractors to provide leased equipment and driving services.

Section 10a(6) of the Motor Carrier Act, M.C.L. Sec. 479.10a(6); M.S.A. Sec. 22.575(1)(6), requires intrastate motor carriers to operate only with direct employees, rather than with independent contractors. The Public Service Commission sent written notices informing plaintiff that it was not permitted to utilize independent contractors to operate leased equipment, and advising plaintiff to bring its intrastate leases into compliance with the statute. The PSC refused to allow plaintiff to add equipment to its intrastate operations and refused to grant the decals necessary for intrastate operation until plaintiff complied with Sec. 10a(6).

Plaintiff filed a complaint in the Macomb Circuit Court, requesting a preliminary injunction, a permanent injunction, a declaratory judgment, and a writ of mandamus against defendants. Plaintiff contended that the PSC's application of Sec. 10a(6), which denied plaintiff, a carrier primarily engaged in interstate commerce, the right to intrastate decals and the use of additional equipment, was in violation of the Commerce Clause of the United States Constitution. U.S. Const., Art. I, Sec. 8. Plaintiff argued that federal regulations allow interstate carriers to operate leased equipment with independent contractors, and claimed that its intrastate business was only incidental to its general business of interstate commerce. Plaintiff contends that Sec. 10a(6) violates the Commerce Clause because it subjects plaintiff to inconsistent regulations and unduly burdens interstate commerce. Plaintiff requested a declaratory ruling from the circuit court that Sec. 10a(6) was unconstitutional. Among the other requested relief, plaintiff asked that the PSC be forced to apply this section in a manner consistent with the federal constitution.

Defendants moved for summary disposition of the complaint. The trial court found that it did not have subject-matter jurisdiction over plaintiff's challenges to the actions by the PSC and that plaintiff had failed to exhaust reasonable and available administrative remedies. The trial court granted summary disposition, and plaintiff's complaint was dismissed with prejudice. We believe both parts of the trial court's ruling were erroneous.

Whether a court has subject-matter jurisdiction is a question of law. Dep't. of Natural Resources v. Holloway Construction Co., 191 Mich.App. 704, 705, 478 N.W.2d 677 (1991). The burden is on the plaintiff to establish jurisdiction. Gooley v. Jefferson Beach Marina, Inc., 177 Mich.App. 26, 28, 441 N.W.2d 21 (1989). As a court of general equity jurisdiction, the circuit court had subject-matter jurisdiction to issue a declaratory ruling, an injunction, or a writ of mandamus. Const. 1963, art. 6, Sec. 13; M.C.L. Sec. 600.605; M.S.A. Sec. 27A.605; Consumers Power Co. v. Public Service Comm., 415 Mich. 134, 144, 327 N.W.2d 875 (1982); State ex rel. Ingham Co. Prosecutor v. American Amusement Co., Inc., 71 Mich.App. 130, 135, 246 N.W.2d 684 (1976). However, where the Legislature intended to make an administrative tribunal's jurisdiction exclusive, a circuit court cannot exercise jurisdiction over those same areas. M.C.L. Sec. 600.605; M.S.A. Sec. 27A.605; Wikman v. Novi, 413 Mich. 617, 646-647, 322 N.W.2d 103 (1982).

The PSC's jurisdiction is limited to regulating motor carriers involved in intrastate commerce, M.C.L. Sec. 460.6(1); M.S.A. Sec. 22.13(6)(1). While the PSC has jurisdiction over the enforcement of the Motor Carrier Act, it has generally been held that an agency that exercises quasi-judicial authority does not possess the power to determine the constitutionality of statutes. Wikman, supra, pp. 646-647, 322 N.W.2d 103; Eyde v. Lansing Twp., 420 Mich. 287, 292, 363 N.W.2d 277 (1984); Dation v. Ford Motor Co., 314 Mich. 152, 159-160, 22 N.W.2d 252 (1946). The circuit court retains jurisdiction to consider certain constitutional issues related to the validity of laws. Johnston v. Livonia, 177 Mich.App. 200, 204-205, 441 N.W.2d 41 (1989). However, if the agency is merely asked to resolve issues couched in constitutional terms that do not involve the validity of a statute, it has jurisdiction to do so. Id.

In the case at bar, plaintiff's entitlement to the relief requested was dependent upon a ruling that Sec. 10a(6), as applied to interstate motor carriers, was unconstitutional under the Commerce Clause. Plaintiff was directly challenging the constitutionality of the statute and not merely couching the complaint in constitutional terms. We find that the trial court erred in determining that it lacked subject-matter jurisdiction. See also Plymouth Twp. v. Wayne Co. Bd. of Comm'rs, 137 Mich.App. 738, 747-748, 359 N.W.2d 547 (1984).

While it was possible for plaintiff to have first pursued any remedies it may have had before the PSC, both judicial economy and the interests of justice supported plaintiff's actions in filing a complaint in the circuit court for declaratory relief. Plaintiff claimed that the PSC lacked statutory authority to regulate it because its primary business as an interstate carrier fell outside the parameters of the powers granted by the Legislature to the PSC over intrastate carriers. Requiring plaintiff to first pursue its administrative remedies would have been futile; therefore, the failure to do so is excusable. Generou v. Kalamazoo Regional Psychiatric Hosp., 192 Mich.App. 295, 305, 480 N.W.2d 638 (1991). When the controlling issue involves a constitutional right, the exhaustion doctrine does not apply. Dickerson v. Warden, Marquette Prison, 99 Mich.App. 630, 641, 298 N.W.2d 841 (1980). Compare Jones v. Dep't of Corrections, 185 Mich.App. 134, 138, 460 N.W.2d 575 (1990); O'Keefe v. Dep't of Social Services, 162 Mich.App. 498, 505-506, 413 N.W.2d 32 (1987).

We also believe that the doctrine of primary jurisdiction does not apply because the agency's statutory authority and the constitutionality of Sec. 10a(6) were issues that did not require the agency's special expertise or fact-finding skills. Attorney General v. Diamond Mortgage Co., 414 Mich. 603, 613, 327 N.W.2d 805 (1982); Int'l. Business Machines Corp. v. Dep't of Treasury, 75 Mich.App. 604, 610, 255 N.W.2d 702 (1977). Therefore, there was no need for the circuit court to defer to the PSC's jurisdiction.

We are satisfied that the remainder of de...