COUNTY OF OAKLAND V MICHIGAN DEPARTMENT OF HUMAN SERVICES
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STATE OF MICHIGAN
COURT OF APPEALS
OAKLAND COUNTY,
FOR PUBLICATION
September 14, 2010
9:00 a.m.
Plaintiff-Appellee,
v
No. 288812
Court of Claims
LC No. 08-000051-MZ
DEPARTMENT OF HUMAN SERVICES,
Defendant-Appellant.
Before: SHAPIRO, P.J., and JANSEN and DONOFRIO, JJ.
JANSEN, J.
Defendant appeals by leave granted the order of the Court of Claims denying its motion
for summary disposition brought pursuant to MCR 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.
I
Defendant, as the agency responsible for the care and custody of children who are
permanent wards of the state, has the authority to place and maintain such children 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. MCL 400.207(7). The county’s liability for the costs
associated with the care of a ward 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).
1
Defendant’s motion for summary disposition was also brought pursuant to MCR 2.116(C)(8).
However, the portion of defendant’s motion brought under subrule C(8) is not at issue in the
present appeal.
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Michigan Administrative Rule 400.341 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. Thus, for example, in accordance with R 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 wards in 2007. In a letter of 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 the 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 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 first deducted the disputed amounts, totaling
$150,765.62, and remitted only $1,243,305 to plaintiff in the end.
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 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 rate increases for the cost of MCI wards.”
In lieu of answering plaintiff’s complaint, defendant filed a motion for summary
disposition pursuant to MCR 2.116(C)(4) and (8).2 Defendant argued that the Court of Claims
2
As noted earlier, the portion of the motion brought pursuant to subrule C(8) is not at issue in the
present appeal.
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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 subjectmatter jurisdiction over the controversy, reasoning in relevant part:
Plaintiff suggests Silverman v Board of Regents, 445 Mich 209 (1994), 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[’s] exclusive jurisdiction is not limited to those action 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. [Emphasis in original.]
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 Services, unpublished order of the Court of Appeals, issued
February 27, 2009 (Docket No. 288812).
II
Summary disposition is proper when, among other things, “[t]he court lacks jurisdiction
of the subject 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 NW2d 483 (2008). 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 NW2d 266 (2008). We
likewise review de novo issues of statutory interpretation. Toll Northville Ltd v Northville Twp,
480 Mich 6, 10-11; 743 NW2d 902 (2008).
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III
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 Ltd Dividend Housing Ass’n v State Housing Dev
Auth, 468 Mich 763, 767; 664 NW2d 185 (2003); Bays v Dep’t of State Police, 89 Mich App
356, 362; 280 NW2d 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 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.
(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 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 thereof upon the circuit
court . . . .
“Additionally, MCL 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[.]” Parkwood, 468 Mich at 768. Specifically,
§ 6419a provides:
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
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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.[3]
We cannot agree with that portion of the lower court’s opinion and order in which it
stated that “[t]he Court of Claims[’s] exclusive jurisdiction is not limited to those action that
arise in contract or tort, it also has jurisdiction over claims that are both grounded in declaratory
relief and monetary damages.” As our Supreme Court has observed, “[t]he plain language of
§ 6419(1)(a), the primary source of jurisdiction for the Court of Claims, does not refer to claims
for money damages or to claims for declaratory relief.” Parkwood, 468 Mich at 772. Instead,
the primary jurisdiction-conferring statute refers only to claims against the state that are “ex
contractu and ex delicto[.]” MCL 600.6419(1)(a); see also Parkwood, 468 Mich at 772. The
unmistakable teaching of Parkwood is that the exclusive subject-matter jurisdiction of the Court
of Claims turns entirely on whether a claim is “ex contractu” or “ex delicto” in nature. And
despite the existence of several earlier, incorrectly decided cases to the contrary, the Parkwood
Court made clear that whether a plaintiff seeks money damages or other monetary relief is
entirely irrelevant to determining whether the Court of Claims possesses exclusive jurisdiction
over his or her claim under § 6419(1)(a). In short, it is the essential nature of the claim—and not
the particular type of relief sought—that determines whether the Court of Claims possesses
exclusive subject-matter jurisdiction. For example, although the plaintiff’s claim in Parkwood
sought only declaratory relief and did not seek money damages, it came within the exclusive
subject-matter jurisdiction of the Court of Claims under § 6419(1)(a) because it was based in
contract and therefore ex contractu in nature. Parkwood, 468 Mich at 772.
The critical question in this case was not whether plaintiff’s claim sought money
damages or other monetary relief. Such an inquiry was irrelevant to whether the Court of Claims
possessed exclusive subject-matter jurisdiction over plaintiff’s claim under § 6419(1)(a).
Instead, the critical question in this case was whether plaintiff’s claim against defendant was “ex
contractu” or “ex delicto” in nature. For the reasons that follow, we hold that plaintiff asserted a
claim seeking a refund of the monies withheld by defendant, accompanied by a prayer for
declaratory relief. We conclude that plaintiff’s claim seeking a refund of the monies withheld by
defendant was ex contractu in nature, and consequently within the exclusive subject-matter
jurisdiction of the Court of Claims under § 6419(1)(a). We further conclude that the Court of
Claims had concurrent jurisdiction under § 6419a to consider plaintiff’s ancillary request for
declaratory relief.
When ascertaining the exact nature of a plaintiff’s claim, we are not bound by the
plaintiff’s choice of labels because this would exalt form over substance. Johnston v Livonia,
177 Mich App 200, 208; 441 NW2d 41 (1989). Instead, “the gravamen of an action is
determined by reading the complaint as a whole, and by looking beyond mere procedural labels
to determine the exact nature of the claim.” Adams v Adams (On Reconsideration), 276 Mich
3
MCL 600.605 provides that “[c]ircuit courts have original jurisdiction to hear and determine all
civil claims and remedies, except where exclusive jurisdiction is given in the constitution or by
statute to some other court or where the circuit courts are denied jurisdiction by the constitution
or statutes of this state.” See also Parkwood, 468 Mich at 768 n 4.
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App 704, 710-711; 742 NW2d 399 (2007). The essential nature of a plaintiff’s claim “must be
determined by the . . . essential facts or grievance as alleged . . . .” Nicholson v Han, 12 Mich
App 35, 43; 162 NW2d 313 (1968). The particular type of relief sought is also a relevant
consideration in determining the essential nature of a plaintiff’s claim. See Adams, 276 Mich at
715 (observing, among other things, that the plaintiff’s claim did not sound in fraud because the
plaintiff did not “seek damages for [the] allegedly fraudulent conduct”).
In this case, plaintiff’s complaint was simply entitled “Complaint for Declaratory
Judgment,” and contained no internal labels or headings identifying any specific claims.
However, the complaint did set forth detailed allegations concerning why plaintiff believed
defendant’s retroactive rate increases were unlawful and why plaintiff believed it was improper
for defendant to retain the withheld amount of $150,765.62. It is true, as explained earlier, that
plaintiff specifically sought declaratory relief with regard to the legality of defendant’s
retroactive rate increases. But plaintiff’s complaint also sought a refund of the monies that
defendant was withholding “as a result of [its] illegal retroactive rate increases for the cost of
MCI wards.” Upon examination of the complaint as a whole, Adams, 276 Mich App at 710-711,
and after having reviewed plaintiff’s particular allegations and the specific relief sought, it is
clear to us that plaintiff’s complaint set forth a claim for money had and received, seeking a
refund of the monies withheld by defendant. Although plaintiff also sought declaratory relief in
addition to its request for a refund, we note that declaratory relief is an equitable remedy and not
truly a separate claim. Mettler Walloon, LLC v Melrose Twp, 281 Mich App 184, 221; 761
NW2d 293 (2008).
The statutory terms “ex contractu” and “ex delicto” are legal terms that have acquired
particular meanings in the law. See MCL 8.3a. The term “ex delicto” is defined as “‘[f]rom a
delict, tort, fault, crime, or malfeasance,’” and describes claims that “‘grow out of or are founded
upon a wrong or tort.’” Lowery v Dep’t of Corrections, 146 Mich App 342, 347-348; 380 NW2d
99 (1985), quoting Black’s Law Dictionary (4th ed), p 660. In contrast, the term “ex contractu”
describes “civil actions arising out of contract.” Lowery, 146 Mich App at 348. But the term “ex
contractu” does not merely describe traditional breach-of-contract claims and claims arising from
express contracts; it also encompasses quasi-contract claims and causes of action arising from
contracts implied in fact and law. Pomann, Callanan & Sofen, PC v Wayne Co Dep’t of Social
Services, 166 Mich App 342, 347 n 5; 419 NW2d 787 (1988); 42 CJS, Implied & Constructive
Contracts, § 4, pp 6-7; see also Lim v Dep’t of Transportation, 167 Mich App 751, 754; 423
NW2d 343 (1988).
It is well settled that an action seeking a refund of fees paid to the state is properly
characterized as a claim in assumpsit for money had and received. Service Coal Co v Michigan
Unemployment Compensation Comm, 333 Mich 526, 531; 53 NW2d 362 (1952); Yellow Freight
Sys Inc v Dep’t of Treasury, 231 Mich App 194, 203; 585 NW2d 762 (1998), rev’d on other
grounds 464 Mich 21 (2001). The present-day claim for money had and received arose from the
early action of indebitatus assumpsit, and is based on the legal fiction of a promise implied in
law.4 See Consumers Power Co v Muskegon Co, 346 Mich 243, 255; 78 NW2d 223 (1956)
4
“In order to afford the remedy demanded by exact justice and adjust such remedy to a cause of
(continued…)
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(SMITH, J., dissenting). A claim for money had and received is ex contractu in nature. See
Yellow Freight, 231 Mich App at 203; see also Rader v Levenson, 290 Ga App 227, 230 n 13;
659 SE2d 655 (2008); Citizens State Bank v National Sur Corp, 199 Colo 497, 500; 612 P2d 70
(1980); Lang v Friedman, 166 Mo App 354, 362; 148 SW 992 (1912); Johnson v Collier, 161
Ala 204, 208; 49 So 761 (1909); Allen v Frawley, 106 Wis 638, 645; 82 NW 593 (1900). We
conclude that plaintiff’s claim seeking a refund of the monies withheld by defendant was actually
a claim for money had and received. See Yellow Freight, 231 Mich App at 203. Therefore, even
though there was no express contract between plaintiff and defendant, plaintiff’s claim was
nonetheless ex contractu in nature. See Pomann, Callanan & Sofen, 166 Mich App at 347 n 5.
Plaintiff’s ex contractu claim against defendant for money had and received unquestionably fell
within the exclusive subject-matter jurisdiction of the Court of Claims. MCL 600.6419(1)(a).
We have already explained that plaintiff’s complaint also contained an associated prayer
for declaratory relief. Indeed, plaintiff sought a declaration that defendant was required to
establish the cost of caring for MCI wards in September, a declaration that the rates established
by defendant in September could not go into effect until the following year, and a declaration
that defendant was not entitled to retroactively increase such rates. Declaratory relief is
equitable in nature. Mettler Walloon, 281 Mich App at 221; Coffee-Rich, Inc v Dep’t of
Agriculture, 1 Mich App 225, 228; 135 NW2d 594 (1965). As discussed previously, § 6419a
provides that “[i]n 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 declaratory relief requested by plaintiff would have facilitated plaintiff’s efforts to
recoup the monies withheld by defendant and would have prevented defendant from retroactively
increasing the cost of caring for MCI wards in the future. In other words, plaintiff’s request for
declaratory relief was ancillary to its ex contractu claim for money had and received. The Court
of Claims therefore had concurrent jurisdiction over plaintiff’s demand for declaratory relief.
MCL 600.6419a.
IV
We conclude that the Court of Claims had exclusive subject-matter jurisdiction over
plaintiff’s ex contractu claim seeking a refund of the monies withheld by defendant. MCL
600.6419(1)(a). We further conclude that the Court of Claims had concurrent subject-matter
jurisdiction over plaintiff’s ancillary demand for declaratory relief. MCL 600.6419a. Although
the Court of Claims relied on erroneous legal reasoning, it reached the correct result by denying
defendant’s motion for summary disposition under MCR 2.116(C)(4). It is axiomatic that we
will not reverse when the lower court has reached the correct result, even if it has done so for the
wrong reason. Taylor v Laban, 241 Mich App 449, 458; 616 NW2d 229 (2000).
We decline to consider defendant’s argument that because plaintiff’s claim is rooted in a
decision of the Director of the Department of Human Services, plaintiff’s proper recourse was to
(…continued)
action, the law sometimes indulges in the fiction of a quasi or constructive contract, with an
implied obligation to pay for benefits received.” Cascaden v Magryta, 247 Mich 267, 270; 225
NW 511 (1929).
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seek judicial review of that final agency decision. Defendant has raised this argument for the
first time in its reply brief, and the argument has therefore not been properly presented for
appellate review. MCR 7.212(G); Maxwell v Dep’t of Environmental Quality, 264 Mich App
567, 576; 692 NW2d 68 (2004).
Affirmed. No taxable costs pursuant to MCR 7.219, a public question having been
involved.
/s/ Kathleen Jansen
/s/ Pat M. Donofrio
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