Abram Andrews v. County of Wayne

STATE OF MICHIGAN

COURT OF APPEALS

ABRAM ANDREWS, SHARON CRAIGHEAD, UNPUBLISHED

and HARVIST SLATER, March 6, 2018

Plaintiffs-Appellants,

v No. 335857

Court of Claims

COUNTY OF WAYNE, WAYNE COUNTY LC No. 16-000080-MZ

TREASURER, RANCILIO & ASSOCIATES, and

WOLVERINE MAILING, PACKAGING,

WAREHOUSE, INC.,

Defendants-Appellees.

Before: CAVANAGH, P.J., and HOEKSTRA and BECKERING, JJ.

PER CURIAM.

In this case arising out of property tax foreclosures, plaintiffs, Abram Andrews, Sharon

Craighead, and Harvist Slater, appeal by right a Court of Claims order dismissing their lawsuit

for lack of subject matter jurisdiction. We affirm in part, reverse in part, and remand the matter

to the Court of Claims for further proceedings consistent with this opinion.

I. PERTINENT FACTS AND PROCEEDINGS

Plaintiffs are former title holders of certain parcels of real property located in the city of

Detroit in Wayne County, Michigan. Defendants are Wayne County and the Wayne County

Treasurer (“the county defendants”); Rancilio & Associates (Rancilio), a Michigan Corporation

hired by the county defendants in connection with foreclosure proceedings to conduct personal

visits to the subject properties; and Wolverine Mailing, Packaging, Warehouse, Inc. (Wolverine),

a Michigan Corporation hired by the county defendants to mail foreclosure notices via certified

mail. Plaintiffs sued defendants in the Court of Claims after judgments of foreclosure were

entered against them in the Wayne County Circuit Court for unpaid taxes in 2012. Plaintiffs

alleged that defendants “negligently, recklessly, and/or deliberately” withheld from plaintiffs the

“series of notices” in the tax foreclosure process required under Michigan’s general property tax

act (GPTA), MCL 211.1 et seq., and that defendants falsified records to indicate that personal

visits to the properties had occurred and that notices had been sent by certified mail. Plaintiffs

claimed that they did not receive the notice required by the GPTA or the Due Process Clauses of

the United States and Michigan Constitutions, US Const Am XIV; Const 1963, art 1, § 17.

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In their complaint, plaintiffs asserted six causes of action. Count one alleged a violation

of due process for failure to provide a meaningful opportunity to be heard based on defendants’

alleged failure to comply with the GPTA hearing requirements. Count two alleged a violation of

due process due to the failure to take additional steps to provide notice after the initial notices

were returned undelivered, failure to provide adequate personal visit notice, and general failure

to provide notice reasonably calculated to apprise plaintiffs of their impending foreclosures.

Count three alleged a violation of plaintiffs’ equal-protection rights associated with how their

payment plans were handled. Count four alleged that defendants had taken plaintiffs’ property

without just compensation in violation of the Takings Clauses of the United States and Michigan

Constitutions, US Const Am V; Const 1963, art 10, § 2. Count five sought declaratory relief,

asking the court to set aside the judgments of foreclosure and subsequent transfers. Finally,

count six alleged breach of contract for failure to honor payment plan agreements entered into

with plaintiffs Andrews and Slater. The relief requested in the complaint was as follows:

A. The declaratory relief as applicable and specified in Count Five,

including, but not limited to, an Order declaring the foreclosures, contracts and

deed the [sic] by which Defendants transferred the properties null and void, and

quieting title in the properties in the name of the Plaintiffs, subject only to valid

tax liens;

B. An award of just compensation, as applicable, in an amount to be

determined at trial;

C. An award of compensatory damages for County Defendant’s breach of

contract and for Defendants’ improper denial of Plaintiffs Constitutional rights;

and/or

D. Any other relief as necessary to redress the violation of Plaintiffs’

rights, guaranteed by the Constitution and laws.

The county defendants and defendant Rancilio answered the complaint and asserted affirmative

defenses, including that the Court of Claims lacked subject-matter jurisdiction. Defendant

Wolverine filed a motion for summary disposition under MCR 2.116(C)(4) (lack of subject-

matter jurisdiction) and (C)(8) (failure to state a claim upon which relief can be granted).

Without holding a hearing, the Court of Claims entered an order granting Wolverine’s

motion for summary disposition and dismissing the entire case for lack of subject-matter

jurisdiction. The order stated as follows:

MCL 600.6419 generally provides that [the Court of Claims] has jurisdiction over

any claim “against the state or any of its departments or officers.” MCL

600.6419(1). Because the claims against defendants; Wayne County, Richard

Hathaway (Wayne County Treasurer), Rancilio & Associates, and Wolverine

Mailing, Packaging, Warehouse, Inc are not claims “against the state or any of its

departments or officers,” as that phrase is defined in MCL 600.6419(7), this Court

lacks jurisdiction to hear and determine those claims.

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Plaintiffs timely moved for reconsideration, arguing that the Court of Claims had made a

palpable error in dismissing the case for lack of jurisdiction. Plaintiffs argued that MCL

600.6419(1) is not the only statute that confers jurisdiction on the Court of Claims and that MCL

211.78l1 of the GPTA expressly conferred subject-matter jurisdiction over their claim in the

Court of Claims. In response, the county defendants argued that MCL 211.78l narrowly granted

subject-matter jurisdiction to the Court of Claims over claims for monetary damages caused by a

failure to give notice required under the GPTA, and that plaintiffs did not assert a claim for

monetary damages. The Court of Claims entered an order denying reconsideration, and this

appeal followed.

II. ANALYSIS

The narrow issue on appeal in this case is whether the Court of Claims properly

dismissed this case for lack of subject-matter jurisdiction. The grant or denial of a motion for

summary disposition is reviewed de novo. See Travelers Ins Co v Detroit Edison Co, 465 Mich

185, 205; 631 NW2d 733 (2001). “Jurisdictional questions under MCR 2.116(C)(4) are

questions of law that are also reviewed de novo.” Id.

“Subject-matter jurisdiction refers to a court’s power to act and authority to hear and

determine a case.” Usitalo v Landon, 299 Mich App 222, 228; 829 NW2d 359 (2012).

“Subject-matter jurisdiction describes the types of cases and claims that a court has authority to

address.” Id.

Jurisdiction over the subject matter is the right of the court to exercise

judicial power over that class of cases; not the particular case before it, but rather

the abstract power to try a case of the kind or character of the one pending; and

not whether the particular case is one that presents a cause of action, or under the

particular facts is triable before the court in which it is pending, because of some

inherent facts which exist and may be developed during the trial. [Id.]

“The Court of Claims is created by statute and the scope of its subject-matter jurisdiction is

explicit.” O’Connell v Director of Elections, 316 Mich App 91, 101; 891 NW2d 240 (2016). By

contrast, “the circuit court is a court of general equity jurisdiction” and its subject-matter

jurisdiction is generally set forth by the Michigan Constitution. Id. MCL 600.6419, part of the

court of claims act, MCL 600.6401 et seq., provides in relevant part as follows:

Except as otherwise provided in this section, the [Court of Claims] has the

following power and jurisdiction:

1

MCL 211.78l is quoted in relevant part later in this opinion.

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(a) To hear and determine any claim or demand, statutory or

constitutional, liquidated or unliquidated, ex contractu or ex delicto, or any

demand for monetary, equitable, or declaratory relief or any demand for an

extraordinary writ against the state or any of its departments or officers

notwithstanding another law that confers jurisdiction of the case in the circuit

court. [MCL 600.6419(1)(a).]

It is undisputed that defendants are not “the state or any of its departments or officers.” Id.

Plaintiff argues that, although MCL 600.6419 grants exclusive jurisdiction to the Court of

Claims to hear tort and contract cases against the state, it is not the only statute that grants the

Court of Claims jurisdiction. Specifically, plaintiffs argue that MCL 211.78l, part of the GPTA,

confers exclusive subject matter jurisdiction in the Court of Claims to hear their case and others

like it. MCL 211.78l states in relevant part:

(1) If a judgment for foreclosure is entered under section 78k and all existing

recorded and unrecorded interests in a parcel of property are extinguished as

provided in section 78k, the owner of any extinguished recorded or unrecorded

interest in that property who claims that he or she did not receive any notice

required under this act shall not bring an action for possession of the property

against any subsequent owner, but may only bring an action to recover monetary

damages as provided in this section.

(2) The court of claims has original and exclusive jurisdiction in any action to

recover monetary damages under this section. [MCL 211.78l (emphasis added).] 2

By arguing that MCL 211.78l grants the Court of Claims jurisdiction to hear their case, plaintiffs

essentially assert that their case falls into the category of cases described in this section of the

statute (i.e., a claim by an owner of an interest extinguished by foreclosure who claims that he or

she did not receive notice under the GPTA and seeks monetary damages from the foreclosing

entity).

In River Investment Group v Casab, 289 Mich App 353, 358; 797 NW2d 1 (2010), this

Court held that MCL 600.6419 is not the only statute that grants jurisdiction in the Court of

Claims. MCL 211.78l(2) grants the Court of Claims exclusive original jurisdiction over claims

for monetary damages arising under the GPTA when it is alleged that a property owner did not

receive proper notice. River Investment Group, 289 Mich App at 358. Defendants do not

contest that MCL 211.78l is an alternative legislative grant of subject-matter jurisdiction.

Rather, defendants argue that none of plaintiffs’ claims fall into the narrow scope of the statute’s

grant of jurisdiction. For the Court of Claims to have jurisdiction under this section, (1) the

action must be related to a judgment for foreclosure entered under section 78k, (2) the plaintiff

must be an owner with a recorded or unrecorded interest in the parcel foreclosed upon, (3) the

plaintiff must be one “who claims that he or she did not receive any notice,” and (4) the plaintiff

must be seeking monetary damages. MCL 211.78l. It is undisputed that “a judgment for

2

The plain language of the statute does not exclude non-governmental defendants.

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foreclosure [was] entered under section 78k” and that each plaintiff was a record owner of a

parcel thus extinguished. MCL 211.78l(1). However, much of plaintiffs’ six-count complaint

exceeds the scope of the plain language of MCL 211.78l. Plaintiffs’ count six for alleged breach

of repayment agreements does not qualify; such an action does not fall under the category of a

claim that the taxpayer did not receive proper notice under the GPTA. On its face, count five is

also excluded because it seeks declaratory relief and MCL 211.78l expressly limits its scope to

recovery of money damages. MCL 211.78l(1). Count four for just compensation under the

Takings Clause does not fall under this section because a takings claim is unrelated to the

provision of notice under the GPTA. See Chelsea Investment Group LLC v Chelsea, 288 Mich

App 239, 261; 792 NW2d 781 (2010). Although count three for violation of equal protection

purports to seek monetary damages, it asserts that plaintiffs were treated differently than other

taxpayers who had entered into repayment plans. Like count six, this count does not assert any

claim related to the provision of notice under the GPTA.

However, counts one and two for violation of due process are directly related to the

notice required under the GPTA. MCL 211.78(2) states as follows:

It is the intent of the legislature that the provisions of [the GPTA] relating

to the return, forfeiture, and foreclosure of property for delinquent taxes satisfy

the minimum requirements of due process required under the constitution of this

state and the constitution of the United States but that those provisions do not

create new rights beyond those required under the state constitution of 1963 or the

constitution of the United States. The failure of this state or a political

subdivision of this state to follow a requirement of this act relating to the return,

forfeiture, or foreclosure of property for delinquent taxes shall not be construed to

create a claim or cause of action against this state or a political subdivision of this

state unless the minimum requirements of due process accorded under the state

constitution of 1963 or the constitution of the United States are violated. [MCL

211.78(2).]

A claim that the foreclosing entity’s attempts to provide notice required by due process were

constitutionally deficient is essentially a claim that the taxpayer “did not receive any notice

required under [GPTA]” as described in MCL 211.78l(1). See Sidun v Wayne County Treasurer,

481 Mich 503; 751 NW2d 453 (2008), Mullane v Central Hanover Bank & Trust Co, 339 US

306, 314; 70 S Ct 652; 94 L Ed 865 (1950), and Jones v Flowers, 547 US 220, 229; 126 S Ct

1708; 164 L Ed 2d 415 (2006).

Each of the plaintiffs asserted in this lawsuit that they did not receive actual notice of the

foreclosure proceedings and that defendants failed to provide constitutionally adequate notice.

However, to the extent the complaint seeks “rescission of the judgment of foreclosure,” such

relief is not within the scope of MCL 211.78l(1). The statute clearly states that the claimant

“shall not bring an action for possession of the property against any subsequent owner, but may

only bring an action to recover monetary damages as provided in this section.” MCL 211.78l(1)

(emphasis added). An action to “rescind” or void the judgments of foreclosure is clearly not an

action to recover monetary damages and is tantamount to an action to recover possession from

the subsequent owner. Likewise, such an action in the Court of Claims would constitute an

impermissible collateral attack on the judgments of foreclosure entered in the circuit court. See

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Workers’ Compensation Agency Director v MacDonald’s Indus Products, Inc, 305 Mich App

460, 474; 853 NW2d 467 (2014) (“It is well established in Michigan that, assuming competent

jurisdiction, a party cannot use a second proceeding to attack a tribunal’s decision in a previous

proceeding.”).

However, plaintiffs also requested “compensation for these violations” (i.e., the

violations of due process). Further, although plaintiffs’ request for relief does not specify any

damages directly related to defendants’ failure to provide notice, it does ask for “[a]ny other

relief as necessary to redress the violation of Plaintiffs’ rights, guaranteed by the Constitution

and laws.” Therefore, a narrow portion of plaintiffs’ complaint falls under the exclusive subject-

matter jurisdiction of the Court of Claims as granted by MCL 211.78l. To the extent plaintiffs

seek money damages from defendants for harm caused by their failure to provide proper notice,

such a cause of action is proper in — and only in — the Court of Claims.

Accordingly, it was error for the Court of Claims to dismiss plaintiffs’ case in its entirety.

Regarding plaintiffs’ assertion that defendants violated the notice requirements of the GPTA and

the principles of due process, and to the extent plaintiffs seek monetary damages for such alleged

violation, we reverse the Court of Claims’ ruling and remand the case for further proceedings

consistent with this opinion. Regarding counts three though six of the complaint and any request

for injunctive or declaratory relief, we affirm.

Affirmed in part, reversed in part, and remanded to the Court of Claims for further

proceedings consistent with this opinion. We do not retain jurisdiction.

/s/ Mark J. Cavanagh

/s/ Joel P. Hoekstra

/s/ Jane M. Beckering

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