Ldm LLC v. State of Michigan Unemployment Insurance Agency ( 2023 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
LDM LLC, doing business as UNITED METAL UNPUBLISHED
PRODUCTS, July 27, 2023
Plaintiff-Appellant,
v No. 363862
Wayne Circuit Court
STATE OF MICHIGAN UNEMPLOYMENT LC No. 22-008574-CZ
INSURANCE AGENCY,
Defendant-Appellee.
Before: CAMERON, P.J., and BORRELLO and O’BRIEN, JJ.
PER CURIAM.
Plaintiff appeals as of right the circuit court’s order granting summary disposition in favor
of the Michigan Unemployment Insurance Agency (UIA) for lack of subject matter jurisdiction.
For the reasons set forth in this opinion, we reverse.
I. BACKGROUND
On July 19, 2022, plaintiff initiated this action against the UIA, alleging one count for
violations of MCL 421.15(j) and one count for declaratory judgment. According to the complaint,
the UIA sent a notice to plaintiff on October 25, 2017, for purportedly delinquent unemployment
tax contributions of approximately $32,731.31 for periods from 2011 through 2014, and the UIA
subsequently sent a notice of intent to withhold federal income tax refund on February 16, 2018,
for alleged delinquent tax contributions for periods from 2012 and 2013. The complaint alleged
that on June 4, 2018, a conversation occurred between representatives for plaintiff and a
representative for the UIA during which plaintiff’s representatives indicated that they had not
received any notice of these alleged deficiencies until the February 16, 2018 notice. Plaintiff’s
representatives allegedly told the UIA’s representative that they wished to protest approximately
$10,044.58 in interest that was purportedly due and that plaintiff would pay approximately
$19,929.27 toward the principal under protest due to the UIA’s improper and untimely notice.
Plaintiff allegedly paid this amount ($19,929.27) and included with the payment a letter
summarizing its position. The complaint alleged that the UIA’s representative “was supposed to
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follow-up her June 4, 2018 conversation with [plaintiff’s representatives] with a letter indicating
the UIA’s determination on Plaintiff’s protest but Plaintiff never received such a determination.”
According to the complaint, on June 7, 2019, the UIA sent plaintiff a response to a request
for cancellation of interest and penalty that stated (1) that the UIA had “received a request to cancel
interest and penalties on Plaintiff’s account in the amount of $16,740.48,” (2) “that the amount
denied would remain on Plaintiff’s account,” and (3) “that the principal amount of claimed unpaid
delinquent unemployment tax contributions would continue to accrue interest at the rate of 1% per
month computed daily.” The response also advised plaintiff that the result of the cancellation
request could not be protested. On June 15, 2022, the UIA allegedly sent a notice to withhold to
plaintiff’s bank, without providing any such notice to plaintiff. The notice to withhold instructed
the bank to retain $23,337.47 of plaintiff’s funds in its account for payment to the UIA, reflecting
$16,696.98 in unpaid principal unemployment tax contributions and $6,640.49 in interest through
July 29, 2022.
In its complaint, plaintiff alleged that it did not owe the assessments imposed by the UIA
because “[a]ll of the UIA’s assessments claimed from Plaintiff violate MCL 421.15(j)” as a result
of being “for periods of more than three (3) calendar years preceding: (a) the UIA’s October 25,
2017 notice of Assessments Involved in Delinquency, (b) the UIA’s February 14, 2018 Notice of
Intent to Withhold Federal Income Tax Refund, and (c) the UIA’s June 15, 2022 Notice to
Withhold to Huntington bank.” In its declaratory judgment count, plaintiff essentially alleged that
it was entitled under MCL 421.15(j) to a declaratory judgment requiring the UIA to return, and
refrain from seeking, all of the assessments and interest improperly imposed on plaintiff. The
complaint alleged that “Plaintiff paid the improperly charged or assessed contributions under
protest within 30 days after the mailing of the notice of determination of assessment which has not
been sent yet as promised by [the UIA’s representative].” The complaint also alleged that plaintiff
“provided the UIA with written notice of its claim on June 4, 2018, which is more than 30 days
before the filing of this action as required by MCL 421.15(d).”
Plaintiff filed this action against the UIA in the Wayne Circuit Court, alleging that the
circuit court had “jurisdiction of this matter pursuant to MCL 421.15(d) because this is an action
to recover improperly collected contributions and interest.”
In leu of an answer, the UIA moved for summary disposition under MCR 2.116(C)(4), for
lack of jurisdiction, and MCR 2.116(C)(8), for failure to state a claim on which relief can be
granted. The UIA argued that “dismissal of [plaintiff’s] request for a declaratory judgment” was
warranted under MCR 2.116(C)(4) because the circuit court “lacks jurisdiction to decide matters
relegated to the Court of Claims under MCL 600.6419(1).” Additionally, the UIA argued that
plaintiff “did not pay the full amount of the assessment under protest within 30 days of the date of
the assessment” as required by MCL 421.15(d) to permit filing an action in the circuit court to
recover the amount improperly collected and that plaintiff also did not provide the 30-day notice
of its intent to file a claim that is also required by MCL 421.15(d). The UIA therefore maintained
that dismissal of plaintiff’s action in its entirety was warranted under MCR 2.116(C)(4) and (8).
The circuit court decided the motion without oral argument and granted the UIA’s motion
for summary disposition. The entirety of the trial court’s rationale was one conclusory sentence:
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“This court lacks subject matter jurisdiction to decide matters relegated to the Court of Claims
under MCL 600.6419(1).” Plaintiff now appeals.
II. STANDARD OF REVIEW
A trial court’s decision on a motion for summary disposition is reviewed de novo on appeal.
El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). “Summary
disposition is proper under MCR 2.116(C)(4) when ‘[t]he court lacks jurisdiction of the subject
matter.’ ” Daystar Seller Financing, LLC v Hundley, 326 Mich App 31, 34; 931 NW2d 15 (2018),
quoting MCR 2.116(C)(4) (alteration in original). “[W]hether a trial court had subject-matter
jurisdiction over a claim is a question of law that is reviewed de novo.” Daystar, 326 Mich App
at 35 (quotation marks and citation omitted; alteration in original). A motion under MCR
2.116(C)(8) is decided on the pleadings alone, accepting all factual allegations as true, and “may
only be granted when a claim is so clearly unenforceable that no factual development could
possibly justify recovery.” El-Khalil, 504 Mich at 160. “[T]he interpretation and application of a
statute is a question of law reviewed de novo by an appellate court.” In re Wayne Co Treasurer,
265 Mich App 285, 290; 698 NW2d 879 (2005).
III. ANALYSIS
The only issue presently before this Court is whether the circuit court had subject-matter
jurisdiction over this action. The circuit court determined that it did not have subject-matter
jurisdiction because this type of action had been solely “relegated to the Court of Claims under
MCL 600.6419(1).” Thus, the more specific issue becomes whether the Court of Claims has
exclusive subject-matter jurisdiction under MCL 600.6419(1) over the type of action brought by
plaintiff in this case.
“In general, subject-matter jurisdiction has been defined as a court’s power to hear and
determine a cause or matter.” In re Wayne Co Treasurer, 265 Mich App at 291. Subject-matter
jurisdiction refers to “the deciding body’s authority to try a case of the kind or character pending
before it, regardless of the particular facts of the case.” O’Connell v Dir of Elections, 316 Mich
App 91, 100; 891 NW2d 240 (2016) (quotation marks and citation omitted).
“Circuit courts are courts of general jurisdiction that derive their power from the Michigan
Constitution.” Prime Time Int’l Distrib, Inc v Dep’t of Treasury, 322 Mich App 46, 51; 910 NW2d
683 (2017). The circuit court has “original jurisdiction in all matters not prohibited by law.” Const
1963, art 6, § 13. Furthermore, “[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.” MCL 600.605. This Court has thus explained that “circuit courts are
presumed to have subject-matter jurisdiction unless jurisdiction is expressly prohibited or given to
another court by constitution or statute.” In re Wayne Co Treasurer, 265 Mich App at 291.
In general terms, the Court of Claims has been statutorily granted “exclusive jurisdiction
over certain claims against the state and its subparts.” Parkwood Ltd Dividend Housing Ass’n v
State Housing Dev Auth, 468 Mich 763, 767; 664 NW2d 185 (2003), citing MCL 600.6419. In
relevant part, MCL 600.6419 provides as follows:
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(1) Except as provided in sections 6421 and 6440, the jurisdiction of the
court of claims, as conferred upon it by this chapter, is exclusive. . . . Except as
otherwise provided in this section, the court has the following power and
jurisdiction:
(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.
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(4) This chapter does not deprive the circuit court of this state of jurisdiction
over actions brought by the taxpayer under the general sales tax act, 1933 PA 167,
MCL 205.51 to 205.78, upon the circuit court, or proceedings to review findings as
provided in the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL
421.1 to 421.75, or any other similar tax or employment security proceedings
expressly authorized by the statutes of this state.
Resolution of the issue presented on appeal presents a question of statutory interpretation.
“The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent
of the Legislature.” In re Wayne Co Treasurer, 265 Mich App at 290. “ ‘The Legislature is
presumed to have intended the meaning it plainly expressed. If the plain and ordinary meaning of
the statutory language is clear, then judicial construction is neither necessary nor permitted. A
court is required to enforce a clear and unambiguous statute as written.’ ” Prime Time, 322 Mich
App at 51 (citation omitted).
As previously stated, circuit courts have subject-matter 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.” MCL 600.605. Although MCL 600.6419(1)(a) generally confers exclusive
subject-matter jurisdiction on the Court of Claims over claims “against the state or any of its
departments or officers,” MCL 600.6419(4) expressly provides that “[t]his chapter does not
deprive the circuit court of this state of jurisdiction over . . . proceedings to review findings as
provided in the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.1 to 421.75,
or any other similar tax or employment security proceedings expressly authorized by the statutes
of this state.”
Here, plaintiff brought a claim under MCL 421.15, which provides in relevant part as
follows:
(d) An employer or employing unit improperly charged or assessed
contributions provided for under this act, or a claimant, employee of the
unemployment agency, or third party improperly assessed a penalty under this act
and who paid the contributions or penalty under protest within 30 days after the
mailing of the notice of determination of assessment, may recover the amount
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improperly collected or paid, together with interest, in any proper action against the
unemployment agency. The circuit court of the county in which the employer or
employing unit or claimant, employee of the unemployment agency, or third party
resides, or, in the case of an employer or employing unit, in which the principal
office or place of business of the employer or employing unit is located, has
original jurisdiction of an action to recover contributions improperly paid or
collected or a penalty improperly assessed whether or not the charge or assessment
has been reviewed by the unemployment agency or heard or reviewed by an
administrative law judge or the Michigan compensation appellate commission.
The court does not have jurisdiction of the action unless written notice of the claim
is given to the unemployment agency at least 30 days before the institution of the
action. In an action to recover contributions paid or collected or penalties assessed,
the court shall allow costs it considers proper. Either party to the action has the
same right of appeal as provided by law in other civil actions. A claimant,
employee of the unemployment agency, or third party shall not bring an action
against the unemployment agency under this subsection unless it is brought only to
recover penalties and interest on those penalties improperly assessed by the
unemployment agency under section 54(a) or (b) or sections 54a to 54c. If a final
judgment is rendered in favor of the plaintiff in an action to recover the amount of
contributions illegally collected or charged, the treasurer of the unemployment
agency, upon receipt of a certified copy of the final judgment, shall pay the amount
of contributions illegally collected or charged or penalties assessed from the
clearing account, and pay interest as allowed by the court, in an amount not to
exceed the actual earnings of the contributions as found to have been illegally
collected or charged, from the contingent fund.
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(j) An assessment or penalty with respect to contributions unpaid is not
effective for any period before the 3 calendar years preceding the date of the
assessment. [Emphasis added.]
MCL 421.15 is contained within the Michigan Employment Security Act, MCL 421.1 et
seq. Under MCL 421.15(d), plaintiff’s action plainly constituted “proceedings to review findings
as provided in the Michigan employment security act, 1936 (Ex Sess) PA 1, MCL 421.1 to 421.75,
or any other similar tax or employment security proceedings expressly authorized by the statutes
of this state.” MCL 600.6419(4). “ ‘[W]here this Court must examine certain statutory language
to determine whether the Legislature intended to deprive the circuit court of jurisdiction,’ this
Court has explained, ‘[t]he language must leave no doubt that the Legislature intended to deprive
the circuit court of jurisdiction of a particular subject matter.’ ” Prime Time, 322 Mich App at 52(citation omitted; alterations in original). Therefore, pursuant to MCL 600.6419(4), the circuit
court in this case erred by dismissing the entirety of plaintiff’s complaint on the ground that it had
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been deprived of subject-matter jurisdiction under MCL 600.6419(1).1 Accordingly, we reverse
and remand for further proceedings.
The trial court did not rule on any of the other arguments raised by the parties, and we thus
decline to address these additional arguments at this juncture to allow the trial court to address
them in the first instance; there is nothing at this point for this Court to review regarding these
additional arguments. See O’Connell, 316 Mich App at 109 (declining to address an issue that
was not addressed or decided by the trial court).
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction. Plaintiff having prevailed in full is entitled to costs. MCR 7.219(A).
/s/ Thomas C. Cameron
/s/ Stephen L. Borrello
/s/ Colleen A. O’Brien
1
Notably, both counts of plaintiff’s complaint relied on alleged violations of MCL 421.15(j).
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