Title: TRAVELERS INS CO V DETROIT EDISON CO

State: michigan

Issuer: Michigan Supreme Court

Document:

_____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
______________________________________________ 
Michigan Supreme Court 
Lansing, Michigan 48909 
C 
hief Just ice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED JULY 27, 2001  
THE TRAVELERS INSURANCE COMPANY,  
Plaintiff-Appellee,  
v  
No. 116610  
THE DETROIT EDISON COMPANY,  
Defendant-Appellant,  
and  
CITY OF DETROIT WATER AND SEWERAGE DEPARTMENT,  
Nonparticipating Defendants.  
BEFORE THE ENTIRE BENCH  
MARKMAN, J.  
We granted leave to appeal in this case, directing the  
parties to address: (1) whether the doctrine of primary  
jurisdiction 
is 
properly characterized as a “defense,” and, if  
so, (2) whether such a defense is waived by a party’s failure  
to raise it in the first responsive pleading.  463 Mich 906  
  
(2000), citing Rinaldo’s Construction Corp v Michigan Bell  
Telephone Co, 454 Mich 65, 70; 559 NW2d 647 (1997), and Grand  
Blanc Landfill Inc v Swanson Environmental Inc, 448 Mich 859;  
528 NW2d 734 (1995).  
For the reasons set forth below, we hold that the  
doctrine of primary jurisdiction is not a defense, but rather  
a prudential doctrine of judicial deference and discretion.  
We further conclude that the doctrine is not waivable, and the  
circuit court did not err in deferring plaintiff’s claim to  
the Michigan Public Service Commission (MPSC). Therefore, we  
reverse the judgment of the Court of Appeals and reinstate the  
decision of the Wayne Circuit Court.  
I. FACTUAL BACKGROUND  
Endeavoring to service certain customers in downtown  
Detroit, Detroit Edison Company (Detroit Edison) sent steam  
power to Heaven on Earth Inn.1  Because repairs were being  
performed on one of its steam lines in January of 1994,  
Detroit Edison shut off steam power to the Inn.  As a result,  
the Inn’s water pipes froze, and flood damage resulted. The  
Inn was insured by appellee, Travelers Insurance Company.  
After paying on the claim filed by the Inn, Travelers sought  
subrogation from Detroit Edison.  On October 17, 1995,  
1  Detroit Edison provided the steam power pursuant to 
tariff no. 4, which had been filed and approved by the MPSC.  
2  
 
Travelers filed several tort claims and a breach of contract  
claim before the Wayne Circuit Court.  On March 19, 1996, the  
court granted partial summary disposition on the tort claims  
in Detroit Edison’s favor.  The sole remaining claim that  
survived this disposition was the breach of contract claim.2  
Nearly twelve months after the circuit court’s grant of  
partial summary disposition, and seventeen months after the  
original complaint had been filed, Travelers moved to amend  
its original complaint. The circuit court granted, in part,  
Travelers motion.  Detroit Edison countered with an answer to  
Travelers amended complaint and, for the first time, asserted  
the doctrine of primary jurisdiction.  Detroit Edison claimed  
that the MPSC was the agency with the sole authority to assert  
jurisdiction over the contract dispute between itself and  
Travelers.3  After this assertion, Detroit Edison moved for  
2  Specifically, in count III of the complaint, Travelers 
alleged that Detroit Edison had contracted with the Inn to 
provide steam service to the Inn’s property.  Travelers  
further alleged that Detroit Edison’s cessation of steam 
service was a breach of its contractual obligations, and that 
such breach caused foreseeable damage to the Inn’s property. 
Travelers claimed that the Inn sustained property damage in 
the amount of $1,632,710.00.  
3  Detroit Edison’s assertion that the MPSC had primary 
jurisdiction over the action was based on the breach of 
contract claim brought by Travelers, alleging that Detroit 
Edison had violated general rule no. 4 of MPSC tariff no. 4.  
That rule states:  
The Company will endeavor, but does not  
guarantee, to furnish continuous and adequate steam  
3  
 
  
summary disposition under MCR 2.116(C)(4)4 on the ground that  
the court lacked subject-matter jurisdiction.5  
Entertaining the parties’ oral arguments on Detroit  
Edison’s motion, the circuit court ruled that Detroit Edison  
could rely on the doctrine of primary jurisdiction, even  
though the doctrine was first asserted in an answer to an  
amended complaint over eighteen months after the filing of the  
initial complaint in the case. 
The circuit court noted a  
conflict among jurisdictions regarding whether primary  
jurisdiction can be asserted after judicial proceedings have  
service . . . .  Service is subject to interruption 
by agreement, by accident, or by necessity of 
maintenance or system operation or other causes not 
under the control of the Company.  
The Company will not be liable for damages, 
either direct or consequential, caused by any 
interruption of service . . . due to strike, 
accident, . . . storm or flood, or other natural 
disasters or any cause whatsoever beyond its  
control except such as may result from failure of 
the Company to exercise reasonable care and skill 
in furnishing the service.  [237 Mich App 485, 487;  
603 NW2d 317 (1999).]  
4
 That rule provides that a motion for summary 
disposition  
may be based on one or more of these grounds, and 
must specify the grounds on which it is based:  
* * *  
(4) The court lacks jurisdiction of the subject 
matter.  
5  Detroit Edison also relied on this Court’s decision in  
Rinaldo’s, supra.  
4  
  
 
commenced, or whether the assertion has been waived by a  
party’s failure to raise it. Citing Rinaldo’s, supra at 70,  
the circuit court stated:  
Michigan courts recognize the concept of  
primary jurisdiction as, not so much divesting a 
court of its subject-matter jurisdiction in favor 
of the exclusive jurisdiction of an administrative 
agency, but a “concept of judicial deference and 
discretion,” and that it exists as “recognition of 
the need for orderly and sensible coordination of 
the work of agency and of courts.”  
Concerning the present case, the circuit court held that  
“while [Detroit] Edison ha[d] defended the case and ha[d]  
participated 
in 
discovery, nonetheless, the case ha[d] not yet  
come to an adjudicatory phase with respect to the breach of  
contract claim.”  The court found that the reasons for not  
allowing waiver of primary jurisdiction expressed in Dist of  
Columbia v Thompson, 570 A2d 277 (DC App, 1990), also applied  
here.6  Further, the court stated that this result was  
consistent with the direction of the court in White Lake Ass’n  
v Whitehall, 22 Mich App 262, 284; 177 NW2d 473 (1970), to  
wit, that the primary jurisdiction doctrine should not be  
applied where “judicial proceedings have advanced to a point  
where it would be unfair to remit the plaintiff to another and  
duplicative proceeding” and where “a court of equity might  
6  Thompson held that the primary jurisdiction doctrine 
was not waivable and that policy considerations dictated 
against 
ignoring 
the 
doctrine, 
even 
after 
judicial 
proceedings 
had commenced.  
5  
  
well conclude that the proper administration of justice  
requires it to retain jurisdiction and itself to decide the  
matter.”  The circuit court stated that here there was no  
danger 
of 
duplicative proceedings as the plaintiff’s breach of  
contract claims had not yet been tried.  
II. APPELLATE HISTORY  
Detroit Edison’s victory was short lived.  In a published  
opinion, the Court of Appeals reversed the circuit court’s  
grant of summary disposition holding that Detroit Edison had  
waived primary jurisdiction by failing to raise the doctrine  
until eighteen months had passed from the time of the filing  
of the original complaint.  
In the Court of Appeals view, the trial court erred when  
it ruled that primary jurisdiction was a defense similar to  
that of subject-matter jurisdiction, and that it could be  
raised at any time during the proceedings.  Id. at 492.  
Citing LeDuc, Michigan Administrative Law, § 10:43, at 70, the  
Court of Appeals concluded that “[b]ecause the defense of  
primary jurisdiction says nothing about the power of the court  
to resolve a dispute before it, there would appear to be no  
policy that justifies equating primary jurisdiction with  
subject-matter jurisdiction for purposes of MCR 2.111(F)(3)  
and MCR 2.116(C)(4).” Id. at 493.  
6  
 
Also, citing Campbell v St John Hosp, 434 Mich 608, 613­
615; 455 NW2d 695 (1990), the Court of Appeals drew an analogy  
between asserting the doctrine of primary jurisdiction as a  
defense 
and 
raising 
an arbitration agreement as an affirmative  
defense. The Court of Appeals noted that, in Campbell, this  
Court 
“recognized 
that 
despite 
the 
Malpractice 
Arbitration 
Act  
. . . and the uniform arbitration act . . . the circuit court  
was 
not 
deprived 
of 
jurisdiction to decide medical malpractice  
claims where the complaining party [had] signed a valid  
arbitration agreement.”  237 Mich App 493 (internal citations  
omitted).  The Court of Appeals determined that Campbell held  
that the failure of a party to assert, as an affirmative  
defense, the existence of an arbitration agreement in its  
original responsive pleading constituted a waiver of that  
defense.  Id. at 494, citing Campbell, supra at 615-617.  The  
Court concluded that the “affirmative defense of primary  
jurisdiction, which does not deprive the trial court of  
subject-matter jurisdiction, is more closely akin to the  
affirmative defense of the existence of an arbitration  
agreement and should be treated similarly.” Id. at 494. In  
contrast, the Court refused to “equate the defenses of primary  
jurisdiction and subject—matter jurisdiction . . . .” 
Id.  
Thus, the Court of Appeals likened the doctrine of primary  
jurisdiction to those other affirmative defenses noted in MCR  
7  
  
2.116(C)(7) that must be pleaded in response to a complaint in  
order to be preserved.7  
The Court of Appeals concluded that the doctrine of  
primary jurisdiction was an “affirmative defense,” and,  
therefore, pursuant to MCR 2.111(F)(2)8 and (3),9 Detroit  
Edison’s failure to timely raise the defense constituted a  
waiver. Id. at 494-95, citing Stanke v State Farm Mut Auto  
7
 MCR 2.116(C) provides that a motion for summary 
disposition “may be based on one or more of these grounds, and 
must specify the grounds on which it is based . . . .” 
Paragraph 7  provides that a motion for summary disposition 
may be based on an assertion that  
[t]he claim is barred because of release, payment, 
prior judgment, immunity granted by law, statute of 
limitations, statute of frauds, an agreement to  
arbitrate, infancy or other disability of the 
moving party, or assignment or other disposition of 
the claim before commencement of the action.  
8  MCR 2.111(F)(2) states:  
A party against whom a cause of action has  
been 
asserted 
by 
complaint, 
cross-claim, 
counterclaim, or third-party claim must assert in a 
responsive pleading the defenses the party has 
against the claim.  A defense not asserted in the  
responsive pleading or by motion as provided by 
these rules is waived, except for the defenses of 
lack of jurisdiction over the subject matter of the 
action, and failure to state a claim on which 
relief can be granted.  
9  MCR 2.111(F)(3) provides: “Affirmative defenses must  
be stated in a party’s responsive pleading, either as 
originally filed or as amended in accordance with MCR 2.118.”  
8  
  
 
 
Ins Co, 200 Mich App 307, 312; 503 NW2d 758 (1993).10  
III. THE DOCTRINE OF PRIMARY JURISDICTION  
The doctrine of primary jurisdiction originated in Texas  
& Pacific R Co v Abilene Cotton Oil Co, 204 US 426; 27 S Ct  
350; 51 L Ed 553 (1907).  There, the United States Supreme  
Court examined “the scope and effect of the [Interstate  
Commerce A]ct to regulate commerce upon the right of a shipper  
to maintain an action at law against a common carrier to  
recover damages because of the exaction of an alleged  
unreasonable rate . . . .” Id. at 436. The Court concluded  
that the “shipper seeking reparation predicated upon the  
unreasonableness of the established rate must, under the act  
to regulate commerce, primarily invoke redress through the  
Interstate Commerce Commission, which body alone is vested  
with the power originally to entertain proceedings for the  
alteration of an established schedule . . . .”  Id. at 448.  
Since the pronouncement of the doctrine in Texas & P R, the  
Supreme Court has expanded application of the doctrine of  
primary jurisdiction to other agencies, recognizing their  
10 
Stanke also relied on Campbell, supra at 616, ns 5 & 
6, which noted that “case law recogniz[ed] the existence of 
affirmative defenses not specifically set forth in MCR 
2.111(F)(3)(a)” and those defenses, failure to state a claim 
and subject-matter jurisdiction, that cannot be waived if 
omitted from a responsive pleading.  
9  
 
 
regulatory areas of expertise.11  
Following Texas & P R, supra, this Court stated that “the  
jurisdiction of courts to determine the reasonableness of the  
tariff published and filed with the Interstate Commerce  
Commission is denied by the Supreme Court of the United States  
. . .” L Starks Co v Grand Rapids & I R Co, 165 Mich 642, 647;  
131 NW 143 (1911), citing Texas and P R.  Eventually, Michigan  
articulated this doctrine as focusing upon “whether the  
questions . . . involved are administrative in character such  
as to preclude the state court from inquiring into and  
adjudicating them without application having been first made  
to the commission.”  Anderson v Chicago M & St P R Co, 208  
Mich 424, 429; 175 NW 246 (1919). As with the Supreme Court  
of the United States, this Court recognized application of the  
11  See, e.g., Communications Workers of America v Beck, 
487 US 735, 743; 108 S Ct 2641; 101 L Ed 2d 634 (1988) 
(holding that employees may not circumvent the primary 
jurisdiction of the National Labor Relations Board simply by 
casting statutory claims as violations of the union’s duty of 
fair representation, a claim ordinarily sounding in tort); 
Federal Communications Comm v ITT World Communications Inc, 
466 US 463, 468; 104 S Ct 1936; 80 L Ed 2d 480 (1984) 
(applying the doctrine of primary jurisdiction to the Federal 
Communications Commission and stating that the district court 
should have dismissed the plaintiff’s claim where the central 
element of the complaint was the agency’s past conduct); San  
Diego Building Trades Council v Garmon, 359 US 236, 245; 79 S 
Ct 773, 3 L Ed 2d 775 (1959) (holding that “[w]hen an activity 
is arguably subject to [sections] of the [National Labor 
Relations Act], the States as well as the federal courts must 
defer to the exclusive competence of the [National Labor 
Relations Board] if the danger of state interference with 
national policy is to be averted”).  
10  
primary jurisdiction doctrine to agencies other than the  
Interstate Commerce Commission. See, e.g., Abel v Behrendt,  
320 Mich 616, 621; 32 NW2d 4 (1948).  There, this Court  
affirmed a trial court’s refusal to grant a motion to dismiss  
on grounds that the plaintiffs could not bypass the Civil  
Service Commission by requesting a court to enter a  
declaratory judgment “blanketing the plaintiffs into civil  
service status.”  
In addition, the primary jurisdiction of the MPSC, the  
administrative agency in charge of the tariff under  
consideration 
in 
the 
instant case, was recognized in Consumers  
Power Co v Michigan, 383 Mich 579, 581; 177 NW2d 160 (1970).  
There, the Court stated that “[t]he primary jurisdiction and  
control of electric utilities lies with the Public Service  
Commission.” Id.  
Later, this Court addressed what types of claims were  
subject to the primary jurisdiction of the MPSC. In Valentine  
v Michigan Bell Telephone Co, 388 Mich 19, 21; 199 NW2d 182  
(1972), the plaintiff alleged breach of contract, gross  
negligence, fraud, and misrepresentation. 
Id. at 21.  
Defendant moved for summary disposition on the basis of the  
doctrine of primary jurisdiction, and the fact that the MPSC  
was 
currently 
reviewing a similar action brought by Valentine.  
Id. at 22.  The trial court granted summary disposition and  
11  
 
 
  
the Court of Appeals affirmed, concluding that plaintiff’s  
claims were based on inadequate service and equipment, claims  
over which the MPSC had primary jurisdiction.  Id. This Court  
granted leave to appeal, and held that the plaintiff’s  
complaint failed to set forth claims in negligence, gross  
negligence, fraud, misrepresentation, or some other tort that  
would 
bring 
subscribers’ claims within the jurisdiction of the  
circuit courts. Id. at 30.  
The most recent case concerning the immediate issue is  
Rinaldo’s, supra. There, the issue presented was “whether a  
circuit court may entertain a cause of action against a  
telephone company alleging negligence, despite the MPSC’s  
primary jurisdiction over customer claims arising under MPSC  
tariffs.”  Id. at 66-67, emphasis added.  The Court held that  
“although a cause of action in tort against a telephone  
company or a claim that the company has violated the  
regulatory code or tariff may proceed in a court of general  
jurisdiction, the doctrine of primary jurisdiction require[d]  
dismissal of plaintiff’s claim because it [arose] solely out  
of the contractual relationship between the telephone company  
and the plaintiff . . . .” Id. at 67.  
IV. PURPOSE OF THE DOCTRINE  
The doctrine of primary jurisdiction is grounded in the  
12  
  
 
 
principle of separation of powers.12  The doctrine has been  
compared 
to 
the 
political question doctrine and the exhaustion  
doctrine, both of which are also concepts rooted in separation  
of powers principles.13 
 “All of the doctrines that cluster about Article  
III—not only standing but mootness, ripeness,  
political question, and the like—relate in part, 
and in different though overlapping ways, to an 
idea, which is more than an intuition but less than  
a 
rigorous 
and 
explicit 
theory, 
about 
the  
constitutional and prudential limits to the powers 
of an unelected, unrepresentative judiciary in our 
kind of government.” [Allen v Wright, 468 US 737, 
750; 104 S Ct 3315; 82 L Ed 2d 556 (1984) (emphasis 
added), quoting Vander Jagt v O’Neill, 226 US App 
DC 14, 26-27; 699 F 2d 1166 (1983) (Bork, J., 
concurring).]  
Allen extensively discussed the principle of separation of  
powers and stated that the “several doctrines that have grown  
12 
South Lake Worth Inlet Dist v Ocean Ridge, 633 So 2d 
79, 82 (Fla App, 1994) (noting the “companion concepts of 
primary 
jurisdiction 
and 
exhaustion 
of 
administrative  
remedies, which are in turn bound up with constitutional 
limitations on the separation of powers); Good Fund Ltd v  
Church, 540 F Supp 519, 540 (1982), rev’d on other grounds by 
McKay v United States, 703 F2d 464 (CA 10, 1983)  (stating 
that 
“separation 
of 
powers 
is 
a 
basis 
of 
primary 
jurisdiction”).  
See 
also Hawkens, The exhaustion component of  
the Mindes justiciability test, 166 Military L R 67, 79  
(stating that  exhaustion of administrative remedies doctrine  
“is a critical factor in an integrated, reviewability matrix 
that—like the political question doctrine and the primary 
jurisdiction doctrine—serves separation of powers concerns”); 
Talmadge, Understanding the limits of power: Judicial  
restraint in general jurisdiction court systems, 22 Seattle 
Univ L R 695, 715, n 65 (1999).  
13  See note 12. See also Davis, Administrative Law (3d 
ed), § 19.01, p 373, stating that the doctrine of primary 
jurisdiction “merges with the exhaustion doctrine.”  
13  
 
up to elaborate that requirement are ‘founded in concern about  
the proper—and properly limited—role of the courts in a  
democratic society.’” Id., citing Warth v Seldin, 422 US 490,  
498; 95 S Ct 2197; 45 L Ed 2d 343 (1975).  
The doctrine of primary jurisdiction also reflects  
practical concerns regarding respect for the agency’s  
legislatively imposed regulatory duties.  Adhering to the  
doctrine of primary jurisdiction reinforces the expertise of  
the agency to which the courts are deferring the matter, and  
avoids the expenditure of judicial resources for issues that  
can better be resolved by the agency.14
 “A question of  
‘primary jurisdiction’ arises when a claim may be cognizable  
in a court but initial resolution of issues within the special  
competence 
of 
an administrative 
agency 
is 
required.”  
Thompson, supra at 288. Closely related is the rule requiring  
the exhaustion of administrative remedies:  
The doctrine . . . is concerned with promoting 
proper 
relationships 
between 
the 
courts 
and  
administrative agencies charged with particular 
regulatory duties.  “Exhaustion” applies where a 
claim is cognizable in the first instance by an 
administrative agency alone; judicial interference 
is withheld until the administrative process has 
run its course.  “Primary jurisdiction,” on the 
other hand, applies where a claim is originally 
cognizable in the courts, and comes into play 
whenever enforcement of the claim requires the  
resolution of issues which, under a regulatory 
scheme, have been placed within the special  
14  Talmadge, supra at 715, n 65.  
14  
 
 
 
competence of an administrative body; in such a 
case the judicial process is suspended pending 
referral of such issues to the administrative body 
for its views. [United States v Western P R Co, 352 
US 59, 63-64; 77 S Ct 161; 1 L Ed 2d 126 (1956), 
(emphasis added), citing General American Tank Car  
Corp v El Dorado Terminal Co, 308 US 422, 433; 60 S 
Ct 325; 84 L Ed 361 (1940).][15]  
“The doctrine reflects the courts’ recognition that  
administrative agencies, created by the Legislature, are  
intended to be repositories of special competence and  
expertise uniquely equipped to examine the facts and develop  
public policy within a particular field.”  Baron, Judicial  
review of administrative agency rules: A question of timing,  
43 Baylor L R 139, 158 (1991).  Thus, whether judicial review  
will be postponed in favor of the primary jurisdiction of an  
administrative agency “necessarily depends upon the agency  
rule at issue and the nature of the declaration being sought  
in the particular case.” Id. at 159.  
No fixed formula exists for applying the 
doctrine of primary jurisdiction.  In every case 
the question is whether the reasons for existence 
of the doctrine are present and whether the  
purposes it serves will be aided by its application 
in the particular litigation. [Western Pacific,  
supra at 64.]  
Several reasons have been advanced for invocation of the  
primary 
jurisdiction 
doctrine. 
First, 
the 
doctrine  
15 See also Reiter v Cooper, 507 US 258, 268-270, n 3; 113 
S Ct 1213; 122 L Ed 2d 604 (1993), discussing the primary 
jurisdiction doctrine and the exhaustion of administrative 
remedies doctrine.  
15  
  
underscores the notion that administrative agencies possess  
specialized and expert knowledge to address issues of a  
regulatory nature.  Use of an agency’s expertise is necessary  
in regulatory matters in which judges and juries have little  
familiarity. Western Pacific, supra at 64, citing Far East  
Conf v United States, 342 US 570, 574; 72 S Ct 492; 96 L Ed  
576 (1952). Thus, the doctrine is principally applicable to  
controversies involving regulatory agencies. Jaffe, Primary  
jurisdiction, 77 Harvard L R 1037, 1039 (1964).  A second  
consideration relates to respect for the separation of powers  
and the statutory purpose underlying the creation of the  
administrative agency, the powers granted to it by the  
legislature, and the powers withheld.  Id. This justification  
includes the principle that courts are not to make adverse  
decisions 
that 
threaten 
the 
regulatory 
authority 
and 
integrity  
of the agency. Att’y Gen v Diamond Mortgage Co, 414 Mich 603,  
613; 327 NW2d 805 (1982). Third, the doctrine exists to  
promote consistent application in resolving controversies of  
administrative law. Texas and P R, supra at 440-441. 
By  
application of the doctrine,  
[u]niformity and consistency in the regulation of 
business entrusted to a particular agency are 
secured, and the limited functions of review by the 
judiciary 
are 
more 
rationally 
exercised, 
by 
preliminary 
resort 
for 
ascertaining 
and  
interpreting the circumstances underlying legal 
issues to agencies that are better equipped than 
courts by specialization, by insight gained through  
16  
 
 
experience, and by more flexible procedure.  [Far  
East Conf, supra at 574-575.]  
In Diamond Mortgage Co, supra, this Court explained its  
adoption of these justifications for primary jurisdiction.  
In cases raising issues of fact not within the 
conventional 
experience 
of 
judges 
or 
cases  
requiring 
the 
exercise 
of 
administrative  
discretion, agencies created by Congress for  
regulating the subject matter should not be passed 
over. This is so even though the facts after they 
have been appraised by specialized competence serve 
as a premise for legal consequences to be  
judicially defined.  [Id. at 612-613, quoting Far  
East Conf, supra at 574-575.]  
Thus, this Court recognized application of the primary  
jurisdiction doctrine to all cases in which it was deemed that  
an administrative agency possessed superior knowledge and  
expertise in addressing recurring issues within the scope of  
their authority.  Quoting Western Pacific, supra at 63-64, the  
Court concluded that “‘[p]rimary jurisdiction’ . . . applies  
where a claim is originally cognizable in the courts and comes  
into play whenever enforcement of the claim requires the  
resolution of issues which, under a regulatory scheme, have  
been 
placed 
within 
the special competence of an administrative  
body . . . .”  Diamond Mortgage, supra at 613 (internal  
citations omitted).  
V. COURT OF APPEALS DECISION  
In our judgment, the Court of Appeals misinterpreted our  
recent pronouncements concerning the applicability of the  
17  
 
 
 
doctrine of primary jurisdiction.  The Court of Appeals quoted  
Rinaldo’s, supra at 70-74, stating that “the Legislature has  
broadly defined the power and jurisdiction of the MPSC over  
such 
matters, 
without explicitly providing that this power and  
jurisdiction is exclusive.”  237 Mich App 493 (emphasis  
added).  The Court of Appeals then interpreted this statement  
regarding the lack of reposing in the MPSC exclusive  
jurisdiction over matters regarding public utilities to mean  
that the circuit court could not, in this case, defer to the  
MPSC. Id. at 494-496. Clearly, this cannot be the case, as  
such a holding would deprive the courts altogether of  
discretion and deference, and would likewise deprive the  
agency of its principal authority to address issues that are  
within its competence. “In cases raising issues of fact not  
within the conventional experience of judges, or cases  
requiring the exercise of administrative discretion, agencies  
created by Congress for regulating the subject matter should  
not be passed over.” Diamond Mortgage, supra at 612.  
In Rinaldo’s, 
the circuit court, in applying the doctrine  
of primary jurisdiction, reasoned that there was no cause of  
action in tort where the relationship between the parties was  
purely contractual in nature, since any alleged duties owed  
plaintiff by defendant were governed by controlling MPSC  
tariffs.  The Court of Appeals affirmed. 
This Court then  
18  
affirmed, as well.  Citing 2 Davis & Pierce, Administrative  
Law (3d ed), § 14.1, at 272, we reaffirmed the fundamental  
rationale of the doctrine of primary jurisdiction.  “Under the  
telephone act of 1913, the MPSC possessed the ‘power and  
jurisdiction to hear and pass upon all matters pertaining to,  
necessary, or incident to the regulation of all public  
utilities, including . . . telephone . . . .’” Id. at 74,  
citing MCL 460.6(1).16  
While Michigan case law has unequivocally held that  
claims sounding in tort against public utilities are properly  
brought before the circuit courts, these holdings do not,  
expressly or by implication, preclude exercise by the MPSC of  
jurisdiction over those claims that have traditionally fallen  
16  MCL 460.6 now provides:  
The public service commission is vested with 
complete power and jurisdiction to regulate all 
public utilities in the state . . . The public 
service commission is vested with the power and 
jurisdiction to regulate all rates, fares, fees, 
charges, services, rules, conditions of service, 
and all other matters pertaining to the formation, 
operation, or direction of such public utilities. 
The public service commission is further granted 
the power and jurisdiction to hear and pass upon 
all matters pertaining to, necessary, or incident 
to 
the 
regulation 
of 
all 
public 
utilities, 
including electric light and power companies, 
whether private, corporate, or cooperative; gas 
companies, water, telegraph, oil, gas, and pipeline 
companies; 
motor 
carriers; 
and 
all 
public 
transportation and communication agencies other 
than railroads and railroad companies.  
19  
 
 
 
 
 
 
within its authority.  Rinaldo’s, supra at 69, Valentine,  
supra at 25-26, and Thomas v Gen Telephone Directory Co, 127  
Mich App 788, 792; 339 NW2d 257 (1983) (stating that under  
Valentine, if the plaintiff’s claim sounds in tort, it is for  
the court; if it is a claim on a contract, it is for the  
MPSC).17  
17 To the extent that Valentine and Rinaldo’s are viewed  
as being in tension with one another with regard to  
application of the primary jurisdiction doctrine to claims 
sounding in tort, and to breach of contract claims, we suggest 
that this perception is incorrect. In Valentine, this Court 
stated, in dicta, that “[a] claim that sets forth facts 
showing a plaintiff suffered damage as a result of a violation 
of the tariffs and regulations can be entertained by a court 
of general jurisdiction . . . .”  Id. at 30 (emphasis added). 
Clearly, this language does not suggest that the court’s 
jurisdiction 
over 
such claims is exclusive.  Furthermore, that 
statement was based on a mistaken premise.  The Court in  
Valentine stated that “[t]he jurisdiction of the Public  
Service Commission is primarily prospective—a matter of 
promulgating regulations and setting rates.” Id.  Yet, an 
agency’s power and authority must be measured by the statutory 
enactments from which it is created.  Att’y Gen v MPSC, 231  
Mich App 76, 78; 585 NW2d 310 (1998).  It is clear from  
reading the enabling statute of the MPSC that the agency’s 
jurisdiction extends well beyond the Valentine Court’s  
purported restriction.  For example, MCL 460.6 vests in the 
MPSC the “power and jurisdiction to regulate all rates, fares, 
fees, 
charges, 
services, rules, conditions of service, and all 
other matters pertaining to the formation, operation, or 
direction of such public utilities.” Pursuant to MCL 460.6, 
the MPSC is also “granted the power and jurisdiction to hear  
and pass upon all matters pertaining to, necessary, or  
incident to the regulation of all public utilities . . . .”  
Id. (emphasis added), see also Att’y Gen v MPSC, supra. This  
includes the power and jurisdiction to hear and decide breach 
of contract claims. 
Dominion Reserves Inc v Michigan  
Consolidated Gas Co, 240 Mich App 216, 221; 610 NW2d 282 
(2000); Energy Reserves Inc v Consumers Power Co, 221 Mich App 
210, 216; 561 NW2d 854 (1997); North Michigan Land & Oil Corp  
v Public Service Comm, 211 Mich App 424, 437; 536 NW2d 259  
20  
 
The Court of Appeals also drew an analogy between the  
doctrine of primary jurisdiction and the affirmative defense  
of the existence of an arbitration agreement. 237 Mich App  
493-494. We find the Court of Appeals analogy unpersuasive.  
The doctrine of primary jurisdiction applies where an  
administrative agency possesses expertise concerning specific  
claims over which it has authority and jurisdiction.  To  
equate this doctrine with the affirmative defense of an  
arbitration 
agreement overlooks this rationale.  While a court  
might prefer to have a malpractice claim submitted to  
arbitration, no principle of deference would compel the court  
to do so, as might be true in the case of primary  
jurisdiction.  It would be no more difficult for a court than  
an arbitration panel to address medical malpractice claims.  
In the case of primary jurisdiction, however, the principle of  
deference 
to 
the 
agency’s expertise compels courts, in certain  
circumstances and at their discretion, to suspend the action  
pending referral and resolution of the claims over which the  
agency with primary jurisdiction has authority and expertise.  
In this case, the MPSC clearly possessed the authority and  
expertise to consider Travelers’ breach of contract claims  
under general rule no. 4 of MPSC tariff no. 4.  
(1995); Miller Bros v Public Service Comm, 180 Mich App 227, 
233; 446 NW2d 640 (1989).  
21  
 
 
Further, responding to the circuit court’s conclusion  
that primary jurisdiction was similar to subject-matter  
jurisdiction, and therefore not subject to waiver, the Court  
of Appeals refused to equate these two doctrines. The Court  
of Appeals then concluded that such a decision required  
treating primary jurisdiction differently than subject-matter  
jurisdiction, to wit, that it could be waived if it had not  
been originally asserted.  237 Mich App 493. That subject­
matter jurisdiction and primary jurisdiction are distinct  
doctrines is indisputable.  However, it does not follow that,  
because the two doctrines are distinct, and because subject­
matter 
jurisdiction 
is not susceptible to waiver, that primary  
jurisdiction is subject to waiver.  
Subject-matter jurisdiction is not subject to waiver  
because it concerns a court’s “abstract power to try a case of  
the kind or character of the one pending” and is not dependent  
on the particular facts of the case. Campbell, supra at 613­
614 (emphasis added); see also Harris v Vernier, 242 Mich App  
306, 319; 617 NW2d 764 (2000).  A court either has, or does  
not have, subject-matter jurisdiction over a particular case.  
Bowie v Arder, 441 Mich 23, 39; 490 NW2d 568 (1992). Primary  
jurisdiction, on the other hand, is not subject to waiver  
because it is determined, not by a right to which the parties  
are entitled, such as an affirmative defense that may be  
22  
 
waived by a party’s failure to assert it, but rather by  
prudential 
considerations 
concerning 
respect 
for 
the  
relationship between the court and the administrative agency,  
and the nature of the claims being addressed.  It may be  
raised whenever a dispute can more appropriately be resolved  
by the administrative agency with authority over such claims.  
Rinaldo’s, supra at 72. Thus, a determination of waiver in  
the case of primary jurisdiction does not depend on whether  
the doctrine is similar or dissimilar to subject-matter  
jurisdiction.  
Further, the Court of Appeals mistakenly concluded that  
just because the doctrine of primary jurisdiction is not  
mentioned as an exception in MCR 2.111(F)(2), see footnote 8,  
it 
necessarily 
follows 
that 
it 
is 
a 
“defense”  
indistinguishable from the other defenses ordinarily subject  
to waiver within that court rule.  This, too, ignores that  
primary jurisdiction is a doctrine, created not for the  
convenience of the parties and the efficiencies attendant to  
adhering to the court rules, but for consideration “whenever  
enforcement of the claim requires the resolution of issues  
which, under a regulatory scheme, have been placed within the  
special competence of an administrative body.” 
Rinaldo’s,  
supra at 71, quoting from Western Pacific, supra at 64  
(emphasis added).  Thus, primary jurisdiction does not fall  
23  
  
 
 
within the list of defenses found in MCR 2.116(C)(7), which,  
according to MCR 2.111(F)(2), must be asserted in order to be  
preserved.  We now proceed to apply the doctrine of primary  
jurisdiction to the present case.  
VI. APPLICATION  
We review the grant or denial of a motion for summary  
disposition de novo. Maiden v Rozwood, 461 Mich 109, 118; 597  
NW2d 817 (1999).  Here, the circuit court granted Detroit  
Edison’s motion for summary disposition under MCR 2.116(C)(4)  
on the ground that the primary jurisdiction doctrine required  
deferral of Travelers’ remaining breach of contract claim to  
the MPSC.  Jurisdictional questions under MCR 2.116(C)(4) are  
questions of law that are also reviewed de novo.18  Citizens  
for Common Sense in Government v Att’y Gen, 243 Mich App 43,  
50; 620 NW2d 546 (2000).  
The circuit court did not err in concluding, as a matter  
18  Primary jurisdiction and subject-matter jurisdiction 
are distinct legal doctrines.  In this case, Detroit Edison 
raised the issue of primary jurisdiction in a motion for 
summary disposition under MCR 2.116(C)(4)(lack of subject­
matter jurisdiction).  Such a pleading was inapt, not only 
because the doctrines are distinct, but also because  
invocation of primary jurisdiction is not the equivalent of 
summary disposition as the latter represents a final  
disposition of a claim while the former merely defers a claim 
to an administrative agency.  However, Detroit Edison’s 
pleading affects neither the standard of review that we apply 
in reviewing the circuit court, nor the analysis of its 
substantive decision. Primary jurisdiction can be raised by 
the court sua sponte, or directly by any party.  
24  
 
of law, that the doctrine of primary jurisdiction was not  
waivable, and that the MPSC had primary jurisdiction over  
Travelers’ remaining breach of contract claim.  First, the  
doctrine of primary jurisdiction can be raised “whenever  
enforcement of the claim requires the resolution of issues  
which, under a regulatory scheme, have been placed within the  
special competence of an administrative body.” Rinaldo’s,  
supra at 71, citing Western Pacific, supra at 64 (emphasis  
added).  This language, which Michigan has adopted, Diamond  
Mortgage Co, supra at 613, does not place a restriction on  
when the doctrine may be asserted.19  In Western Pacific at 64,  
19  We recognize that, as a prudential doctrine, primary 
jurisdiction 
does 
not 
always 
compel 
resort 
to 
the  
administrative agency. There may well be cases, for example, 
in which the invocation of primary jurisdiction is not 
appropriate because litigation with respect to the particular 
claim that would normally be subject to the jurisdiction of 
the administrative agency has “advanced to a point where it 
would be unfair to remit the [party] to another and  
duplicative proceeding . . . .”  White Lake Ass’n, supra at  
284. See also Pace v Honolulu Disposal Service Inc, 227 F3d 
1150, 1156 (CA 9, 2000) (responding to an argument that a 
party had to raise the issue of primary jurisdiction in a 
cross-appeal, the court stated that the doctrine of primary 
jurisdiction is “unlike garden-variety defenses such as in 
personam 
jurisdiction, for it implicates the ‘strong policy of 
judicial deference’” and its importance is such that “we 
raised the . . . doctrine sua sponte”); Montgomery Co v  
Broadcast Equities, 360 Md 438, 451; 758 A2d 995 (2000) 
(noting that the rule requiring the courts of appeal of 
Maryland to consider only issues that have been preserved 
recognized an exception by allowing the issue of primary 
jurisdiction to be raised sua sponte); Williams Pipe Line Co  
v Empire Gas Corp, 76 F3d 1491, 1496 (CA 10, 1996) (explaining 
that, because the doctrine of primary jurisdiction exists for 
the proper distribution of power between judicial and  
25  
 
 
the United States Supreme Court made clear that “in such a  
case, the judicial process is suspended pending referral of  
such issues to the administrative body for its views.” More  
recently, the same Court has described the effect of the  
doctrine as requiring “the [trial court] to . . . stay[]  
further proceedings so as to give the parties reasonable  
opportunity to seek an administrative ruling.”
 Reiter v  
Cooper, 507 US 258, 268; 113 S Ct 1213; 122 L Ed 2d 604  
(1993). Thus, the Court explained, “[r]eferral of the issue  
to the administrative agency does not deprive the court of  
jurisdiction; it has discretion either to retain jurisdiction  
or, if the parties would not be unfairly disadvantaged, to  
dismiss the case without prejudice.” Id. at 268-269 (emphasis  
added), citing Carnation Co v Pacific Westbound Conf, 383 US  
213, 222-223; 86 S Ct 781; 15 L Ed 2d 709 (1966); Mitchell  
Coal & Coke Co v Pennsylvania R Co, 230 US 247, 266-67; 33 S  
Ct 916; 57 L Ed 1472; Jaffe, supra at 1055.  
Second, consistent with a sense of deference to agency  
expertise, the circuit court reasoned that Travelers’ claim  
was one that was anticipated and controlled by the tariff, and  
that application of § 4 of the tariff would depend on a  
factual inquiry best left to the determination of the MPSC.  
administrative bodies and not for the convenience of the  
parties, a court may consider its application sua sponte).  
26  
 
 
The MPSC “possesses the degree of expertise with regard to the  
purpose and effect of the governing tariffs to decide whether  
the presumptively valid tariff provisions apply to particular  
facts that do not constitute tortious conduct or a violation  
of the code or tariff.” Michigan Basic Property Ass’n v  
Detroit Edison Co, 240 Mich App 524, 533; 618 NW2d 32 (2000).  
Such matters should be deferred to the MPSC. Id.  
Third, following from the rationale of deferring to the  
expertise of the agency, the circuit court also concluded that  
deferral would promote uniformity and consistency in the  
application of tariff no. 4.  Specifically, the circuit court  
noted that judicial decision making over the type of claim  
involved in the instant case could lead to an imposition of  
liability that the MPSC itself might not otherwise recognize.  
Fourth, it is clear from the record that no inconvenience  
to the parties has occurred concerning Travelers’ remaining  
breach of contract claim.  The claims sounding in tort were  
dismissed by partial summary disposition before the circuit  
court considered Travelers’ claim of breach of contract, and  
Detroit 
Edison’s 
claims that the breach of contract allegation  
should be deferred to the MPSC under the doctrine of primary  
jurisdiction.  Any discovery that has been obtained by either  
party has been done so with regard to the original tort  
claims, but since the contract claim had not yet been  
27  
 
 
adjudicated, neither party has been unfairly disadvantaged.  
To the extent that the discovery that had been carried out  
could be utilized in the breach of contract claim before the  
MPSC, the circuit court concluded that such discovery as had  
occurred could only contribute to a swifter resolution of the  
matter by the MPSC. Further, since the doctrine of primary  
jurisdiction is one that requires “referral,” but not  
necessarily 
dismissal of an action, neither party is precluded  
from seeking judicial review of the MPSC’s decision after it  
has heard Travelers’ claim. Reiter, supra at 268. Pursuant  
to the discretion afforded a court in determining whether  
specific claims have been properly brought before it, or  
whether those claims primarily deserve review by the  
administrative agency charged with authority over the issues  
raised, the circuit court did not commit legal error in  
determining that the remaining contract claim concerning the  
tariff could first be brought before the MPSC without  
unfairness or disadvantage to either party.  The circuit  
court’s opinion proceeded in great depth to explain its  
reasoning in this regard.20  
20  While seventeen months may appear to be a long time 
from the commencement of the lawsuit for Detroit Edison to  
have raised the doctrine, it should be noted that our decision 
in Rinaldo’s had not yet been released before Detroit Edison’s 
raising the issue.  Rinaldo’s was decided on March 4, 1997. 
Detroit Edison filed its amended pleading on April 1, 1997. 
Rinaldo’s clarified what claims could be addressed by the MPSC  
28  
 
 
Fifth, the circuit court stated that the doctrine of  
primary jurisdiction applies where there is “recognition of  
the need for orderly and sensible coordination of the work of  
agency and of courts.” Rinaldo’s, supra at 70. The circuit  
court had discretion to determine that, as a matter of law,  
the breach of contract action based on MPSC general rule no.  
4, tariff 4, should be first determined by the MPSC. 
This  
rationale has found support in the decisions of other courts  
that have concluded that the doctrine of primary jurisdiction  
cannot be waived “since the doctrine exists for the proper  
distribution of power between judicial and administrative  
bodies and not for the convenience of the parties.” Distrigas  
of Mass Corp v Boston Gas Co, 693 F2d 1113, 1117 (CA 1, 1983).  
See, also Nader v Allegheny Airlines, Inc, 167 US App DC 350,  
365, n 37; 512 F2d 527 (1975), rev’d on other grounds 426 US  
under the doctrine of primary jurisdiction.  Presumably, this 
was a part of Detroit Edison’s impetus for raising the 
doctrine at that time.  Further, as noted above, the trial 
court had not yet even considered Travelers’ breach of 
contract claim, as the tort claims were addressed first.  For  
most of this seventeen-month period, before the issue of 
primary jurisdiction was raised, the claims of the plaintiff 
were in contract and tort.  Only the contract claims could be  
heard by the MPSC. 
Thus, to have raised the doctrine of 
primary jurisdiction while both claims survived would have 
subjected 
Detroit Edison 
and 
Travelers 
to 
bifurcated  
proceedings—tort claims in circuit court and the breach of 
contract claim in the MPSC. 
Thus, it seems perfectly 
reasonable for Detroit Edison to have waited until the tort  
claims were dismissed before asking that what remained—a 
contract claim alone—be referred to the MPSC.  
29  
 
290, 96 S Ct 1978, 48 L Ed 2d 643 (1976); Louisiana & Arkansas  
R Co v Export Drum Co, 359 F2d 311, 314 (CA 5, 1966); Locust  
Cartage Co v Transamerican Freight Lines Inc, 430 F2d 334  
(CA 1, 1970). Indeed, it has been noted that  
[t]he primary jurisdiction doctrine is another form 
of judicial restraint. It is more complicated than 
the political question doctrine because it involves 
congressional delegation of discretion to an  
agency. It will arise when Congress has passed a 
statute regulating an area under the supervision of 
an expert administrative agency whose supervision 
involves factual determinations aided by the  
special expertise of the agency.  Once the agency 
has acted, the court must determine the extent to 
which it will defer to that special expertise or 
review the agency’s action.” [Good Fund Ltd v  
Church, 540 F Supp 519, 546 (D Colo, 1982), rev’d 
sub nom McKay v United States, 703 F2d 464 (CA 10, 
1983).]  
The circuit court noted that judicial resolution of the issue  
could adversely affect the regulatory responsibilities of the  
MPSC.
 See, Diamond Mortgage, supra at 613. 
The circuit  
court’s reasoning was consistent with the rationale set forth  
by this Court in Rinaldo’s, supra at 71-72. 
It thoroughly  
considered the issue in light of the requisite agency  
expertise, the necessity for uniform resolution of the issue  
underlying the dispute, and the effect of a judicial, rather  
than an administrative, resolution.  
In our judgment, the circuit court, in assessing the  
factors applicable to questions of primary jurisdiction, did  
not err as a matter of law, and properly applied the doctrine  
30  
 
 
 
to the instant case.  
CONCLUSION  
For the foregoing reasons, we conclude that the doctrine  
of primary jurisdiction is not a defense, but rather a  
doctrine of judicial deference and discretion, a prudential  
doctrine, designed to accord respect to the separation of  
powers in our constitutional system.  Because we conclude that  
the doctrine of primary jurisdiction is not a defense, it was  
unnecessary for Detroit Edison to have raised the issue in its  
first responsive pleading. The circuit court did not err in  
concluding that the proper forum for Travelers’ breach of  
contract claim was before the MPSC. We, therefore, reinstate  
the decision of the circuit court.  
Reversed.  
CORRIGAN, C.J., and CAVANAGH, KELLY, TAYLOR, and YOUNG, JJ.,  
concurred with MARKMAN, J.  
31  
______________________________________________ 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
THE TRAVELERS INSURANCE COMPANY,  
Plaintiff-Appellee,  
No. 116610  
THE DETROIT EDISON COMPANY,  
Defendant-Appellant,  
and  
CITY OF DETROIT WATER AND SEWERAGE DEPARTMENT,  
Nonparticipating Defendants.  
WEAVER, J. (concurring).  
I concur with the result of the majority opinion and the  
analysis of part VI.