Court Opinion

ID: 3156422
Source: CourtListenerOpinion
Date Created: 2015-11-20 16:05:50.960668+00
Date Added: 2024-06-11T12:11:33.433246
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

AARON SPECK,                                                         UNPUBLISHED
                                                                     November 19, 2015
               Plaintiff-Appellee,

v                                                                    No. 322466
                                                                     Wayne Circuit Court
TRACY CUNNINGHAM,                                                    LC No. 12-000520-CZ

               Defendant-Appellant.

Before: JANSEN, P.J., and MURPHY and RIORDAN, JJ.

PER CURIAM.

        Defendant appeals as of right a judgment awarding plaintiff $17,405 that was entered by
the circuit court following a short bench trial. We agree with defendant that the circuit court
lacked subject-matter jurisdiction with respect to plaintiff’s action. Accordingly, we vacate the
judgment and remand for entry of an order of dismissal.

        In January 2012, plaintiff, an attorney, filed this lawsuit against defendant, alleging that
he performed legal services on defendant’s behalf pursuant to a contract – a retainer agreement –
in regard to a domestic relations matter. Plaintiff alleged that defendant had failed to pay
outstanding invoices relative to the contracted legal services, which had been rendered between
January 2006 and November 2007. Plaintiff asserted in the complaint that defendant currently
owed plaintiff $27,760 for his services. In the prayer for relief, plaintiff requested “judgment
against the Defendant in the amount of $27,760.00, together with costs, interest, and attorney
fees so wrongfully incurred.”

         The bench trial took place on February 19, 2014, with each party proceeding in propria
persona. As reflected in invoices submitted by plaintiff at trial and plaintiff’s own testimony and
statements at the trial, the $27,760 requested in the complaint did not represent the true amount
owing by defendant when the complaint was filed. Instead, the $27,760 represented the total
cost of all of plaintiff’s legal services performed for defendant absent any deduction for
payments defendant had made to plaintiff for services rendered. In his opening statement,
plaintiff, after noting that there was a $25 mistake in favor of defendant with respect to the total
bill for attorney fees, stated:

               So the amount that was services rendered to Mr. Cunningham were
       actually $27,735.00 not $27,760.00. The evidence will show that he made
       payments totaling $10,480.01 toward that obligation, and I will be submitting a
                                                -1-
       summary to the Court showing a balance due of $17,254.99, and we’re going to
       be asking the Court for a judgment for that amount.

       When plaintiff testified during cross-examination, he conceded that “[i]t was a
misstatement” when asked about the dollar amount alleged to be due and owing as set forth in
the complaint. In his closing argument, plaintiff similarly indicated:

              The Complaint was filed based upon the summary of all the invoices, and
       I apologize to the Court that the credits weren’t reflected there, but we gave Mr.
       Cunningham the benefit of all the payments and all the credits while this case has
       been in litigation.

        At the beginning of defendant’s opening statement, he first requested the circuit court to
dismiss the action on the basis of lack of jurisdiction, arguing that the case, in light of plaintiff’s
concession concerning the actual amount in dispute, should proceed in the district court. At this
juncture, we shall briefly recite the basic principles governing jurisdiction as between a circuit
court and a district court with respect to civil cases. 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.” And under
MCL 600.8301(1), “[t]he district court has exclusive jurisdiction in civil actions when the
amount in controversy does not exceed $25,000.00.” (Emphasis added.) This monetary line of
demarcation in regard to the amount in controversy concerns the issue of subject-matter
jurisdiction. Moody v Home Owners Ins Co, 304 Mich. App. 415, 426; 849 NW2d 31 (2014).1
Here, the circuit court denied defendant’s request to dismiss, noting that the case was over two
years old and stating that, if defendant believed that the case should have been filed in the district
court, he should have filed a motion to dismiss for lack of jurisdiction early on. It is clear to us
that the circuit court failed to appreciate that a motion to dismiss for lack of “subject-matter
jurisdiction may be raised at any time, even if raised for the first time on appeal.” Smith v Smith,
218 Mich. App. 727, 729-730; 555 NW2d 271 (1996). Indeed, MCR 2.116(D)(3) provides that a
motion to dismiss for lack of subject-matter jurisdiction “may be raised at any time, regardless of
whether the motion is filed after the expiration of the period in which to file dispositive motions
under a scheduling order[.]”

        Following the bench trial, but prior to the circuit court’s entry of an opinion and order,
plaintiff filed a brief addressing a lien issue that had arisen at trial and the matter of subject-
matter jurisdiction. Plaintiff correctly observed that the retainer agreement between him and
defendant had required defendant to pay invoices within 30 days of billing, with any amount

1
  Moody was consolidated by this Court with Hodge v State Farm Mut Auto Ins Co. Moody, 304
Mich. App. at 419 n 1. The two cases, addressed jointly in this Court’s single opinion, were
separately appealed to our Supreme Court, and the Moody case was ultimately dismissed, 858
NW2d 462 (2015), after the Court had initially granted leave to appeal, 497 Mich. 866 (2014).
But leave was also granted in Hodge, 497 Mich. 957 (2015), and that appeal remains pending in
the Supreme Court.

                                                 -2-
owing after 30 days incurring interest at the rate of 7% annually, which interest accrued on the
unpaid balance until paid in full. Taking the interest into account, plaintiff calculated that
defendant actually owed plaintiff $25,131 as of the day of trial. Plaintiff argued that the circuit
court had the discretion to award him that full amount, “even if not billed on the individual
invoices or requested at trial[.]”2 Plaintiff therefore maintained that, at the time of trial, the
amount in controversy was in excess of the jurisdictional limit of $25,000. The circuit court did
not address the argument in its written opinion and subsequent order awarding plaintiff $17,405
for breach of contract, ostensibly because the proofs had already been closed and the court had
already rejected defendant’s request at trial to dismiss the case for lack of jurisdiction.
Defendant filed a motion for reconsideration, arguing that the district court had exclusive
jurisdiction over the case, that the circuit court was thus compelled to dismiss the suit, and that
plaintiff had known full well when he filed the complaint that the amount in dispute did not
exceed $25,000. In a cursory order, the circuit court ruled that defendant was merely presenting
the same issues and arguments previously addressed by the court and that defendant had failed to
demonstrate a palpable error by which the court and the parties were misled.

        On de novo review, Moody, 304 Mich. App. at 426, we hold that the circuit court lacked
subject-matter jurisdiction to adjudicate this case. “When a court lacks subject matter
jurisdiction to hear and determine a claim, any action it takes, other than to dismiss the action, is
void.” Bowie v Arder, 441 Mich. 23, 56; 490 NW2d 568 (1992); see also Derderian v Genesys
Health Care Sys, 263 Mich. App. 364, 375; 689 NW2d 145 (2004) (“a court that lacks subject-
matter jurisdiction cannot adjudicate the parties’ claims”). In Moody, 304 Mich. App. at 430, this
Court, construing MCL 600.8301(1) (district court exclusive jurisdiction), held:

               [W]e conclude that the plain, ordinary, and legal meaning of “amount in
       controversy” under MCL 600.8301(1) is the amount the parties to a lawsuit
       dispute, argue about, or debate during the litigation. While the amount in
       controversy in a lawsuit will most often be determined by reviewing the amount
       of damages or injuries a party claims in his or her pleadings, the statute does not
       explicitly state this. Indeed, the statute does not provide any method for
       determining the amount in controversy. . . . If the Legislature had intended to
       establish that the limits of the district court's jurisdiction were to be determined
       solely on the basis of the amount demanded in the complaint, it could easily have
       done so, but it did not. Rather, the Legislature used the phrase “amount in
       controversy,” which is the dollar value of the damages that are disputed in the
       lawsuit. Stated otherwise, it is the amount the parties argue about, debate, or
       controvert. Here, Moody's pretrial discovery answers, the arguments of Moody's
       counsel before trial, and the presentation of evidence at trial, all showed that the
       amount in controversy in that case far exceeded the $25,000 subject-matter
       jurisdiction of the district court. MCL 600.8301(1). Hodge similarly presented

2
  Plaintiff briefly mentioned the contractual interest at trial, stating in his closing argument that
“I’m not even requesting that, your Honor,” and that “I would waive any seven percent fee on
the funds that are owing.”

                                                -3-
       evidence of damages far exceeding the $25,000 subject-matter jurisdiction of the
       district court. Without subject-matter jurisdiction over Moody's and Hodge's
       complaints, the only actions the district court judges could have properly taken
       would have been to dismiss the cases, MCR 2.116(C)(4), or transfer them to the
       circuit court, MCR 2.227(A)(1). [Citations omitted.]

         Although Moody involved actions filed in district court that should have been filed in
circuit court, the opposite of the situation here, the principles from Moody are clearly equally
applicable in the context of our case, and Moody is binding precedent. The Moody panel
explained that a party cannot employ artful pleading relative to a damage claim so as to come
within jurisdictional limits, while placing in dispute through evidence and argument a damage
amount that is outside those jurisdictional limits. Moody, 304 Mich. App. at 433. “A plaintiff
may not merely say some magic words and confer jurisdiction where it otherwise would not
exist.” Id. The Court rejected efforts to allege “up to the $25,000 jurisdictional limit of the
district court, knowing that the true amount sought exceeded $25,000, and then present[] to the
jury evidence of and argument for damages far exceeding the jurisdictional limit of the court.”
Id. at 431. Moody involved first-party, no-fault claims, which would tend to be more open-ended
with respect to the amount of damages than the straightforward contractual claim involved here,
thereby providing an even more compelling reason to apply the principles from Moody.

         Given that plaintiff’s own documents and records revealed that defendant had paid, pre-
complaint, approximately $10,000 of the total bill for legal services that amounted to over
$27,000, plaintiff certainly knew, or should have known, that the true amount in dispute was less
than $25,000. We cannot comprehend why plaintiff sought damages in an amount that simply
reflected total billings without any consideration of the substantial sums of money paid by
defendant. The amount the parties argued about, debated, or controverted in the litigation was
under $25,000. Further, considering that plaintiff had not invoiced defendant for the contractual
interest, had not requested the contractual interest in his complaint, and did not demand the
contractual interest at trial, and in fact expressly waived it, we reject plaintiff’s effort to meet the
$25,000 jurisdictional threshold by relying on his post-trial claim seeking to add the contractual
interest into the equation. The contractual interest was not in dispute or requested all the way
through the conclusion of trial. The circuit court did not reopen the proofs or arguments
thereafter with respect to the issue, nor did the court indicate that it entertained plaintiff’s post-
trial request.3 Moreover, we note that the trial had been adjourned a few times, and plaintiff’s
interest calculations, as gleaned from his own lower court filing, would have fallen short of
driving the damages above $25,000 had the trial been held when originally scheduled in June
2013, as well as being woefully short on the date the complaint was filed in January 2012. In
sum, the amount in controversy did not exceed $25,000; therefore, the district court had
exclusive jurisdiction over plaintiff’s action.

3
  The court had allowed the parties to file supplementary materials or briefs, but solely on the
lien matter.

                                                  -4-
       Finally, plaintiff cites and relies on Administrative Order No. 1998-1, 457 Mich. lxxxv
(1998), as amended by 477 Mich. cxxxvi (2006), which provides, in relevant part, as follows:

               A circuit court may not transfer an action to district court under MCR
       2.227 based on the amount in controversy unless: (1) The parties stipulate to the
       transfer and to an appropriate amendment of the complaint, see MCR
       2.111(B)(2); or (2) From the allegations of the complaint, it appears to a legal
       certainty that the amount in controversy is not greater than the applicable
       jurisdictional limit of the district court. [Emphasis added.]

        Assuming the application of AO 1998-1, it would simply have barred the transfer of the
case to the district court by the circuit court; it did not preclude the circuit court from dismissing
the action outright for lack of subject-matter jurisdiction under the jurisdictional statutes. Given
AO 1998-1, we vacate the trial court’s judgment and remand solely for entry of an order of
dismissal, not transfer. Plaintiff is of course free to commence a new action should he desire to
do so.

      Vacated and remanded for entry of an order of dismissal. We do not retain jurisdiction.
Having fully prevailed on appeal, defendant is awarded taxable costs under MCR 7.219.

                                                              /s/ Kathleen Jansen
                                                              /s/ William B. Murphy
                                                              /s/ Michael J. Riordan

                                                 -5-