Summary
recognizing that "[a]n action for an accounting is equitable in nature"
Summary of this case from Darshan Singh Grewal v. DoeOpinion
Docket No. 66225.
Decided March 20, 1984.
Saukas, Bush Idema, P.A. (by Michael L. Idema and Kenneth T. Saukas), for plaintiffs. Clary, Nantz, Wood, Hoffius, Rankin Cooper (by Gregory G. Prasher), for defendant.
In this action, the 77 plaintiffs raise claims against defendant for breach of contract, violation of a provision of the Retail Installment Sales Act, MCL 445.865; MSA 19.416(115), and violation of the requirements of the Michigan Consumer Protection Act, MCL 445.901 et seq.; MSA 19.418(1) et seq. According to plaintiffs' complaint, each plaintiff entered into an installment contract with 21st Century Health Spa, Inc., for health spa services. 21st Century went bankrupt and ceased operation after assigning the contracts to defendant Nelson Credit Centers, Inc., which attempted to delegate performance of the contracts to American Health Fitness Centers. Plaintiffs sought a declaratory judgment as to the parties' rights and obligations under the contracts, an accounting, and actual damages or the penalty specified in MCL 445.911(2); MSA 19.418(11)(2), whichever was greater. The circuit court held that it lacked subject matter jurisdiction and granted accelerated judgment for defendant pursuant to GCR 1963, 116.1(2). Plaintiffs appeal as of right.
The subject matter jurisdiction of a circuit court in civil cases is governed by MCL 600.605; MSA 27A.605, which provides:
"Circuit 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."
One exception to the subject matter jurisdiction of a circuit court is created by MCL 600.8301(1); MSA 27A.8301(1), which provides:
"The district court shall have exclusive jurisdiction in civil actions when the amount in controversy does not exceed $10,000.00."
However, MCL 600.8315; MSA 27A.8315 provides:
"The district court shall not have jurisdiction in actions for injunctions, divorce or actions which are historically equitable in nature, except as otherwise provided by law."
We first note that plaintiffs' prayer for a declaratory judgment was not of itself sufficient to place the action within the circuit court's subject matter jurisdiction. See GCR 1963, 521.1, which provides:
"In a case of actual controversy within its jurisdiction, any circuit court of this state may declare the rights and other legal relations of any interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." (Emphasis added.)
A circuit court has no jurisdiction to issue a declaratory judgment unless it has jurisdiction over the underlying controversy. See Fornell v Fornell Equipment, Inc, 39 Mich. App. 709, 723; 198 N.W.2d 694 (1972), rev'd on other grounds 390 Mich. 540; 213 N.W.2d 172 (1973). The Supreme Court specifically approved the reasoning of the Court of Appeals on the jurisdictional issue. 390 Mich. 549. Compare Grunow v Sanders, 84 Mich. App. 578; 269 N.W.2d 683 (1978) (Court of Claims has jurisdiction to render declaratory judgment in a case otherwise within its subject matter jurisdiction).
An action for an accounting is equitable in nature, but whether a plaintiff has stated a cause of action for an accounting must be determined from the facts pled in the plaintiff's complaint rather than from the prayer for relief. Marshall v Ullmann, 335 Mich. 66, 71; 55 N.W.2d 731 (1952). In Laubengayer v Rohde, 167 Mich. 605, 611; 133 N.W. 535 (1911), the Court explained:
"To sustain a bill for an accounting there must be mutual demands, a series of transactions on one side, and payments on the other. Where all the items are on one side, there can be no accounting. The bill shows no items of which the complainant is not fully informed, and the only items involved are the money complainant paid for the land and money expended by him in its improvement."
An accounting may not be had where the action is for a specific sum due under a contract. Brown v Brodsky, 348 Mich. 16, 22; 81 N.W.2d 363 (1957); Basinger v Provident Life Accident Ins Co, 67 Mich. App. 1, 8; 239 N.W.2d 735 (1976). An accounting is unnecessary where discovery is sufficient to determine the amounts at issue. Cyril J Burke, Inc v Eddy Co, Inc, 332 Mich. 300, 303; 51 N.W.2d 238 (1952). Here, plaintiffs' complaint contains no allegation of a series of mutual demands. Plaintiffs' claims are for the refund of specific sums paid under their contracts, or alternatively, for the penalty specified in MCL 445.911(2); MSA 19.418(11)(2). The allegations in plaintiffs' complaint do not support an inference that the transactions at issue are so complex that ordinary discovery procedures would be inadequate. In this connection, we note that nearly all of the plaintiffs submitted affidavits in support of a motion for summary judgment and that nearly all of the affidavits specified the exact amount at issue. Plaintiffs' reliance on MCL 445.860; MSA 19.416(110) is misplaced; that section requires a holder of a retail installment contract to forward to the buyer upon written request a written statement of the dates and amounts of payments and the total amount unpaid under the contract. The section does not purport to give buyers the right to bring an equitable action for an accounting and shows, if anything, that the plaintiffs had an adequate remedy without such an action. Plaintiffs' prayer for an accounting was insufficient to confer subject matter jurisdiction on the circuit court because plaintiffs failed to state a cause of action for an accounting.
No individual plaintiff made a claim for more than $10,000, but it is not disputed that all of the claims, if aggregated, would exceed that amount. In class actions, some Michigan courts have permitted the claims of individual members of the class to be aggregated to establish the jurisdictional minimum for circuit court. Paley v Coca Cola Co, 39 Mich. App. 379; 197 N.W.2d 478 (1972), aff'd on other grounds by equally divided court 389 Mich. 583; 209 N.W.2d 232 (1973); Grettenberger Pharmacy, Inc v Blue Cross-Blue Shield of Michigan, 98 Mich. App. 1, 10-11; 296 N.W.2d 589 (1980). However, this case is not a class action. Whether, in an action which is not a class action, the separate claims of individual plaintiffs may be aggregated to establish the jurisdictional minimum is a question of first impression in Michigan. However, such aggregation is not permitted to establish the jurisdictional minimum for federal question jurisdiction in federal district court. Clark v Paul Gray, Inc, 306 U.S. 583, 589; 59 S Ct 744; 83 L Ed 1001 (1939). Clark is in accord with the general rule in other jurisdictions; see 20 Am Jur 2d, Courts, § 168, pp 508-509. Plaintiffs' reliance on Crippen v Fletcher, 56 Mich. 386; 23 N.W. 56 (1885), and Henderson v Detroit M R Co, 131 Mich. 438; 91 N.W. 630 (1902), is misplaced; in those cases the Court merely permitted aggregation of various claims of a single plaintiff, a result in accord with the majority rule in other jurisdictions. See 20 Am Jur 2d, Courts, § 167, pp 507-508. We find Clark and similar decisions persuasive and elect to follow them.
The circuit court correctly ruled that it lacked subject matter jurisdiction. However, under the circumstances presented, the circuit court had discretion to remove the action to the appropriate district court rather than dismiss it. GCR 1963, 707.1; MCL 600.641; MSA 27A.641. In lieu of affirming the circuit court's decision, we exercise our power pursuant to GCR 1963, 820.1(7) to grant such relief as the case may require and order the case removed to the appropriate district court. Because the record does not disclose which district court is appropriate, we remand the case to circuit court for resolution of that question.
Remanded for further proceedings consistent with this opinion. We retain no jurisdiction.