MILLER v ALLSTATE INSURANCE COMPANY
Docket Nos. 134393 and 134406
Supreme Court of Michigan
Decided July 2, 2008
481 Mich 601 | 751 N.W.2d 463
In an opinion by Justice MARKMAN, joined by Chief Justice TAYLOR and Justices CORRIGAN and YOUNG, the Supreme Court held:
Allstate lacks statutory standing to challenge PT Works’ corporate status because the BCA grants the power to challenge corporate status solely to the Attorney General.
- Although the Legislature cannot expand beyond constitutional limits the class of people who have standing, it may limit the class of people who may challenge a statutory violation.
- The BCA indicates that once articles of incorporation have been filed, such filing constitutes conclusive evidence that all the requirements for complying with the BCA have been fulfilled and that the corporation has actually been formed in compliance with the BCA, thereby creating an irrebuttablе presumption of proper incorporation. The BCA creates a single exception to this presumption by granting the Attorney General the sole authority to challenge whether a corporation has been properly incorporated under the BCA. Thus, this Court can only consider whether a corporation has been properly incorporated under the BCA in a suit brought by the Attorney General.
- The provision of the BCA that grants the Attorney General the sole authority to challenge whether a corporation was properly incorporated presents a jurisdictional bar to Allstate‘s affirmative defense that PT Works was improperly incorporated. Accordingly, the lower courts should not have considered the merits of Allstate‘s claim.
Affirmed, but rationale vacated; case remanded to the circuit court for further proceedings.
Justice CAVANAGH concurred in the result only.
Justice WEAVER, joined by Justice KELLY, concurred in the result only, because the defendant lacked standing to challenge the corporate status of PT Works, but wrote separately to disagree with the majority‘s discussion of and test for standing.
1. STATUTES - BUSINESS CORPORATION ACT - STANDING.
An individual plaintiff lacks statutory standing to challenge whether a corporation was properly incorporated under the Business Corporation Act because that act grants standing with respect to that issue solely to the Attorney General (
2. STATUTES - BUSINESS CORPORATION ACT - AFFIRMATIVE DEFENSES - JURISDICTION.
Courts do not have jurisdiction to consider improper incorporation under the Business Corporation Act as an affirmative defense of a party who is not the Attorney General (
Nemier, Tolari, Landry, Mazzeo & Johnson, P.C. (by David B. Landry and Michelle E. Mathieu), for Allstate Insurance Company.
Thav, Gross, Steinway & Bennett, P.C. (by Barry A. Steinway), for PT Works, Inc.
Amici Curiae:
Allan Falk, P.C. (by Allan Falk), for Preferred Mediсine, Inc., Joanna Rohl, and Fatmeh Chehab.
Couzens, Lansky, Fealk, Ellis, Roeder & Lazar, P.C. (by Karen W. Magdich), for the International Association of Special Investigation Units, the Michigan Chapter of the International Association of Special Investigation Units, and the Property Casualty Insurers Association of America.
Hall, Render, Killian, Heath & Lyman, PLLC (by Margaret Marchak, Michael J. Philbrick, and Leah Voigt Romano), for the Health Care Law Sectiom of the State Bar of Michigan.
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and David W. Silver and Amy L. Rosenberg, Assistant Attorneys General, for the Attorney Gеneral.
James L. Carey, Justin G. Klimko, and Cyril Moscow for the Business Law Section of the State Bar of Michigan.
Foster, Swift, Collins & Smith, P.C. (by Richard C. Kraus and Alan T. Rogalski), for the Michigan Physical Therapy Association.
Keranen & Associates, P.C. (by Gary D. Quesada), for the American Institute of Architects Michigan, the
Gross & Nemeth, P.L.C. (by Mary T. Nemeth), for the Insurance Institute of Michigan.
OPINION OF THE COURT
MARKMAN, J. We granted leave to appeal to consider (1) whether plaintiff corporation was improperly incorporated undеr the Business Corporations Act (BCA),
I. FACTS AND PROCEDURAL HISTORY
William Miller was injured in separate car accidents on February 27, 2002, and September 13, 2002.1 Miller was diagnosed with whiplash; his doctor prescribed physical therapy and referred Miller to plaintiff PT Works, Inc. Miller was treated by PT Works from April 2, 2003, through August 28, 2003, incurring a bill for $29,150.
Allstate moved for summary disposition, arguing that PT Works was unlawfully incorporated under the BCA, because PT Works was required to incorporate under the Professional Services Corporations Act (PSCA),
Allstate appealed, and the Court of Appeals affirmed. Miller v Allstate Ins Co, 272 Mich App 284; 726 NW2d 54 (2006). The Court of Appeals held that, regardless of whether PT Works was lawfully incorporated under the BCA, the treatment rendered to Miller was “lawful” under
Allstate then filed an application for leave to appeal with this Court, and, in lieu of granting leave, we vacated the initial Court of Appeals judgment and remanded to the Court of Appeals to consider whether PT Works was lawfully incorporated and, if PT Works was unlawfully incorporated, tо reconsider whether treatment was lawfully rendered. 477 Mich 1062 (2007).
On remand, the Court of Appeals again affirmed the trial court‘s denial of summary disposition. Miller v Allstate Ins Co (On Remand), 275 Mich App 649; 739 NW2d 675 (2007). The Court of Appeals held that PT Works could have incorporated under the PSCA, and thus was unlawfully incorporated under the BCA, citing
PT Works appealed the decision of the Court of Appeals that it was unlawfully incorporated. In a separate application, Allstate appealed the decision of the Court of Appeals that, despite the unlawful incorporation, the treatment was “lawfully rendered.” This Court granted both applications for leave to appeal. 480 Mich 938 (2007).
II. STANDARD OF REVIEW
Questions of statutory interpretation are reviewed de novo. Lash v Traverse City, 479 Mich 180, 186; 735 NW2d 628 (2007).
III. ANALYSIS
Our constitution requires that a plaintiff possess standing before a court can exercise jurisdiction over thаt plaintiff‘s claim. Rohde v Ann Arbor Pub Schools, 479 Mich 336, 346; 737 NW2d 158 (2007). This
Although the Legislature cannot expand beyond constitutional limits the class of persons who possess standing, the Legislature may permissibly limit the class of persons who may challenge a statutory violation. That is, a party that has constitutional standing may be precluded from enforcing a statutory provision, if the Legislature so provides. This doctrine has been referred to as a requirement that a party possess “statutory standing.” See, e.g., Graden v Conexant Sys, Inc, 496 F3d 291, 294 (CA 3, 2007). Statutory standing “simply [entails] statutory interpretation: the question it asks is whether [the Legislature] has accorded this injured plaintiff the right to sue the defendant to redress his injury.” Id. at 295 (emphasis in original).
In this case, plaintiff asks this Court to conclude that, under the express terms of the BCA, defendant may not bring any challenge against plaintiff‘s corporate status. That is, defendant‘s lack of statutory standing would act as a jurisdictional bar to defendant‘s affirmative defense that plaintiff was unlawfully incorporated. If the BCA categorically bars defendant‘s claim, then the lower courts should not have considered the substance of defendant‘s claim, as they each did in different ways; rather, they should have simply determined that defendant may not raise the affirmative defense that plaintiff was unlawfully incorporated. Accordingly, before considering whether an entity is lawfully incorporated under the BCA, a court must consider whether the party challenging corporate status has statutory standing to raise that claim.
Statutory standing, which necessitates an inquiry into whether a statute authorizes a plaintiff to sue at all, must be distinguished from whether a statute permits an individual claim for a particular type of relief. See Steel Co v Citizens for a Better Environment, 523 US 83, 92; 118 S Ct 1003; 140 L Ed 2d 210 (1998) (distinguishing between “whether [a statute] authorizes this plaintiff to sue” and “whether the scope of the [statutory] right of action includes past violations” and stating that the latter “goes to the merits and not to statutory standing“). The statutory-standing inquiry is generally jurisdictional; the claim-for-relief inquiry is non-jurisdictional. Lerner v Fleet Bank, NA, 318 F3d 113, 127 (CA 2, 2003); see also Steel Co, supra at 92 (stating that the claim for relief inquiry is non-jurisdictional and contrasting that inquiry with the statutory-standing inquiry); Northwest Airlines, Inc v Kent Co, 510 US 355, 365; 114 S Ct 855; 127 L Ed 2d 183 (1994) (“The question whether a... statute creates a claim for relief is not jurisdictional.“). But see Canyon Co v Syngenta Seeds, Inc, 519 F3d 969, 975 n 7 (CA 9, 2008) (rejecting the proposition that statutory standing is jurisdictional). We acknowledge that the line dividing these inquiries is not always susceptible to easy demarcation; as Steel Co points out, “the merits inquiry and the statutory standing inquiry often ‘overlap.’ ” Steel Co, supra at 97 n 2, quoting Nat‘l R Passenger Corp v Nat‘l Ass‘n of R Passengers, 414 US 453, 456; 94 S Ct 690; 38 L Ed 2d 646 (1974).
An example illustrates the distinction. This Court considered during its last term whether an individual plaintiff “may maintain a private cause of action for money damages against” a public employer for a violation of
Two conclusions should be drawn from this. First, a determination that a plaintiff lacks statutory standing to assert a cause of action is essentially the equivalent of concluding that a plaintiff cannot bring any action in reaction to an alleged legal violation. Second, an inquiry regarding statutory standing and an inquiry regarding the merits of a particular claim for relief both follow the
Here, the initial question is whether defendant Allstate may challenge the incorporation of PT Works under the BCA.5 Because the relevant question is whether the BCA authorizes defendant to make such a challenge, the issue presented is properly characterized as one of statutory standing.
The corporate existence shall begin on the effective date of the articles of incorporation as provided in [
MCL 450.1131 ].6 Filing is conclusive evidence that all conditions precedent required to be performed under this act have been fulfilled and that the corporation has been formed under this act, except in an action or special proceeding by the attorney general.
In essence,
Moreover,
A physician, hospital, clinic or other person or institution lawfully rendering treatment to an injured person for an accidental bodily injury covered by personal protection insurance, and a person or institution providing rеhabilitative occupational training following the injury, may charge a reasonable amount for the products, services and accommodations rendered. [Emphasis added.]
“[S]pecific provisions... prevail over any arguable inconsistency with the more general rule....” Jones v Enertel, Inc, 467 Mich 266, 271; 650 NW2d 334 (2002). The question raised by Allstate is how to ascertain which provision is more specific and which is more general. As with any question of statutory interpretation, we examine the language of the statutes to discern the Legislature‘s intent. Fluor Enterprises, Inc v Dep‘t of Treasury, 477 Mich 170, 174; 730 NW2d 722 (2007). In order to determine which provision is truly more specific and, hence, controlling, we consider which provision applies to the more narrow realm of circumstances, and which to the more broad realm.
Contrary to Allstate‘s argument,
Although our analysis rests solely on our interpretation of the relevant statutes, we note that
This brings us to the doctrine, founded in public policy and convenience and supported by an almost unanimous consensus of judicial opinion, which is that rightfulness of the existence of a body claiming to act, and in fact acting in the face of the State, as a corporation, cannot be litigated in actions between private individuals, or between рrivate individuals and the assumed corporation, but that the rightfulness of the existence of the corporation can be questioned only by the State; in other words, that the question of the rightful existence of the corporation cannot be raised in a collateral proceeding. [Id. at 67 (quotations and citation omitted).]
One need not look far to ascertain the merits of this limitation. As one treatise states:
It would produce endless confusion and hardship, and probably destroy the corporation, if the legality of its existence could be drawn in question in every suit to which it was a party.... [18A Am Jur 2d, Corporations, § 208, p 88.]
IV. CONCLUSION
Because Allstate lacks statutory standing to assert that PT Works was improperly incorporated, the Court of Appeals correctly held that summary disposition should be granted to PT Works, albeit on alternative grounds. Accordingly, we affirm the conclusion of the Court of Appeals, but vacate its rationale, and we remand to the trial court for further proceedings consistent with this opinion.
TAYLOR, C.J., and CORRIGAN and YOUNG, JJ., concurred with MARKMAN, J.
CAVANAGH, J. I concur in the result only.
WEAVER, J. (concurring in the result only). I concur in the result of the majority opinion because defendant
I write separately because I disagree with the opinion‘s strained discussion of the standing test erroneously created by the majority of four (Chief Justice TAYLOR and Justices CORRIGAN, YOUNG, and MARKMAN) in Lee v Macomb Co Bd of Comm‘rs,1 Nat‘l Wildlife Federation v Cleveland Cliffs Iron Co,2 Rohde v Ann Arbor Pub Schools,3 and Michigan Citizens for Water Conservation v Nestlé Waters North America Inc.4 In those cases, the majority of four systematically dismantled Michigan‘s law on standing and replaced years of precedent with its own test that denies Michigan citizens access to the courts.5
KELLY, J., concurred with WEAVER, J.
Notes
A corporation may be formed under this act for any lawful purpose, except to engage in a business for which a corporation may be formed under any other statute of this state unless that statute permits formation under this act.
Nat‘l Wildlife Federation v Cleveland Cliffs Iron Co, 471 Mich 608; 684 NW2d 800 (2004).To establish constitutional standing, a plaintiff must satisfy three elements:
“First, the plaintiff must have suffered an ‘injury in fact‘—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) ‘actual or imminent, not “conjectural” or “hypothetical.“’ Second, there must be a causal connection between the injury and the conduct complained of the injury has to be ‘fairly traceable to the challenged action of the defendant, and not... the result [of] the independent action of some third party not before the court.’ Third, it must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be ‘redressed by a favorable decision.’ ” [Nat‘l Wildlife Federation, supra at 628-629 (citations omitted).]
Rohde v Ann Arbor Pub Schools, 479 Mich 336; 737 NW2d 158 (2007).This conclusion is bolstered by other provisions of the BCA that limit the authority of certain individuals to challenge improper incorporation. The BCA,
(1) The attorney general may bring an action in the circuit court of the county in which the principal place of business or registered office of the corporation is located for dissolution of a corporation upon the ground that the corporation has committed any of the following acts:
(a) Procured its organization through fraud.
(b) Repeatedly and willfully exceeded the authority conferred upon it by law.
(c) Repeatedly and willfully conducted its business in an unlawful manner.
(2) The enumeration in this section of grounds for dissolution does not exclude any other statutory or common law action by the attorney general for dissolution оf a corporation or revocation or forfeiture of its corporate franchises.
Thus,
