Background
Citizens United Reciprocal Exchange (CURE), a no-fault auto insurer, sought recovery for allegedly excessive fees charged by defendants after a vehicle belonging to one of its insureds was towed pursuant to MCL 257.252d following a motor-vehicle accident. Area Towing & Recovery, Inc. removed the vehicle at police direction and delivered it to Grand Sport Collision for safekeeping. When CURE attempted to retrieve the vehicle, Grand Sport refused release unless CURE reimbursed Area Towing’s fees and paid thousands in additional charges, ultimately collecting $56,448.10. CURE paid the demanded amounts and subsequently filed suit in circuit court asserting common-law and statutory conversion, MCPA violations, civil extortion, tortious interference with insurance contracts, unjust enrichment, and conspiracy to defraud.
The defendants moved for summary disposition arguing the circuit court lacked subject-matter jurisdiction. The circuit court agreed, holding that MCL 257.252e(1)—which grants district and municipal courts exclusive jurisdiction over claims involving the “processing” of vehicles under the Vehicle Code’s anti-theft provisions—divested the circuit court of all jurisdiction. The court dismissed the entire action.
The Court’s Holding
The Michigan Court of Appeals reversed, holding that while MCL 257.252e(1) does divest circuit courts of jurisdiction over claims arising under MCL 257.252d, CURE’s claims fall outside the statute’s jurisdictional scope. The court rejected a categorical rule that all claims arising from towing and storage under MCL 257.252d must be brought in district court. Instead, the court held that “processing” under MCL 257.252e(1) refers narrowly to following the legislatively prescribed procedure set forth in the applicable Vehicle Code sections—the mechanical steps for removal, impoundment, notification, and release.
CURE’s claims, the court found, do not challenge compliance with these procedural steps. Rather, they allege that defendants wrongfully conditioned vehicle release on payment of allegedly inflated or unjustified fees and engaged in common-law torts and consumer fraud. Notably, MCL 257.252d’s procedural provisions contain no express authority to contest the reasonableness of fees charged; only MCL 257.252a and MCL 257.252b(6)-(11) explicitly allow such challenges through district court hearings. The court declined to read a fee-reasonableness dispute into the plain language of MCL 257.252d, which lacks any such provision. Accordingly, CURE’s tort and statutory-violation claims fall outside the exclusive district court jurisdiction and the general jurisdictional provisions of MCL 600.605 apply, vesting jurisdiction in the circuit court (assuming the amount in controversy exceeds $25,000).
Key Takeaways
- Exclusive district court jurisdiction under MCL 257.252e(1) is narrowly confined to challenges to the statutory “processing” procedure itself, not to collateral tort or consumer protection claims arising from the same transaction.
- The term “processing” means following the prescribed procedural steps outlined in the relevant Vehicle Code sections and does not encompass claims alleging unreasonable fees or unlawful conditioning of release.
- Only the specific Vehicle Code provisions expressly addressing fee contests (MCL 257.252a and MCL 257.252b) trigger the exclusive district court remedy; claims under MCL 257.252d do not.
- Parties alleging broader misconduct (conversion, extortion, MCPA violations) in connection with towing and storage may pursue those claims in circuit court, not limited to district court fee-review procedures.
Why It Matters
This decision clarifies a critical jurisdictional boundary that affects both insurers and the towing and repair industry. By narrowing “processing” to procedural compliance and excluding tort-based challenges, the court permits more expansive litigation in circuit court where larger damage awards and broader remedies are available. Insurers facing what they view as predatory towing and storage practices can now pursue comprehensive claims—including conversion, extortion, and consumer protection statutes—without being confined to the limited remedies available in district court fee-dispute proceedings.
For towing companies and repair shops, the decision expands their exposure to complex litigation in a higher court. It also establishes that the statutory fee-contest procedures in the Vehicle Code do not preempt or displace common-law tort liability for conditioning vehicle release on allegedly excessive charges, creating potential dual exposure if fee practices are challenged both procedurally and substantively.