Travelers Insurance v. Detroit Edison Co.

Michigan Supreme Court
Lansing, Michigan 48909
_____________________________________________________________________________________________
C hief Just ice Justices
Maura D . Corrigan Michael F. Cavanagh

Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
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 .

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

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.

Detroit Edison also relied on this Court’s decision in

Rinaldo’s, supra.

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

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.

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.

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

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.”

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.

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”).

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

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

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.”

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.

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.

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

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

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

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.

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

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).

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

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

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.

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

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).

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

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

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 .

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

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.

S T A T E O F M I C H I G A N

SUPREME COURT

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.

______________________________________________

WEAVER, J. (concurring).

I concur with the result of the majority opinion and the

analysis of part VI.

Travelers Insurance v. Detroit Edison Co.

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