Adair v. State
| Decision Date | 20 September 2016 |
| Docket Number | Docket No. 311779. |
| Citation | 317 Mich.App. 355,894 N.W.2d 665 |
| Parties | ADAIR v. STATE OF MICHIGAN. |
| Court | Court of Appeal of Michigan — District of US |
Secrest Wardle, Troy (by Dennis R. Pollard and Mark S. Roberts) for plaintiffs.
Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Timothy J. Haynes, Assistant Attorney General, for defendants.
Before: SAAD, P.J., and MURRAY and GADOLA, JJ.
Plaintiffs1 bring this original taxpayer action to enforce §§ 25 and 29 of the Headlee Amendment, Const. 1963, art. 9, §§ 25 to 34. Plaintiffs allege that the Legislature violated the Headlee Amendment by failing to appropriate sufficient funds to reimburse the school districts of this state for the necessary costs associated with the districts' compliance with the recordkeeping requirements of the Center for Educational Performance and Information (CEPI).2 According to plaintiffs, the legislative appropriations for the 2012–2013, 2013–2014, and 2014–2015 school years are tens of millions of dollars less than is needed to satisfy the state's funding obligation under the Headlee Amendment. Plaintiffs also challenge the method by which the Legislature funded these appropriations. Plaintiffs characterize that funding scheme as an unconstitutional shell game. Finally, plaintiffs allege that the Legislature violated the Headlee Amendment by imposing a new or an increased level of activities on the school districts through amendments of certain provisions of the Revised School Code, MCL 380.1 et seq., and the teacher tenure act, MCL 38.71 et seq., without appropriating any funding to reimburse the school districts for the necessary costs associated with the new mandates. Defendants move for summary disposition with regard to plaintiffs' underfunding claim. Plaintiffs request a declaratory judgment in their favor with regard to their remaining claims. We grant summary disposition in favor of defendants with regard to plaintiffs' underfunding claim. The doctrine of res judicata bars our consideration of the merits of plaintiffs' underfunding claim. Plaintiffs' remaining claims were authoritatively rejected in Adair v. Michigan, 302 Mich.App. 305, 839 N.W.2d 681 (2013), rev'd in part on other grounds 497 Mich. 89, 860 N.W.2d 93 (2014), and thus, the doctrine of stare decisis bars reconsideration of the merits of those claims. Plaintiffs' complaint is dismissed in its entirety with prejudice.
This action focuses, in part, on the application of the second sentence of the Headlee Amendment, which is commonly referred to as the "prohibition on unfunded mandates" or POUM provision. As a result of prior litigation brought in this Court by plaintiffs, our Supreme Court held that the state violated the POUM provision when it required plaintiff school districts to collect, maintain, and report to the CEPI certain types of data for use by the state without providing funds to reimburse the school districts for the necessary costs incurred by the districts in order to comply with the new mandates. Adair v. Michigan, 486 Mich. 468, 494, 785 N.W.2d 119 (2010) ( Adair I ). Thereafter, our Legislature appropriated $25,624,500 for the 2010–2011 school year "to be used solely for the purpose of paying necessary costs related to the state-mandated collection, maintenance, and reporting of data to this state." 2010 PA 217, § 152a. The Legislature increased the appropriation to $34,064,500 for the 2011–2012 school year. This latter appropriation included an allocation of $8,440,000 to reimburse the school districts for the costs of complying with a new CEPI reporting requirement.
Plaintiffs then commenced their second CEPI-related suit in this Court under the Headlee Amendment (Adair II ). See Adair v. Michigan, 497 Mich. 89, 860 N.W.2d 93 (2014) ; Adair, 302 Mich.App. 305, 839 N.W.2d 681. They alleged that the Legislature failed to appropriate sufficient funding to cover the CEPI mandates for the 2010–2011 and 2011–2012 school years; that, to the extent that 2010 PA 217 otherwise reduced the overall discretionary state aid funds by reallocation of a portion of those discretionary funds to § 152a, the act violated Const. 1963, art. 9, §§ 25 and 29 by shifting the tax burden to local taxpayers; that the Legislature violated the POUM provision by mandating a new evaluation process for teachers and administrators without providing any funding to implement the mandate; and that the Legislature failed to appropriate sufficient funding to fully fund the new Teacher Student Data Link portion of the CEPI system. This Court referred the matter to a special master.
The special master granted partial summary disposition in favor of defendants with regard to plaintiffs' challenge to the method by which the Legislature chose to fund the CEPI-related appropriations. He opined that he was required to do so because this Court had "definitively rejected" the arguments advanced by plaintiffs in Durant v. Michigan, 251 Mich.App. 297, 650 N.W.2d 380 (2002), and Durant v. Michigan (On Remand), 238 Mich.App. 185, 605 N.W.2d 66 (1999). In subsequent proceedings, the special master granted partial summary disposition in favor of defendants on the ground that the newly mandated evaluation process involved the provision of a benefit for employees, and thus, pursuant to MCL 21.232(1), the evaluation process was not a state-mandated service or activity for purposes of the Headlee Amendment. Finally, during a trial on the merits of plaintiffs' remaining POUM claims, the special master granted defendants' motion for involuntary dismissal after plaintiffs' lead counsel indicated during his opening statement that plaintiffs would not attempt to prove a specific dollar amount of underfunding, but instead would limit proofs to expert testimony that would show that the Legislature's methodology to determine the requisite amount of funding was materially flawed.
This Court vacated the special master's grant of involuntary dismissal and remanded the matter to the master for the taking of proofs. This Court otherwise affirmed the rulings of the special master. Adair, 302 Mich.App. 305, 839 N.W.2d 681. Our Supreme Court reversed this Court in part and reinstated the special master's grant of involuntary dismissal. In so doing, however, the Supreme Court noted in its opinion that "[w]e do not disturb the balance of the Court of Appeals' holdings not addressed in this opinion." Adair, 497 Mich. at 111 n. 54, 860 N.W.2d 93.
In the meantime, plaintiffs commenced the instant suit (Adair III ). We referred plaintiffs' underfunding claim to a special master for the taking of proofs and the reporting of proposed factual findings for this Court's review. We reserved the remaining legal questions for our resolution at the conclusion of the proceedings before the special master.
Thereafter, proceedings commenced before the special master, and defendants moved for summary disposition on three grounds. First, defendants sought summary disposition pursuant to MCR 2.116(C)(7) on the ground that the doctrine of res judicata, the doctrine of collateral estoppel, or both doctrines barred plaintiffs from relitigating the adequacy of the roughly $34 million appropriation to fund the CEPI recordkeeping requirements unsuccessfully challenged in Adair II. Second, defendants sought summary disposition pursuant to MCR 2.116(C)(8) on the ground that plaintiffs' revised first amended complaint failed to state a claim for a violation of the POUM provision consistent with the special pleading requirements of MCR 2.112(M) because plaintiffs failed to allege any new activity or service imposed by the state on the school districts since the school years at issue in Adair II or that the Legislature had decreased the level of funding for the same activities and services at issue in Adair II. Third and finally, defendants sought summary disposition pursuant to MCR 2.116(C)(10) on the ground that plaintiffs had not alleged and could not prove the existence of any new unfunded or underfunded mandate.
The special master issued his report on March 31, 2016, in which he recommended that defendants' motionfor summary disposition be granted. The special master began his analysis with the acknowledgment that, in Adair v. Michigan, 470 Mich. 105, 120–126, 680 N.W.2d 386 (2004), our Supreme Court ruled that the doctrine of res judicata applies in actions to enforce the Headlee Amendment to bar the relitigation of similar issues by similar parties. He also acknowledged that the doctrine of res judicata bars a subsequent action when (1) the prior action was decided on the merits, (2) both actions involved the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first. The special master then found that all three of these elements had been satisfied on the instant record and, therefore, that the doctrine of res judicata barred further consideration of the underfunding claims. He also found that the doctrine of collateral estoppel barred consideration of these claims.
The matter now returns for our determination of whether defendants are entitled to summary disposition with regard to plaintiffs' underfunding claim. We also must determine whether plaintiffs are entitled to the entry of a declaratory judgment in their favor with regard to their remaining claims.
A motion for summary disposition brought pursuant to MCR 2.116(C)(7) requires this Court to accept as true the well-pleaded allegations of plaintiffs and to construe those allegations in favor of plaintiffs unless the allegations are specifically contradicted by the affidavits or other appropriate documentation submitted by the movant. Adair v. Michigan, 250 Mich.App. 691, 702–703, 651 N.W.2d 393 (2002), aff'd in part and rev'd in part on other grounds 470 Mich. 105, 680 N.W.2d 386 (2004). "If the pleadings demonstrate that a party...
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