City of Bay City v. Bay County Treasurer

• Citation: 292 Mich.App. 156,807 N.W.2d 892
• Decision Date: 05 April 2011
• Docket Number: Docket No. 294556.
• Parties: CITY OF BAY CITY v. BAY COUNTY TREASURER.
• Court: Court of Appeal of Michigan (US)

292 Mich.App. 156

807 N.W.2d 892

CITY OF BAY CITY

v.BAY COUNTY TREASURER.

Docket No. 294556.

Court of Appeals of Michigan.

Submitted July 14, 2010, at Lansing.Decided April 5, 2011, at 9:05 a.m.

Warner Norcross & Judd LLP (by Kurt M. Brauer, Southfield, and Nicole L. Mazzocco, Grand Rapids), for plaintiff.

Peter Goodstein, Flint, for defendant.

Miller, Canfield, Paddock and Stone, P.L.C. (by Steven D. Mann, Detroit, and Don M. Schmidt, Kalamazoo), for the Michigan Municipal League and the Michigan Townships Association.

Before: FORT HOOD, P.J., and BORRELLO and STEPHENS, JJ.

BORRELLO, J.

Plaintiff appeals as of right the trial court's order denying its claim to declaratory and mandamus relief following a bench trial. For the reasons set forth in this opinion, we reverse.

I. FACTS

The relevant facts are largely undisputed. Under the current statutory tax-foreclosure scheme, the state of Michigan has a right of first refusal to purchase any tax-foreclosed properties in the state. MCL 211.78m(1). If the state declines to purchase a property, the city, village, or township within whose limits the property is located may purchase it “for a public purpose.” Id. The price of purchase (referred to as the “minimum bid”) is set at what the minimum bid would be if the property were being auctioned off, which is determined by adding all taxes, interest, and fees owed on the property, so that the foreclosing governmental unit (FGU) breaks even on the property. MCL 211.78m(11). Before 1999, the state administered the tax-foreclosure scheme in every Michigan county. In 1999, the Legislature passed Public Act 123, which allowed counties to “opt-in” and replace the state as the FGU, administering foreclosures within their jurisdictions. MCL 211.78(3), as amended by 1999 PA 123. On December 14, 2004, Bay County elected to name its treasurer, defendant, as its FGU.

Starting in 2005, defendant, as the FGU, began foreclosing on properties, but plaintiff did not seek to purchase any foreclosed properties until 2008. In 2008, defendant foreclosed on 16 parcels within plaintiff's limits. Plaintiff informed defendant that it wished to purchase four of the parcels and forwarded a check to defendant in the amount of the total of the minimum bids for the four parcels. Defendant determined that he was not obligated to sell the parcels to plaintiff unless he was satisfied that plaintiff would be returning the property to a position in which the property would generate tax revenue. Following defendant's determination, officials of plaintiff and Bay County met to discuss the issue and come to an understanding, but they were not able to reach an agreement. On August 22, 2009, plaintiff filed this action against defendant for declaratory and mandamus relief. Plaintiff sought a declaration that its stated public purpose for the parcels was valid and a writ of mandamus directing defendant to transfer title to the parcels.

The properties sought by plaintiff were located at 105 West Thomas, 1216 Park Avenue, 606 Wilson, and 1906 Broadway. In its complaint, plaintiff stated its public purpose was “to reduce the number of vacant tax reverted properties within [plaintiff]'s limits thereby minimizing the real and present dangers they present and to remove certain blighted conditions present on the subject properties” and that, through redevelopment of the properties, plaintiff “will ensure a healthy and growing tax base.”

Both parties moved for summary disposition, with plaintiff arguing that there were only two conditions placed on the conveyance of property: that plaintiff tenders the purchase price to the FGU and that plaintiff has a public purpose for the property. Plaintiff argued it was undisputed that both of these requirements were fulfilled; hence, defendant had a clear legal duty to convey the properties, and plaintiff had a clear legal right to the performance of that duty. Defendant argued he had a statutory duty “to confirm that the municipality wants the requested property for a public purpose and that the municipality will be able to accomplish that purpose efficiently and expeditiously.” He asserted that plaintiff had no public purpose for the Park Avenue, Broadway, and West Thomas properties, and that plaintiff would not be able to achieve its public purpose for the Wilson property efficiently and expeditiously. The trial court denied both parties' motions, and the case went to a bench trial.

At trial, defendant testified that it was unclear that plaintiff had a public purpose for the properties. Stephen Black, plaintiff's Deputy City Manager of Community Development, testified that plaintiff sought to acquire the Broadway property in order to tear down the building thereon and use the land as a parking lot for the adjacent property, which the city already owned. The Park Avenue property, according to Black, presented health and safety issues because it was “severely impacted by cat urine.” Black said that foreclosure of the West Thomas property presented an opportunity to eliminate a multi-family home, noting that multi-family homes generate complaints in single-family areas. The city planned to either demolish the home or redevelop it. Defendant testified that the West Thomas property was a single-family, not a multi-family, dwelling. As for the Wilson property, Black testified it was a vacant lot that the city was considering conveying to Habitat for Humanity for it to build a new home.

The trial court found for defendant with respect to the Wilson and Broadway parcels, and for plaintiff with respect to the Park Avenue and West Thomas parcels. The parties agreed that, pending appeal, defendant would not “auction, sell, or otherwise dispose of” the Park Avenue, West Thomas, and Wilson properties and that it would not convey the Park Avenue and West Thomas properties to plaintiff. Plaintiff agreed not to seek the Broadway property.

Because defendant did not appeal the decision with respect to the Park Avenue and West Thomas properties, and because plaintiff agreed not to pursue its claim to the Broadway property, the only property at issue in this appeal is the Wilson property.

II. MOOTNESS

Defendant argues on appeal that this claim is moot because he has offered to settle the suit by conveying the Wilson property to plaintiff. According to defendant, this removes any case or controversy between the parties. Defendant also argues that this does not fall into the mootness exception “carved out for those situations where ... the issue is of public significance and likely to recur while also likely to evade judicial review.” Defendant argues that it is speculative whether plaintiff will seek to purchase tax-foreclosed property from defendant again and that even if it does, it is only speculative that defendant will refuse to convey the property, and that even if both of these things occur, there will be opportunity for judicial review of the issue at that time.

Plaintiff denies the assertion that there is no case or controversy between the parties. Plaintiff argues that an offer to settle does not render a case moot unless the offer is accepted, and plaintiff has not accepted defendant's offer to convey the property in question. Plaintiff also notes that defendant has not conceded the legal points at issue in this case. Regarding the mootness exception for cases involving issues of public significance that recur but are likely to evade judicial review, plaintiff points out that, although it did not purchase any tax-foreclosed properties in 2009, it has regularly purchased tax-foreclosed properties in the past and certainly will do so in the future. And plaintiff argues that, if defendant's settlement offer renders the issue moot, there is a possibility that the issue will evade judicial review because defendant could simply convey the property every time plaintiff challenges its refusal to do so.

In MGM Grand Detroit, LLC v. Community Coalition for Empowerment, Inc., 465 Mich. 303, 633 N.W.2d 357 (2001), the Detroit City Council passed an ordinance allowing the plaintiff to use a specified site to build a casino. Id. at 311–312, 633 N.W.2d 357 (Cavanagh, J., dissenting). The defendant conducted a petition drive in an attempt to refer the ordinance, but the city clerk denied the petition on the ground that the ordinance was exempt from referendum. Id. at 312, 633 N.W.2d 357. The plaintiff sought a declaratory judgment that the ordinance was in fact exempt from referendum. Id. After the trial court granted the plaintiff's motion for summary disposition, the plaintiff went ahead with its casino construction, although the defendant had filed a claim of appeal with this Court. Id. at 312–313, 633 N.W.2d 357. Our Supreme Court addressed the issue of mootness in light of these developments. Justice Cavanagh's dissent, which Justice Kelly joined, concluded that the defendant could not have the relief it sought, because even if the referendum were allowed and the ordinance defeated, the casino would remain as an allowed, prior nonconforming use of the land. Id. at 313–314, 633 N.W.2d 357. The majority rejected this conclusion, holding that “a party can not [sic] obliterate an opponent's appeal, on the basis of mootness, by so changing the status quo during the appeal ... that [it] can then argue it is impossible to return to the situation that existed when the appeal was filed.” Id. at 307, 633 N.W.2d 357.

This case presents the reverse situation—defendant seeks to render the appeal moot not by making it impossible for plaintiff to have the relief it seeks, but by giving plaintiff that relief. In Oak Park & River Forest High Sch. Dist. 200 Bd. of Ed. v. Ill. State Bd. of Ed., 79 F.3d 654, 659 (C.A.7, 1996), the Seventh Circuit of the United States Court of Appeals held that a party's “strategic choice [not to ‘cut its losses' by settling] does not make [a] lawsuit moot. A desire for a favorable precedent will not...