Coeus, LLC v. City of Walled Lake

• Decision Date: 20 January 2022
• Docket Number: 353844
• Parties: COEUS, LLC, Plaintiff/Counterdefendant-Appellant, v. CITY OF WALLED LAKE, LINDA S. ACKLEY, L. DENNIS WHITT, CHELSEA PESTA, and JENNIFER A. STUART, Defendants-Appellees, and JOHN AND JANE DOES 1 THROUGH 20, FRANK MARRA, and MATTHEW CECCHETTI, Defendants, and CUSTOM BUILT PROPERTIES, LLC, doing business as GREEN HOUSE OF WALLED LAKE, and JERRY MILLEN, Defendants/Counterplaintiffs.
• Court: Court of Appeal of Michigan — District of US

COEUS, LLC, Plaintiff/Counterdefendant-Appellant,
v.
CITY OF WALLED LAKE, LINDA S. ACKLEY, L. DENNIS WHITT, CHELSEA PESTA, and JENNIFER A. STUART, Defendants-Appellees,

and JOHN AND JANE DOES 1 THROUGH 20, FRANK MARRA, and MATTHEW CECCHETTI, Defendants, and CUSTOM BUILT PROPERTIES, LLC, doing business as GREEN HOUSE OF WALLED LAKE, and JERRY MILLEN, Defendants/Counterplaintiffs.

No. 353844

Court of Appeals of Michigan

January 20, 2022

UNPUBLISHED

Oakland Circuit Court LC No. 2018-170030-CZ

Before: Gadola, P.J., and Markey and Murray, JJ.

Per Curiam.

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Plaintiff, COEUS, LLC, appeals as of right the trial court's stipulated order of dismissal.^[1]On appeal, plaintiff challenges the trial court's earlier opinion and order granting summary disposition in favor of defendants city of Walled Lake, Mayor Linda S. Ackley, City Manager L. Dennis Whitt, City Development Manager Chelsea Pesta, and City Clerk Jennifer A. Stuart (collectively, "the city defendants"). On appeal, plaintiff argues that the city defendants are not entitled to governmental immunity and that its claims alleging a violation of due process and promissory estoppel were legally sufficient. We affirm.

This case arises from the city of Walled Lake's implementation, under the authority of the Medical Marihuana Facilities Licensing Act (MMFLA), MCL 333.27101 et seq., of its medical marijuana facilities licensing ordinance and plaintiffs subsequent application for a license to operate a provisioning center. The ordinance specifies that there are to be three licenses for provisioning centers, with two located in the C-2 zoning district and one located in the C-3 zoning district. Walled Lake Ordinance C-334-17, § 6b, enacting § 21.49(b) of the Zoning Ordinance. Subsequently, the city passed Resolution 2018-10, which established administrative rules for processing MMFLA permit applications.

After submitting applications to the city, plaintiff attempted numerous times to obtain status updates. In response to plaintiffs repeated phone calls, the city informed plaintiff that no action had been taken on any of the applications, no permits had been issued, and no meetings had been held addressing any of the applications. Plaintiff alleged that contrary to the city's claims that no MMFLA licenses had been issued, it was evident that the city had issued a license to defendant Green House of Walled Lake. Ultimately, plaintiff was advised that its request for the C-3 license was denied.

In its second amended complaint, plaintiff alleged the following counts against the city defendants: fraudulent misrepresentation (Count II); silent fraud (Count III); negligent misrepresentation (Count IV); unjust enrichment (against the city of Walled Lake only) (Count V); breach of an implied contract (Count VI); promissory estoppel (Count VII); violation of due process and equal protection (Count VIII); civil conspiracy (Count IX); injunctive relief (Count X); and gross negligence (Count XI).

The city defendants thereafter moved for summary disposition under MCR 2.116(C)(7), arguing that they were entitled to governmental immunity with respect to the alleged torts, and under MCR 2.116(C)(8) on plaintiffs due-process and promissory-estoppel claims. In a thorough opinion and order, the trial court granted the motion and dismissed all claims against the city defendants.

I. GOVERNMENTAL IMMUNITY

This Court reviews de novo a trial court's decision on a motion for summary disposition, Odom v Wayne Co, 482 Mich. 459, 466; 760 N.W.2d 217 (2008), as well as issues involving

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questions of law, such as the construction and interpretation of a city charter or ordinance. Oakland Co Bd of Co Rd Comm 'rs v Mich. Prop & Cas Guaranty Ass 'n, 456 Mich. 590, 610; 575 N.W.2d 751 (1998); Ferguson v City of Lincoln Park, 264 Mich.App. 93, 95; 694 N.W.2d 61 (2004).

A party is entitled to summary disposition under MCR 2.116(C)(7) if, among other things, the plaintiffs claims are "barred because of immunity granted by law." When considering a motion brought under this subrule, the court considers all the affidavits, depositions, admissions, or other documentary evidence submitted by the parties. MCR 2.116(G)(5). "The contents of the complaint are accepted as true unless contradicted by the evidence provided." Odom, 482 Mich. at 466 (quotation marks and citation omitted).

A. CITY OF WALLED LAKE

The governmental tort liability act (GTLA), MCL 691.1401 et seq., provides that "a governmental agency is immune from tort liability if the governmental agency is engaged in the exercise or discharge of a governmental function."^[2] MCL 691.1407(1); see also Genesee Co Drain Comm 'r v Genesee Co, 309 Mich.App. 317, 326-327; 869 N.W.2d 635 (2015). While there are six statutory exceptions to this broad grant of immunity, plaintiff did not allege that any applied.^[3]Thus, as the trial court noted, the only question is whether the city was engaged in a governmental function.

The GTLA defines "governmental function" as "an activity that is expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, or other law." MCL 691.1401(b). Conversely, when "a governmental agency engages in an activity which is not expressly or impliedly mandated or authorized by constitution, statute, or other law (i.e., an ultra vires activity), it is not engaging in the exercise or discharge of a governmental function" and "is therefore liable for any injuries or damages incurred as a result of its tortious conduct." Ross v Consumers Power Co (On Rehearing), 420 Mich. 567, 620; 363 N.W.2d 641 (1984). However, when determining whether an act is a "governmental function" or merely an ultra vires act, courts are to" 'look to the general activity involved rather than the specific conduct engaged in when the alleged injury occurred.'" Genesee Co Drain Comm 'r, 309 Mich.App. at 327, quoting Ward v Mich. State Univ (On Remand), 287 Mich.App. 76, 84; 782 N.W.2d 514 (2010).

Although plaintiff alleges that the city engaged in fraudulent and corrupt acts, its focus is too narrow. In this instance, the general activity in which the city had been engaged was the implementation and adoption of its medical marijuana facilities licensing ordinance and the

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processing of applications for a license. The implementation of the ordinance was expressly authorized by the MMFLA, and the processing of applications for licenses was authorized by the city's ordinance. Therefore, the city was engaged in a governmental function, and accordingly, it is immune from tort liability. Thus, the trial court did not err by granting summary disposition to the city on this ground.^[4]

B. CITY DEVELOPMENT MANAGER PESTA AND CITY CLERK STUART

Plaintiff next argues that the trial court erred by granting summary disposition in favor of City Development Manager Pesta and City Clerk Stuart.

The GTLA also grants immunity to officers and governmental agency employees for negligent and intentional conduct if other conditions are met.

Regarding negligent torts, MCL 691.1407(2) provides, in pertinent part:

[E]ach officer and employee of a governmental agency, each volunteer acting on behalf of a governmental agency, and each member of a board, council, commission, or statutorily created task force of a governmental agency is immune from tort liability for an injury to a person or damage to property caused by the officer, employee, or member while in the course of employment or service or caused by the volunteer while acting on behalf of a governmental agency if all the following are met:

(a) The officer, employee, member, or volunteer is acting or reasonably believes he or she is acting within the scope of his or her authority.

(b) The governmental agency is engaged in the exercise or discharge of a governmental function.

(c) The officer's, employee's, member's, or volunteer's conduct does not amount to gross negligence that is the proximate cause of the injury or damage.

In response to the city defendants' motion for summary disposition, plaintiff only contested the gross-negligence component by stating, "[T]he sole issue before this Court is whether Plaintiff has properly alleged the elements of gross negligence." Thus, our review is whether the conduct of Pesta and Stuart amounts to gross negligence.

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Gross negligence is defined as "conduct so reckless as to demonstrate a substantial lack of concern for whether an injury results." MCL 691.1407(8)(a). The alleged failure of Pesta and Stuart to follow the procedures in the city's ordinance and resolution do not amount to gross negligence. Notably, on appeal and without providing any citations to the lower court record, plaintiff merely asserts that it had "specifically plead[ed] that the actions of those individuals [Pesta and Stuart] constituted gross negligence, citing specific examples and drawing upon the deposition of Pesta." This type of cursory argument constitutes an abandonment of the issue on appeal. See Peterson Novelties, Inc v Berkley, 259 Mich.App. 1, 14; 672 N.W.2d 351 (2003). Even considering the cursory argument, however, it appears that plaintiff is referring to its response to the city defendants' motion for summary disposition because it is in that filing that plaintiff cites and provides the deposition of Pesta. But plaintiffs allegations are limited to Pesta failing to advise plaintiff of the results of the preliminary review, which plaintiff asserts was required under the city's Resolution 2018-10. Pesta testified that she thought the resolution only required her to notify applicants if the preliminary review revealed that their application was somehow incomplete.^[5] Assuming Pesta had an obligation under the resolution to conduct a preliminary review and to communicate the results to plaintiff, yet failed to do so because she was mistaken, such conduct...