Davis v. City of Detroit Fin. Review Team

Decision Date21 May 2012
Docket Number309250,309482.,Docket Nos. 309218
Citation821 N.W.2d 896,296 Mich.App. 568
PartiesDAVIS v. CITY OF DETROIT FINANCIAL REVIEW TEAM. McNeil v. City of Detroit Financial Review Team.
CourtCourt of Appeal of Michigan — District of US

OPINION TEXT STARTS HERE

Andrew A. Paterson, Pleasant Ridge and Carl J. Marlinga, Clinton Township for Robert Davis.

Miller Cohen, P.L.C., Detroit (by Richard G. Mack, Jr., Robert D. Fetter, and Keith D. Flynn), for Edward McNeil.

Bill Schuette, Attorney General, John J. Bursch, Solicitor General, B. Eric Restuccia, Deputy Solicitor General, Richard A. Bandstra, Chief Legal Counsel, and Michelle M. Brya, Assistant Attorney General, for the City of Detroit Financial Review Team, the Governor, and the State Treasurer.

Before: WHITBECK, P.J., and O'CONNELL and M.J. KELLY, JJ.

WHITBECK, P.J.

These consolidated cases involve the relationship between the Open Meetings Act 1 and the Local Government and School District Fiscal AccountabilityAct,2 commonly known as the emergency financial manager act. The central issue in these cases is whether a financial review team that the Governor appoints under § 12(3) of the emergency financial manager act 3 is a “public body,” as § 2(a) of the Open Meetings Act 4 defines that term. We conclude that a financial review team—and therefore the Detroit Financial Review Team—is not a public body, because it is not a “ governing body” as the Open Meetings Act uses that term. And we therefore also conclude that the State Treasurer, whether acting in his executive capacity or as a “one man committee” of the Detroit Financial Review Team, is not a “public body.”

We further conclude that the trial court abused its discretion by granting injunctive relief through its various rulings and orders in the proceedings below, in two major ways. First, the trial court failed to apply controlling legal principles in determining that the Detroit Financial Review Team was a public body. Second, the trial court erred by finding that there would be per se irreparable harm to the people if it did not grant injunctive relief.

Thus, in Davis v. Detroit Financial Review Team (Docket No. 309218), we reverse the trial court's orders granting declaratory and injunctive relief to Davis and remand the case to the trial court for entry of judgment in favor of defendants regarding the merits of the case. Similarly, in McNeil v. Detroit Financial Review Team (Docket No. 309482), we reverse the trial court's order granting a show-cause hearing concerning McNeil's claim under the Open Meetings Act and remand for entry of judgment in favor of defendants. However, in Davis v. Detroit Financial Review Team (Docket No. 309250), we remand the case for further proceedings regarding Davis's motion for civil contempt.

I. BASIC FACTS
A. THE EMERGENCY FINANCIAL MANAGER ACT

The emergency financial manager act became effective March 16, 2011.5 The emergency financial manager act provides that, when certain conditions are met, the State Treasurer, as the “state financial authority” of a municipal government, may conduct a preliminary review of a municipality's financial problems.6

If the State Treasurer makes a finding of “probable financial stress,” the Governor must appoint a review team for that municipal government.7 The review team for a municipal government must include the State Treasurer or his or her designee; the Director of the Department of Technology, Management, and Budget or his or her designee; a nominee of the Senate Majority Leader; and a nominee of the Speaker of the House of Representatives.8 But the Governor may also appoint other state officials or “other persons with relevant professional experience to serve on a review team to undertake a municipal financial management review.” 9

Under the emergency financial manager act, the review team has the power to examine the books and records of the local government, utilize the services of other state agencies and employees, and negotiate and sign a consent agreement with the chief administrative officer of the local government. 10 However, for such a consent agreement with a municipal government to go into effect, it must be approved by resolution of the governing body of the local government and be approved and executed by the State Treasurer. 11

Importantly, the review team must meet with the local government as part of its review.12 At this meeting or meetings, the review team is to receive, discuss, and consider information provided by the local government concerning the financial condition of the local government.13 The review team must report its findings to the Governor within 60 days following its appointment, although the Governor may grant one 30–day extension to this limit.14 Within ten days after receipt of the report of the review team, the Governor must make a determination whether a financial emergency exists and how to proceed.15 A financial emergency can be resolved either through a consent agreement or the appointment of an emergency manager. 16

B. OPEN MEETINGS ACT

The Open Meetings Act 17 generally requires “decisions” or “deliberations” of a “public body” to be open to the public.18 The Open Meetings Act allows individualsto bring civil actions for injunctive relief to either compel compliance or enjoin further noncompliance. 19

The Open Meetings Act defines the term “public body” for its purposes to include:

Any state or local legislative or governing body, including a board, commission, committee, subcommittee, authority, or council, that is empowered by state constitution, statute, charter, ordinance, resolution, or rule to exercise governmental or proprietary authority or perform a governmental or proprietary function.... 20

The Open Meetings Act defines a “meeting,” in part, as “the convening of a public body at which a quorum is present for the purpose of deliberating toward or rendering a decision on a public policy....” 21 And the Open Meetings Act defines a “decision” as a “determination, action, vote, or disposition upon a motion, proposal, recommendation, resolution, order, ordinance, bill, or measure on which a vote by members of a public body is required and by which a public body effectuates or formulates public policy.” 22

C. DOCKET NO. 309218

On December 21, 2011, State Treasurer Andy Dillon provided Governor Rick Snyder with a preliminary review, concluding that probable financial stress existed in the city of Detroit. On December 27, 2011, the Governor appointed the Detroit Financial Review Team. The Governor subsequently granted the financial review team a 30–day extension.

On February 1, 2012, Robert Davis filed a complaint in the Ingham Circuit Court, seeking a declaratory judgment and injunctive relief based on his assertions that defendant—the Detroit Financial Review Team, the Governor, and the State Treasurer—had violated multiple provisions of the Open Meetings Act. Davis later filed an emergency motion for declaratory judgment and injunctive relief, and defendants moved for summary disposition. The trial court heard arguments on February 6 and February 15, 2012, and made rulings from the bench that it incorporated into two orders, one that it issued on February 6, 2012, and the other that it issued on February 29, 2012.

In the February 29, 2012 order, the trial court granted Davis's motion for declaratory judgment, denied defendants' motion for summary disposition, and granted Davis's motion for a permanent injunction barring defendants from violating any and all provisions of the Open Meetings Act. The trial court also held that the Detroit Financial Review Team was a public body subject to the provisions of the Open Meetings Act and that the Detroit Financial Review Team had violated the act by (1) failing to hold its January 10, 2012, meeting in public, (2) failing to keep minutes of the January 10, 2012, meeting and failing to provide Davis with a copy of the minutes, (3) failing to post notice of the January 10, 2012, meeting, and (4) meeting in closed session for impermissible purposes on January 10, 2012.

The trial court further held that the Detroit Financial Review Team violated the Open Meetings Act by holding a private meeting with the Detroit Mayor and other city officials and by meeting in closed session on January 17, 2012. The trial court awarded costs and attorney fees to Davis. The trial court dismissed the matter with prejudice and retained jurisdiction only for the purpose of enforcement. The trial court denied defendants' motion for a stay of proceedings and closed the case.

On March 21, 2012, defendants filed a claim of appeal from the trial court's February 29, 2012, order. Defendants have subsequently stated that, although they dispute the correctness of the trial court's decision, they have conducted subsequent meetings of the Detroit Financial Review Team in conformance with the Open Meetings Act.

D. DOCKET NO. 309250

On March 1, 2012, Davis filed in the trial court an ex parte motion for civil contempt and order to show cause why defendants should not be held in contempt for establishing a subcommittee that would violate the trial court's February 29, 2012, order. The trial court issued a show-cause order on March 1, 2012, requiring all 10 members of the Detroit Financial Review Team to appear for a show-cause hearing on March 12, 2012. Defendants moved for reconsideration of that order. They asserted that the subcommittee had yet to meet and that advisory committee meetings do not violate the Open Meetings Act. In two orders issued March 8, 2012, the trial court adjourned the show-cause hearing and denied defendants' motion for reconsideration.

On March 9, 2012, Davis noticed a show-cause hearing in the trial court, supported by affidavits from him and his counsel, indicating that there were additional questions that defendants had not answered. On March 13, 2012, the trial court scheduled the show-cause hearing for March 22, 2012. Defendant...

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