Gym 24/7 Fitness, LLC v. State

• Decision Date: 31 March 2022
• Docket Number: 355148
• Parties: THE GYM 24/7 FITNESS, LLC, and All Others Similarly Situated, Plaintiffs-Appellees/Cross-Appellants, v. STATE OF MICHIGAN, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

THE GYM 24/7 FITNESS, LLC, and All Others Similarly Situated, Plaintiffs-Appellees/Cross-Appellants, v. STATE OF MICHIGAN, Defendant-Appellant/Cross-Appellee.

No. 355148

Court of Appeals of Michigan

March 31, 2022

Court of Claims LC No. 20-000132-MM.

Before: Cavanagh, P.J., and Markey and Servitto, JJ.

Jane E. Markey, J.

Defendant the State of Michigan (the State), appeals by leave granted the opinion and order of the Court of Claims that denied the State's motion for summary disposition with respect to an action brought by plaintiff, The Gym 24/7 Fitness, LLC (the Gym), ^[1] alleging an unconstitutional taking of its business property by operation of Executive Orders issued by the Governor that temporarily shuttered the business in response to the COVID-19 pandemic. The Gym demanded "just compensation" for the taking of its private property that resulted from the closure. The Gym cross appeals, arguing that the Court of Claims properly denied the State's motion for summary disposition but applied the wrong analytical framework.^[2] This appeal concerns the interplay between the constitutional principles applicable to the taking of private property for public use and the principles applicable to the state's authority to exercise its police powers to protect the health, safety, and welfare of its citizens. We reverse and remand for entry of judgment in favor of the State.

I. BACKGROUND

A. RULING BY THE MICHIGAN SUPREME COURT - COVID-19 LITIGATION

The Gym filed suit about three months before our Supreme Court issued its opinion in In re Certified Questions from the United States Dist Court, Western Dist of Mich, Southern Div, 506 Mich. 332; 958 N.W.2d 1 (2020). The decision provided background information that is helpful in understanding and giving context to the instant litigation. The Michigan Supreme Court observed and ruled:

This case concerns the nature and scope of our state's public response to one of the most threatening public-health crises of modern times. In response to a global, national, and state outbreak of the severe acute respiratory disease named COVID-19, Michigan's Governor has issued a succession of executive orders over the past six months limiting public and private gatherings, closing and imposing restrictions upon certain businesses, and regulating a broad variety of other aspects of the day-to-day lives of our state's citizens in an effort to contain the spread of this contagious and sometimes deadly disease.

The ongoing validity of these executive orders has been the subject of much public debate as well as litigation in both state and federal courts. In the interest of comity, the United States District Court for the Western District of Michigan has asked this Court to resolve critical questions concerning the constitutional and legal authority of the Governor to issue such orders. We hereby respond to the federal court in the affirmative by choosing to answer the questions the federal court has certified, concluding as follows: first, the Governor did not possess the authority under the Emergency Management Act of 1976 (the EMA), MCL 30.401 et seq., to declare a "state of emergency" or "state of disaster" based on the COVID-19 pandemic after April 30, 2020; and second, the Governor does not possess the authority to exercise emergency powers under the Emergency Powers of the Governor Act of 1945 (the EPGA), MCL 10.31 et seq., because that act is an unlawful delegation of legislative power to the executive branch in violation of the Michigan Constitution. Accordingly, the executive orders issued by the Governor in response to the COVID-19 pandemic now lack any basis under Michigan law.

* * *

The coronavirus . . . is a respiratory disease that can result, and has resulted, in significant numbers of persons suffering serious illness or death. In response to COVID-19, on March 10, 2020, one day before it was declared a pandemic by the World Health Organization, the Governor issued Executive Order (EO) No. 2020-04, declaring a "state of emergency" under the EPGA and the EMA. On March 20, 2020, the Governor issued EO 2020-17, which prohibited medical providers from performing nonessential procedures. On March 23, 2020, she issued EO 2020-21, which ordered all residents to stay at home with limited exceptions.

On April 1, 2020, she issued EO 2020-33, which declared a "state of emergency" under the EPGA and a "state of emergency" and "state of disaster" under the EMA. She then requested that the Legislature extend the state of emergency and state of disaster by 70 days, and a resolution was adopted, extending the state of emergency and state of disaster, but only through April 30, 2020. Senate Concurrent Resolution No. 2020-24.

On April 30, 2020, the Governor issued EO 2020-66, which terminated the declaration of a state of emergency and state of disaster under the EMA. But, immediately thereafter, she issued EO 2020-67, which provided that a state of emergency remained declared under the EPGA. [In re Certified Questions from the United States Dist Court, 506 Mich. at 337-339 (emphasis added).]

B. THE COMPLAINT

The Gym's complaint set forth various allegations that touched on many of the events and circumstances discussed by the Supreme Court in In re Certified Questions from the United States Dist Court. The Gym alleged that throughout the period during which the Governor issued the EOs, the one constant was the closure of fitness centers for the public purpose of halting or minimizing the spread of COVID-19.^[3] The Gym further contended that the Governor had placed the cost of the EOs "squarely upon the shoulders of private businesses and ha[d] failed to justly compensate affected parties for these takings undertaken for the benefit to the general public." The Gym maintained that many fitness centers were on the verge of economic collapse as a direct result of the Governor's actions. The Gym also indicated in its complaint that the lawsuit did not seek to contest whether the Governor's EOs were prudent or whether they were within her authority to issue. Indeed, the Gym asserted that it accepted that the Governor had taken her actions regarding fitness centers "solely for a public purpose." And, according to the Gym, when the government takes property for a public purpose the state and federal constitutions "require the payment of just compensation if eminent domain proceedings are not first commenced."

The Gym further alleged that notwithstanding the legitimate governmental purpose in issuing the EOs, they "halted all economic activity for . . . [fitness centers] and made it impracticable to benefit from the property interests belonging to the [fitness centers] for any economically beneficial purpose, and inflicted very nearly the same effect for constitutional purposes as appropriating or destroying the property as a whole." The Gym claimed that despite issuing the EOs "for a readily-apparent public purpose," the Governor failed to compensate fitness centers, causing them to suffer "substantial-and perhaps total-diminution of value in their property interests as a result." The Gym contended that fitness centers should not have been forced to bear the public burden that in all fairness should have been borne by the public as a whole through the government's payment of just compensation.

In Count I of the complaint, the Gym alleged a cause of action for inverse condemnation. In Count II, the Gym asserted a takings claim under Const 1963, art 10, § 2. And in Count III, the Gym alleged a takings claim under U.S. Const, Am V. With respect to each of the three counts, the Gym maintained that the State had taken "constitutionally-protected property interests" from fitness centers "in the form of the on-going operations of their business[es] . . . and the resulting revenues and profits therefrom, and have appropriated or 'took' said property interests for public use without the payment of just compensation and have failed to commence appropriate condemnation proceedings." The Gym demanded the payment of "just compensation" as damages.

C. THE STATE'S MOTION FOR SUMMARY DISPOSITION

In lieu of filing an answer to the Gym's complaint, the State moved for summary disposition under MCR 2.116(C)(7), (8), and (10). The State first argued that under precedent issued by the United States Supreme Court, the government has broad authority to implement emergency measures to address an epidemic that threatens society. The State contended that the exercise of police powers to protect the public health and safety does not give rise to inverse condemnation and taking claims. Therefore, the government "need not pay compensation to businesses subjected to reasonable, temporary public health and safety measures imposed during a pandemic." The State additionally maintained that the Gym failed to sufficiently plead a claim for inverse condemnation, as there was no assertion of actions that permanently harmed the value of the Gym's property, no allegation of facts suggesting that the State had abused its power, and no contention that the Gym had suffered a unique or special injury. Further, the State argued that the taking claims were facially meritless "because the challenged regulation is directed toward public health and safety removing it from the ambit of relevant takings precedent." The State also noted that the Gym had not properly pleaded a viable takings claim. The State explained that the Gym had not alleged a taking at all, considering that the EOs constituted health-and-safety regulations. Finally, the State argued that there had been no regulatory taking because such a taking requires more than a decidedly-proper use of a government's police powers.

In a response to the State's motion for...