Johnson v. Economic Development Corp.

Decision Date29 November 2000
Docket NumberNo. 99-1884,99-1884
Parties(6th Cir. 2001) Walter Johnson, Plaintiff-Appellant, v. Economic Development Corporation of the County of Oakland, Defendant-Appellee. Argued:
CourtU.S. Court of Appeals — Sixth Circuit

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 98-71672

Robert A. Sedler, WAYNE STATE UNIVERSITY LAW SCHOOL, Detroit, Michigan, for Appellant.

Kevin T. Baine, WILLIAMS & CONNOLLY, Washington, D.C., for Appellee.

Betty Lee Dunkum (briefed), Chiristian Legal Society, Annandale, VA, for Amicus Curiae

Before: NELSON, SILER, and CLAY, Circuit Judges.

CLAY, J., delivered the opinion of the court, in which SILER, J., joined.

NELSON, J. (pp. 32-34), delivered a separate concurring opinion.

OPINION

CLAY, Circuit Judge.

Plaintiff, Walter Johnson, appeals from the district court's order denying summary judgment to Plaintiff and granting summary judgment to Defendant, the Economic Development Corporation of the County of Oakland ("Oakland EDC"), on Plaintiff's claim alleging that Defendant violated the First Amendment Establishment Clause by issuing tax-exempt revenue bonds to finance the construction of buildings at the Academy of the Sacred Heart (the "Academy"), a Catholic elementary and secondary school. For the reasons that follow, we AFFIRM the district court's order denying summary judgment to Plaintiff and granting summary judgment to Defendant.

BACKGROUND

Plaintiff is a resident and taxpayer of Oakland County, Michigan. Defendant is a public economic development corporation incorporated pursuant to the Economic Development Corporation Act, Mich. Comp. Laws §125.1601 et seq.(the "EDC Act" or "Act"). The Academy, a non-party, is an independent Roman Catholic school in Bloomfield Hills, Michigan. For purposes of the summary judgment motion, the parties stipulated to facts in this case.

In 1974, the Michigan Legislature enacted the EDC Act to "alleviate and prevent conditions of unemployment." Mich. Comp. Laws Ann. § 125.1602 (West 1997). To deal with the problems of unemployment, the legislature found that it was "necessary to assist and retain local industrial and commercial enterprises" and "to provide means and methods for the encouragement and assistance of industrial and commercial enterprises . . . in locating, purchasing, constructing, reconstructing, modernizing, improving, maintaining, repairing, furnishing, equipping, and expanding in this state and in its municipalities." Id. To further these goals, the EDC Act authorizes the creation of an economic development corporation ("EDC") in each municipality; municipality is defined as a county, city, village or township. See Mich. Comp. Laws Ann. § 125.1603(d). To accomplish the goals of the EDC Act, an EDC is authorized, inter alia, to borrow money and issue revenue bonds to finance building and improvement projects. See Mich. Comp. Laws Ann. §125.1607(d). The EDC Act provides that the municipality shall not be liable on notes of the EDC, and that the notes and bonds shall not be a debt of the municipality. See Mich. Comp. Laws Ann. § 125.1623(2).

Defendant was created pursuant to the terms of the EDC Act for the purposes set forth in the Act. Defendant performs the functions authorized under section 125.1607 of the EDC Act relating to the approval of projects and the issuance of tax-exempt bonds in connection therewith, as well as other economic development related work for the Oakland County area. Defendant has 15 regular voting members, none of whom are officials of Oakland County. All voting members, as well as two project-specific, non-voting members are drawn from the private sector.

Article IX of Defendant's Articles of Incorporation provides that the Oakland EDC will be financed from donations, gifts, grants, and devises, either solicited or unsolicited, obtained from public authorities, individuals, corporations and other organizations, by earnings from its activities, borrowings and issuance of revenue bonds and notes. Defendant uses the facilities of the Oakland County Development and Planning Division (the "DPD") for its day to day operations. Defendant, however, reimburses the DPD for its proportionate share of the building rent, equipment and other overhead costs. In addition, the administrative support services for Defendant are furnished by two DPD employees, who spend between five and ten percent of their time working for Defendant. Defendant also reimburses the DPD for the proportionate salaries of these employees. Defendant has no taxing power. However, Defendant receives some portion of its revenue from certain unrefundable fees from project applicants. From each applicant, Defendant receives (1) a $500 fee at the project application phase; (2) a $500 fee at the "Resolution of Inducement" phase; (3) a $500 fee when the final project plan is submitted; and (4) a closing fee equal to 1/8 of 1% of the face value of bonds issued.

Founded in 1851, the Academy is an independent Roman Catholic school located in Bloomfield Hills, Michigan. The Academy has more than 450 students including pre-school from nearly forty communities. It is divided into four schools: Pre, Lower, Middle and Upper. It educates girls in grades K-12 and boys in grades K-5. The Academy is a nonprofit organization, as described in § 501(c)(3) of the Internal Revenue Code, and is exempt from federal income taxation under § 501(a) of the Code. The Academy, which is incorporated under the laws of Michigan, holds legal title to all school property.

Article II of the Academy's Restated Articles of Incorporation provides that the purpose of the Academy is to "conduct an independent Catholic school from pre-school through and including the 12th grade, wherein the arts and sciences, and other forms of primary and secondary learning are taught, and diplomas and honors therein conferred: while maintaining a philosophy consonant with that of the network of the Sacred Heart schools of which it is a member." (J.A. at 66.) The Academy's curriculum and requirements provide that [e]very student at [the Academy] receives intensive training in the basic academic skills of English, Mathematics, History, Foreign Language and Science. Art, Music, Drama, Forensics, Theology and Computer Science are essential parts of this program. [The Academy] offers each student a full Physical Education Program designed to develop a sense of sportsmanship, a respect for physical fitness and an awareness of the enjoyment derived from athletic endeavors.

(J.A. at 154.) In its recruiting brochure, the Academy describes itself as "a Christ-centered school operating in the evolving tradition of the Church [that] has always included students and faculty of all faiths." (J.A. at 116.) The course overview of the Academy's Religion Department states that The academy provides education in, and opportunities for, decision making in the light of Gospel values. These moral and ethical values are taught in an age-appropriate, all-inclusive program developed across disciplines. The religious studies program probes the relationship of self to God, to others, and to the world. The academy teaches a respect for the various religious traditions of the world while presenting itself to the wider community as a Christ-centered institution within the tradition of the Roman Catholic Church.

(J.A. at 322.)

An independent Board of Trustees consisting of no more than 24 members governs the Academy. There are no religious requirements for membership on the Board. Non-Catholics have served, and currently serve, on the Board. The Academy does not discriminate on the basis of race, color, creed, or national origin in its admissions process; nor does it give preference in admission to Roman Catholics. Moreover, the Academy does not discriminate on the basis of race, color, or national origin in any of its educational policies, scholarship and loan programs, athletic or extracurricular activities, or other-school administered programs. As of the date of the issuance of the bonds at issue, 135 of the 366 (non-preschool) students at the Academy or 37%, were non-Catholic. As of the date of the stipulation, 34% of the students were non-Catholic. Faiths represented in the Academy student body include non-Catholic Christian, Jewish, Islamic, Shinto and others. Furthermore, the Academy does not discriminate on the basis of race, color, creed or national origin in the hiring of its employees. The Academy has a teaching faculty of 60, of whom five are members of religious orders. There is no religious-affiliation requirement or preference for the Academy's teachers, and the school does not inquire as to the religious affiliation of prospective faculty members.

In March 1995, representatives of the Academy approached Defendant with a proposal to obtain tax-exempt bond financing for a project to improve facilities at the Academy (the "Project"). The Project consisted of (1) construction of an approximately 6700 square foot addition to the Academy's lower school, (2) renovation of and improvements to a science wing, and (3) other renovations of existing facilities including new telephone equipment, classroom monitors, fiber-optic cable and an intercom system. The Project did not include any construction, renovation or improvement of the Academy's chapel. On March 13, 1995, the Academy submitted an Application for Assistance to initiate the approval process.

On March 21, 1995, at its regularly scheduled monthly meeting, Defendant unanimously adopted the Resolution of Inducement (the "Resolution") finding that the Project served a public purpose. The Resolution stated that construction of the Project would create job opportunities for the residents of the County and would aid in the general economic welfare of the County and State of Michigan. The Resolution further provided that the Project would...

To continue reading

Request your trial
41 cases
  • Hamby v. Neel
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • 17 Mayo 2004
    ... ... Johnson v. Econ. Dev. Corp., 241 F.3d 501, 509 (6th Cir.2001). A moving party is ... ...
  • Pedreira v. Kentucky Baptist Homes for Children
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • 31 Agosto 2009
    ...a direct injury to the plaintiffs, as their tax money is funding KBHC and constitutes "lost revenue." Johnson v. Econ. Dev. Corp. of County of Oakland, 241 F.3d 501, 507 (6th Cir.2001).4 ii. The defendants cite a Seventh Circuit decision to show that at least one court has required a demons......
  • Smith v. Jefferson County School Bd. of Com'Rs
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • 24 Noviembre 2008
    ... ... 549 F.3d 647 ... Mountain View Youth Development" Center as a case manager ...          2. Kingswood ...    \xC2" ... (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Fed.R.Civ.P ... 2d 184 (1970), the Supreme Court was careful to explain that both economic and non-economic injuries will suffice to establish standing. The fact ... City of Cleveland, 773 F.2d 736, 741-42 (6th Cir. 1985); Johnson v. Econ. Dev. Corp. of County of Oakland, 241 F.3d 501, 508 (6th ... ...
  • Ariz. Christian Sch. Tuition Org. v. Winn
    • United States
    • U.S. Supreme Court
    • 4 Abril 2011
    ...system rather than through direct grants, loans, or other forms of government assistance").2 See Johnson v. Economic Development Corporation of Cty. of Oakland, 241 F.3d 501 (C.A.6 2001), aff'g 64 F.Supp.2d 657 (E.D.Mich.1999) ; Steele v. Industrial Development Bd. of Metropolitan Govt. Nas......
  • Request a trial to view additional results
1 books & journal articles
  • CHAPTER 3
    • United States
    • Full Court Press Zalma on Property and Casualty Insurance
    • Invalid date
    ...summary judgment de novo. Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 466 n.10 (1992); Johnson v. Econ. Dev. Corp., 241 F.3d 501, 509 (6th Cir. 2001); Buckeye Cmty. Hope Found. v. City of Cuyhaoga Falls, 263 F.3d 627, 633 (6th Cir. 2001). Summary judgment is appropriate......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT