Long v. Liquor Control Comm'n

• Decision Date: 16 November 2017
• Docket Number: No. 335723,335723
• Citation: 322 Mich.App. 60,910 N.W.2d 674
• Parties: Michael LONG, Plaintiff-Appellant, v. LIQUOR CONTROL COMMISSION, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

322 Mich.App. 60

910 N.W.2d 674

Michael LONG, Plaintiff-Appellant,

v.LIQUOR CONTROL COMMISSION, Defendant-Appellee.

No. 335723

Court of Appeals of Michigan.

Submitted November 8, 2017, at Grand Rapids.

Decided November 16, 2017, at 9:05 a.m.

The Mastromarco Firm (by Victor J. Mastromarco, Jr., and Kevin J. Kelly ) for plaintiff.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Laura Moody, Chief Legal Counsel, and Adam M. Leyton, Assistant Attorney General, for defendant.

Before: Hoekstra, P.J., and Stephens and Shapiro, JJ.

Per Curiam.

In this inverse-condemnation action, the trial court granted summary disposition under MCR 2.116(C)(8) to defendant, the Liquor Control Commission (the LCC) and denied plaintiff, Michael Long’s motion to amend his complaint. Plaintiff now appeals as of right. Because plaintiff failed to state a claim for inverse condemnation and amendment of his complaint would be futile, we affirm.

Plaintiff owns and operates a liquor store, known as Par-T-Pac, in Boyne City, Michigan. Since 1990, he has held a specially designated distributor (SDD) license, which allows him to sell alcohol¹ for off-premises consumption under the Michigan Liquor Control Code, MCL 436.1101 et seq. See MCL 436.1111(12) ; MCL 436.1533(4). In August 2013, the LCC issued an SDD license under the "resort" provision in MCL 436.1531(5) to Family Fare, LLC, which operates a supermarket in Boyne City. Under the MCL 436.1531(5) resort provision, Family Fare was able to obtain its SDD license without abiding by the quota and distance restrictions that would have otherwise applied to a new applicant for an SDD license. See MCL 436.1533(4) ; 2004 Annual Admin. Code R. 436.1133.² In other words, Family Fare was able to obtain an SDD license even though it is located less than 2,640 feet from plaintiff’s store and even though Boyne City already had its quota of SDD liquor licenses based on the city’s population. See MCL 436.1531(5) ; MCL 436.1533(4) ; 2004 Annual Admin. Code Supp., R. 436.1133.

On August 12, 2016, proceeding in propria persona , plaintiff filed a complaint in circuit court against the LCC. Plaintiff’s complaint indicates that since Family Fare received its SDD license, Par-T-Pac has seen a significant reduction in sales and, as a result, the value of his own license has been significantly reduced. Plaintiff alleged that the loss of sales and the reduced value of the SDD license "essentially" amounted to an "Unfair Taking" of the liquor license and resulted in a "form of Eminent Domain" that "steals all of [plaintiff’s] equity and value, and transfers it unfairly to Family Fare."

In response to plaintiff’s complaint, the LCC moved for summary disposition. Pertinent to this appeal, the LCC maintained that plaintiff failed to plead the elements of a de facto taking because there was no allegation that the LCC abused its legitimate powers in affirmative actions directly aimed at plaintiff’s property and because the granting of a license to a private corporation to conduct a private business could not be regarded as the taking of private property by the government for public use. Before the trial court decided the LCC’s motion for summary disposition, plaintiff obtained an attorney, and his attorney moved for leave to file an amended complaint. Plaintiff’s proposed amended complaint contained one count of inverse condemnation, which was based on the theory that plaintiff had a property interest in his SDD license and that the LCC effectively took this property and transferred it to a private entity, namely Family Fare, for economic development. Following a hearing on the parties’ motions, the trial court granted summary disposition to the LCC under MCR 2.116(C)(8), and it denied plaintiff’s motion to amend his complaint, stating that the amendment would be futile. Plaintiff now appeals as of right.

On appeal, plaintiff argues that the trial court erred by granting summary disposition and by denying his motion to amend his complaint. Plaintiff contends that he has a property interest in his SDD license and, in particular, a right to the protections afforded by the quota and distance requirements governing SDD licenses, which restricted competition and assured that plaintiff’s license had a particular value. According to plaintiff, by exempting Family Fare from these requirements to promote tourism under the MCL 436.1531(5) resort provision, the LCC effectively transferred the value of plaintiff’s property interests to Family Fare for the benefit of the public. In contrast, the LCC maintains that, while plaintiff may have a property interest in his SDD license, that interest does not provide him with a property right to be free from competition or to enjoy set profits. Additionally, the LCC contends that, to the extent plaintiff has a property interest in his SDD license, his claims fail because any action taken by the LCC in issuing the license to Family Fare was not aimed directly at plaintiff’s property.

As explained in this opinion, we agree with the LCC that plaintiff lacked a property right in being free from increased competition and that the LCC’s actions in issuing an SDD license to Family Fare were not aimed directly at plaintiff’s liquor license. In these circumstances, the trial court did not err by granting summary disposition to the LCC under MCR 2.116(C)(8), and the trial court did not abuse its discretion by denying plaintiff’s motion to amend his complaint because any amendment would be futile.

I. STANDARDS OF REVIEW

We review de novo a trial court’s decision to grant summary disposition. Ligon v. Detroit , 276 Mich.App. 120, 124, 739 N.W.2d 900 (2007). Constitutional issues, including claims relating to the taking of private property, are also reviewed de novo. Id. In this case, the trial court specified that it granted summary disposition under MCR 2.116(C)(8). A motion under this subrule "tests the legal sufficiency of the complaint based on the pleadings alone." Gallagher v. Persha , 315 Mich.App. 647, 653, 891 N.W.2d 505 (2016). In reviewing a motion under MCR 2.116(C)(8), "[a]ll factual allegations supporting the claim and any reasonable inferences that can be drawn from the facts are accepted as true." Lakin v. Rund , 318 Mich.App. 127, 131, 896 N.W.2d 76 (2016). The motion is properly granted "when the claims are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery." Gallagher , 315 Mich.App. at 653, 891 N.W.2d 505 (quotation marks and citation omitted).

A trial court’s decision on a motion to amend a complaint is reviewed for an abuse of discretion. Trowell v. Providence Hosp. & Med. Ctrs., Inc. , 316 Mich.App. 680, 690, 893 N.W.2d 112 (2016). Under MCR 2.116(I)(5), if summary disposition is granted pursuant to MCR 2.116(C)(8), "the court shall give the parties an opportunity to amend their pleadings as provided by MCR 2.118, unless the evidence then before the court shows that amendment would not be justified." "Leave to amend the pleadings should be freely granted to the nonprevailing party upon a grant of summary disposition unless the amendment would be futile or otherwise unjustified." Lewandowski v. Nuclear Mgt. Co., LLC , 272 Mich.App. 120, 126–127, 724 N.W.2d 718 (2006).

II. ANALYSIS

"The Fifth Amendment of the United States Constitution and Article 10 of the Michigan Constitution both prohibit the taking of private property for public use without just compensation." Dorman v. Clinton Twp. , 269 Mich.App. 638, 645, 714 N.W.2d 350 (2006). "[T]o ensure the protections of this guarantee, the State of Michigan recognizes a cause of action, often referred to as an inverse or reverse condemnation suit, for a de facto taking when the state fails to utilize the appropriate legal mechanisms to condemn property for public use." Peterman v. State Dep’t of Natural Resources , 446 Mich. 177, 187–188, 521 N.W.2d 499 (1994). "A de facto taking can occur without a physical taking of the property; a diminution in the value of the property or a partial destruction can constitute a taking." Cummins v. Robinson Twp. , 283 Mich.App. 677, 708, 770 N.W.2d 421 (2009) (quotation marks and citation omitted). "[T]he plaintiff must prove that the government’s actions were a substantial cause of the decline of the value of the plaintiff’s property and must establish that the government abused its legitimate powers in affirmative actions directly aimed at the plaintiff’s property." Marilyn Froling Revocable Living Trust v. Bloomfield Hills Country Club , 283 Mich.App. 264, 295, 769 N.W.2d 234 (2009).

Notably, as a preliminary matter, "[o]ne who asserts an uncompensated taking claim must first establish that a vested property right is affected." In re Certified Question , 447 Mich. 765, 787–788, 527 N.W.2d 468 (1994). See also Adams Outdoor Advertising v. East Lansing (After Remand) , 463 Mich. 17, 24, 614 N.W.2d 634 (2000). "Property interests ... are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law." Mich. Soft Drink Ass’n v. Dep’t of Treasury , 206 Mich.App. 392, 403, 522 N.W.2d 643 (1994) (quotation marks and citations omitted). "A vested property right is an interest that is more than a mere expectation." Murphy-DuBay v. Dep’t of Licensing & Regulatory Affairs , 311 Mich.App. 539, 557, 876 N.W.2d 598 (2015). A vested property right requires a legitimate claim of entitlement based on something more than "an anticipated continuance of the present general laws ...." In re Certified Question , 447 Mich. at 788, 527 N.W.2d 468 (quotation marks and citations omitted). See also Murphy-DuBay , 311 Mich.App. at 557, 876 N.W.2d 598.

In this case, analysis of whether plaintiff has a vested property right requires a determination of precisely what interests plaintiff claims have been taken by the LCC’s actions. Plaintiff generally asserts that he has a property interest in his ...