Mich. Ass'n of Home Builders v. City of Troy, Docket No. 156737

CourtSupreme Court of Michigan
Citation504 Mich. 204,934 N.W.2d 713
Decision Date11 July 2019
Docket NumberDocket No. 156737
Parties MICHIGAN ASSOCIATION OF HOME BUILDERS, Associated Builders and Contractors of Michigan, and Michigan Plumbing and Mechanical Contractor Association, Plaintiffs-Appellants, v. CITY OF TROY, Defendant-Appellee.

McClelland & Anderson, LLP, Lansing (by Gregory L. McClelland and Melissa A. Hagen ) for plaintiffs.

Lori Grigg Bluhm and Allan T. Motzny for defendant.

Miller, Canfield, Paddock and Stone, PLC, Ann Arbor (by Sonal Hope Mithani ) for Amici Curiae, the Government Law Section of the State Bar of Michigan, the Michigan Municipal League, and the Michigan Township Association.

McClelland & Anderson, LLP, Lansing (by Gregory L. McClelland and Melissa A. Hagen ) for Amicus Curiae, Michigan Realtors.

McClelland & Anderson, LLP, Lansing (by Melissa A. Hagen ) for Amici Curiae, the Michigan Health and Hospital Association and the Michigan Society of Association Executives.

Honigman Miller Schwartz and Cohn LLP, Lansing (by Daniel L. Stanley ) for Amicus Curiae, the Michigan Manufacturers Association.

Kickham Hanley PLLC (by Gregory D. Hanley, Royal Oak and Jamie Warrow ) for Amicus Curiae, Kickham Hanley PLLC.

BEFORE THE ENTIRE BENCH

Zahra, J.

The question presented in this case is whether the building inspection fees assessed by defendant, the city of Troy (the City), are "intended to bear a reasonable relation to the cost"1 of acts and services provided by the City’s Building Inspection Department (Building Department) under the Construction Code Act (CCA).2 We hold that the City’s use of the revenue generated by those fees to pay the Building Department’s budgetary shortfalls in previous years violates MCL 125.1522(1). While fees imposed to satisfy the alleged historical deficit may arguably be for "the operation of the enforcing agency or the construction board of appeals," this does not mean that such fees "bear a reasonable relation" to the costs of acts and services provided by the Building Department. Here, plaintiffs have presented sufficient evidence to conclude that the City established fees that were not intended to "bear a reasonable relation" to the costs of acts and services necessary to justify the City’s retention of 25% of all the fees collected. We further conclude that there is no express or implied monetary remedy for a violation of MCL 125.1522(1). Nonetheless, we conclude that plaintiffs may seek declaratory and injunctive relief to redress present and future violations of MCL 125.1522(1). Because the City has presented evidence to justify the retention of a portion of these fees, we remand to the trial court for further proceedings.

Lastly, we conclude that there is no record evidence establishing that plaintiffs are "taxpayer[s]" with standing to file suit pursuant to the Headlee Amendment.3 On remand, the trial court shall allow plaintiffs' members an opportunity to establish representational standing on plaintiffs' behalf. Accordingly, we reverse the Court of Appeals judgment and remand to the trial court for further proceedings not inconsistent with this opinion.

I. BASIC FACTS AND PROCEEDINGS

Since 2003, the Building Department allegedly had been operating with a yearly deficit which, in the aggregate, amounted to $6,707,216 in 2011. In July 2010, the City privatized the Building Department by entering into a contract with SAFEbuilt Michigan, Inc. (SAFEbuilt), under which SAFEbuilt assumed the duties of the Building Department. Under the terms of the contract, SAFEbuilt would receive 80% of the building inspection fees, and the City would retain the remaining 20% of the fees. The contract also provided that if the fees totaled more than $1,000,000 for any fiscal year, then SAFEbuilt would only receive 75% of the fees and the City would retain 25% of the fees. The City has retained over $250,000 in fees every year since 2011, indicating that the fees totaled more than $1,000,000 in each of those years. While the Building Department operated at a $47,354 deficit in 2011, the City retained $269,483 in fees in 2012, $488,922 in 2013, and $325,512 in 2014. Over these three years, the City retained $1,083,917 in fees and, by 2016, the City had retained $2,326,061.

On December 15, 2010, plaintiffs, Michigan Association of Home Builders, Associated Builders and Contractors of Michigan, and Michigan Plumbing and Mechanical Contractors Association, filed a three-count verified complaint against the City. Plaintiffs alleged violations of the CCA and the Headlee Amendment,4 and they sought declaratory and injunctive relief. They claimed that the building inspection fees generated under the City’s contract with SAFEbuilt produced "significant monthly surpluses" that the City used to augment its general fund. Plaintiffs alleged that this practice violates MCL 125.1522(1), which requires that fees (1) be reasonable, (2) "be intended to bear a reasonable relation to the cost" of Building Department services, and (3) be used only for operation of the Building Department. They also claimed that the City’s fee practice is unconstitutional under the Headlee Amendment, which prohibits taxation by local units of government without voter approval.

Following discovery, plaintiffs moved for summary disposition under MCR 2.116(C)(10), and the City sought summary disposition under MCR 2.116(I)(2).

After conducting a hearing, the trial court granted summary disposition to the City, ruling that the court did not have jurisdiction over plaintiffs' lawsuit because plaintiffs had failed to exhaust their administrative remedies under MCL 125.1509b before filing their complaint. The Court of Appeals agreed and affirmed.5 Plaintiffs applied for leave to appeal in this Court, and we ordered and heard oral argument on whether to grant plaintiffs' application or take other preemptory action.6 In a memorandum opinion, we reversed the lower courts' decisions and held that the administrative procedure referred to in MCL 125.1509b did not apply.7 We remanded to the trial court for further proceedings.8

On remand, the trial court allowed additional discovery. The parties then filed cross-motions for summary disposition. The court granted the City’s motion. The court determined as a matter of law that the City’s practice of depositing the fees it had retained into the general fund does not violate MCL 125.1522(1) because that money repaid loans from the general fund that were used to operate the Building Department in times of shortfalls.

Plaintiffs appealed. The Court of Appeals agreed with the trial court and affirmed its decision in an unpublished opinion.9

Plaintiffs again applied for leave to appeal in this Court. We directed the Clerk of this Court to schedule oral argument on whether to grant the application or take other action, and we ordered the parties to file supplemental briefing on the following issues:

(1) whether the creation of a fee surplus generated by an enforcing agency under the Construction Code Act (CCA), MCL 125.1501 et seq. , and the use of that surplus to pay for shortfalls in previous years by transfer of the surplus into the city’s general fund, violates the constraints of § 22 that fees be reasonable, be intended to bear a reasonable relation to the cost of acts and services provided by the enforcing agency, and be used only for the operation of the enforcing agency or the construction board of appeals, or both; (2) if so, whether appellants have a private cause of action against a governmental subdivision for enforcement of the CCA, MCL 125.1508b(1) ; (3) whether appellants are "taxpayers" that have standing to file suit pursuant to the Headlee Amendment, Const. 1963, art. 9, § 32 ; and (4) if so, whether the challenged fees violate the Headlee Amendment, Const. 1963, art. 9, § 31.[10 ]
II. STANDARD OF REVIEW AND APPLICABLE RULES OF STATUTORY INTERPRETATION AND CONSTITUTIONAL INTERPRETATION

This Court reviews de novo a trial court’s decision on a motion for summary disposition.11 The parties brought their respective summary disposition motions under MCR 2.116(C)(10), which tests the factual sufficiency of a claim.12 "In reviewing a motion for summary disposition brought under MCR 2.116(C)(10), a trial court considers affidavits, pleadings, depositions, admissions, and documentary evidence filed in the action or submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion."13 If, "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, ... the moving party is entitled to judgment or partial judgment as a matter of law,"14 and the trial court must grant the motion without delay.15 Whether a party has standing is a question of law that is reviewed de novo.16

This Court also reviews de novo questions of statutory interpretation.17 "The role of this Court in interpreting statutory language is to ‘ascertain the legislative intent that may reasonably be inferred from the words in a statute.’ "18 "The focus of our analysis must be the statute’s express language, which offers the most reliable evidence of the Legislature’s intent."19 " [W]here the statutory language is clear and unambiguous, the statute must be applied as written.’ "20 " [A] court may read nothing into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself.’ "21 Neither will this Court "rewrite the plain statutory language and substitute our own policy decisions for those already made by the Legislature."22

"A primary rule in interpreting a constitutional provision such as the Headlee Amendment is the rule of ‘common understanding[.] "23 As this Court has explained:

A constitution is made for the people and by the people. The interpretation that should be given it is that which reasonable minds, the great mass of people themselves, would give it.
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