Rudolph Steiner School v. ANN ARBOR CHARTER TP.

• Decision Date: 18 January 2000
• Docket Number: Docket No. 211143.
• Parties: RUDOLPH STEINER SCHOOL OF ANN ARBOR, Plaintiff-Appellee/Cross-Appellant, v. ANN ARBOR CHARTER TOWNSHIP, Defendant-Appellant/Cross-Appellee, and The City of Ann Arbor, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

605 N.W.2d 18

237 Mich. App. 721

RUDOLPH STEINER SCHOOL OF ANN ARBOR, Plaintiff-Appellee/Cross-Appellant, v. ANN ARBOR CHARTER TOWNSHIP, Defendant-Appellant/Cross-Appellee, and The City of Ann Arbor, Defendant-Appellee.

Docket No. 211143.

Court of Appeals of Michigan.

Submitted June 16, 1999, at Detroit.

Decided October 5, 1999, at 9:00 a.m.

Released for Publication January 18, 2000.

Dykema Gossett PLLC (by E. Edward Hood and Steven A. Susswein), Ann Arbor, for the plaintiff.

Bodman, Longley & Dahling, LLP (by James J. Walsh and Sandra L. Sorini), Ann Arbor, and Foster, Swift, Collins & Smith, P.C. (by Kevin T. McGraw and Richard J. Suhrheinrich), Lansing, for the defendant.

Bauckham, Sparks, Rolfe & Thomsen, P.C. (by John K. Lohrstorfer ), Kalamazoo, amicus curiae, for Michigan Townships Association.

Before: SMOLENSKI, P.J., and GRIBBS and O'CONNELL, JJ.

SMOLENSKI, P.J.

Defendant Ann Arbor Charter Township appeals as of right from the trial court's order granting plaintiff Rudolph Steiner School of Ann Arbor summary disposition and releasing plaintiff's property from defendant township to allow annexation into defendant City of Ann Arbor. Plaintiff cross appeals. We reverse in part and affirm in part.¹

I

Defendants are adjacent municipalities that executed a "Policy Statement Between City of Ann Arbor and Ann Arbor Charter Township" in 1994 to set forth an orderly procedure for annexations by defendant city. The policy statement provided in pertinent part as follows:

PROMULGATION OF POLICIES

The City of Ann Arbor, a Michigan municipal corporation, with its main office located at 100 N. Fifth Avenue, Ann Arbor, Michigan 48104 (hereinafter the "City") and Ann Arbor Charter Township, a Michigan municipal corporation with its main office located at 3792 Pontiac Trail, Ann Arbor, Michigan 48105 (hereinafter the "Township") hereby state that for the purpose of furthering the common welfare, they are promulgating policies set forth below and declare their intentions to abide by those policies in their exercise of their governmental authority insofar as it is practical and permitted by law. This agreement is intended to provide for orderly annexation procedures between the two governments and establish a common boundary between the communities so that each may systematically plan for provision of services to the area to be included within its boundaries.

I. Common Boundary

All land in the Township lying west of U.S. 23 and south of M-14 shall be annexed to the City in an orderly manner. That portion of the Township lying north of M-14, east of Maple Road and south of the Huron River, excluding therefrom the area located east of Maple Road, west of Newport Road, and south of the Huron River, as shown on the map attached as Exhibit A-1 and as more specifically described in the legal description attached as Exhibit A-2, shall also be annexed to the City in an orderly manner. It is understood that this aforementioned boundary is unofficial until such time as it can be officially designated pursuant to the procedures required under applicable state law and regulations.

The parties agree to the following policies:

A. The City shall be the only municipality to provide sewer and water service to all areas within the area identified herein as areas to be annexed to the City.

B. The City may initiate a petition for annexation of any Township property located within the area designated area A on the map attached as Exhibit B.

C. The Township agrees to release any property in area A which is presently receiving or in the future requests a connection to City sewer or water mains.

D. Any land in areas A through D as shown on the map attached as Exhibit B for which connection to Ann Arbor City water service is requested will be released by the Township at the request of the owner. The Township agrees that it will not object to such annexations or refuse to release the properties because of the requested connection to the City water supply.

* * * * * *

G. All properties located within areas B through D which request connection to Ann Arbor City sewer will be released by the Township forthwith upon the owner's request for annexation to the City.

* * * * * *

III. Existing Agreements

Nothing in this boundary policy and agreement is intended to alter the terms of the existing agreements between Township residents and the City concerning annexation or the provision of water or sewer service by the City to those residents.

IV. Petitions to State Boundary Commission

The City agrees it will not initiate a petition to the State Boundary Commission to annex any owner occupied lands in areas B, C, or D before December 31, 2007. After that date, the Township will not oppose a petition by the City to annex properties in Areas B, C, or D or otherwise intervene on behalf of the owner.

V. Pending Litigation

The City and Township agree to take all necessary action to dismiss or otherwise conclude, in a manner consistent with this agreement, all pending litigation and State Boundary Commission proceedings involving annexation of Township land into the City.

The factual record in this case is limited. Plaintiff owns twelve acres of property located in defendant township on which it operates a private elementary and junior high school, which receives municipal sewer and water service from defendant city. On or about February 2, 1996, plaintiff applied for a conditional use permit from defendant township regarding the property.² In a letter dated October 16, 1996, to defendant township's supervisor, plaintiff stated that it was withdrawing its request to the township's planning commission for approval of site development and advised defendant township of its intent to seek annexation into defendant city. Defendant township subsequently denied plaintiff's request to release its property from defendant township for annexation into defendant city at a township meeting held on December 16, 1996. Then, some months later, on July 24, 1997, plaintiff filed the present declaratory action against defendants pursuant to MCR 2.605. In count I of its complaint, plaintiff asked the trial court to find that defendant township breached its duty to release plaintiff's property for annexation under the terms of the "boundary agreement" and that plaintiff was a third-party beneficiary of that agreement.³ In count II, plaintiff asked the court to find that defendants' "boundary agreement" violated plaintiff's equal protection rights under the Michigan Constitution.⁴

Plaintiff continued to seek annexation into defendant city after filing the suit. In a letter to defendant township dated October 3, 1997, plaintiff requested release of its property because it had requested a new water meter line, an upgrade of its existing water meter, and a new sewer line from defendant city. Plaintiff stated that these new water and sewer service requests required defendant township to release its property pursuant to sections I(D) and (G) of the policy statement. Plaintiff subsequently amended its complaint to allege that its property was entitled to be released from defendant township pursuant to section I(D) of the policy statement, because the property was an "Area B" property that had requested water service from defendant city. Defendant township subsequently denied plaintiff's request for release during its meeting on November 17, 1997.

Plaintiff moved for summary disposition pursuant to MCR 2.116(C)(9) and (10), contending that there was no genuine issue of fact that it was a third-party beneficiary of the policy statement and that defendants breached the terms of the statement by denying plaintiff's request for release from the township. Defendant township filed its own motion for summary disposition pursuant to MCR 2.116(C)(4), (8), and (10), contending that plaintiff failed to exhaust its administrative remedies by failing to file an action with the State Boundary Commission and that plaintiff was not a third-party beneficiary of the policy statement. At the hearing on the motions for summary disposition, defendant city's attorney agreed with plaintiff that defendant township should release the property under the terms of the policy statement.⁵ The trial court granted plaintiff's motion for summary disposition, denied defendant township's motion for summary disposition, and ordered the board of trustees of defendant township to release plaintiff's property for annexation into defendant city. In reaching its decision, the court stated its belief that the policy statement was an agreement by which defendants delegated their decision regarding whether property was to be within the boundaries of the township or the city to the individual property owners.⁶ The trial court further stated its belief that the only purpose served by the policies was to grant the property owners a choice with respect to where they wanted to locate their property, and that this conferred a benefit to establish a third-party beneficiary contract for the property owners.⁷

The court clarified its order in its April 28, 1998, final judgment, which provided in pertinent part as follows:

The Court directed the parties to appear to clarify the Court's prior Order of Summary Disposition and to address any remaining issues. As stated on the record this date IT IS ORDERED AND ADJUDGED as follows:

1. Plaintiff's motion for summary disposition is GRANTED to the extent that Defendant Township shall release Plaintiff's property at 2775 Newport Road for annexation to the City of Ann Arbor.

2. Plaintiff's constitutional claims are thereby moot.

3. Pursuant to MCR 2.116(I)(2), it appears that the Defendant is entitled to summary disposition of Plaintiff's damage claims and the same are hereby dismissed.

4. The City of Ann Arbor is no longer a necessary party to this litigation and is therefore dismissed from this action.

II

In its first issue on appeal, defendant township contends that the...