Toll Northville, Ltd v. Tp. of Northville

• Decision Date: 03 October 2006
• Docket Number: Docket No. 259021.
• Citation: 726 N.W.2d 57,272 Mich. App. 352
• Parties: TOLL NORTHVILLE, LTD., and Biltmore Wineman, LLC, Plaintiffs-Appellees, v. NORTHVILLE TOWNSHIP, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

726 N.W.2d 57

272 Mich. App. 352

TOLL NORTHVILLE, LTD., and Biltmore Wineman, LLC, Plaintiffs-Appellees, v. NORTHVILLE TOWNSHIP, Defendant-Appellant.

Docket No. 259021.

Court of Appeals of Michigan.

Submitted September 12, 2006, at Detroit.

Decided October 3, 2006, at 9:10 a.m.

Released for Publication January 5, 2007.

Appeal from the Circuit Court, Wayne County, John A. Murphy, J.

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Hoffert & Associates, P.C. (by David B. Marmon and Myles B. Hoffert), Farmington Hills, for the plaintiffs.

Rose & Abramson, P.C. (by Nevin A. Rose), Westland, for the defendant.

Bauckham, Sparks, Rolfe, Lohrstorfer & Thall, P.C. (by James W. Porter), Kalamazoo, for Michigan Townships Association and Michigan Municipal League, amicus curiae.

Mary Rose Macmillan, Deputy Assistant Corporation Counsel, and Onnie B. Jacque, Assistant Corporation Counsel, Detroit, for Wayne County, amicus curiae.

Before: WHITBECK, C.J., and HOEKSTRA and WILDER, JJ.

PER CURIAM.

I. Overview

Defendant Northville Township appeals as of right the trial court's order denying the township summary disposition under MCR 2.116(C)(8) and granting plaintiffs Toll Northville, LTD; and Biltmore Wineman, LLC, summary disposition under MCR 2.116(C)(10). We affirm. This case arises out of a dispute regarding the taxable value of public service improvements made to 537 residential parcels of real property located in Northville Township.

In a special election held on March 15, 1994, Michigan electors voted in support of "Proposal A" to amend the Michigan Constitution. The constitutional amendment became effective on April 30, 1994. In pertinent part, Proposal A added language to Const 1963, art 9, § 3 to generally limit annual increases in the assessed taxable value on a parcel of property to the lesser of five percent or the increase in the general price level. The limit only applies, however, as long as the same party owns the property. And, even if the property is not transferred, Proposal A allows the value of property to be adjusted for "additions" without regard to the stated limit.¹

II. Basic Facts And Procedural History

Toll Northville and Biltmore Wineman (the developers) are engaged in developing real property located in Northville Township. In tax year 2001, the taxable property consisted of 353 single-family residential lots and a large acreage parcel. By tax year 2002, the large acreage parcel had been divided into 184 residential condominium lots and 124 of the single-family lots had been sold, leaving only 229 of those lots subject to taxation. During those years, Toll Northville installed physical improvements, including a primary access road, streetlights, sewer service, water service, electrical service, natural gas service, telephone service, and sidewalks, for the single-family residential lots. Biltmore Wineman installed similar improvements for the condominium lots. Because of the improvements, the township increased the taxable value of the parcels for those tax years.

The developers appealed the tax assessments to the Michigan Tax Tribunal. The developers argued that the township did not have authority to increase the taxable value of the parcels because MCL 211.34d(1)(b)(viii), which, as written, purports to increase the taxable value of real property because of the installation of public service improvements on the property, was unconstitutional. The Tax Tribunal, however, did not have jurisdiction to decide the constitutionality of the statute.² The Tax Tribunal hearing was held in abeyance pending a circuit court's declaratory judgment.

Toll Northville filed a complaint in circuit court, seeking a judgment declaring MCL 211.34d(1)(b)(viii) unconstitutional. Toll Northville supported its claim by analogy to MCL 211.34d(1)(b)(vii), which, according to Toll Northville, the Michigan Supreme Court declared unconstitutional because the term "addition" was already defined and had a known meaning before the voters approved Proposal A.³ Toll Northville contended that, under the same rationale, subsection viii was also an unconstitutional expansion of the term "addition." Toll Northville averred that, as the court of competent jurisdiction, the circuit court needed to decide the constitutionality of the statute in order for the Tax Tribunal to reach a decision on the taxable value of the property.

The township answered the complaint, stating that Toll Northville installed the subject additions at its expense and that the additions, which Toll Northville claimed were "made available" to the property, were located on land owned or previously owned by Toll Northville. And, although admitting that the constitutionality of MCL 211.34d(1)(b)(viii) was called into question by the Michigan Supreme Court, the township denied that the statute actually was unconstitutional. The township objected to Toll Northville's failure to add Biltmore Wineman to the action. In keeping with this contention, the township's only affirmative defense alleged that Toll Northville failed to join a necessary party. The circuit court later granted the township's motion for a compulsory joinder of Biltmore Wineman.

The developers moved for summary disposition under MCR 2.116(C)(10), arguing that there was no genuine issue of material fact and that MCL 211.34d(1)(b)(viii) was unconstitutional as a matter of law. The developers argued that, under MCL 211.34d(1)(c)(i), the Township was prohibited from valuing as an addition any increased value attributable to the "platting, splits, or combinations of property." It was for this reason, the developers argued, that the township was instead relying on the definition of additions for public services, as found in subsection viii. But, the developers argued, that definition was unconstitutional because defining public services as "additions" was inconsistent with the definition of "additions" before the passage of Proposal A. The developers pointed out that before Proposal A was approved, the term "additions" was understood only to mean "new construction or a physical addition of equipment or furnishings."⁴ The developers asserted that public services did not fall within the scope of "new construction or a physical addition of equipment or furnishings," noting that "new construction" was separately defined by the statute.

The township moved for summary disposition under MCR 2.116(C)(8), arguing that the term "additions" did include the installation of public services before the enactment of Proposal A. According to the township, public services constituted "new construction" or the "physical addition of equipment or furnishings," and therefore fell within the definition of "additions" as defined by MCL 211.34d(1)(a) before the enactment of Proposal A. The township also argued that WPW Acquisition Co v. City of Troy,⁵ the case on which the developers relied, was distinguishable. According to the township, a change in the rate of occupancy, as referred to in MCL 211.34d(1)(b)(vii), clearly could not fit within the scope of "new construction or a physical addition of equipment or furnishings." However, the township asserted, the installation of public services was clearly capable of fitting within the scope of both "new construction" and "a physical addition of equipment or furnishings." The township pointed out that, even before Proposal A was approved, the general practice of state assessors was to treat the installation of improvements like roadways, sewers, and walks, as "additions."

The circuit court granted the Michigan Townships Association (MTA) and the Michigan Municipal League (MML) leave to file a brief amicus curiae in support of the township. The MTA and the MML argued that the term "additions," as defined by MCL 211.34d(1)(b)(viii) to include public services, was consistent with the established meaning of "additions" at the time that term was added to Proposal A.

After hearing oral arguments on the motions for summary disposition, the circuit court issued its written opinion and order granting the developers summary disposition and denying the township summary disposition. The circuit court concluded that additions . . . means improvements and equipment that actually become part of the land in question in the sense that they are attached or affixed to it. The circuit court then considered, as a complicating factor, the fact that the subject parcels were part of a subdivision, and concluded as follows:

If upon approval title resides with the municipality, these improvements cannot be included in valuing the private party's property. This was the understanding in 1994, and we are bound by it now. This conclusion accords with the purpose of Proposal A: to restrict increases in property taxes to situations in which the owner decides to add improvements....

The township now appeals.

III. Actual Controversy

The township argues that the Tax Tribunal has no jurisdiction or authority to grant relief in this case because the underlying tax appeal covers tax years 2001 and 2002 but the alleged "additions" to the taxable value were made in tax year 2000.⁶ Thus, the township argues, there is no actual controversy for this Court to resolve.

The township did not raise this argument below. Indeed, the township conceded at oral argument that, in its answer to Toll Northville's complaint, it admitted the existence of an actual controversy between the parties and that the circuit court had the authority under MCR 2.605 to adjudicate the matter and enter a declaratory judgment. The general rule provides that this issue is not preserved and that it need not be addressed.⁷ However, jurisdictional defects may be raised at any time, even if raised for the first time on appeal.⁸ And an issue may be raised for the first time on appeal if its consideration "`is necessary to a proper determination of a case.'"⁹ Therefore, we address this issue to the extent that the township's...