Kevin Logan v. Charter Township of West Bloomfield ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
KEVIN LOGAN, Individually and on Behalf of UNPUBLISHED
All others Similarly Situated, January 11, 2018
Plaintiffs-Appellants,
v No. 333452
Oakland Circuit Court
CHARTER TOWNSHIP OF WEST LC No. 2015-149134-CZ
BLOOMFIELD,
Defendant-Appellee.
Before: CAMERON, P.J., and SERVITTO and GLEICHER, JJ.
PER CURIAM.
Plaintiffs brought a self-styled class-action suit against West Bloomfield Charter
Township, challenging fees levied by the township’s building division. Their complaint asserted
equitable and legal claims. The circuit court granted partial summary disposition to the
township, ruling that plaintiffs could not seek equitable damages when they had an adequate
remedy at law, and that a statute underlying one of plaintiffs’ legal claims did not authorize an
independent cause of action. We granted plaintiffs’ application for leave to appeal, and now
vacate the circuit court’s order.
I. BACKGROUND
Plaintiffs’ putative class action complaint against West Bloomfield Charter Township
alleges that the township’s building division charged excessive fees, generated a profit, and
deposited the extra money in the township general fund “to finance other operations.” The class
representative1 asserted that he and others were forced to pay into this illegal municipal
enterprise when applying for building permits. Through this system, plaintiffs alleged, the
township violated the Stille-DeRossett-Hale single state construction code act (CCA), MCL
125.1501 et seq. Plaintiffs alleged that the township also violated the Headlee Amendment,
Const 1963, Art 9, § 31,2 by charging fees that exceeded the reasonable cost of its building
1
Kevin Logan raised individual claims as well.
2
The Headlee Amendment provides:
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division services as the fees had “the effect of a tax increase that was not authorized by a
majority of the electorate . . . .” Plaintiffs ultimately raised four counts in their complaint: (1)
statutory violation of the CCA, (2) violation of the Headlee Amendment, (3) unjust enrichment
premised on the township’s violation of the CCA, and (4) a request for permanent injunctive
relief against imposition of the challenged fees.
The circuit court summarily dismissed plaintiffs’ complaint in part upon the township’s
motion. The court dismissed the class plaintiffs’ and Logan’s individual Headlee Amendment
claims arising before September 16, 2014, on statute of limitations grounds pursuant to MCR
2.116(C)(7). Plaintiffs do not challenge this ruling.
The township contended that plaintiffs’ claims for unjust enrichment and for violation of
the CCA were “derived from the Headlee Amendment Claim” and therefore were also time
barred. Plaintiffs retorted that the claims were “distinct causes of action requiring different
proofs.” The circuit court avoided deciding this issue, ruling instead that “there is no private
cause of action for a refund or damages under the CCA” according to the plain language of the
act and that “there is no cause of action for unjust enrichment arising out of the Headlee
Amendment violation.”3 In relation to the latter, the court ruled that equitable relief was
precluded in plaintiffs’ Headlee Amendment claim because “there is already a fully [sic],
complete, and adequate legal remedy.” Accordingly, the court dismissed the CCA and unjust
enrichment claims under MCR 2.116(C)(8). Only plaintiffs’ request for injunctive relief to
prevent future excessive fees remained.
We granted leave to appeal limited to the issue of whether the circuit court erred when it
dismissed plaintiffs’ unjust enrichment claim premised on the township’s alleged violation of the
CCA (not the Headlee Amendment as incorrectly posited in the circuit court’s opinion) pursuant
to MCR 2.116(C)(8). Logan v Charter Twp of West Bloomfield, unpublished order of the Court
of Appeals, entered November 30, 2016 (Docket No. 333452). Plaintiffs contend that the circuit
court erred because: (1) they were permitted to plead alternative and inconsistent causes of
action, and (2) the circuit court incorrectly ruled that plaintiffs were precluded from raising a
claim of unjust enrichment premised on MCL 125.1522(1) where that statute did not expressly
provide a legal remedy for violations of its provisions.
Units of Local Government are hereby prohibited from levying any tax not
authorized by law or charter when this section is ratified or from increasing the
rate of an existing tax above that rate authorized by law or charter when this
section is ratified, without the approval of a majority of the qualified electors of
that unit of Local Government voting thereon. . . .
3
Plaintiffs had not sought equitable relief in connection with its Headlee Amendment claim,
however, only in relation to their challenge under the CCA.
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II. ANALYSIS
We review a trial court’s decision on a motion for summary disposition de
novo. A motion under MCR 2.116(C)(8) tests the legal sufficiency of the
complaint on the basis of the pleadings alone to determine if the opposing party
has stated a claim for which relief can be granted. We must accept all well-
pleaded allegations as true and construe them in the light most favorable to the
nonmoving party. The motion should be granted only if no factual development
could possibly justify recovery. [Zaher v Miotke, 300 Mich App 132, 139; 832
NW2d 266 (2013) (quotation marks and citations omitted).]
The Michigan Supreme Court has explained that a court
may grant equitable relief “[w]here a legal remedy is not available[.]” “A remedy
at law, in order to preclude a suit in equity, must be complete and ample, and not
doubtful and uncertain . . . .” Furthermore, to preclude a suit in equity, a remedy
at law, “both in respect to its final relief and its modes of obtaining the relief,
must be as effectual as the remedy which equity would confer under the
circumstances . . . .” While legislative action that provides an adequate remedy
by statute precludes equitable relief, the absence of such action does not. This is
so because “[e]very equitable right or interest derives not from a declaration of
substantive law, but from the broad and flexible jurisdiction of courts of equity to
afford remedial relief, where justice and good conscience so dictate.” [Tkachik v
Mandeville, 487 Mich 38, 45; 790 NW2d 260 (2010) (citations omitted).]
Accordingly, the Legislature may preclude equitable relief by specifically including a legal
remedy in a statute or act. Where the Legislature neither includes nor expressly excludes a legal
remedy, equitable relief might remain available.
This Court outlined the remedy of unjust enrichment in AFT Mich v Michigan, 303 Mich
App 651, 677; 846 NW2d 583 (2014), aff’d sub nom AFT Mich v State of Michigan, 497 Mich
197 (2015), as follows:
Unjust enrichment is an equitable doctrine. It is the equitable counterpart
of a legal claim for breach of contract. Unjust enrichment of a person occurs
when he has and retains money or benefits which in justice and equity belong to
another. [I]n order to sustain a claim of . . . unjust enrichment, a plaintiff must
establish (1) the receipt of a benefit by the defendant from the plaintiff and (2) an
inequity resulting to the plaintiff because of the retention of the benefit by the
defendant. [Quotation marks and citations omitted, alterations in original.]
The statute at issue in this case—MCL 125.1522(1)—neither provides a legal remedy nor
expressly excludes a plaintiff from seeking recourse:
The legislative body of a governmental subdivision shall establish reasonable fees
to be charged by the governmental subdivision for acts and services performed by
the enforcing agency or construction board of appeals under this act, which fees
shall be intended to bear a reasonable relation to the cost, including overhead, to
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the governmental subdivision of the acts and services, including, without
limitation, those services and acts as, in case of an enforcing agency, issuance of
building permits, examination of plans and specifications, inspection of
construction undertaken pursuant to a building permit, and the issuance of
certificates of use and occupancy, and, in case of a board of appeals, hearing
appeals in accordance with this act. The enforcing agency shall collect the fees
established under this subsection. The legislative body of a governmental
subdivision shall only use fees generated under this section for the operation of
the enforcing agency or the construction board of appeals, or both, and shall not
use the fees for any other purpose.
Although the circuit court correctly recognized that the statute did “not expressly allow a
private cause of action for recovery of fees collected in violation of its provisions,” it failed to
take the next, necessary step; the court did not ask whether any remedy was available to
plaintiffs with regard to their claim that the township had violated MCL 125.1522(1). And
plaintiffs did properly state an unjust enrichment claim.
In their complaint, plaintiffs alleged that the township received a benefit from them in the
form of payment of the challenged fees. Plaintiffs also alleged that the township was “not
authorized by its ordinances or the [CCA] to impose or collect the excessive or otherwise
unwarranted charges and fees mandated by its Building Division.” When viewing all of the
factual allegations raised by plaintiffs in their complaint in the light most favorable to plaintiffs,
plaintiffs have stated a claim of unjust enrichment sufficiently to survive a (C)(8) motion and the
court erred in dismissing this count.
However, the township alternatively contends that plaintiffs’ CCA challenge is
duplicative of their Headlee Amendment challenge and that plaintiffs have an adequate legal
remedy for that violation. Accordingly, the township asserts, dismissal of plaintiffs’ claim for
unjust enrichment under the CCA would still be appropriate as time-barred. But the township
disregards MCR 2.111(A)(2)(b). The court rule provides, “Inconsistent claims or defenses are
not objectionable. A party may . . . state as many separate claims or defenses as the party has,
regardless of consistency and whether they are based on legal or equitable grounds or on both.”
MCR 2.116(C)(8) is not a proper vehicle to dismiss properly raised, although inconsistent,
alternative grounds for relief. MCR 2.116(C)(8) only concerns the legal sufficiency of a claim
and whether a party has stated a claim on which relief could be granted. Zaher, 300 Mich App at
139. The summary disposition rule does not preclude plaintiffs from investigating the factual
support for alternative claims in discovery. And the unjust enrichment claim based on the CCA
is not fettered by the same short limitations period.
In their CCA claim, plaintiffs assert that the township’s building division fees were
unreasonable and misappropriated for non-building division purposes in violation of MCL
125.1522(1). In the Headlee Amendment claim, plaintiffs contended that the township’s fees
were actually an illegal tax. “There is no bright-line test for distinguishing between a valid user
fee and a tax that violates the Headlee Amendment.” Jackson Co v City of Jackson, 302 Mich
App 90, 99; 836 NW2d 903 (2013) (quotation marks and citation omitted). “Generally, a ‘fee’ is
‘exchanged for a service rendered or a benefit conferred, and some reasonable relationship exists
between the amount of the fee and the value of the service or benefit.’ A ‘tax,’ on the other
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hand, is designed to raise revenue.” Bolt v Lansing, 459 Mich 152, 161; 587 NW2d 264 (1998)
(citations omitted). “[T]hree primary criteria” guide a court’s determination: (1) “a user fee must
serve a regulatory purpose rather than a revenue-raising purpose,” (2) “user fees must be
proportionate to the necessary costs of the service,” and (3) a fee is voluntary. Id. at 161-162.
While the factual considerations are similar and interrelated, plaintiffs were not required to
exclusively allege one claim over the other. Moreover, given that there is no “bright-line test”
for a Headlee Amendment claim, it is entirely possible that plaintiffs’ Headlee Amendment claim
might fail, leaving them without an adequate legal remedy absent their unjust enrichment claim.
Therefore, it was appropriate for plaintiffs to raise both claims in their complaint.
We vacate the summary disposition judgment in relation to plaintiffs’ unjust enrichment
claim and remand for further proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Thomas C. Cameron
/s/ Deborah A. Servitto
/s/ Elizabeth L. Gleicher
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