City of Huntington Woods v. City of Oak Park , 311 Mich. App. 96 ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
CITY OF HUNTINGTON WOODS and CITY OF FOR PUBLICATION
PLEASANT RIDGE, June 11, 2015
9:15 a.m.
Plaintiffs/Counter-Defendants-
Appellants,
v No. 321414
Oakland Circuit Court
CITY OF OAK PARK, LC No. 2013-135842-CZ
Defendant/Counter-Plaintiff-
Appellee,
and
45TH DISTRICT COURT,
Defendant/Appellee.
Before: JANSEN, P.J., and SAWYER and FORT HOOD, JJ.
PER CURIAM.
Plaintiffs city of Huntington Woods and city of Pleasant Ridge appeal by leave granted
the trial court’s order granting in part defendant city of Oak Park’s motion for summary
disposition pursuant to MCR 2.116(C)(10). Plaintiffs argue on appeal that the trial court
erroneously concluded (1) that plaintiffs have a statutory duty to contribute to the costs of
operating the 45th District Court, and (2) that the city of Oak Park does not have a statutory duty
to disburse to plaintiffs a portion of fees assessed against criminal defendants in 45th District
Court proceedings and allocated to funds for building improvements and retiree health care
benefits. We affirm.
I. HISTORY OF THE DISTRICT COURT ORGANIZATION
Before July 1, 2012, the 45-B District Court served the cities of Huntington Woods,
Pleasant Ridge, and Oak Park, and Royal Oak Township. Effective July 1, 2012, the Legislature
abolished the 45-B District Court and established in its place the 45th District Court, also serving
the cities of Huntington Woods, Pleasant Ridge, and Oak Park, and Royal Oak Township. MCL
600.8123(4). The 45th district is a “district of the third class,” meaning that it is “a district
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consisting of 1 or more political subdivisions within a county and in which each political
subdivision comprising the district is responsible for maintaining, financing and operating the
district court within its respective political subdivision except as otherwise provided in this act.”
MCL 600.8103(3). In third-class districts in which the district court does not sit in each political
subdivision within the district, one-third of specified fines and costs are to be paid to the non-
seating political subdivision whose law was violated. MCL 600.8379(1)(c).
Defendants maintain that the 45th District Court and its predecessor were historically
underfunded, almost from the time of the 45-B District Court’s inception. In 1983, the Oak Park
City Council passed a resolution requesting plaintiffs to provide court facilities within each of
their political subdivisions, or, alternatively, to enter into an agreement with Oak Park to share
expenses of maintaining, financing, and operating the 45-B District Court, which was located
within Oak Park’s political subdivision. Plaintiffs did not accept either proposal.
In 1995, the Oak Park City Council discussed the 45-B District Court’s plan to add a $5
charge per ticket to cover the cost of including district court retirees in Oak Park’s retiree health
care plan. The council also discussed increasing “fees” or “fines” to fund construction of a new
court facility. In September 1995, the State Court Administrative Office (SCAO) issued a report
detailing the inadequacies of the Oak Park court facilities. These included noncompliance with
current building standards for occupancy and fire safety, and inaccessibility of areas of the
building for the disabled. Oak Park created a municipal building construction capital fund to
account for expenditures made to construct a new district court building. This would be funded
by a $5 per ticket charge on fines levied by the 45-B District Court. Oak Park also created an
internal service fund to fund medical benefits for 45-B District Court retirees. The revenues
were collected through an additional $5 per ticket charge added to violation fees. In 2007, the
Oak Park City Council unanimously passed a resolution to increase the per ticket levies for the
building fund and the retiree health plan fund from $5 to $10. The resolution also imposed $100
in costs for certain misdemeanors, to be allocated for the building fund.
In fiscal year (FY) 2012-2013 (beginning July 1, 2012), the 45th District Court
distributed one-third of the building fund and retiree health care fund assessments to plaintiffs, in
the same manner that other costs and fines are distributed. Defendants apparently regard this
distribution as an error. In October 2012, SCAO issued a report in which it found that there was
no agreement in place for distribution of fines and costs to political subdivisions other than Oak
Park. The report states:
The court distributed court costs, with the exception of court costs titled as
operational costs, using the method of one-third to the political subdivision whose
ordinance was violated and two-thirds to the city of Oak Park during the review
period. It should be noted that in fiscal year 2013, the court started distributing
the operational costs using the method that was previously used for all other court
costs.
The SCAO report reviewed the history of the collection of court costs, beginning in August
1995. The court used an OPCS cash code for receipting these costs. From FY-1996 to FY-2012,
the entire amount of cash received under these codes was distributed to Oak Park, which
allocated the distributions to the building fund and retiree healthcare fund. Beginning in May
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2007, the 45-B District Court began collecting court costs on misdemeanor violations, using an
OPBF cash code for receipting the funds. For FY-2007 through FY-2012, the entire amount
receipted under the OPBF cash code was distributed to Oak Park. SCAO calculated the amounts
of court costs collected from violations occurring in plaintiffs’ political subdivisions, and
distributed to Oak Park under the OPCS and OPBF codes, for the period from FY 1996 through
FY 2012. The report provided more detailed breakdowns of amounts contributed to the building
fund and retiree health care fund per fiscal year, for each political subdivision.
In correspondence to Oak Park’s city manager, dated May 13, 2013, plaintiffs and Royal
Oak Township asserted that Oak Park “knowingly received and retained certain property owned
by” plaintiffs, namely “various funds including a building fund, a retiree health care fund, and a
serious misdemeanor fund.” Plaintiffs demanded return of the funds, and cited SCAO’s
accounting of $116,696.33 of Pleasant Ridge’s property, and $251,021.93 of Huntington
Woods’s property. In response, the Oak Park City Council passed a resolution declaring that
money collected by the 45th District Court and transmitted to the building fund would be used
for improvements for the 45th District Court, and money collected and transmitted to the retiree
healthcare fund would be used only for the costs of retiree healthcare for district court
employees. Defendants did not grant plaintiffs’ demand, leading to the instant litigation.
II. PROCEDURAL HISTORY
Plaintiffs alleged in their complaint that defendants Oak Park and the 45th District Court
violated their statutory duty under MCL 600.8379 to disburse one-third of the costs and fees
assessed for the building fund and retirees’ healthcare fund from 1996 to 2011. Plaintiffs
referred to the October 2012 SCAO report finding that Huntington Woods and Pleasant Ridge
were entitled to reimbursement of $251,021.93 and $111,696.33, respectively, because
defendants wrongfully diverted court costs to the building fund and retiree healthcare fund
instead of distributing one-third of these monies to plaintiffs. Plaintiffs asserted a claim for
violation of MCL 600.8379 against both defendants, and a claim for statutory conversion under
MCL 600.2919a against Oak Park only. Plaintiffs also asserted a claim for breach of contract,
alleging that they were third-party beneficiaries of a contract between Oak Park and the 45th
District Court, pursuant to which the court collected monies for Oak Park while acting as a
trustee of funds generated from fines and costs on tickets and violations that arose in plaintiffs’
political subdivisions, and that the court breached its duty to tender the one-third portion of fines
and costs owed to plaintiffs. Plaintiffs also asserted a claim for unjust enrichment, alleging that
Oak Park retained and used for its own benefit the portion of funds to which plaintiffs were
entitled.
Oak Park filed a counter-complaint for declaratory relief. Oak Park asserted that all
district funding units were required, pursuant to MCL 600.8104, MCL 600.8621, and MCL
600.8271, to contribute to the expenses of the district court operating within their district. Oak
Park sought a declaratory judgment that plaintiffs were required to contribute to the expense of
operating the 45th District Court, and that their responsibility to do so was not limited to the
amount of fines and costs allocated to Oak Park under the statutory one-third/two-thirds
arrangement. In count II, Oak Park alleged that in 2012 and 2013, the court administrator
erroneously disbursed to plaintiffs a portion of the fees collected for the building fund and retiree
healthcare fund. Oak Park sought a declaratory judgment that these funds were incorrectly
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disbursed, and an order requiring plaintiffs to reimburse Oak Park for the incorrect
disbursements.
Oak Park moved for summary disposition pursuant to MCR 2.116(C)(7), (8), and (10).
Oak Park asserted that the amounts collected for the building and retiree healthcare funds were
fees, and therefore not subject to distribution under MCL 600.8379, which required distribution
only of imposed fines and costs. Oak Park argued that plaintiffs failed to comply with the
statutory mandate of MCL 600.8271(1). Oak Park requested that the trial court declare that
plaintiffs were required to share the expense of maintaining, financing, and operating the district
court, in accordance with an agreement as authorized by MCL 600.8104(3), or the formula set
forth in MCR 8.201. Oak Park also argued that the doctrine of laches or, alternatively, the
statute of limitations barred plaintiffs from asserting their entitlement to a one-third disbursement
of these fees.
In their response to Oak Park’s motion, plaintiffs reviewed the funding history for the
district court. In December 1974, the city of Pleasant Ridge passed a resolution approving an
arrangement in which the district court would sit in Oak Park. In exchange for waiving the
requirement that the court sit in Pleasant Ridge, Pleasant Ridge would receive one-third of all
fines and costs assessed for offenses that originated in Pleasant Ridge. The city of Huntington
Woods passed a similar resolution. Plaintiffs argued that defendants did not have the authority to
collect fines and costs in excess of the two-thirds collection authorized by the resolutions. Citing
SCAO’s review for the fiscal years 1996-2012, plaintiffs asserted that the additional court costs
collected by defendants for infractions originating in the plaintiff cities should have been
distributed to plaintiffs pursuant to the statutory formula prescribed in MCL 600.8379.
Plaintiffs also argued that Oak Park’s argument that MCL 600.8104 mandated that
plaintiffs help fund the 45th District Court was based on a misinterpretation of the statute. MCL
600.8014(2) states that “a district funding unit shall be responsible for maintaining, financing,
and operating the court only within its political subdivision.” MCL 600.8014(3) provides that
“district funding units within any district may agree among themselves any or all of the expenses
of maintaining . . . the district court.” Plaintiffs argued that the district court was not within their
political subdivisions, and therefore, they were not responsible for the expenses set forth in this
provision. They emphasized that MCL 600.8014(3) used the permissive term “may” instead of
the directive “shall.” Plaintiffs remarked that the 45th District Court never presented a budget
request to plaintiffs, and if it did, they would not have approved it because their populations and
governmental operations budgets were significantly smaller than Oak Park’s.1 Plaintiffs disputed
Oak Park’s contention that the assessments at issue were fees, and not costs or fines, and were
subject to MCL 600.8379(1)(c).
1
According to plaintiffs, Pleasant Ridge has approximately 2,500 residents, and its budget for
the 2013-2014 fiscal year was $2,400,000. Huntington Woods has approximately 6,000
residents, and had a total budget for 2013-2014 fiscal year of $6,800,000. In contrast, Oak Park
has 30,000 residents, and operates on a 2013-2014 annual budget greater than $45,000,000.
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Oak Park argued in response that the district court was underfunded by plaintiffs and
Royal Oak Township, and the court facility was “sorely inadequate.” Oak Park cited the 1996
Comprehensive Annual Financial Report, which explained that the assessments beginning in
1995-1996 addressed the problems of retiree healthcare and building expenses. They reiterated
that the charges for the building fund and healthcare fund were not costs, and were kept in
segregated accounts, pursuant to generally accepted accounting practices.
Regarding plaintiffs’ argument that the SCAO reports referred to the assessments as
costs, Oak Park argued that the report was not intended as a legal analysis of whether the
collected payments for the building and healthcare funds were fees or costs. Oak Park denied
that waiving the requirement for the court to sit in plaintiffs’ jurisdictions relieved plaintiffs of
their obligation under MCL 600.8103(3) to contribute to the expenses for operating the district
court.
The 45th District Court filed a brief concurring with Oak Park’s summary disposition
motion and asserting its own motion for summary disposition. It asserted that the municipalities
within the district could not agree on a means of supporting the district court, so Oak Park
became the control unit, because of its population size, caseload volume, and available space for
court operations. The municipalities could not agree on a formula for expense and cost sharing,
and thus complied with the statutory default mechanism. MCL 600.8103, MCL 600.8104, and
MCL 699.8379. However, the 45th District Court was never adequately funded. Consequently,
it began assessing additional fees for building improvement and retiree healthcare to compensate
for inadequate funding.
The 45th District Court cited Oak Park’s annual budget for FY 2013-2014 as evidence
that the court required the assessments to cover expenses and obligations not paid by plaintiffs.
The 45th District Court contended that plaintiffs had not met their responsibility for
appropriating their fair share toward the cost of operating the district court, leaving it to Oak
Park to make up the difference. Until July 1, 2012, Oak Park’s burden was offset by the portion
of fines and costs distributed pursuant to MCL 600.8379(1)(c), the building and healthcare fees,
and other fees, charges, or penalties. The 45th District Court argued that plaintiffs’ obligation to
finance, maintain, and support the district court was not limited to the two-thirds allocation of
fines and costs pursuant to MCL 600.8379, and that the two-thirds portion allocated to the court
was not sufficient to cover plaintiffs’ obligations to financially support court operations. The
45th District Court also argued that even if the assessed fees were subject to distribution under
MCL 600.8379, plaintiffs would not be entitled to the fees because plaintiffs were historically
derelict in their duties to finance court operations.
The trial court granted summary disposition for defendants pursuant to MCR
2.116(C)(10). The court concluded in its order that pursuant to “the clear language of MCL
600.8104 and MCL 600.8271(1), all political subdivisions,” including the parties, are
“responsible for the funding of the 45th District Court.” The trial court ordered plaintiffs to
comply with MCL 600.8271(1) “upon receipt of a Chief Judge line item budget which shall also
be in with accord with MCR 8.201(A).” The court granted Oak Park the authority to establish a
fund for court building improvements. It determined that funds designated for the building fund
and retiree healthcare fund were “not fines and costs subject to distribution under MCL
600.8379.” The trial court indicated that its order was not final, because Oak Park’s claim for
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return of revenues incorrectly allocated to plaintiffs from July 1, 2012 to June 30, 2013, had not
been resolved.
III. ANALYSIS
Plaintiffs argue that MCL 600.8104 provides that where the district court serves more
than one political subdivision, but sits in only one of them, the political subdivision where the
court sits is responsible for the financial operation of the court. Plaintiffs contend that any
obligation they have to support the 45th District Court is satisfied by the district court’s retention
of two-thirds of the fines and costs assessed against litigants for legal violations that originate in
plaintiffs’ political subdivisions.
We review de novo a trial court’s decision on a motion for summary disposition.
Mercantile Bank Mtg Co, LLC v NGPCP/BRYS Centre, LLC, 305 Mich. App. 215, 223; 852
NW2d 210 (2014). A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the
factual sufficiency of the complaint. Corley v Detroit Bd of Ed, 470 Mich. 274, 278; 681 NW2d
342 (2004). “When deciding a motion for summary disposition under MCR 2.116(C)(10), a
court must consider the pleadings, affidavits, depositions, admissions, and other documentary
evidence submitted in the light most favorable to the nonmoving party.” Ernsting v Ave Maria
College, 274 Mich. App. 506, 509; 736 NW2d 574 (2007). “Summary disposition is proper under
MCR 2.116(C)(10) if the documentary evidence shows that there is no genuine issue regarding
any material fact and the moving party is entitled to judgment as a matter of law.” Id.
This issue mainly involves questions of statutory construction, which are reviewed de
novo. Cheboygan Sportsman Club v Cheboygan Co Prosecuting Attorney, 307 Mich. App. 71,
75; 858 NW2d 751 (2014). The fundamental goal when constraining a statute is to “determine
and give effect to the intent of the Legislature, with the presumption that unambiguous language
should be enforced as written.” Id. The provisions of the statute should be read “reasonably and
in context.” McCahan v Brennan, 492 Mich. 730, 739; 822 NW2d 747 (2012). Courts “must
give effect to every word, phrase, and clause in a statute and avoid an interpretation that renders
nugatory or surplusage any part of a statute.” Hannay v Dep’t of Transp, 497 Mich. 45, 58; 860
NW2d 67 (2014). Under the principle of in paria materia, statutes that relate to the same subject
or share a common purpose must be read together as one law. Titan Ins Co v State Farm Mut
Auto Ins Co, 296 Mich. App. 75, 83; 817 NW2d 621 (2012).
MCL 600.8103(3) defines a “district of the third class” as “a district consisting of 1 or
more political subdivisions within a county and in which each political subdivision comprising
the district is responsible for maintaining, financing and operating the district court within its
respective political subdivision except as otherwise provided in this act.” MCL 600.8104
provides, in pertinent part:
(1) The term “district funding unit” or “district control unit” means:
***
(b) The city or the township in districts of the third class except as
provided in subdivision (c).
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***
(2) Except as otherwise provided in this act, a district funding unit shall be
responsible for maintaining, financing, and operating the court only within its
political subdivision. In districts of the third class a political subdivision shall not
be responsible for the expenses of maintaining, financing, or operating the district
court, traffic bureau, or small claims division incurred in any other political
subdivision except as provided by section 8621 and other provisions of this act.
(3) One or more district funding units within any district may agree among
themselves to share any or all of the expenses of maintaining, financing, or
operating the district court. To become effective such agreements must be
approved by resolution adopted by the governing body of the respective political
subdivisions entering into the agreement, and upon approval such agreements
shall become effective and binding in accordance with, to the extent of, and for
such period stated in that agreement.
Under this statute, each plaintiff, as a city in a third-class district, qualifies as a “district funding
unit” or “district control unit” of the 45th District. Under subsection (2), plaintiffs are not
responsible for the expenses of maintaining, financing, or operating the 45th District Court in
Oak Park, except as otherwise provided by MCL 600.8621, or other provisions of the act.
MCL 600.8621(1) provides:
District court recorders and reporters shall be paid by each district control
unit. In districts consisting of more than 1 district control unit, each district
control unit shall contribute to the salary in the same proportion as the number of
cases entered and commenced in the district control unit bears to the number of
cases entered and commenced in the district, as determined by the judges of the
district court under rules prescribed by the supreme court.
MCL 600.8271(1) provides:
The governing body of each district funding unit shall annually
appropriate, by line-item or lump-sum budget, funds for the operation of the
district court in that district. However, before a governing body of a district
funding unit may appropriate a lump-sum budget, the chief judge of the judicial
district shall submit to the governing body of the district funding unit a budget
request in line-item form with appropriate detail. A court that receives a line-item
budget shall not exceed a line-item appropriation or transfer funds between line
items without the prior approval of the governing body. A court that receives a
lump-sum budget shall not exceed that budget without the prior approval of the
governing body.
MCL 600.8379 provides, in pertinent part:
(1) Fines and costs assessed in the district court shall be paid to the clerk
of the court who shall appropriate them as follows:
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(a) A fine imposed for the violation of a penal law of this state and a civil
fine ordered in a civil infraction action for violation of a law of this state shall be
paid to the county treasurer and applied for library purposes as provided by law.
(b) . . . In districts of the third class, costs imposed for the violation of a
penal law of this state or ordered in a civil infraction action for the violation of a
law of this state shall be paid to the treasurer of the political subdivision where the
guilty plea or civil infraction admission was entered or where the trial or civil
infraction action hearing took place.
(c) . . . In districts of the third class, all fines and costs, other than those
imposed for the violation of a penal law of this state or ordered in a civil
infraction action for the violation of a law of this state, shall be paid to the
political subdivision whose law was violated, except that where fines and costs
are assessed in a political subdivision other than the political subdivision whose
law was violated, 2/3 shall be paid to the political subdivision where the guilty
plea or civil infraction admission was entered or where the trial or civil infraction
action hearing took place and the balance shall be paid to the political subdivision
whose law was violated.
(d) In a district of the third class, if each political subdivision within the
district, by resolution of its governing body, agrees to a distribution of fines and
costs, other than fines imposed for the violation of a penal law of this state or
ordered in a civil infraction action for the violation of a law of this state,
differently than as provided by this section, the distribution of those fines and
costs among the political subdivisions of that district shall be as agreed to. An
existing agreement applicable to the distribution of fines and costs shall apply
with the same effect to the distribution of civil fines and costs ordered in a civil
infraction actions.
(e) A civil fine imposed upon a person for violation of a provision of a
code or an ordinance of a political subdivision of this state regulating the
operation of a commercial vehicle that substantially corresponds to a provision of
the Michigan vehicle code, 1949 PA 300, MCL 257.1 to 257.923, shall be paid to
the county treasurer and allocated as follows:
(i) Seventy percent to the political subdivision in which the citation is
issued.
(ii) Thirty percent for library purposes as provided by law.
(f) A civil fine imposed upon a person for violation of a provision of a
code or an ordinance regulating the operation of a commercial vehicle adopted by
a city, township, or village pursuant to section 1 of 1956 PA 62, MCL 257.951,
shall be paid to the county treasurer and allocated as follows:
(i) Seventy percent to the political subdivision in which the citation is
issued.
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(ii) Thirty percent for library purposes as provided by law.
MCL 600.8261 provides that “[c]ourt facilities shall be provided at those places where
the court sits.” In districts of the third class, court facilities “shall be provided by each political
subdivision where the court sits.” MCL 600.8251(4) provides as follows for third-class districts:
In districts of the third class, the court shall sit at each city having a
population of 3,250 or more and within each township having a population of
12,000 or more and at other places as the judges of the district determine. The
court is not required to sit in any political subdivision if the governing body of
that subdivision by resolution and the court agree that the court shall not sit in the
political subdivision.
MCR 8.201 provides:
(A) Duties of Clerks of Each Third-Class Control Unit Having a Clerk.
(1) On the last day of March, June, September, and December of each
year, the clerk of each third-class control unit having a clerk (see MCL 600.8281)
shall determine the total number of civil and criminal cases filed during the
preceding three months in the district and each political subdivision of the district
under subrule (B). These figures are the total number of cases entered and
commenced in that district and each political subdivision.
(2) The clerk shall determine the total cost of maintaining, financing, and
operating the district court within the district.
(3) The clerk shall determine the proper share of the costs to be borne by
each political subdivision by use of the following formula: (the number of cases
entered and commenced in each political subdivision divided by the total number
of cases entered and commenced in the district) multiplied by the total cost of
maintaining, financing, and operating the district court.
(4) The clerk shall determine the proper share of the salary of the court
reporter or recorder under MCL 600.8621(1) by use of the following formula: (the
number of cases entered and commenced in each political subdivision divided by
the total number of cases entered and commenced in the district) multiplied by the
total salary of the court reporter or recorder.
(5) The clerk shall certify the figures determined under subrules (A)(3)
and (4) to the treasurer of each political subdivision in the district. Payment by
each political subdivision of any unpaid portion of its certified share of the cost
and salaries is then due.
Plaintiffs deny a statutory obligation to provide financial support for the district court,
relying on the following emphasized language in MCL 600.8104(2) and (3):
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(2) Except as otherwise provided in this act, a district funding unit shall be
responsible for maintaining, financing, and operating the court only within its
political subdivision. In districts of the third class a political subdivision shall not
be responsible for the expenses of maintaining, financing, or operating the district
court, traffic bureau, or small claims division incurred in any other political
subdivision except as provided by section 8621 and other provisions of this act.
(3) One or more district funding units within any district may agree
among themselves to share any or all of the expenses of maintaining, financing,
or operating the district court. To become effective such agreements must be
approved by resolution adopted by the governing body of the respective political
subdivisions entering into the agreement, and upon approval such agreements
shall become effective and binding in accordance with, to the extent of, and for
such period stated in that agreement. [Emphasis added.]
Plaintiffs overlook the limiting introductory language at the beginning of § 8104(2), “except as
otherwise provided in this act,” and the similar language at the end of that subsection, which
again specifies that the provisions of that subsection apply “except as provided by section 8621
and other provisions of this act.”
MCL 600.8621 requires each district funding unit to contribute to the salaries of district
court recorders and reporters. MCL 600.8271(1) states that the governing body of each district
funding unit “shall annually appropriate . . . funds for the operation of the district court in that
district.” It is well established “that the term ‘may’ is permissive,’ . . . as opposed to the term
‘shall,’ which is considered ‘mandatory.’ ” Manuel v Gill, 481 Mich. 637, 647; 753 NW2d 48
(2008). By using the mandatory term “shall,” instead of the permissive term “may,” MCL
600.8271(1) clearly requires each district funding unit to provide funding for the district court.
Reading these provisions of the Revised Judicature Act together, in accordance with the doctrine
of in pari materia, the statutory scheme clearly imposes on all district funding units in a third-
class district a duty to provide financial support for the district court, regardless of which
political subdivision the court is seated. Titan Ins Co, 296 Mich. App. at 83.
Plaintiffs argue that if there is such a requirement, it is not triggered until the chief judge
submits a proposed budget to the funding unit. Plaintiffs rely on the second sentence in
§ 8271(1), which states that “before a governing body of a district funding unit may appropriate
a lump-sum budget, the chief judge of the judicial district shall submit to the governing body of
the district funding unit a budget request in line-item form with appropriate detail.” The
statutory provision goes on to state that “[a] court that receives a line-item budget shall not
exceed a line-item appropriation or transfer funds between line items without the prior approval
of the governing body” and “[a] court that receives a lump-sum budget shall not exceed that
budget without the prior approval of the governing body.” The relevant context of this
requirement pertains to the choice of a lump-sum budget over a line-item budget, not to the
funding unit’s financial obligation.
Plaintiffs argue that the provision in MCL 600.8379(1)(c), which provides for the one-
third/two-third allocation of fines and costs assessed where the “fines and costs are assessed in a
political subdivision other than the political subdivision whose law was violated,” provides the
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means by which a funding unit other than the funding unit where the district court sits fulfills its
obligation to support the district court. Nothing in MCL 600.8379 supports this interpretation.
Section 8379 provides a formula for revenue sharing, but does not indicate that the revenue
allocation satisfies the district funding unit’s obligation.
Plaintiffs also argue that there is sufficient evidence of the existence of oral agreements
between each plaintiff and defendants, in which defendants agreed to refund one-third of
revenues from tickets and fines originating in plaintiffs’ political subdivisions, and plaintiffs
would not incur any additional expenses related to the operation of the 45th District Court. They
argue that the evidence shows that the parties formed oral agreements in 1974, or, alternatively,
that the parties’ conduct establishes an implied-in-fact agreement. Plaintiffs rely on the 1974
resolutions in support of the existence of a contractual agreement. The resolution adopted by the
Pleasant Ridge City Commission on December 10, 1974, acknowledges the abolition of the
Municipal Court for the city of Pleasant Ridge, and the creation of the 45-B District Court to
serve the three cities and Royal Oak Township. The resolution states that the judges of the Oak
Park Municipal Court will become the district court judges. It also states that these judges
“conferred with the appropriate officials of the City of Pleasant Ridge and with the City
Commission and have agreed that the court location requirement of MCLA 600.8251(3) shall be
waived and that the district court for the 45-B District shall not be required to sit in the City of
Pleasant Ridge.” The resolution further states that “the City of Pleasant Ridge will not incur any
expenses in connection with the operation of the new district court and will receive one-third of
all fines assessed which originate in the City of Pleasant Ridge.” Huntington Woods adopted a
substantially similar resolution.
Oak Park counters that a search of its records for the years 1974 and 1975 revealed no
record of a resolution or agreement pertaining to funding and the operation of the 45-B District
Court. Indeed, the 1983 Resolution, CM-04-290-83, clearly indicates that there was no
agreement between the communities. The minutes of the April 3, 1983 Oak Park City Council
meeting indicate that the council passed a resolution concerning the 45-B District Court. The
resolution states, in pertinent part:
WHEREAS, since January 1, 1975 the City of Oak Park, as the district
control unit for the 45-B District Court, has borne the total expense of operating
said Court located within its municipal offices, and since 1975 the subsidy from
the City of Oak Park General Operating Fund required to maintain the operations
of said Court has grown from Fifteen Thousand Sixty-Three Dollars ($15,063) to
an estimated subsidy of Two Hundred Forty Nine Thousand One Hundred
Fourteen Dollars ($249,114) in fiscal year 1983-84 . . . and
WHEREAS, the Judges of the 45-B District Court have expressed to the
City of Oak Park their inability to properly dispose of cases on their docket due to
the inadequacy of facilities . . . and have expressed their desire and intent to have
the 45-B District Court sit in other political subdivisions within the 45-B District
Court boundaries, unless adequate facilities are provided within the political
subdivision of the City of Oak Park and . . .
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
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1. That the City of Huntington Woods, City of Pleasant Ridge and
Township of Royal Oak each are hereby requested, pursuant to Section 8261 of
Public Act 154, to provide court facilities within each of their political
subdivisions, and to provide for the maintenance, financing and operation of the
45B District Court within their political subdivisions as required by Section 8104
of Public Act 154.
2. That in the alternative, the City of Hunting Woods, City of
Pleasant Ridge and Township of Royal Oak are hereby requested to enter into an
agreement with the City of Oak Park to share all the expenses of maintaining,
financing and operating the 45-B District Court at a location within the
boundaries of the political subdivision of the City of Oak Park. [Council Meeting
minutes, April 5, 1983, 48-51, Oak Park Exhibit 3.]
MCL 600.8104(3) provides that district funding units “may agree among themselves to
share any or all of the expenses of . . . operating the district court,” but “[t]o become effective
such agreements must be approved by resolution adopted by the governing body of the
respective political subdivisions entering into the agreement.” Here, there are no such
resolutions. Plaintiffs’ resolutions state that they “will not incur any expense in connection with
the operation of the new District Court,” but plaintiffs have not provided any evidence that Oak
Park or the 45th District Court assented to these resolutions.
Plaintiffs alternatively argue that the parties’ conduct demonstrates an implied contract.
“A contract is implied where the intention as to it is not manifested by direct or explicit words
between the parties, but is to be gathered by implication or proper deduction from the conduct of
the parties, language used or things done by them, or other pertinent circumstances attending the
transaction.” Miller v Stevens, 224 Mich. 626, 632; 195 N.W. 481 (1923). However, MCL
600.8104(3) provides that such agreements are effective only when “approved by resolution
adopted by the governing body of the respective political subdivisions.” “In general, where
comprehensive legislation prescribes in detail a course of conduct to pursue and the parties and
things affected, and designates specific limitations and exceptions, the Legislature will be found
to have intended that the statute supersede and replace the common law dealing with the subject
matter.” Trentadue v Buckler Automatic Lawn Sprinkler, 479 Mich. 378, 389; 738 NW2d 664
(2007) (citation omitted). Plaintiffs cannot establish the existence of a valid agreement
respecting their funding obligations without satisfying the requirements of MCL 600.8104(3).
Moreover, plaintiffs have failed to establish a genuine issue of fact regarding whether a
valid contract was formed. “The essential elements of a contract are parties competent to
contract, a proper subject matter, legal consideration, mutuality of agreement, and mutuality of
obligation. Mallory v Detroit, 181 Mich. App. 121, 127; 449 NW2d 115 (1989). “An implied
contract must also satisfy the elements of mutual assent and consideration.” Id. “The essence of
consideration—whatever form it takes—is that there be a bargained-for exchange between the
parties.” Calhoun Co v Blue Cross Blue Shield of Mich, 297 Mich. App. 1, 13; 824 NW2d 202
(2012). Plaintiffs state that their implied contract with Oak Park provides that they will receive
one-third of all fines and costs assessed for offenses that originated in their respective
jurisdictions, and that they would not incur any expenses in connection with operating the district
court. This alleged agreement lacks consideration, because plaintiffs do not promise anything in
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exchange for their relief from their obligation to provide financial support. Accordingly,
plaintiffs cannot establish the existence of a valid contract limiting their financial obligations to
the one-third/two-thirds revenue sharing provision.
Plaintiffs argue also that the trial court erred in determining that the monies allocated to
the building fund and the retiree healthcare fund were exempt from the one-third/two-thirds split,
because they are “fees” and not “costs.” The language of MCL 600.8379(1)(c) provides that “all
fines and costs . . . shall be paid to the political subdivision whose law was violated, except that
where fines and costs are assessed in a political subdivision other than the political subdivision
whose law was violated, 2/3 shall be paid to the political subdivision where the guilty plea or
civil infraction admission was entered or where the trial or civil infraction action hearing took
place and the balance shall be paid to the political subdivision whose law was violated”.
(Emphasis added.) Thus, we must determine whether the monies allocated to the building and
retiree healthcare funds are “fines” or “costs” within the meaning of this provision.
MCL 600.4801 provides the following relevant definitions:
(a) “Costs” means any monetary amount that the court is authorized to
assess and collect for prosecution, adjudication, or processing of criminal
offenses, civil infractions, civil violations, and parking violations, including court
costs, the cost of prosecution, and the cost of providing court-ordered legal
assistance to the defendant.
(b) “Fee” means any monetary amount, other than costs or a penalty, that
the court is authorized to impose and collect pursuant to a conviction, finding of
responsibility, or other adjudication of a criminal offense, a civil infraction, a civil
violation, or a parking violation, including a driver license reinstatement fee.
(c) “Penalty” includes fines, forfeitures, and forfeited recognizances.
(d) “Civil violation” means a violation of a law of this state or a local
ordinance, other than a criminal offense or a violation that is defined or
designated as a civil infraction, that is punishable by a civil fine or forfeiture
under the applicable law or ordinance.
Neither the building fund assessment nor the retiree healthcare fund assessment qualify as
a “cost” within the definition of MCL 600.4801(a). The charge was not assessed or collected for
the prosecution, adjudication, or processing of criminal offenses, civil infractions, or other
violations. Moreover, we are not persuaded that the term “court costs” in § 4801(a) extends to
money collected for a court building fund or court retiree healthcare fund. In interpreting a
statute, “effect should be given to every phrase, clause, and word in the statute,” and the
“statutory language must be read and understood in its grammatical context, unless it is clear that
something different was intended.” Sun Valley Foods Co v Ward, 460 Mich. 230, 238; 596
NW2d 119 (1999). MCL 600.4801(a) is a single sentence consisting of a subject (the term
“costs”), a linking verb (“means”), and a predicate nominative. The predicate nominative of the
sentence is “any monetary amount,” followed by a series of modifiers. The first modifier is the
subordinate clause, “that the court is authorized to assess and collect . . . .” The object of the
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subordinate clause is the infinitive, “to assess and collect.” The infinitive is modified by a
prepositional phrase that provides a specific list of purposes for assessing and collecting the
money, namely the actions of “prosecution, adjudication, or processing,” which in turn are
modified by the prepositional phrase giving a specific list of the objects of those three actions,
“of criminal offenses, civil infractions, civil violations, and parking violations.” The list of
included actions and corresponding objects being then complete, the sentence further modifies
the list of actions and corresponding objects with the participial phrase, “including court costs,
the cost of prosecution, and the cost of providing court-ordered legal assistance to the
defendant.” “[I]t is a general rule of statutory, as well as grammatical, construction that a
modifying clause is confined to the last antecedent unless a contrary intention appears.” Dale v
Beta-C, Inc, 227 Mich. App. 57, 69; 574 NW2d 697 (1997). Accordingly, the modifying clause
“including court costs” pertains to the last antecedent, “for prosecution, adjudication, or
processing of criminal offenses, civil infractions, civil violations, and parking violations.”
“Court costs” is not a standalone item in the list of monetary charges or assessments that come
within the definition of “costs.” Rather, “court costs” is an item included in the subset of costs
relating to prosecution, adjudication, or the processing of criminal offenses, civil infractions,
civil violations, and parking violations. Accordingly, only court costs assessed and collected for
those purposes are included in the statutory definition of “costs” in MCL 600.4801(a).
Therefore, monies assessed and collected for the building fund and the retiree healthcare
fund are not “costs” under MCL 600.4801(a). Such assessments come within the statutory
definition of “fee,” which is defined as “any monetary amount, other than costs or a penalty, that
the court is authorized to impose and collect pursuant to a conviction, . . . .” MCL 600.4801(b).
Because a “fee” is not part of the allocation required by MCL 600.8379(1)(c), neither Oak Park
nor the 45th District Court was required to distribute one-third of the assessment to plaintiffs.
Plaintiffs argue that the trial court erroneously relied on City of Muskegon v Muskegon
Co, 63 Mich. App. 44; 233 NW2d 849 (1975). Although the trial court referenced that case,
which was cited by Oak Park, it did so only in the context of summarizing Oak Park’s argument.
The court did not rely on that decision in support of its analysis of the issue. We agree that the
decision is not relevant to this case. In City of Muskegon, this Court addressed whether the
plaintiff cities or the defendant county was responsible for paying witness fees for witnesses
called by the cities in cases arising from the cities’ ordinances. This Court considered MCL
600.8323, which provides:
Witnesses in the district court shall be entitled to receive the same fees and
mileage allowances to which witnesses in circuit court are entitled. Where the
county is responsible for such expenses in the circuit court, the district control
unit for the place where the trial occurs shall be responsible for such expenses in
the district court.
This Court concluded that “because the defendant county would not be responsible for witness
and mileage fees for the municipalities’ witnesses in circuit court, defendant county is not
responsible for such fees in district court.” Id. at 45. Quoting the trial court’s opinion, this Court
noted:
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[P]laintiffs further argue that since Muskegon County is a first class
district comprised solely of Muskegon County, therefore, as such, it is the sole
district control unit involved and is responsible for witness fees. The Plaintiffs
further urge that witness fees are an integral part of maintenance, financing and
operation of a District Court. See MCL 600.8104(2) . . . . [Id. at 46.]
The plaintiffs cited MCL 600.8104 for the statement that a political subdivision in third-class
districts “shall not be responsible for the expenses of maintaining, financing, or operating the
district court . . . incurred in any other political subdivision . . . .” City of Muskegon, 63 Mich
App at 46-47. The defendants contended that ordinance violation expenses were never treated as
an obligation of the county. Id. at 47. This Court agreed that “in both civil and criminal cases,
the municipality, as a litigant, is required by R.J.A. s 8323 to pay witness and mileage fees.”
City of Muskegon, 63 Mich. App. at 53.
City of Muskegon is not helpful to the instant analysis, because the Court there did not
analyze the issue of distinguishing costs from fees for purposes of distribution under MCL
600.8379. Indeed, this Court quoted extensively from the trial court’s opinion, which used the
terms interchangeably, as noted here:
Witness fees are not a part of or included in the maintenance, operating or
financing of a court. The Court or forum per se is a passive element of the
system. Theoretically, the District Control Unit might create the court, maintain it,
operate it, and a case may never be tried in it, or a proceeding of any kind may
never take place in it. Having created it, maintained, operated and financed it, the
District Control Unit has acquitted its obligation under the statute. It is the
litigants and their supporting cast (including their witnesses) who are the active
participants in the pit. Witness fees are a part of the cost of litigation, not an
element of maintaining, operating or financing the court, and it is the litigants
who must initially pay their own costs-whether those costs of litigation, costs of
prosecution, costs of defense, are ultimately recoverable depending upon result, is
a matter determined by Statute or Court Rule. [City of Muskegon, 63 Mich App.
at 52.]
Plaintiffs observe that the SCAO audit report referred to the charges as costs. The SCAO
report referred to the building fund and retiree healthcare assessments as “court costs” and
“operational costs.” The report noted that the 45th District Court “distributed court costs, with
the exception of court costs titled as operational costs . . .” until FY 2013, when it began
distributing the operational costs. However, the SCAO report did not address the legal question
whether the building fund and retiree health care fund assessments were costs subject to
distribution. The terminology used in that report is not dispositive of the proper characterization
of the charges for purposes of this case. Plaintiffs suggest that the trial court’s decision was
premature, because discovery was not complete, and further discovery could provide more
evidence whether the assessments are properly classified as costs or fees. However, the
classification of the assessments as costs or fees is not a question of fact. It is a question of law,
in which discovery would shed no further light.
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Finally, we find no merit to plaintiffs’ argument that the Legislature’s recent amendment
of MCL 769.1k supports their position that the retiree health care assessment and building
assessment are actually costs subject to distribution. MCL 769.1k addresses a trial court’s
authority to impose costs when sentencing a criminal defendant. In People v Cunningham, 496
Mich. 145, 154-155; 852 NW2d 118 (2014), our Supreme Court observed that the statute
authorizes a court to impose costs at sentencing, but held that it did not authorize a court to
impose “any cost,” but rather “only those costs that the Legislature has separately authorized by
statute.” In response to the Cunningham decision, the Legislature amended MCL 769.1k,
effective October 17, 2014. The enacting sections provide:
Enacting section 1. This amendatory act applies to all fines, costs, and
assessments ordered or assessed under section 1k of chapter IX of the code of
criminal procedure, 1927 PA 175, MCL 769.1k, before June 18, 2014, and after
the effective date of this amendatory act.
Enacting section 2. This amendatory act is a curative measure that
addresses the authority of courts to impose costs under section 1k of chapter IX of
the code of criminal procedure, 1927 PA 175, MCL 769.1k, before the issuance of
the supreme court opinion in People v Cunningham, 496 Mich. 145 (2014).
The decision in Cunningham, and the subsequent statutory amendment, address the trial court’s
authority to assess certain categories of costs against a convicted criminal defendant. The issue
presented in this case does not concern whether the 45th District Court or Oak Park has authority
to impose the building or retiree healthcare fund assessments, but whether plaintiffs are entitled
to a one-third split of those assessments under MCL 600.8379(1)(a). Neither the Cunningham
decision nor the statutory amendment of MCL 769.1k have any relevance to the interpretation of
MCL 600.4801.
Accordingly, we affirm the trial court’s determination that the monies allocated to the
building fund and the retiree healthcare fund are not subject to the one-third/two-thirds
distribution scheme in MCL 600.8379(1)(a). In light of this decision, it is unnecessary to address
Oak Park’s alternative argument that the doctrine of laches should also preclude plaintiffs from
receiving a one-third distribution of monies collected for the building and retiree healthcare
funds.
Affirmed and remanded for further proceedings. We do not retain jurisdiction.
/s/ Kathleen Jansen
/s/ David H. Sawyer
/s/ Karen M. Fort Hood
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