Yellow Tail Ventures Inc v. City of Berkley ( 2022 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
YELLOW TAIL VENTURES, INC., FOR PUBLICATION
December 15, 2022
Plaintiff-Appellant/Cross-Appellee, 9:05 a.m.
and
OAK FLINT, LLC, NATURE’S REMEDY OF
BERKLEY, LLC, and 123 VENTURES, LLC,
Plaintiffs-Cross-Appellees,
v No. 357654
Oakland Circuit Court
CITY OF BERKLEY, BERKLEY CITY COUNCIL, LC No. 2020-184751-CZ
MATTHEW BAUMGARTEN, MATTHEW
KOEHN, ERIN SCHULTOW, and DANIEL HILL,
Defendants-Appellees/Cross-
Appellants,
and
ATTITUDE WELLNESS, LLC, doing business as
LUME CANNABIS COMPANY,
Cross-Appellant.
FIRE FARM, LLC, and PURE ROOTS, LLC,
Plaintiffs-Appellants/Cross-Appellees,
and
PURE LIFE BERKLEY, LLC, PURE LIFE
BERKLEY II, LLC, BERKLEY HERBAL
CENTER, LLC, and GS ASHLEY, LLC,
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Plaintiffs/Cross-Appellees,
v No. 357666
Oakland Circuit Court
CITY OF BERKLEY, BERKLEY CITY COUNCIL, LC No. 2020-184754-CZ
MATTHEW BAUMGARTEN, MATTHEW
KOEHN, ERIN SCHULTOW, and DANIEL HILL,
Defendants-Appellees/Cross-
Appellants,
and
ATTITUDE WELLNESS, LLC, doing business as
LUME CANNABIS COMPANY,
Cross-Appellant.
FIRE FARM, LLC, PURE LIFE BERKLEY, LLC,
PURE LIFE BERKLEY II, LLC, BERKLEY
HERBAL CENTER, LLC, GS ASHLEY, LLC, and
PURE ROOTS, LLC,
Plaintiffs,
and
3895 EUCLID, LLC,
Intervening Plaintiff-Appellant,
v No. 358242
Oakland Circuit Court
CITY OF BERKLEY, BERKLEY CITY COUNCIL, LC No. 2020-184754-CZ
MATTHEW BAUMGARTEN, MATTHEW
KOEHN, ERIN SCHULTOW, and DANIEL HILL,
Defendants-Appellees.
Before: HOOD, P.J., and SWARTZLE and REDFORD, JJ.
SWARTZLE, J.
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By approving Proposition 18-1, Michigan voters did not enact Mr. F.A. Hayek’s
Spontaneous Order with respect to marijuana. Though the ballot summary was a mere 99 words
and the actual proposal that voters approved (though nowhere found on the ballot) exceeded 6,500
words, both the ballot summary and the actual statutory language make clear that municipalities
can ban or restrict marijuana licenses. If a municipality decides to permit but restrict the number
of licenses, then that municipality can apply criteria that, among other things, (1) ensure that a
licensee is best suited to comply with the law within that particular municipality, (2) regulate the
time, place, and manner of operation of the marijuana establishment, and (3) do not impose
unreasonably impracticable conditions on the licensee.
In these consolidated appeals, rejected licensees raise several constitutional and statutory
challenges to the City of Berkley’s licensing criteria. As explained, the primary statutory
challenges are without merit, and we decline to address the remaining challenges in the first
instance. Accordingly, we affirm in part, reverse in part, and remand for proceedings consistent
with this opinion.
I. BACKGROUND
Our Constitution permits the people of Michigan to bypass our Governor and Legislature
and enact a statute by the citizen-driven initiative process. Const 1963, art 2, § 9. A statute enacted
by initiative has the same force and effect as one passed the traditional way, with the exception
that the initiated statute is not subject to gubernatorial veto and any amendment requires 3/4 votes
of both chambers of the Legislature. Id.
For decades, it has been unlawful to manufacture, sell, or possess marijuana, under both
federal and state criminal law. In November 2018, Michigan voters approved Proposition 18-1 by
a vote of 2,356,422 to 1,859,675. As a result of this approval, it is now lawful to manufacture,
sell, and possess marijuana under Michigan law, though it remains unlawful to engage in any of
these activities under federal law.
Proposition 18-1 became the Michigan Regulation and Taxation of Marihuana Act
(“MRTMA”), MCL 333.27951 et seq. (Note: The MRTMA uses the “marihuana” spelling; when
we are not quoting the act, we use the more familiar “marijuana” spelling.) Section 2 of the act
sets out the people’s “purpose and intent” with respect to the MRTMA. These include the need
“to control the commercial production and distribution of marihuana under a system that licenses,
regulates, and taxes the businesses involved” and to “ensure security of marihuana
establishments.” MCL 333.27952. The people directed that, “[t]o the fullest extent possible, this
act shall be interpreted in accordance with the purpose and intent set forth in this section.” Id.
Specifically with respect to the local regulation of marijuana, the MRTMA prohibits
anyone from selling marijuana to the general public without first obtaining a local license. A
municipality can “completely prohibit or limit the number” of marijuana establishments—
including the number of retailers—that can operate within its boundaries. See MCL 333.27956(1).
If a municipality permits marijuana establishments to operate within its geographical borders, then
that municipality can adopt ordinances that, among other things, impose “reasonable restrictions
on public signs” and “regulate the time, place, and manner of operation” of such establishments,
so long as those ordinances “are not unreasonably impracticable” and do not conflict with the
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MRTMA or rules promulgated under the act. MCL 333.27956(2). And, if a municipality elects
to limit the number of marijuana establishments, then that municipality must select its licensees
“among competing applications by a competitive process intended to select applicants who are
best suited to operate in compliance with this act within the municipality.” MCL 333.27959(4).
In December 2019, the City adopted an ordinance to license and regulate marijuana
establishments. Berkley Code, § 30-802 et seq. With respect to the number of licenses, the City
limited the number to three. Each application had to be accompanied by a fee and include certain
information. The completed application would initially be referred to the City’s community
development director, and it would be reviewed by the City’s community development
department, treasurer, and department of public safety. After passing through these preliminary
reviews, applications would then be examined by the City manager using “a point-based system”
in which the following 16 criteria would be considered:
(1) The content and sufficiency of the information contained in the
application.
(2) Whether the proposed plan has received approval from the public safety
department, community development department, and all other appropriate
departments.
(3) Whether the proposed facility will revitalize or redevelop property that
has been vacant or unused for an extended period of time.
(4) Planned outreach on behalf of the proposed business, and whether the
applicant or its stakeholders have made, or plan to make, significant physical
improvements to the building housing the marihuana business, including plans to
control traffic, noise, and odor effects on the surrounding area.
(5) Whether the applicant or any of its stakeholders have a record of acts
detrimental to the public health, security, safety, morals, good order, or general
welfare prior to the date of the application; and whether the applicant or any of its
stakeholders have ever been convicted of operating an illegal business enterprise of
any kind.
(6) Whether the applicant has reasonably and tangibly demonstrated it
possesses adequate resources and experience to implement the submitted business
plan.
(7) Whether the proposed location in the city in relation to its proximity to
other locations for marihuana businesses represents a reasonable and harmonious
dispersion of marihuana businesses.
(8) The proximity of the business to a school.
(9) Whether adequate off street parking is provided or available.
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(10) Whether the size and nature of the use in relationship to previously
approved and issued marihuana business licenses is reasonable.
(11) Whether the applicant has business experience previously in the city
and demonstrates that the applicant has sufficient business experience to operate
the proposed marihuana business.
(12) Whether the proposed plan incorporates sustainable infrastructure and
energy efficient elements and fixtures.
(13) Whether the proposed plan incorporates infrastructure that adequately
addresses stormwater drainage.
(14) Whether the proposed plan incorporates odor control systems to
prevent odor dispersion to neighboring properties.
(15) Whether an applicant has applied for a co-location of equivalent
licenses at one location.
(16) Other criteria as indicated important for consideration by any
appropriate department of the city administration. [Berkley Code, § 30-806(c).]
This point-based system could “include additional criteria intended to select licensees that provide
the best outcome for the community as determined by the city.” Id. § 30-806(e). Based on this
review, the City manager would make recommendations first for site plan approval to the planning
commission and then to the City council for its consideration in a public meeting.
In performing this review, the City received more applicants than the number of available
licenses. As a result, the City rejected several of the applicants, including plaintiffs in these
consolidated cases. These unsuccessful applicants sued the City and several City officials and
staff. Plaintiffs alleged that the City’s criteria violated the MRTMA because they allowed the City
to score applications based on factors that were not relevant to the operation of a marijuana
establishment. Plaintiffs also alleged that the scoring of the applications by the City manager
violated the OMA because it was not done in a public forum. There were additional claims raised
for a writ of mandamus, superintending control, and violations of procedural and substantive due
process.
Multiple parties attempted to intervene, either as plaintiffs whose applications were also
denied or as defendants whose applications were approved. The trial court granted several parties
the ability to intervene as plaintiffs with claims similar to the claims alleged, but the trial court
notably denied intervening parties as defendants whose applications were approved. Relevant to
this appeal, the trial court denied Attitude Wellness, LLC’s motion to intervene as a defendant to
protect its prospective license.
Defendants moved for summary disposition and raised several grounds for relief under
MCR 2.116. After oral argument, the trial court concluded that plaintiffs failed to state a claim for
relief under the MRTMA and granted summary disposition under MCR 2.116(C)(8).
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The trial court concluded, however, that the City’s scoring process violated the OMA. The
trial court found that the City ordinance made “the City Manager responsible for scoring the
applications based on the scoring criteria,” and that the City manager enlisted “subordinates to
assist him with the task of scoring the applications.” Based on the record, the trial court found that
there was, in effect, a “Scoring Committee” composed of the public policy assistant, the director
of public safety, the City manager, and the community development director. The trial court
considered this “Scoring Committee” akin to the one that our Supreme Court concluded was used
by the Regents of the University of Michigan to skirt certain OMA requirements. Booth
Newspapers, Inc v Univ of Mich Bd of Regents, 444 Mich 211; 507 NW2d 422 (1993). The trial
court noted that “there [was] no evidence that the Scoring Committee held any public meetings to
discuss the application review and scoring process,” and therefore, “the scoring process did violate
the Open Meetings Act.”
Plaintiffs then moved for attorney fees under MCL 15.271(4) because they prevailed on
their OMA claim, but the trial court denied that motion after it concluded that plaintiffs had not
commenced the civil action to compel the City’s compliance or enjoin the City’s further
noncompliance with the OMA. Instead, the trial court found that plaintiffs were seeking to enjoin
defendants from issuing licenses to applicants other than plaintiffs.
With respect to the myriad of other claims, the trial court determined that it did not need to
address them because its finding that the City violated the OMA sufficiently resolved those other
issues.
Plaintiffs appealed the trial court’s order regarding its ruling that the City’s ordinance did
not violate the MRTMA, and defendants cross-appealed regarding the trial court’s order that the
City had violated the OMA. Attitude cross-appealed the trial court’s denial of intervenor status.
II. ANALYSIS
“We review de novo a trial court’s decision to grant or deny a motion for summary
disposition.” Sherman v City of St Joseph, 332 Mich App 626, 632; 957 NW2d 838 (2020)
(citations omitted). “A motion for summary disposition under MCR 2.116(C)(8) tests the legal
sufficiency of a claim by the pleadings alone.” Smith v Stolberg, 231 Mich App 256, 258; 586
NW2d 103 (1998) (citation omitted).
A. THE MICHIGAN REGULATION AND TAXATION OF MARIJUANA ACT
Plaintiffs argue that the City’s ordinance conflicts with the MRTMA or is otherwise
restricted by the MRTMA so that it cannot include certain scoring criteria. Statutory interpretation
is a question of law which this Court reviews de novo. Sherman, 332 Mich App at 632. Whether
enacted by our Legislature in the normal course or the people directly via the initiative process,
Const 1963, art 2, § 9; League of Women Voters of Mich v Secretary of State, 339 Mich App 257,
279; ___ NW2d ___, (2021), this Court must give effect to “the plain, ordinary, or generally
accepted meaning” of the statute’s terms, D’Agostini Land Co, LLC v Dep’t of Treasury, 322 Mich
App 545, 554; 912 NW2d 593 (2018) (cleaned up). “A statutory provision is ambiguous only if it
irreconcilably conflicts with another provision, or when it is equally susceptible to more than a
single meaning.” People v Fawaz, 299 Mich App 55, 63; 829 NW2d 259 (2012) (cleaned up).
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“Only when ambiguity exists does the Court turn to common canons of construction for aid in
construing a statute’s meaning.” D’Agostini, 322 Mich App at 554-555 (cleaned up).
First, plaintiffs argue that the City ordinance does not comply with MCL 333.27959(4),
which provides:
If a municipality limits the number of marihuana establishments that may
be licensed in the municipality pursuant to section 6 of this act and that limit
prevents the department from issuing a state license to all applicants who meet the
requirements of subsection 3 of this section, the municipality shall decide among
competing applications by a competitive process intended to select applicants who
are best suited to operate in compliance with this act within the municipality.
Plaintiffs argue that this provision prohibits the City from adopting scoring criteria focused on
community concerns, such as green infrastructure, sustainability, aesthetics, and economic goals.
The City’s scoring criteria have no relation to whether an applicant is suited to operate a marijuana
establishment in compliance with the MRTMA because the competitive process must select
applicants that are “best suited to operate in compliance with this act.” (Emphasis added.) Thus,
for example, whether an establishment has solar panels has nothing to do with compliance with
the act, according to plaintiffs.
But plaintiffs read the MRTMA too narrowly. They would have this Court stop short in
its reading of MCL 333.27959(4) and omit the following emphasized phrase: “. . . best suited to
operate in compliance with this act within the municipality.” (Emphasis added.) The statute could
have been drafted to omit this qualifying language, and the provision would have made
grammatical sense. But, the statute was not written that alternative way, and the statute does
include the qualifier “within the municipality.” We read this qualifier as permitting a municipality
to craft criteria suited to its own local concerns, provided that the criteria conform to the other
provisions of the MRTMA.
Against this reading, plaintiffs suggest that this Court treat the phrase “within the
municipality” as nugatory. This we will not do. It is a long-standing principle of statutory
construction that a court must avoid a “construction that would render any part of the statute
surplusage or nugatory.” West St Joseph Prop, LLC v Delta Twp, 338 Mich App 522, 535; 980
NW2d 727 (2021). The plain and ordinary reading of MCL 333.27959(4) authorizes a
municipality to adopt a competitive process to select applicants that are best suited to operate
within the municipality. This includes concerns specific to that community, including green
infrastructure, sustainability, aesthetics, and economic goals.
Plaintiffs next argue that MCL 333.27956 cabins a municipality’s authority to impose local
regulations on a marijuana establishment. As a general proposition, this is true; but as applied, the
City’s ordinance does not stray outside the cabin. To see this, consider subsections (2) and (3) of
MCL 333.27956, specifically the following emphasized language:
2. A municipality may adopt other ordinances that are not unreasonably
impracticable and do not conflict with this act or with any rule promulgated
pursuant to this act and that:
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(a) establish reasonable restrictions on public signs related to marihuana
establishments;
(b) regulate the time, place, and manner of operation of marihuana
establishments and of the production, manufacture, sale, or display of marihuana
accessories;
(c) authorize the sale of marihuana for consumption in designated areas that
are not accessible to persons under 21 years of age, or at special events in limited
areas and for a limited time; and
(d) designate a violation of the ordinance and provide for a penalty for that
violation by a marihuana establishment, provided that such violation is a civil
infraction and such penalty is a civil fine of not more than $500.
3. A municipality may adopt an ordinance requiring a marihuana
establishment with a physical location within the municipality to obtain a municipal
license, but may not impose qualifications for licensure that conflict with this act
or rules promulgated by the department.
These provisions of the MRTMA do not prohibit or restrict a municipality from considering
the scoring criteria that plaintiffs complain are improper. Instead, the provisions expressly permit
a municipality to adopt an ordinance so long as it (1) is not unreasonably impracticable, (2) does
not directly conflict with the MRTMA or promulgated rules, and (3) regulates the time, place, and
manner of operation of a marijuana establishment. Id.The criteria used by a municipality to evaluate an application can certainly reflect and
anticipate whether that proposed licensee will be willing and able to conform to the local “time,
place, and manner” regulations enacted by that municipality. And, so long as those regulations do
not impose unreasonably impracticable requirements or conflict with the MRTMA or promulgated
rules, then the use of criteria that reflect those local concerns is permissible.
Here, there is nothing in the record to suggest that the criteria of which plaintiffs complain
are unreasonably impracticable or conflict with any provision of the MRTMA or a promulgated
rule. Rather, the criteria fit neatly within a reasonable understanding of the MRTMA’s “time,
place, and manner” provision. Accordingly, the trial court did not err when it granted summary
disposition to defendants on this issue.
B. OPEN MEETINGS ACT
Although the trial court did not find fault with the City under the MRTMA, it did conclude
that the City violated the OMA. The trial court held that the City employed an impermissible
“Scoring Committee” similar to the one found objectionable in our Supreme Court’s opinion in
Booth.
The trial court erred. The City ordinance did not create a “Scoring Committee”; rather, the
City’s ordinance provided that the City manager would review the applications before sending
them to the planning commission, which would then send them to the City council for ultimate
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approval. Even though the City manager was aided by other officials and staff, there was no
delegation of decision-making duties to these persons. The trial court’s reference to Booth was
misplaced, and this case is more similar to our Supreme Court’s decision in Herald Co v City of
Bay City, 463 Mich 111, 134-135; 614 NW2d 873 (2000), in which our Supreme Court explained
the distinguishing feature of Booth:
The important distinguishing feature of Booth was that the board was clearly a
“public body” that was subject to the OMA, and the various regents and subquorum
groups had no independent authority to narrow the field, make a recommendation,
or select a president. The board effectively sought to delegate its authority as a
body subject to the OMA to various bodies of its own creation that it believed were
not subject to the OMA, for the express purpose of avoiding the requirements of
the OMA.
Thus, the decision in Booth precluded an attempt by a public body to evade
the OMA (and thus circumvent legislative intent) by delegating its authority. In
this case, the city manager was assigned the task of recommending a new fire chief
directly by the city charter, and, therefore, he required no delegation of authority
from the city commission in order to perform that function. Under these
circumstances, the Legislature, by electing not to include individuals in the
definition of public body in the OMA, has exempted the city manager from its
requirements.
There was no impermissible delegation of authority to the City manager because the
ordinance itself authorized the City manager to review the applications before sending them to the
City council. Berkley Code, § 30-806(f)-(h). The City ordinance’s procedure that dictated that
the City manager would review applications did not involve the work of a “public body” for the
purposes of the OMA because, as recognized in Herald, an individual person is not included in the
definition of a public body for the purposes of the OMA. See MCL 15.262(a). Thus, the process
by which the City manager scored the applications was not required to be conducted in a public
hearing even though the manager enlisted the help of other City employees to accomplish the task.
The ultimate decision on which applications were approved was made by the City council, all in
accordance with the OMA.
This reading is consistent with this Court’s recent holding in Pinebrook Warren, LLC v
City of Warren, ___ Mich App ___, ___; ___ NW2d ___ (2022) (Docket Nos. 355989, 355994,
355995, 356005, 356011, 356017, 356023, 359269, & 359285), slip op at 18-23, in which the
Court held that the use of a review committee to evaluate applications for medical-marijuana
licenses was not subject to the OMA because the ordinance at issue merely allowed for an advisory
board to assist the City council.
We reverse the trial court’s decision that defendants violated the OMA.
C. PLAINTIFFS’ REMAINING CLAIMS
Collectively, plaintiffs have also alleged various claims of substantive and procedural due
process, declaratory relief, and injunctive relief. Additionally, plaintiffs in Docket No. 357654
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moved for a writ of mandamus as well as for the trial court to impose superintending control over
the City. The trial court has not yet addressed these issues. “Generally, an issue is not properly
preserved if it is not raised before, addressed by, or decided by the lower court or administrative
tribunal.” General Motors Corp v Dep’t of Treasury, 290 Mich App 355, 386; 803 NW2d 698(2010). We decline to address these issues on appeal, and instead remand them to the trial court
for proceedings consistent with this opinion.
D. ATTORNEY FEES
Defendants argue in their cross-appeal that the trial court properly declined to award
plaintiffs their attorney fees in relation to their OMA claim. The only plaintiff to raise this issue
on appeal was Yellow Tail Ventures, Inc., but its appeal was dismissed by stipulation. No other
plaintiff has challenged the denial of attorney fees. Therefore, this issue is abandoned, and we
decline to address it.
E. INTERVENTION
Lastly, Attitude cross appeals the trial court’s denial of its motion to intervene. We review
a trial court’s decision on a motion to intervene for an abuse of discretion. Kuhlgert v Mich State
Univ, 328 Mich App 357, 377; 937 NW2d 716 (2019). Attitude alleged that it had an interest in
intervening to protect its preliminary license and proprietary information from being disclosed.
The trial court denied Attitude’s motion because it found that defendants were already adequately
suited to protect Attitude’s interests, Attitude did not have a claim or defense in common with
plaintiffs’ allegations, and the substance of the allegations concerned the City’s actions, not those
of Attitude.
MCR 2.209(B) governs the right of parties to intervene permissively in a case, and it states:
(B) Permissive Intervention. On timely application a person may intervene
in an action
(1) when a Michigan statute or court rule confers a conditional right to
intervene; or
(2) when an applicant’s claim or defense and the main action have a
question of law or fact in common.
In exercising its discretion, the court shall consider whether the intervention
will unduly delay or prejudice the adjudication of the rights of the original parties.
Even though Attitude’s interests are legitimate, it is not evident that these interests were a
subject of the litigation between the current parties. Moreover, even if the trial court agreed that
defendants violated the OMA or that the City’s ordinance was preempted by the MRTMA, there
were no facts to conclude that Attitude’s license would ultimately be revoked after a proper
rescoring. Furthermore, plaintiffs’ claims did not invite a fact-based comparison of the various
applicants, or the applicants who received the three highest scores, and, thus, Attitude was unable
to demonstrate that its proprietary information was at risk of being disclosed. The trial court did
not abuse its discretion in denying Attitude’s motion to intervene because it is not outside the range
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of principled outcomes that plaintiffs’ claims did not involve a question of law or fact relating to
Attitude’s interests.
III. CONCLUSION
The trial court did not err when it determined that the City’s ordinance did not conflict with
the MRTMA because that act expressly allows municipalities to enact ordinances regulating the
number of marijuana businesses, and the criteria enacted by the City conform with the MRTMA.
The trial court did, however, err when it determined that the City had violated the OMA by not
holding the City manager’s scoring process open to the public, because the City ordinance
provided the City manager with the authority to review the applications before making
recommendations to the City council.
The trial court did not err when it denied Attitude’s motion to intervene because plaintiffs’
claims did not concern Attitude’s interests.
The trial court’s order denying plaintiffs’ attorney fees was abandoned when the only
plaintiff to raise the issue was dismissed from these appeals.
Lastly, we decline to address plaintiffs’ other claims because the trial court did not rule on
them. Instead, those matters are remanded to the trial court for proceedings consistent with this
opinion.
Affirmed in part, reversed in part, and remanded. We do not retain jurisdiction.
/s/ Brock A. Swartzle
/s/ Noah P. Hood
/s/ James Robert Redford
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