Morgan Development LLC v. City of Detroit

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
MORGAN DEVELOPMENT, LLC, UNPUBLISHED
June 25, 2020
Plaintiff-Appellee,
v No. 346230
Wayne Circuit Court
CITY OF DETROIT, LC No. 18-002386-CH
Defendant-Appellant.
Before: TUKEL, P.J., and SERVITTO and BECKERING, JJ.
PER CURIAM.
Defendant, city of Detroit, appeals as of right the trial court’s partial denial of defendant’s
motion for summary disposition. Defendant raises two additional issues on appeal related to the
same order. In an effort to conserve judicial resources, we consider these two additional issues as
on leave granted. MCR 7.216(A)(3). We affirm.
I. RELEVANT FACTS AND PROCEDURAL BACKGROUND
In 2006, the parties entered into a contract for plaintiff to develop and build on 17.8 acres
of undeveloped land located in Detroit, generally referred to as Lenox Waterfront Estates (the
Lenox Property). Although plaintiff began work under the contract, ultimately it requested an
extension of the contractual deadlines because the real estate downturn made development of the
property unprofitable. Defendant refused and began the process to revert title of the property from
plaintiff to itself. Litigation ensued and, in settlement of the claims, the parties executed a new
development agreement on April 22, 2016. Under the terms of the 2016 agreement, plaintiff was
required to pay defendant additional funds at closing, after which defendant was to provide
plaintiff with a deed to the Lenox Property. The 2016 agreement defined “Closing” as “a date
agreed upon by the parties hereto for the transfer of title to the Property, but in no event shall said
date be more than nine (9) months from the date of this Agreement.”
According to plaintiff, defendant delayed the closing until December 16, 2016, and
required plaintiff to pay an additional $167,000. Defendant, however, never conveyed title to the
Lenox Property to plaintiff by quit claim deed as required under the 2016 agreement. Plaintiff was
never able to access financing that it had secured because it had not received title to the property,
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but it expended substantial additional amounts to further develop the property. In December 2017,
however, plaintiff received a notice demanding that it stop work immediately and to take certain
steps before restarting work. When plaintiff attempted to comply with the required steps,
defendant allegedly told plaintiff that it would not allow plaintiff to do so. Plaintiff thus obtained
counsel and notified defendant that if defendant failed to record a deed transferring title of the
Lenox Property to plaintiff, plaintiff would seek all remedies available under the agreement,
including specific performance. Defendant responded with a letter to plaintiff declaring plaintiff
in default under the 2016 agreement.
In March 2018, plaintiff filed a complaint against defendant asserting claims of breach of
contract, inverse condemnation, conversion, ejectment, slander of title, and unjust enrichment, and
seeking specific performance, to quiet title to the Lenox Property, and injunctive relief. In lieu of
filing an answer, defendant filed a motion for summary disposition under MCR 2.116(C)(7), (8),
and (10), alleging, among other things, governmental immunity, a ripeness issue, contract
preclusion, and duplicative claims. The trial court ultimately issued an order partially granting
defendant’s motion, but denying summary disposition on plaintiff’s intentional tort, quiet title,
specific performance, and injunctive relief claims. Defendant now appeals that order.
II. STANDARD OF REVIEW
This Court reviews de novo a trial court’s decision to grant summary disposition. Barnard
Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich App 362, 369; 775 NW2d 618
(2009). MCR 2.116(C)(7) allows for summary disposition when a claim is barred because of
immunity granted by law. “When reviewing a motion under MCR 2.116(C)(7), this Court must
accept all well-pleaded factual allegations as true and construe them in favor of the plaintiff, unless
other evidence contradicts them.” Dextrom v Wexford Co, 287 Mich App 406, 428; 789 NW2d
211 (2010). A motion for summary disposition under MCR 2.116(C)(8) tests the legal sufficiency
of a complaint. “Under this subrule all well-pleaded factual allegations are accepted as true and
construed in a light most favorable to the nonmovant.” Liggett Rest Group, Inc v City of Pontiac,
260 Mich App 127, 133; 676 NW2d 633 (2003). Under MCR 2.116(C)(10), summary disposition
is appropriate when there is no genuine issue with respect to any material fact and the moving
party is entitled to judgment as a matter of law. When reviewing a motion for summary disposition
brought under MCR 2.116(C)(10), “a court must examine the documentary evidence presented
and, drawing all reasonable inferences in favor of the nonmoving party.” Dextrom, 287 Mich App
at 415. This Court also reviews de novo issues of statutory interpretation, Beckett-Buffum Agency,
Inc v Allied Prop & Cas Ins Co, 311 Mich App 41, 44; 873 NW2d 117 (2015), and determinations
regarding the application of a statutory exception to governmental immunity. Reed v State of
Michigan, 324 Mich App 449, 452; 922 NW2d 386 (2018).
III. ANALYSIS
Defendant first claims that the trial court erred when it denied summary disposition on
plaintiff’s intentional tort claims of conversion, ejectment, and slander of title, averring that
defendant was completely immune from those claims under MCL 691.1407(1) and the trial court
erroneously concluded that the “proprietary function” exception found in MCL 691.1413 was
applicable. We disagree.
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“The primary goal of statutory interpretation is to give effect to the Legislature’s
intent,” and it is well-recognized that “[t]he words of a statute provide the most
reliable evidence of its intent[.]” Klooster v City of Charlevoix, 488 Mich 289, 296;
795 NW2d 578 (2011) (quotation marks and citations omitted). Consequently, we
focus on the statute’s plain language. Id. “Unless statutorily defined, every word
or phrase of a statute should be accorded its plain and ordinary meaning, taking into
account the context in which the words are used.” Krohn v Home-Owners Ins Co,
490 Mich 145, 156; 802 NW2d 281 (2011). A dictionary may be consulted to
determine a word’s common and ordinary meaning. Id. “When the language is
clear and unambiguous, we will apply the statute as written and judicial
construction is not permitted.” Driver v Naini, 490 Mich 239, 247; 802 NW2d 311
(2011). [Beckett-Buffum, 311 Mich App at 44.]
Governmental agencies are generally immune from liability for tort claims when “the
government agency is engaged in the exercise or discharge of a governmental function.” MCL
691.1407(1). However, MCL 691.1413 provides, in relevant part:
The immunity of the governmental agency shall not apply to actions to recover for
bodily injury or property damage arising out of the performance of a proprietary
function as defined in this section. Proprietary function shall mean any activity
which is conducted primarily for the purpose of producing a pecuniary profit for
the governmental agency, excluding, however, any activity normally supported by
taxes or fees.
In this case, the trial court determined that plaintiff had pleaded sufficient facts to establish that
defendant’s actions fell under the proprietary function exception.
The parties’ arguments regarding the applicability of the exception differ, in part, because
they have either broadly or narrowly defined defendant’s actions in this case. Defendant focuses
on the fact that the contract was executed by the planning and development board and was designed
to stabilize neighborhoods and get properties back on the tax rolls, thereby falling squarely within
the exercise or discharge of a governmental function. Plaintiff, on the other hand, characterizes
defendant as selling the Lenox Property as its “proprietor,” and, thus, not in the exercise of a
governmental function at all. Plaintiff then further argues that even if defendant’s selling of the
property was a governmental function, its primary purpose in selling the property was “producing
a pecuniary profit for the governmental agency,” placing it squarely within the exception found in
MCL 691.1413.
Defendant’s sole citation for its premise that its actions constituted a governmental function
is Jenkins v City of Detroit, unpublished per curiam opinion of the Court of Appeals, issued
November 6, 2001 (Docket Nos. 215116, 215117, and 215118). We reject defendant’s reliance
on Jenkins for three reasons. First, Jenkins is unpublished, so its holdings are not binding on this
Court. MCR 7.215(C)(1). Second, the Jenkins opinion relies on trial testimony for its
determination that “urban development and stabilization of neighborhoods are the sorts of
activities normally funded through taxes.” Jenkins, unpub op at 5. Thus, this is not a legal
determination or holding, but a factual statement based on testimonial evidence found in the
record; something that does not exist in this case. Third, there is a substantial factual difference
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between Jenkins and the instant case. In Jenkins, this Court noted “that the offers of repurchase
were made to the prior owners of title who were residing in Detroit, and not to the general
population, [which] indicates that the sales were not essentially commercial in nature.” Id. at 4.
In the instant case, the properties were sold to developers for significant amounts of money. The
developer was required to improve the property, construct residences on it and generally increase
its value, and, eventually, sell the developed properties to homeowners or businesses. This was
not an exchange designed primarily to benefit current residents at minimal expense to the city in
exchange for back taxes and funds to pay county taxes. This was a commercial transaction in
which the city sold the property at a discount to a developer with the understanding that the
developer would improve the property and make a profit, ultimately providing the city with
property that would be added back onto the tax rolls and increase the tax income to the city, and
the purchase price from the developer was essentially all profit which the city could use for other
things.
Indeed, plaintiff argued to the trial court that it paid $1.3 million to the city for the property,
and paid over $165,000 in further costs at the closing, reflecting a profit for the city. Plaintiff also
argued in its reply to defendant’s motion for summary disposition, “[m]oreover, these funds were
deposited into the general fund of the city and not utilized for any direct cost associated with the
city's sale of the Lenox Property.” Plaintiff raised this argument again at the motion hearing. Now,
for the first time, and only in its reply brief, defendant argues that plaintiff provided no evidence
to support its argument that the primary purpose of the sale was for profit.
This argument is also unavailing. First, this argument is not properly before us because “
‘raising an issue for the first time in a reply brief is not sufficient to present the issue for appeal.’
” Bronson Methodist Hosp v Mich Assigned Claims Facility, 298 Mich App 192, 199; 826 NW2d
197 (2012), quoting Blazer Foods, Inc v Restaurant Props Inc, 259 Mich App 241, 252; 673 NW2d
805 (2003) (alteration in Bronson omitted). Second, even if defendant had properly raised this
issue in its appellate brief, when this Court reviews a motion for summary disposition, it must rely
solely on the record as it existed at the time the trial court made its decision and will not consider
arguments that were not presented to the lower court for consideration in ruling on the motion.
Barnard, 285 Mich App at 381. Because defendant did not raise this argument before the trial
court for consideration, this Court cannot now consider it. Id. Finally, even considering the
substance of the argument, the lack of documentary evidence to determine whether the proprietary
function exemption applied in this case is the result of defendant’s failure to support its burden of
production. When a party files a motion for summary disposition, it must support its motion with
documentary evidence in support of the grounds asserted. MCR 2.116(G)(3). The trial court was
required to accept all of plaintiff’s well-pleaded allegations as true and construe them in the light
most favorable to plaintiff. Plaintiff having alleged that the proprietary function exception applied,
defendant was required to present evidence to support its assertion that the exception did not apply.
Thus, it was defendant who bore the burden of providing evidence to support its contention that
profit was not the primary purpose of the sale of the Lenox Property. “If the moving party fails to
properly support its motion for summary disposition, the nonmoving party has no duty to respond
. . . .” Barnard, 285 Mich App at 370. Under these circumstances, where defendant bore the
burden of producing evidence to support its argument that the proprietary function exception did
not apply, plaintiff had no obligation to provide evidence to support its allegation that the exception
did apply.
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Defendant next asserts that the trial court erred when it denied summary disposition on
plaintiff’s quiet title claim because plaintiff failed to allege title superior to defendant. This
argument is meritless. The fact that plaintiff does not have a deed that reflects some type of
property right does not preclude its quiet title action. Under MCL 600.2932(1),
[a]ny person, whether he is in possession of the land in question or not, who claims
any right in, title to, equitable title to, interest in, or right to possession of land, may
bring an action in the circuit courts against any other person who claims or might
claim any interest inconsistent with the interest claimed by the plaintiff, whether
the defendant is in possession of the land or not.
Plaintiff alleged that it had complied with the terms of the 2016 agreement, after which
defendant was required to transfer title of the property to plaintiff. By providing a copy of the
2016 agreement in conjunction with its allegations, plaintiff established that it arguably had a right
to the Lenox Property under the terms of that contract and that its right to the Lenox Property was
superior to defendant’s rights. In addition, plaintiff and defendant disputed whether plaintiff had
complied with the terms of the 2016 agreement, thereby establishing a question of fact about
whether plaintiff was entitled to a deed reflecting ownership of the Lenox Property. Therefore,
the trial court did not err when it concluded that plaintiff had argued that it had superior title to the
Lenox Property and when it denied defendant summary disposition on that basis.
Lastly, defendant argues that the trial court erred by failing to dismiss plaintiff’s injunctive
relief count as duplicative of its specific performance count. Defendant contends that the counts
are duplicative because they both seek to force defendant to convey the Lenox property to plaintiff
and authorize construction on the property without unwarranted interference by defendant. We
disagree.
Whether claims are duplicative is generally determined not by the relief they seek, but in
the proofs required to establish a right to recovery. This is because MCR 2.111(A)(2)(b) permits
a litigant to plead “as many separate claims or defenses as it has, regardless of consistency and
whether they are based on legal or equitable grounds or both.” Litigants are thus precluded from
duplicate recoveries, but they are within their rights to plead in the alternative. See also Frieburger
v Dep’t of Mental Health, 161 Mich App 316, 319-320; 409 NW2d 821 (1987) (a given set of facts
may give rise to more than one cause of action, such that it would be improper to summarily
dismiss one claim merely because it relies upon the same set of facts as another claim).
Dismissal for duplicative claims can occur when a party has provided a separate label to
the exact same claim. See, e.g., Burnett v City of Adrian, 414 Mich 448, 453-454; 326 NW2d 810
(1982). However, in this case, regardless of whether plaintiff’s specific performance and
injunctive relief counts seek the same relief, the law does not consider them to be duplicative
claims. Furthermore, as plaintiff notes, Counts II and X do not seek the same relief. Plaintiff’s
specific performance count seeks to have the trial court order defendant to “perform its obligations
under the Development Agreement,” while its count for injunctive relief sought to prohibit
defendant from continuing to engage in actions that prevented plaintiff from constructing the
project. Thus, Count II seeks an order requiring defendant to take certain actions, while Count X
seeks an order prohibiting defendant from taking certain actions. The effects of both orders may
ultimately be the same, but the relief requested is not identical. For example, assuming that the
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trial court determines that plaintiff is entitled to specific performance, it retains the option of also
granting injunctive relief depending on whether it believes defendant has been actively attempting
to prevent plaintiff from completing the project in an attempt to realize additional funds from a
subsequent sale to a third party, or it believes that defendant honestly believed that plaintiff had
violated the 2016 agreement. Were the claims identical, the trial court’s determination that
plaintiff was entitled to specific performance would necessarily give plaintiff the relief it sought
from the injunctive relief. Because the trial court can grant one count without necessarily
providing the relief sought in the other, the trial court did not err when it determined that Counts
II and X were not duplicative.
Affirmed.
/s/ Jonathan Tukel
/s/ Deborah A. Servitto
/s/ Jane M. Beckering
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