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Michigan Ass'n of Home Builders v. City of Troy

Supreme Court of Michigan

June 4, 2015

MICHIGAN ASSOCIATION OF HOME BUILDERS, ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN, and MICHIGAN PLUMBING AND MECHANICAL CONTRACTORS ASSOCIATION, Plaintiffs-Appellants,
v.
CITY OF TROY, Defendant-Appellee

Argued March 11, 2015.

For MICHIGAN ASSOCIATION OF HOME BUILDERS, ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN, MICHIGAN PLUMBING AND MECHANICAL CONTRACTOR ASSOCIATION, Plaintiffs-Appellants: GREGORY L. MCCLELLAND, LANSING, MI.

For CITY OF TROY, Defendant-Appellee: ALLAN T. MOTZNY, TROY, MI.

Chief Justice: Robert P. Young, Jr. Justices: Stephen J. Markman, Mary Beth Kelly, Brian K. Zahra, Bridget M. McCormack, David F. Viviano, Richard H. Bernstein.

[497 Mich. 282] BEFORE THE ENTIRE BENCH

MEMORANDUM OPINION

Robert P. Young, Jr., Chief Justice.

Plaintiffs, a group of associations representing builders, contractors, and plumbers, filed suit against defendant, the city of Troy, claiming that defendant's building department fees violated § 22 of the Single State Construction Code Act (CCA), MCL 125.1522, as well as a provision of the Headlee Amendment, Const 1963, art 9, § 31. The circuit court granted summary disposition to defendant, holding that the court lacked jurisdiction over the matter because plaintiffs [497 Mich. 283] had failed to exhaust the administrative procedure outlined in § 9b of the CCA, MCL 125.1509b.

The plain language of MCL 125.1509b, however, provides that the director[1] may conduct performance evaluations of defendant's " enforcing agency" and does not

Page 2

provide any administrative procedure relative to the entity responsible for establishing fees pursuant to MCL 125.1522(1): " [t]he legislative body of a governmental subdivision." Because the administrative proceedings in § 9b do not purport to provide the director with the authority to evaluate defendant's legislative body, the circuit court erred by granting summary disposition to defendant on the basis of plaintiffs' failure to exhaust their administrative remedies.

We reverse the judgment of the Court of Appeals and remand this case to the circuit court for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

After several years of operating its building department at a deficit, defendant--which is a " governmental subdivision" within the meaning of the CCA[2]--privatized the building department in July 2010. It entered into a contract with SafeBuilt Michigan, Inc.,[3] [497 Mich. 284] under which SafeBuilt assumed the duties of defendant's building inspection department, which is the " enforcing agency" within the meaning of the CCA.[4]

On December 15, 2010, plaintiffs filed the instant complaint, seeking declaratory and injunctive relief. Plaintiffs claimed that the fees generated under the contractual arrangement with SafeBuilt produced " significant monthly surpluses" [5] that were used to augment defendant's general fund in violation of MCL 125.1522 and constituted an unlawful tax increase in violation of Const 1963, art 9, § 31.

After discovery, plaintiffs moved for summary disposition under MCR 2.116(C)(10), and defendant sought summary disposition under MCR 2.116(I)(2). After conducting a hearing, the circuit court granted summary disposition to defendant, ruling that the court did not have jurisdiction over plaintiffs' lawsuit because plaintiffs had failed to exhaust their administrative remedies under § 9b of the CCA before filing their complaint.

Plaintiffs appealed, arguing that they were entitled to proceed in circuit court without first seeking administrative action. The Court of Appeals affirmed,[6] holding that because § 9b of the CCA provided an administrative [497 Mich. 285] procedure in which plaintiffs could have raised their claim, plaintiffs were required to exhaust that administrative procedure before proceeding to circuit court. Furthermore, the panel held that although plaintiffs' complaint alleged a constitutional violation, plaintiffs were still required to exhaust their administrative

Page 3

remedies when the constitutional claim was intermingled with an issue properly before an administrative agency.[7] We ordered and heard oral argument on whether to grant plaintiffs' application for leave to appeal or take other preemptory action.[8]

II. STANDARD OF REVIEW

We review de novo the grant or denial of a motion for summary disposition.[9] Moreover, whether the circuit court has subject matter jurisdiction over a particular matter is a question of law that this Court reviews de novo.[10] Additionally, to the extent that the resolution of this case involves questions of statutory interpretation, our review is also de novo.[11]

III. ANALYSIS

The CCA creates a state construction code that governs innumerable aspects related to the construction, use, and occupation of residential and commercial buildings and structures.[12] The CCA and the construction [497 Mich. 286] code " apply throughout the state," [13] and the CCA provides that, except as otherwise provided, the director is responsible for administering and enforcing both the CCA and the construction code.[14] The language " except as otherwise provided" --an exception to the director's plenary authority--permits governmental subdivisions to assume responsibility for administering and enforcing, as well as prosecuting violations of, the CCA and construction code.[15]

Plaintiffs contend that the transfer of building department monies to defendant's general fund violates MCL 125.1522(1), which provides:

The legislative body of a governmental subdivision shall establish reasonable fees to be charged by the governmental subdivision for acts and services performed by the enforcing agency or construction board of appeals under this act, which fees shall be intended to bear a reasonable relation to the cost, including overhead, to the governmental subdivision of the acts and services, including, without limitation, those services and acts as, in case of an enforcing agency, issuance of building permits, examination of plans and specifications, inspection of construction undertaken pursuant to a building permit, and the issuance of certificates of use and occupancy, and, in case of a board of appeals, hearing appeals in accordance with this act. The [497 Mich. 287] enforcing agency shall collect the fees established under this subsection. The legislative body of

Page 4

a governmental subdivision shall only use fees generated under this section for the operation of the enforcing agency or the construction board of appeals, or both, and shall not use the fees for any other purpose. [Emphasis added.]

Defendant cites MCL 125.1509b as the basis of its claim that plaintiffs are required to exhaust their administrative remedies before proceeding to circuit court. This statutory provision provides in relevant part:

(1) The director, as prescribed in this section, may conduct a performance evaluation of an enforcing agency to assure that the administration and enforcement of this act and the code is being done pursuant to either [MCL 125.1508a or MCL 125.1508b]. A performance evaluation may only be conducted either at the request of the local enforcing agency or upon the receipt of a written complaint. . . .
(2) When conducting a performance evaluation of an enforcing agency, the director may request that the local enforcing agency accompany the director or other state inspectors on inspections. The inspections shall be for the enforcement of this act and the code. The enforcing agency shall maintain all official records and documents relating to applications for permits, inspection records including correction notices, orders to stop construction, and certificates of use and occupancy. The enforcing agency shall make available for review all official records between 8 a.m. and 5 p.m. on business days.
(3) . . . The [State Construction Code Commission] may issue a notice of intent to withdraw the responsibility for the administration and enforcement of this act and the code from a governmental subdivision after receiving the results of a performance evaluation. The notice shall include the right to appeal within 30 business days after receipt of the notice of intent to withdraw the responsibility. [MCL 125.1509b (emphasis added).]

[497 Mich. 288] The plain language of MCL 125.1509b provides that the director may conduct a " performance evaluation" of the enforcing agency --here, the City of Troy Building Inspection Department--to assure that the " administration and enforcement of this act and the code is being done pursuant to either [MCL 125.1508a or 125.1508b]." The administrative proceeding articulated in MCL 125.1509b is simply inapplicable to the entity identified in MCL 125.1522(1) as being responsible for establishing the fees to be charged for building department services--the " legislative body " of the city of Troy.

Defendant maintains that § 9b applies to the " entire city." However, the Legislature made a clear distinction between the " enforcing agency" and the " governmental subdivision." Under the definitional sections of the CCA, the " governmental subdivision" is the municipality that has assumed responsibility for code enforcement,[16] whereas the " enforcing agency" is the governmental agency within the governmental subdivision that is responsible for code enforcement.[17] Had the Legislature intended to permit the director to conduct a performance evaluation of the Troy City Council, it surely could have said so. We presume that the Legislature intended the meaning of the words used in the statute, and we may not substitute alternative language for that used by the

Page 5

Legislature.[18] Thus, the plain language of § 9b indicates that it applies only to the " enforcing agency" and not the " legislative body of a governmental subdivision." For that reason, the circuit court erred by concluding that plaintiffs were required to exhaust the administrative remedy in MCL 125.1509b.

[497 Mich. 289] The judgment of the Court of Appeals is reversed, and the case is remanded to the circuit court for further proceedings consistent with this opinion.


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