934 N.W.2d 713
Mich.2019Background
- City of Troy privatized its Building Department in 2010 under a contract with SAFEbuilt: SAFEbuilt receives 80% of inspection fees (75% if annual fees exceed $1,000,000) and the City retains the remainder.
- From 2012–2014 the City retained substantial sums ($269,483; $488,922; $325,512), and by 2016 had retained over $2.3 million. Plaintiffs allege those retained fees were used to augment the City’s general fund and to cover prior Building Department deficits.
- Plaintiffs (trade associations) sued claiming the fee practice violated MCL 125.1522(1) (fees must be reasonable, reasonably related to cost including overhead, and used only for the enforcing agency) and the Headlee Amendment; they sought declaratory and injunctive relief.
- Trial court and Court of Appeals granted summary disposition to the City (procedural and merits rulings); Michigan Supreme Court reversed, holding the City’s use of fees to pay historical shortfalls violated MCL 125.1522(1) but remanding for further factual findings on allowable retained amounts.
- The Court ruled plaintiffs may seek declaratory and injunctive relief (no implied monetary tort remedy), and remanded so plaintiffs may establish representational standing under the Headlee Amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether retaining/using building-fee revenue to cover historical budget shortfalls violates MCL 125.1522(1) | Fees must correlate to costs of services; using fees to pay past deficits is not reasonably related to cost and thus unlawful | Fees are for the "operation" of the enforcing agency (past, present, future); occasional surplus used to cover past shortfalls is permitted and within local discretion | City’s practice of using fees to pay historical deficits violated MCL 125.1522(1); remand for fact-finding on allowable retained portion |
| Whether a private monetary cause of action exists under MCL 125.1522(1) | Statute codifies common-law remedies for unreasonable municipal fees; an implied private right of action should be available | No express statutory remedy; GTLA and governmental immunity foreclose common-law tort claims against municipalities without express authorization | No express or implied private monetary remedy; plaintiffs may pursue declaratory or injunctive relief instead |
| Whether plaintiffs have standing under the Headlee Amendment (Const 1963, art 9, §32) | Plaintiffs allege members are taxpayers and pay/are affected by fees and thus have standing to challenge under Headlee | Plaintiffs lack record proof that they or members paid taxes/fees in Troy; standing not established | On the existing record plaintiffs did not prove representational taxpayer standing; remand to allow members to establish standing |
| Proper remedy and next steps | Invalidate the City’s fee practice and require refund/monetary relief | Seek dismissal or narrow relief; argue Director or administrative remedies control enforcement | Remedies limited to prospective/declaratory/injunctive relief; remand for trial court to quantify permissible retained fees and for plaintiffs to prove standing |
Key Cases Cited
- Lash v. Traverse City, 479 Mich 180 (2007) (statutory violation may be enforced by declaratory or injunctive relief even if no private monetary remedy exists)
- Detroit Retail Druggists’ Ass’n v. Detroit, 267 Mich 405 (1934) (historical common-law challenges to municipal fee practices relied on by plaintiffs; pre-GTLA)
- Fletcher Oil Co. v. Bay City, 247 Mich 572 (1929) (common-law authority cited regarding unreasonable municipal charges)
- Vernor v. Secretary of State, 179 Mich 157 (1914) (older common-law precedent invoked by plaintiffs)
- Merrelli v. City of St. Clair Shores, 355 Mich 575 (1959) (statutory reasonableness standard does not require exact parity between fees and costs)
- Macomb County Taxpayers Ass’n v. L’Anse Creuse Pub. Schs., 455 Mich 1 (1997) (Headlee Amendment §32 grants standing to taxpayers to sue to enforce Headlee provisions)