City of Highland Park v. Wayne Cnty. Land Bank Corp.

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CITY OF HIGHLAND PARK, Plaintiff/Counterdefendant-Appellant, v. WAYNE COUNTY LAND BANK CORPORATION, Defendant/Counterplaintiff-Appellee.

No. 362158

Court of Appeals of Michigan

March 21, 2024

UNPUBLISHED

Wayne Circuit Court LC No. 19-010949-CZ

Before: CAVANAGH, P.J., and JANSEN and MALDONADO, JJ.

PER CURIAM.

Plaintiff appeals by right the trial court's order denying its motion for summary disposition and granting defendant's motion for summary disposition MCR 2.116(C)(10) (no genuine issue of material fact). We affirm in part, reverse in part and remand for additional proceedings.

I. BACKGROUND

This is the second time this case has been before this Court. The relevant background facts were summarized in this Court's prior opinion in City of Highland Park v Wayne Co Land Bank Auth Corp, unpublished per curiam opinion of the Court of Appeals, issued April 22, 2021 (Docket No. 354434) pp 1-3:

Plaintiff owns and operates a "combined" sewer system, meaning that both stormwater runoff and sanitary sewage are transported in the same pipes. All of the combined sewage is transported to a regional wastewater treatment facility. Defendant was formed in 2006 through an agreement between the Wayne County treasurer and the Michigan Land Bank Fast Track Authority . . . and owns hundreds of parcels of property in Highland Park, some of which have structures, and some of which are vacant land. Defendant receives drainage and stormwater runoff conveyance and treatment services from plaintiff with respect to properties it owns in Highland Park. In July 2016, plaintiff enacted a drainage and stormwater billing ordinance. The ordinance requires owners of property in Highland Park to be charged and pay for the drainage and stormwater runoff conveyance and treatment services attributable to their property. Consistent with the ordinance, plaintiff began billing Highland Park property owners, including defendant, for these services in August 2016. Defendant has never paid its bills. Plaintiff thus filed its complaint against defendant on August 12, 2019, for violation of the drainage and stormwater billing ordinance.

Defendant answered the complaint and asserted various affirmative defenses, including that the charges for drainage and stormwater runoff conveyance and treatment services constitute unconstitutional taxes under the Headlee Amendment, Const. 1963, art. 9, §§ 25 to 34. Defendant also filed a countercomplaint asserting that pursuant to Tax Reverted Clean Title Act (specifically MCL 211.1025), once it has conveyed title of a property to a third party, defendant is entitled to receive 50% of all taxes collected on the conveyed properties for a period of five years [(5/50 taxes)]. According to defendant, it has conveyed many, many properties to third parties since January 2016 but has yet to receive its 50% share of the taxes collected on those properties. Defendant asserted that plaintiff owes it $15,407.37 for 2017, $37,405.93 for 2018, and $86,157.86 for 2019.

Plaintiff filed a motion for partial summary disposition, citing MCR 2.116(C)(9) and (10). Plaintiff asserted that defendant's affirmative defense relying on the Headlee Amendment is subject to a one-year statute of limitations pursuant to [MCL 600.308a(3)], such that defendant is barred from challenging any drainage and runoff fees imposed prior to September 16, 2018 (one year prior to its filing of the affirmative defense). Plaintiff also asserted that the 50% tax fee defendant asserts is payable to it requires that defendant file a list of the properties sold in each calendar year to the Highland [P]ark assessor under MCL 211.1024(1). Defendant provided no list to the assessor until December 18, 2018, and is thus not entitled to its 50% of taxes for the 2017 and 2018 calendar years. Plaintiff thus sought dismissal of defendant's counterclaim with respect to its claim for 2017 and 2018 tax years. Plaintiff also sought dismissal of defendant's claim for the 2019 tax year without prejudice, as the claim was not yet ripe for adjudication. Finally, plaintiff sought partial summary disposition in its favor with respect to defendant's attempt to challenge plaintiff's charges for drainage and stormwater runoff conveyance and treatment services as a tax to the extent that such charges became due prior to September 16, 2018.

Defendant asserted that it did not pay the charged fees because the fee is actually a tax and defendant is exempted from paying taxes and because defendant, as an involuntary property owner, is not required to pay the stormwater drainage fee charged by plaintiff. Defendant also asserted that the fee constitutes an unconstitutional tax in violation of the Headlee Amendment and the statute of limitations imposed as to a Headlee claim has not begun to run in this case given that defendant did not bring an action under the Headlee Amendment. In addition, defendant asserted that it sold 417 parcels of property in Highland Park since 2017 and even if it did not provide a list of the properties sold to the assessor, the Tax Reverted Clean Title Act does not state that failure to provide a list excuses plaintiff from its obligation to provide defendant with its share of the tax money collected on those properties.

Defendant also filed its own motion for partial summary disposition pursuant to MCR 2.116(C)(10). According to defendant, it involuntarily obtained title to vast majority of the properties in Highland Park (except for seven of them) due to plaintiff's refusal to accept title to the properties (at no cost) following tax foreclosure. Defendant asserted that MCL 124.764(4) excuses involuntary property owners from plaintiff's imposed fees such that defendant was not subject to the fees for all but seven of the properties it sold.

On July 15, 2020, without a hearing and without issuing a written opinion, the trial court denied plaintiff's motion for partial summary disposition and granted defendant's partial motion for summary disposition. It simply issued an order that stated "Highland Parks motion denied-Wayne County Land Banks motion granted." However, the trial court issued a second order that day indicating that the case was closed. That order stated that defendant's motion was granted and "no attorney fees-case closed."

Only plaintiff appealed those orders. However, because of the trial court's cursory treatment of all the issues raised, this Court deemed "it impossible . . . to engage in any meaningful analysis." Highland Park, unpub op at 3. This Court noted that despite both parties having moved for partial summary disposition, and with the trial court's rulings on those motions, defendant's counterclaim was never resolved. Thus, this Court vacated the portion of the order closing the case and remanded for the trial court to

issue a written opinion and order setting forth a thorough and detailed analysis of each of the issues presented in the parties' motions for partial summary disposition. The trial court may do so with or without conducting a hearing, as it deems necessary, but in no way may it submit a written opinion to this [C]ourt that closes the case or does not completely address the arguments of the parties. [Id. at 3.]

On remand, the trial court issued an opinion and order detailing the basis for its summarydisposition rulings. The court agreed with defendant that statutes of limitation only apply to "actions," and not affirmative defenses. The trial court also addressed plaintiff's argument that defendant's claim for 5/50 taxes for tax year 2019 should be dismissed because it is not ripe. The court agreed, stating that because defendant's counterclaim was filed in September 2019, there were five months remaining in the 2019 winter tax year, which resulted in the claim not being ripe at the time of the filing. In its motion for partial summary disposition, defendant argued that with respect to all but seven properties it owned, it was an involuntary property owner, and therefore, it was exempt from paying the stormwater drainage fee under MCL 124.764(4). The trial court agreed that, as an involuntary owner, defendant was immune from suit and could assert other legal defenses under MCL 124.764(4), which makes it not liable to pay for stormwater services. The court therefore granted defendant's motion for partial summary disposition.

With the resolution of the parties' motions, the remaining claims involved plaintiff's claim for stormwater charges for the seven properties defendant did not obtain through involuntary foreclosure and defendant's counterclaim for 5/50 taxes for tax years 2017 and 2018. Plaintiff moved for summary disposition pursuant to MCR 2.116(C)(7) and (10). With regard to (C)(7), plaintiff argued that because defendant never previously appealed the trial court's sua sponte dismissal of its counterclaim, defendant was precluded by the doctrine of res judicata from pursuing its counterclaim. With respect to MCR 2.116(C)(10), plaintiff argued that there was no genuine issue of fact that defendant owed it the fees for the seven properties it did not involuntarily own. Plaintiff further argued that defendant could not demonstrate an issue of fact regarding its Headlee challenge that the fees at issue are actually taxes. Defendant moved for summary disposition pursuant to MCR 2.116(C)(10) regarding its counterclaim for the 5/50 taxes. Defendant argued that it was owed the 5/50 taxes as a matter of law and that there was no dispute that defendant sold a combined total of 345 properties in the city. Defendant sought 5/50 taxes for the years 2018, 2019, 2020, and 2021, totaling $195,744.96. Defendant acknowledged that plaintiff made two payments totaling $48,022.18, which brought the amount owed down to $147,721.78.

The...