Warren City Council v. Fouts

WARREN CITY COUNCIL, Plaintiff-Counterdefendant-Appellee, v. JAMES R. FOUTS, Defendant-Counterplaintiff-Appellant.

No. 361288

Court of Appeals of Michigan

December 29, 2022

Macomb Circuit Court LC No. 2022-000923-AW

Before: Cavanagh, P.J., and K. F. Kelly and Garrett, JJ.

Per Curiam.

In this budget dispute between plaintiff Warren City Council and its mayor, defendant James R. Fouts, defendant appeals by right the trial court's stipulated order of final judgment in favor of plaintiff. The core issue presented is whether the Warren City Charter ("Charter") permits plaintiff to unilaterally amend the recommended budget from defendant when passing a general appropriations resolution, or whether plaintiff is limited to simply affirming or rejecting the recommended budget as a whole. The trial court concluded that the Charter allowed plaintiff to make amendments to the budget and granted preliminary injunctive and declaratory relief in plaintiff's favor. We affirm those orders, and hold that under normal principles of statutory construction the Charter does not limit plaintiff to merely affirming or rejecting defendant's recommended budget. Rather, under the Charter, plaintiff may enact any budget so long as it otherwise complies with the law.

I. BASIC FACTS AND PROCEDURAL HISTORY

In April 2021, in his capacity as mayor, defendant submitted a recommended budget to plaintiff for approval, which included a line item of $615,000 for the City of Warren Downtown Development Authority ("DDA") for "Contractual Services" and a line item of $75,000 for DDA for "Community Promotions." In addition to being mayor defendant is also the chairperson of the DDA's Board, and the money for the "Contractual Services" line item was for an advertisement campaign called "MI Warren" featuring defendant. Plaintiff met to consider defendant's recommended budget and decided it would revise the budget to allocate $0 for DDA "Contractual Services" and $10,000 for DDA "Community Promotions."

On May 11, 2021, plaintiff adopted a General Appropriations Resolution ("Resolution") for fiscal year 2021-2022 that included the revisions to the DDA projects, as well as a salary increase for the Deputy Council Secretary. Defendant vetoed the resolution, stating that plaintiff did not have the authority to "propose and adopt its own budget" but could only "act upon the budget proposed by the Mayor." Plaintiff unanimously overrode the veto. Defendant nevertheless instructed finance staff to fund the DDA projects in the amounts he originally requested.

On September 15, 2021, the DDA Board approved an expenditure of $310,000 for the "MI Warren" advertising campaign which was to be funded from the "Contractual Services" and "Community Promotions" budget line items. During the September 15 meeting, the DDA Board discussed the budget dispute and the following exchange was memorialized in the meeting minutes:

Mr. Fox then stated how council eliminated funding for the recently proposed budget immensely and how once again there is a conflict. The Mayor proposed a budget of $615,000.00 in contractual services for DDA and council cut it to zero. He also proposed $75,000.00 for community promotion and council cut it to $10,000.00.

The Mayor has decided that we are going to move forward with his budget until a compromise is agreed upon. Mayor Fouts stated that he met with Ms. Moore to try and avoid costly litigation. This is the first time in history that City Council has sued the mayor & clerk. This is also the first time in history that council has fired the city attorney on their own accord and hired an outside law firm to act as the city attorney, both of which are a violation of the city charter.

Mr. Vicari asked if any of the line items on the proposed budget were the same as past budgets. Mr. Fox stated that most of them are the same or similar. An example would be contractual services, last year the budget was $500,000.00 and this year we are requesting $615,000.00. Community promotion was $75,000.00 last year and the same amount was requested for this year. There is nothing strange or out of the ordinary in the new proposed budget.

The Mayor stated that he is willing to compromise, but unfortunately council is not willing to do so. Some members refuse to even meet with him to discuss the matter.

According to plaintiff, as of January 31, 2022, the DDA "spent $180,266.90 in unappropriated funds and a total of $302,593.98 had been encumbered for 'Contractual Services' and $60,000 for 'Community Promotions.' "

On March 3, 2022, plaintiff filed a verified complaint seeking a writ of mandamus, declaratory judgment, and injunctive relief. Plaintiff alleged defendant's actions violated the Charter, the Uniform Budgeting and Accounting Act, MCL 141.421a et seq. ("UBAA"), and the recodified tax increment financing act, MCL 125.4101 et seq. ("RTIFA"). Plaintiff sought a ruling in its favor regarding its powers under the Charter and an order enjoining defendant's further expenditure of unappropriated money.

Plaintiff also moved for a temporary restraining order and preliminary injunction. Plaintiff claimed it would suffer irreparable harm in the absence of an injunction because it was likely no money already expended could ever be recouped, thereby causing injury to plaintiff and residents of the City of Warren. Plaintiff also argued that the public interest would be served by granting an injunction because the public had a "fundamental interest in having its elected officials operate within the confines of the law . . . ." In response, defendant argued that injunctive relief was not warranted because plaintiff was unlikely to prevail on its claims because under the Charter, plaintiff's role in the budget process was limited to reviewing and then approving or disapproving defendant's recommended budget. According to defendant, under Detroit City Council v Stecher, 430 Mich. 74; 421 N.W.2d 544 (1988), the Charter did not grant plaintiff the authority to amend the budget. Defendant also argued that plaintiff was unlikely to succeed on its mandamus claim because plaintiff did not identify a clear legal right it possessed different from that owed to the citizenry at large and did not identify a clear legal duty owed by defendant.

The trial court held a hearing on plaintiff's motion on March 28, 2022. Plaintiff argued the case was nearly identical with Zelenko v Burton City Council, unpublished per curiam opinion of the Court of Appeals, issued May 15, 2018 (Docket No. 339746),^[1] a case in which this Court sided with the defendant-city council after a budget dispute with the plaintiff-mayor in which the Court concluded the defendant could amend the plaintiff's proposed budget. Defendant argued, however, that Zelenko was wrongly decided and the language of the charter at issue was different than the Charter.

On March 31, 2022, the trial court issued a written opinion and order granting plaintiff's motion for preliminary injunction. The court found Zelenko to be persuasive, stating:

The procedure for the annual budget in Zalenko [sic] is similar to the procedure in this case. In Zalenko [sic], the city charter required department heads to submit statements of financial needs and anticipated revenues to the mayor by February 1, and the mayor assembles the statements and prepares a proposed budget. Id. The mayor then submits the proposed annual budget to the city council. Id. The city council "shall, by resolution, adopt a budget for the ensuing fiscal year" at a regular meeting. Id. (emphasis added).

The Zalenko [sic] Court noted that the Burton city charter was silent on the issue of whether the city council had authority to amend the mayor's proposed budget before adopting it. Id. at slip op. 2. However, the Zalenko [sic] Court looked to the plain language of the charter to determine the drafter's intention. Id. The Zalenko [sic] Court focused on the language of the charter which directed the city council to "adopt a budget . . ." Id. (emphasis added). The Zalenko [sic] Court determined that the use of the word "a" instead of "the" "suggested that the council is not limited to adopting the budget proposal submitted by the mayor." Id. "By the same token, if the city council is authorized to adopt a budget but is not restricted to consideration of the mayor's budget proposa1, we can infer that the city council may alter or amend the mayor's budget proposal as long as the approved budget otherwise complied with local and state law." Id.

In addition, the trial court found Stecher to be distinguishable because that case dealt with the issue of" 'whether the Detroit City Council had the authority to unilaterally amend a previously adopted budget in the middle of the fiscal year, rather than a budget proposal that had not yet been passed.'" Thus, the court concluded plaintiff was likely to succeed on the merits of its declaratory judgment claim because "the clear and unambiguous language of the Charter does not limit the City Council to adopting the recommended budget of Fouts. Therefore, the City Council may alter or amend Fouts' recommended budget as long as the approved budget otherwise complies with local and state law."

The trial court also concluded that plaintiff was likely to succeed on the merits of its mandamus claim:

The Charter requires Fouts to perform all acts required by law and that money is not to be drawn from the treasury of the city except in accordance with an appropriation. These acts are ministerial and are not within Fouts [sic] discretion. Further, the Court finds that the City Council presents sufficient evidence that it does not have another adequate remedy. Thus, without definitively deciding the merits of the City Council's claim for a writ of

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