Tag: Michigan Court of Appeals

Horse rescue project considered “commercial production” under (MI) Right to Farm Act; case remanded to consider GAAMPs

by Rachel Greifenkamp

Township of Webber v Bruce Austin
(Michigan Court of Appeals, April 22, 2014)

In 2011 Bruce Austin began a horse rescue project in the Township of Webber, Michigan on commercially zoned property that he had purchased for this purpose. The Township filed a complaint against Austin, alleging that the project violated the regulations of the commercial zoning district.  The Township was granted a preliminary injunction forcing Austin to temporarily cease his horse rescue project. At trial, Austin utilized the Michigan Right to Farm Act (RTFA) as an affirmative defense, stating that even though he had not yet made a profit from the project, he intended to in the future. The trial court deemed the animal rescue operation to be a valid nonconforming use of the property and was not a nuisance, and that therefore the use of the property was protected by the Michigan RTFA.  Following the trial court’s judgment, Austin filed for costs and attorney fees as well as costs for the transport, care, and feeding of the horses during the trial. Austin was granted attorney fees and costs but was denied animal care costs. The Township appealed both the judgment and the attorney fee award to the Michigan Court of Appeals.

The Court of Appeals addressed three issues critical to the outcome (1) characterization of the horse rescue project as a nonconforming use, (2) the application of generally accepted agricultural management practices (GAAMPs) under the RTFA, and (3) the horse rescue project as “commercial production” under the RTFA.

Nonconforming use.  A nonconforming use is “a vested right in the use of particular property that does not conform to zoning restrictions, but is protected because the use lawful existed before the zoning regulation’s effective date.”…When a property is transferred to a new owner, the nonconforming use may continue but cannot be expanded…To be a valid continuation of a nonconforming use, the new owner’s use must be “substantially of the same size and the same essential nature as the use existing at the time of passage of a valid zoning ordinance.” The court concluded that because the commercial zoning designation was in effect prior to Austin beginning his project, and the project was significantly different than the previous use of the property (no livestock was raised or sold), the horse rescue project was not a nonconforming use.

GAAMPs.  The township argued that the precedent set in the recently decided case of  Lima Township v. Bateson requires that a person asserting the RTFA as a defense has the burden of proving that the activity at issue is a protected operation, and that it complies with the generally accepted agricultural management practices (GAAMPs). Because the trial court’s refusal to consider the GAAMPs is directly contrary to the Bateson holding, the court determined that remand for further proceedings was necessary.

Commercial production. Finally, the township contended that the trial court’s determination that Austin’s horse rescue project was a commercial production protected by the RTFA was incorrect. The RTFA only protects activities associated with the commercial production of farm products.  While the RTFA itself does not define “commercial production,” previous cases have stated that commercial production means “the act of producing or manufacturing an item intended to be marketed and sold at a profit….There is no minimum level of sales that must be reached before the RTFA is applicable.  The trial court concluded that Austin successfully proved that he intended to operate the horse rescue project as a commercial production, and that absent clear error, the Court of Appeals could not overturn that assessment. This portion of the judgment was held by the Court of Appeals.

The judgment was reversed by the Court of Appeals and the case was remanded for rehearing the trial court level.

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Michigan Right-to-Farm Act does not protect horses kept for personal use

by Kaitlin Heinen

Peggy Sue Brown v. Summerfield Township
(Michigan Court of Appeals,  August 23, 2012)

Peggy Sure Brown claimed that the Right to Farm Act (MCL 286.471) “preempts a township ordinance that prohibits her from keeping her horses on property less than one and a half acres.” The trial court, disagreed, finding that Brown was not engaged in a commercial farming operation.  She appealed.

The Right to Farm Act “states that a farm or farm operation must not be found to be a public or private nuisance if it conforms to ‘generally accepted agricultural and management practices’ (GAAMPs), according to policy determined by the state commission on agriculture. Local government may not enact or enforce an ordinance that conflicts with the Right to Farm Act or the GAAMPs.” (MCL 286.474(6)) So “any township ordinance, including a zoning ordinance, is unenforceable to the extent that it would prohibit conduct protected by the [Right to Farm Act],” which includes ordinances requiring minimum lot sizes.

The Right to Farm Act “preempts ordinances only to the extent that they impose restrictions on commercial farming operations,” which means that the Act does not apply to property owners who are not engaged in commercial operations for profit. A farm operation is defined “as activity conducted ‘in connection with the commercial production, harvesting, and storage of farm products.'” Brown referenced the subsection (MCL 286.472(b)) that mentions “the care of farm animals.” However, this subsection is listed in connection with possible farm activities conducted in a commercial operation. It is not an exception to the commercial requirement.

Brown offered no evidence that she kept her horses for profit (breeding, boarding, horse rides for fee, etc.). The Michigan Court of Appeals did not have to address  whether the farm operation provision creates a cause of action or provides a defense because the Right to Farm Act does not apply to Brown. The court  also did not have to address whether the farm operation provision applies to a new farming operation in property zoned as residential. The trial court rightly found it unnecessary to address the issues.

The Michigan Court of Appeals also held that the trial court rightly granted summary disposition on Brown’s substantive due process claim because the ordinance was not unreasonable.  The Court of Appeals affirmed the trial court on Brown’s equal protection claim as well, since she offered no evidence that she had been treated differently than any other person. The trial court’s decision was thus affirmed.

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Lakeway easement interpreted as providing access, not a park

Gary Taylor

by Victoria Heldt

Bedford, et. al., v. Joan Yvonne Rogers, Joan Yvonne Rogers Trust
(Michigan Court of Appeals, April 17, 2012)

The long list of plaintiffs in this case is comprised of property owners within the Glen Eyrie subdivision located on Crystal Lake.  The plat (recorded in 1920) and the parties’ deeds established a 100-foot wide strip of land designated as the “lakeway” between the plaintiffs’ property and the edge of Crystal Lake.  The lots do not extend all the way to the water.  The lakeway was to be “dedicated to the common use of property owners in Glen Eyrie plat.”  Sometime after 1920, Crystal Lake Drive was constructed parallel to, and partially within, the lakeway.  Surveys done in 2001 and 2010 indicated that the border separating the property owners’ lots and the lakeway is located near the center line of Crystal Lake Drive.

Historically, some of the property owners built boathouses or storage units in the lakeway.  When Rogers purchased her lot in 1987 a 20 x 28-foot boathouse was built in the lakeway in front of her property.  In September 2009 she applied to the township for a permit to build a new 28 x 34-foot boathouse to replace the existing one.  The township granted the permit and Rogers began construction in October 2009.  The new “boathouse” was to include running water, heat, toilet facilities, a kitchenette, a workshop, and a second floor cupola.

As Rogers’ construction was in its early stages, the plaintiffs wrote a letter through an attorney asking Rogers to cease construction since the lakeway was reserved for the common use of property owners.  Rogers refused to stop the construction.  In December 2009 the Lake Township Zoning Administrator wrote her a letter stating the building violated the township’s zoning ordinance since it “includes substantial space designated by the Building Department as living quarters” and issued a stop work order.  Rogers appealed the administrator’s opinion and, in April 2010, the Board of Appeals voted that the boathouse constructed should be “allowed as a compatible non-commercial recreational facility.”  The Board did place certain conditions on the property that included the removal of certain residential features (e.g. a tub, shower, and certain fixed kitchen appliances).

In trial court, the plaintiffs filed a request for summary disposition citing trespass and nuisance.  They argued that the plat dedication granted property owners an “irrevocable easement over the lakeway property and prevented defendant from exclusively using the portion of the lakeway in front of her lot by constructing a new structure that expanded the footprint of the old boathouse.”  Rogers also filed for summary disposition, arguing she owned the portion of the lakeway in front of her property and had the right to make use of it.  The court noted that a tacit agreement existed among land owners that 100% of the lakeway was not dedicated for common use since most property owners built boathouses for personal use.  History supported that claim since most of the structures had existed for over 40 years.  The court acknowledged that the expansion of this boathouse by several feet would not further prevent other land owners from using and enjoying the lakeway.  It determined the expansion should be allowed.

On appeal the Court of Appeals first noted that a use under a plat dedication must be within the scope of the dedication and must not interfere with the owners’ use and enjoyment of the property.  In this case, the plaintiffs interpreted the plat dedication to create a park for common use by the lot owners.  This Court of Appeals disagreed.  The dedication stated that “the drive, court, spring road and lakeway” were dedicated for common use.  When interpreting language like this, it is in accordance with precedent to treat word groups in a list as having related meanings.  The drive, court, and spring road are all used as right-of-ways (access) for lot owners to travel to, from, and within the plat, not as a park (which implied open space without obstructions).  The Court stated that the lakeway is to be considered similar; i.e., as a right-of-way.  The Court further noted that the term “lakeway” suggests it should be used as a right-of-way rather than a park (since the word “way” is found within the term.)

Subsequently, the Court determined that “the scope of the dedication created an easement within the lakeway for common use of lot owners of the land as a right-of-way that allows lot owners to use the lakeway in the same manner as the drive, court, and spring road.”  Since Crystal Drive, which runs through the lakeway, satisfies the purpose of a right-of-way providing access, there is no need to prohibit obstructions such as boathouses from the lakeway.   The Court determined that the slightly larger boathouse would not prevent residents from using and enjoying the lakeway for its purpose as right-of-way any more so than the previous boathouse did.  Thus, it affirmed the trial court’s decision.

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Under Pontiac (MI) zoning, proposed use is a permitted outpatient clinic, not a crisis center

Gary Taylor

by Victoria Heldt

Common Ground v. City of Pontiac, Pontiac Planning Commission, Pontiac City Council
(Michigan Court of Appeals, May 3, 2012)

Common Ground owns a piece of land in the City of Pontiac on which it wanted to develop administrative offices and provide mental health services.  Catering to children, youth, and families in crisis, the services provided would include psychiatric screening, referrals, and outpatient counseling.  The land in question is zoned C-2, Central Business District.  This zoning classification allows for, among other things, “physical culture and health services.”  Property zoned C-2 also allows for any uses that are permitted in C-1 zones, which includes “medical clinics (outpatient only) and offices of doctors…and similar or allied professionals.”

Common Ground’s application was presented to the Pontiac Planning Commission at four separate meetings throughout 2008.  Provided with the application were reports from Madhu Oberoi (the city’s planning administrator) and David Breneau (City Planner) that stated the intended mental health center was a permitted use under the C-2 zoning district.  The planning commission also received complaints about the proposal on the grounds that it was not consistent with plans for the redevelopment of downtown Pontiac.  Pontiac’s Downtown Development Authority (DDA) opposed the proposal because it believed downtown Pontiac was “oversaturated…with mental health care facilities.”

Subsequently, the planning commission held a closed meeting with an outside attorney.  It received a legal opinion stating Common Ground’s proposed facility was considered a “crisis center” that was not a permitted use under C-2 zoning.  In September 2008, the commission voted against the proposal without articulating in the minutes of the meeting an explanation for the vote or the findings of the commission.  About a week later Oberoi, who was not a member of the planning commission, wrote a letter detailing the reasons for the plan’s denial.  Among the reasons was that Common Ground’s proposed use was not a stated use within C-1 or C-2 districts and that the development would not be compatible with the surrounding neighborhood.  Common Ground appealed the decision to the city council, which affirmed the denial.

The circuit court ruled that the planning commission’s decision was procedurally defective since it did not articulate its reasons for denial as required by statute.  It also determined that the proposed site was within the “permitted principle uses” of C-2 districts, so the commission should not have denied the application on that basis.  It noted the proposed facility was clearly an outpatient clinic and constituted a “physical culture and health services” facility regardless of the fact that the commission labeled it a “crisis center.”  It remanded the case to the planning commission for reevaluation.

On remand, the planning commission acknowledged that Common Ground’s proposed use was permitted under the zoning district.  It found, however, that any facility where patients stay longer than 18 hours, are admitted against their will, or restrained is contrary to the goal of district C-2 zoning development as it does not attract “heavy pedestrian activity” or enhance the “economic welfare” of the area.  It further found that an ambulance bay is not a permitted accessory to clinics in C-2 districts.  It conditionally approved Common Grounds proposal so long as its exterior was modified to comply with the design guidelines in the area and it did not contain any residential quarters or detention areas.  It further prohibited any patients from being brought to the clinic restrained, against their will, or in an ambulance vehicle.    Common Ground appealed the commission’s restrictions, arguing the circuit court already declared the facility was a permitted use and that the restrictions the commission identified lie outside the governing scope of the Zoning Ordinance.  It claimed the few instances of restraint and the use of ambulances are ancillary to the principal use.  The Pontiac City Council again ruled in favor of the planning commission and affirmed the conditions placed on Common Ground’s development.

Common Ground brought the matter back to circuit court.  It objected to the exterior design stipulation because the ruling did not identify how to comply with the current building design standards and because it claimed the DDA Design Committee did not have the authority to dictate such matters.  Common Ground challenged the conditions regarding patient detention and ambulance transportation on the grounds that the relevant Zoning Ordinance only pertained to “physical characteristics of the building exterior and site” and not to activities and use of the site.  This time around, the trial court determined that an ambulance bay should be permitted because it was included in the application from the start and therefore falls within the permitted use.  It also stated Common Ground should be allowed to have a detention center for similar reasons, but maintained the prohibition of residential quarters.

On appeal, the City argued the circuit court erred when it determined Common Ground’s proposal was a permitted use.  The Court disagreed.  It noted that the zoning district clearly allows “medical clinics (outpatient only) and offices of doctors…and similar or allied professionals” and “health services.”  The City failed to show that a “crisis center” is anything other than a form of outpatient mental health clinic.  Furthermore, the Court ruled that the circuit court did not err when it found the planning commission’s ruling procedurally defective.  The zoning ordinance clearly states that the commission is required to articulate its reasoning and findings when making a decision regarding a permit.  The City’s last argument was that the conditions regarding the detention center and the ambulance bay do not comply with the district’s zoning goals because it does not attract pedestrians and enhance the economic welfare of the area.  In support of this argument, it asserted the city’s police powers authorized the commission to place conditions upon the site plan.  The Court noted that no other legal authority was cited and the argument was insufficient.  It affirmed the circuit court’s ruling.

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Demolition not necessary to correct hazards posed by two historic Detroit structures

Gary Taylor

by Victoria Heldt

City of Grosse Pointe Park v. Detroit Historic District Commission
(Michigan Court of Appeals, April 19, 2012)

The City of Grosse Pointe Park (the City) wanted to demolish two buildings it owns on East Jefferson Street in Detroit – immediately adjacent to the City – to possibly construct a bus turnaround loop on the property.  One building was built in 1918 and the other in 1920.  In April 2007 the City applied to the Detroit Building Safety and Engineering Department (BS&E Department) for a permit to tear down the buildings, which it received.  Three days later, the BS&E Department issued a “stop work” order.  Since the properties are in a main street overlay area, the Detroit Planning and Development Department needed to sign off on the demolition and construction plans to ensure that it was “consistent with the design standards of the subdivision.”

In May 2007 the Jefferson Avenue Business Association asked the Detroit City council to establish the area as an interim historic district, which it agreed to.  The Historic Designation Advisory Board was ordered to study whether the property qualified for historic-designation status and the Detroit Historic District Commission (DHD commission) was to review the demolition and building permit applications within the scope of the Local Historic Districts Act (LHDA).

During April 2008 the City applied to the DHD commission for permission to demolish the buildings, noting that statue allows demolition where public safety is an issue.  It provided an affidavit from Ronald Supal, a building inspector, in which he stated the properties were “dangerous to human life and public welfare” and recommended they be demolished.  Jack Durbin, a professional engineer, also submitted a report recommending the buildings be razed.  Susan McBride, a staff member of the DHD commission, submitted a report noting that the City had never stated the cost of rehabilitating the building and argued the building should remain due to its historical and architectural value.  She claimed it is “one of the few remaining commercial districts that reflect commercial architecture and suburban development on the east side of Detroit during the 1920’s.”  At a public hearing, the DHD commission denied the application because it did not meet the United States Secretary of Interior’s standards for rehabilitation.

Soon after the hearing, the city council passed an ordinance that established the Jefferson-Chalmers Historic Business District, which included the buildings in question.  In July 2008 the City filed an appeal to the review board challenging the DHD commission’s denial.  It argued that the DHD commission’s decision was arbitrary and capricious since the buildings were only an interim historic district when the application was denied.

In July 2009 the review board affirmed the DHD commission’s denial to demolish.  It noted the level of expertise present in the DHD commission and its authority to decide these matters.  It also found that the opinions the City provided from Supal and Durbin failed to establish that the buildings were a public hazard.  The board took issue with Durbin’s report because it lacked specific facts to support the conclusion.  It further found that the City “failed to establish that demolition was necessary to improve or correct any problematic condition.”  The City appealed in circuit court, which affirmed the review board’s decision.

On appeal, the City claimed that the circuit court misapplied the substantial-evidence test.  The Court disagreed.  It noted that the evidence the City presented was unconvincing.  The pictures provided in Supal’s report showed the deterioration in the buildings was “far less severe than is seen in many buildings which are routinely rehabilitated in Detroit.”  The City argued that buildings needed to be demolished because they did not meet current safety codes.  This claim was not sufficient because code compliance is the most common reason for buildings to be rehabilitated.  It further noted that, even if the buildings were shown to be a hazard to public safety, the City would have needed to prove that the proposed work (demolition) was “necessary to substantially improve or correct” the situation.  The evidence did no such thing.  Rehabilitation, too, could substantially improve or correct the situation. The Court concluded that the review board’s decision to deny the demolition request was reasonable and supported by the evidence.

The City’s last argument was that, according to statute, it was not required to prove the buildings posed an immediate or imminent hazard to the public.  The Court admitted that the words “immediate” and “imminent” are not necessarily contained in the governing statute, but that the specific wording in this case is a minor issue.  The statute clearly provides that an applicant must prove a building is a hazard to the safety of the public.  Additionally, the circuit court did not rule that the building did not constitute an immediate or imminent hazard, but rather that the evidence failed to convince the review board that demolition was necessary.  The Court affirmed the circuit court’s decision.

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Lake access provided through plat not interpreted to include boat docks

Gary Taylor

by Victoria Heldt

John J. Banacki v. David W. Howe and Jamie C. Howe, et al.
(Michigan Court of Appeals, March 20, 2012)

John Banacki, the Howes, and the remaining defendants are all residents of the Gilmore Lake Subdivision.  It consists of 62 lots, a street, a park, and two courts (East Court and West Court).  Lots 1-36 have water frontage on Magician Lake while the remaining 26 lots have frontage along Gilbert Street.  East Court is a 25-foot wide strip of waterfront land in between lots 12 and 13 and West Court is a similar strip of land between lots 29 and 30.  Banacki owns lot 13, while the defendants are the owners of lots 47, 48, 49, and 50.  When the property was platted in 1941, the dedication stated that “the park, street, and courts, as shown on said plat are hereby dedicated to the use of persons owning land adjacent to said park, street, or courts.”

Banacki filed a trespassing complaint regarding the defendants’ installation of a pier, boat lift, wooden dock, and decking adjacent to Magician Lake on the East Court.  He asserted that they do not have a right to use East Court or the adjacent lake frontage since they are not owners of land adjacent to East Court.  He further argued that defendants’ additions interfered with his ability to use and enjoy East Court and the adjacent property.  He sought an injunction to prevent future installation of such structures.  Banacki also pursued a quiet title to declare himself and another (Smit) the owners of the property adjacent to East Court.

The Howes and the rest of the defendants filed for summary disposition, arguing no trespass had occurred.  They asserted that the language of the plat dedication gave all persons owning land adjacent to any park, street, or court the right to use the parks, street, or courts.  They also argued they had a prescriptive easement for the use of East Court since their predecessors used the property in a similar fashion for 65 years without complaint.  Banacki responded by filing his own motion for summary disposition, arguing the language of the dedication clearly prevented anyone from the seasonal installation of boat lifts and the overnight mooring of boats  in East Court.  Therefore, the defendants’ actions interfered with all lot owners’ right to use East Court.  The district court concluded the defendants’ use of East Court exceeded the scope of the plat dedication and granted summary judgment in favor of Banacki.  This appeal followed.

The question in front of the Court was to what extent nonriparian land owners have access to East Court.  According to statute, a nonriparian owner has the right to “use the surface of the water in a reasonable manner for such activities as boating, fishing and swimming” as well as “to anchor boats temporarily.”  Any additional uses must be granted by easement, which defendants argued was given to them through the plat dedication.  Since the language was unclear, the Court looked to the way in which the land was used at the time of the plat dedication.  Defendants provided an affidavit of Jack Szymanski, a previous owner of lots 47-50 for over 50 years, who testified that he used East Court as “lake access” and for the “overnight mooring of boats, and seasonal installation and removal of a wooden pier and shore station.”  He further stated that his parents, the original owners of the property, used East Court in a similar way.  The Court noted, however, that the record did not show that these activities occurred at the time of the plat dedication.  Therefore, it relied solely on the language of the dedication.

Typically, the granted “use” of streets and alleys near navigable waters extends up to the edge of the water and includes public access to the water.  The Court consulted the common definition of a “court” and determined it should be treated in the same way.  It concluded that the defendants failed to prove that the plat dedication granted any other “use” outside of general public access to the water surface.  There was no evidence that the dedication allowed individual lot owners to monopolize East Court by permanently parking boats or installing decks and boat lifts within East Court.  In regards to the defendants’ supposed prescriptive easement, the Court noted that a prescriptive easement is usually appropriate only where an express easement has failed because of a defect.  This is not the case here.  It further compared a prescriptive easement to adverse possession, which requires an element of adversity.  There was no adversity or hostility present in this case.  Therefore, the Court concluded that no prescriptive easement was granted.  It affirmed the district court’s decision.

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Refusal to rezone to multi-family not a due process violation; did not constitute exclusionary zoning

Gary Taylor

by Victoria Heldt

DF Land Development, LLC v. Charter Township of Ann Arbor
(Michigan Court of Appeals, November 17, 2011)

DF Land Development owned a 54-acre piece of property within Ann Arbor Charter Township (Township) that was zoned “A-1”.  This zoning classification allowed farming and agricultural use or one residential unit per every ten acres.  DF Land wanted the property rezoned to “R-7” so it could build multi-family residential units.  Its request was denied.  DF filed a substantive due process claim in court alleging that the denial to rezone the property constituted exclusionary zoning and a taking of the property.  The trial court granted summary judgment in favor of the Township and dismissed DF Land’s substantive due process and takings claims.

DF Land appealed, arguing that the refusal to rezone is arbitrary and capricious and that the current zoning was unreasonably restrictive.  They were of the opinion that it violated their substantive due process rights and was an “inverse condemnation of the property through regulation.”  The Court first noted that, in a review of a city ordinance, 1) the ordinance is presumed valid, 2) the challenger has the burden of proof to prove unreasonableness, and 3) the Court gives heavy weight to the trial court’s findings.  Additionally, in order to be successful in its claim, DF Land must show that no reasonable governmental interest is advanced by the zoning classification and that the ordinance is unreasonable “because of the purely arbitrary, capricious, and unfounded exclusion of other types of legitimate land use from the area in question.”

As to the question of whether the zoning ordinance serves a legitimate governmental interest, the Court found that it did.  The evidence presented showed that the ordinance worked to “preserve the rural character, natural features, and availability of open areas by limiting residential development on the property through density restrictions.”  According to precedent, this purpose constitutes a legitimate governmental interest.  It further found that the ruling was consistent with the historical use of the property, so it was not an arbitrary decision.  DF Land argued that the statute was too restrictive because it disallowed the property’s most economically viable use.  The Court dismissed that argument as irrelevant because a property does not, by law, need to be zoned for its most profitable use.

DF Land argued that the zoning ordinance was unlawfully exclusionary because it prohibited an R-7 zoning classification on the property.  The Court noted that an ordinance would only be considered exclusionary if it prohibited that zoning throughout the entire township.  Evidence demonstrated that 28-37% of the residential units in the township consisted of multi-family housing, so the R-7 zoning classification was not forbidden in the entire Township.  Therefore, the ordinance was not unjustly exclusionary.   The Court affirmed the trial court’s decision.

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Tear down your 9,000 sq. ft. mansion (and Happy Valentines Day!)

Gary Taylor

by Gary Taylor

Thom and Lockwood Hills HOA v. Palushaj
(Michigan Court of Appeals, February 14, 2012)

The Thoms live in the Lockwood Hills development in Macomb County. The Palushajs purchased the parcel of land adjacent to the Thoms. Several deed restrictions apply to the lots in Lockwood Hills. The relevant restrictions provide that any home built must be a minimum of 100 feet from any adjacent homes, and that any home built must be a minimum of 40 feet from the side lot line.
During construction of the Palushaj’s 9,000 square foot mansion, the Thoms approached them with concerns that the new home potentially violated these deed restrictions.  The Palushajs apparently sought the advice of counsel and concluded that the restrictions were no longer valid and did not apply to their planned construction. They proceeded with construction of their home as planned, which ended up located 80 feet from the Thom’s home and approximately 28 feet from the side lot line.  After litigation spanning years, the Court of Appeals in this case was faced with the question of the appropriate remedy for the violation of the deed restriction.  The court observed that

[D]eed restrictions are a form of a contractual agreement and create a valuable property right. If a deed restriction is unambiguous, we will enforce that deed restriction as written unless the restriction contravenes law or public policy, or has been waived by acquiescence to prior violations, because enforcement of such restrictions grants the people of Michigan the freedom ‘freely to arrange their affairs’ by the formation of contracts to determine the use of land.

The court emphasized that it was “not faced with a situation where by innocent mistake a house was built that slightly encroached into the setback zone. Rather, we have a substantial,
intentional and flagrant violation of the setback requirements…”  In light of this, the court determined that demolition of all or part of the home to bring it into compliance with the deed restrictions was the only adequate remedy available to be imposed by the courts.

OBSERVATION:  This is a case involving violation of home owners association covenants.  Would the court have been as merciless if it were a zoning violation?

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Conditions in development agreement not enforceable as contractual promises

Gary Taylor

by Victoria Heldt

Button Realty, LLC, v. Charter Township of Commerce and Country Hills Development, LLC
(Michigan Court of Appeals, September 22, 2011)

In 2004, Button Realty entered into a purchase agreement with Country Hills Development for the sale of 34 acres of land.  The agreement provided that Country Hills purchase the property in order to build a single-family residential project with pressure sewer and public water.  It stated that Button would enter into a legitimate land contract once Country Hills obtained site approval from the Charter Township of Commerce (the township).   It further stated that Button must agree to the imposition of any special assessments in order to cover costs for installing the water/sewer system.  Country Hills petitioned the Township for the creation of a special assessment district (which included the property) in order to finance the extension of the public water system to the property.  The Township approved.  Subsequent to approval of the site plan, Button and Country Hills executed a land contract in accordance with the terms of the agreement.

Country Hills submitted an application to the township to rezone the property (as it was zoned “undeveloped” at the time) to allow the single-family residence to be constructed.  The Township agreed and entered into a development agreement with Country Hills.  As a condition of the rezoning, Country Hills was required to undertake certain actions (such as the construction of the residences and the installation of a water system) within 15 years of the date of the agreement or else the property would revert back to its original zoning classification.  The Township noted that Country Hills was not required to do these things, but that they were a condition of the rezoning.

Country Hills eventually defaulted on its land contract with Button and the property was transferred back to Button before the public water and sewer lines had been extended throughout the development onto Country Hills’ property.  Button filed an action in district court seeking to have the assessments declared unenforceable on the grounds that they conferred no special benefit to Button.  They also claimed they received no notice of the assessment hearing, so the assessments were invalid.  In addition, Button claimed that Country Hills breached its contract with the Township when they failed to extend the water system to the property.  Button alleged that those contractual obligations conferred a direct benefit to Button, and so Button was a third-party beneficiary of the development agreement.

Country Hills argued that Button was not a third-party beneficiary of the agreement with the township, so therefore Button had no grounds to bring a lawsuit raising the issue that Country Hills was in breach of that contract.  Country Hills further claimed that it had not breached the contract since there was a 15-year limit in which to complete the actions and because the actions were not required.  The district court granted summary judgment in favor of the township and Country Hills on both claims.   Button appealed.

In regards to the question of whether Country Hills breached their development contract with the township, the Court of Appeals ruled they had not.  It noted the distinction between a condition and a promise.  A condition “is distinguished from a promise in that it creates no right or duty in and of itself but is merely a limiting or modifying factor.”  In this case, the actions to be taken by Country Hills were a condition to the rezoning of the property, not a requirement.  The only consequence of not completing the actions was that it would revert back to its previous zoning classification.  Additionally, the Court noted that the agreement allows for a 15 year deadline to complete the actions, and therefore the claim was not yet timely.

Further, the Court agreed with the district court in its decision that Button is not a third-party beneficiary of the development agreement.  A person is a third-party beneficiary of a contract only when the promisor undertakes an obligation “directly” to or for the person.  This means that not just anybody who benefits from a contract can enforce it.  Since Button was not named in the contract, it is not a third-party beneficiary.  The Court of Appeals affirmed the district court’s decision.

Contracts/Conditional Zoning, Minnesota courts, Rezoning , ,
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Local ordinance permitted to define “available public sanitary sewer system” more broadly than state statute

Gary Taylor

by Victoria Heldt and Gary Taylor

Roger Newell and Arelene Newell v. Village of Otter Lake, County of Lapeer
(Michigan Court of Appeals, November 15, 2011)

The Newells own property in the Village of Otter Lake on which sits a structure with a working septic system.  In 2004, the Village created a special assessment for its public sanitary sewage system.  The Newells were assessed $10,475; however, they were of the opinion that the assessment should not be applied to them so they filed a complaint with the Michigan Tax Tribunal.  During the time between when the Newells filed their complaint and the time of their hearing, the Village enacted an ordinance that changed the definition of an “available public sanitary sewer system.”  Under the new definition any public sewer system that “crosses, adjoins, or abuts a parcel upon which a structure is located” is considered an “available public sewer system” regardless of how many feet the system was from the structure it services or could potentially service.  This ordinance differed from the previously governing state statute (MCL 333.12751 (c)), which “available public sanitary sewer system as  “a public sanitary sewer system located in a right of way, easement, highway, street, or public way which crosses, adjoins, or abuts upon the property and passing not more than 200 feet at the nearest point from a structure in which sanitary sewage originates.”

At the Tax Tribunal trial, the Newells argued that the assessment was unjust because they received no benefit from the sewer system (they did not connect to it, nor did they need to connect to it).  The tribunal upheld the assessment and the Newells paid it.   Since they did not connect to the system, however, they refused to pay the operation and maintenance fees that were due each quarter thereafter.  When they were notified of their delinquency on the operation and maintenance fees, the Newells filed a claim in circuit court arguing that the ordinance was preempted by the previously governing state statute, that the fee violated the Headlee Amendment, and that the assessment violated the right to equal protection under the Michigan Constitution.  The court ruled in favor of the Village, finding that the preemption claim could have been resolved in the tax tribunal hearing so the court was prohibited from ruling on it.  Additionally it found that, although a municipality is not allowed to enact ordinances that conflict with state statutes, it is free to make ordinances that expand on them.

On appeal, the Newells again made a preemption claim arguing that the state statute preempted the Village’s ordinance.  They were of the opinion that they were not required to connect to the public sewer system (per the state statute MCL 333.12751 (c)) because their structure was located more than 200 feet from it.  The Court disagreed, finding that the Village’s ordinance was not in conflict with the state statute but merely expanded on it, which is allowable.  Thus, the Village’s ordinance was not preempted by the state statue.  The Court further noted that, in matters of public health such as a sewer system, municipalities act as an agent of the state in the regulation of such systems.

Citing People v. Llewellyn, the Newells additionally argued that this area of regulation was one in which state law has exclusive jurisdiction.  This argument rested on the fact that MCL 333.12751 was not included in the list of sections that the statute specified as being expandable by municipalities.  The Court rejected this argument, finding that the statute clearly anticipated changes by local governments.  It further found that the fact that the section was not listed did not equal a declaration that the state’s statutes were the exclusive governing power in that area.

The Newells also argued that the fee violated the Headlee Act, which prohibits municipalities from enacting a tax that was not authorized by state law, and from increasing an already authorized tax without a majority vote.  The Court found that since the fee is “serving a regulatory and not a revenue-raising purpose,” it is not considered a tax.  Consequently, the Headlee Act does not apply to it.  The Court affirmed the lower court’s decision in favor of the Village.

Fees, Michigan courts, Preemption, Public sewer and/or water services, special assessments, Taxes , , ,
Leave a Comment on Local ordinance permitted to define “available public sanitary sewer system” more broadly than state statute

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