Articles Posted in Michigan Supreme Court

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In Docket No. 151800, Clam Lake Township and Haring Charter Township (the Townships) appealed the determination of the State Boundary Commission (the Commission) that an agreement entered into under the Intergovernmental Conditional Transfer of Property by Contract Act (Act 425 agreement) between the Townships was invalid. In Docket No. 153008, as the Commission proceedings in Docket No. 151800 were ongoing, TeriDee, LLC brought an action against the Townships, seeking a declaratory judgment that the Act 425 agreement was void as against public policy because it contracted away Haring’s zoning authority by obligating Haring’s zoning board to rezone pursuant to the agreement. The Act 425 agreement at issue here sought to transfer to Haring Charter Township an undeveloped parcel of roughly 241 acres of land in Clam Lake Township that was zoned for forest-recreational use. The agreement provided a description of the Townships’ desired economic development project, including numerous minimum requirements for rezoning the property. Approximately 141 acres of the land were owned by TeriDee LLC, the John F. Koetje Trust, and the Delia Koetje Trust (collectively, TeriDee), who wished to develop the land for commercial use. To achieve this goal, TeriDee petitioned the Commission to have the land annexed by the city of Cadillac. The Commission found TeriDee’s petition legally sufficient and concluded that the Townships’ Act 425 agreement was invalid because it was created solely as a means to bar the annexation and not as a means of promoting economic development. The Townships appealed the decision in the circuit court, and the court upheld the Commission’s determination, concluding that the Commission had the power to determine the validity of an Act 425 agreement. The Townships sought leave to appeal in the Court of Appeals, which the Court of Appeals denied in an unpublished order. The Michigan Supreme Court held: (1) the State Boundary Commission did not have the authority to determine the validity of the Act 425 agreement and could only find whether an agreement was "in effect"; and (2) an Act 425 agreement can include requirements that a party enact particular zoning ordinances, and the Court of Appeals erred by concluding to the contrary. TeriDee's annexation petition was preempted. Both cases were remanded to the circuit court for further proceedings. View "Clam Lake Township v. Dept. of Licensing & Reg. Affairs" on Justia Law

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On a snowy night, plaintiff Krystal Lowrey went with friends to defendant Woody’s Diner for drinks to celebrate St. Patrick’s Day. While exiting the diner, she fell on the stairs and injured herself. She brought this premises liability action, and the trial court granted summary disposition in defendant’s favor. The Court of Appeals subsequently reversed, concluding that defendant had failed to establish that it lacked notice of the hazardous condition alleged in the complaint, reasoning that defendant had not presented evidence of what a reasonable inspection would have entailed under the circumstances. After its review, the Michigan Supreme Court concluded that in order to obtain summary judgment under MCR 2.116(C)(10), defendant was not required to present proof that it lacked notice of the hazardous condition, but needed only to show that plaintiff presented insufficient proof to establish the notice element of her claim. The Court concluded defendant met its burden because plaintiff failed to establish a question of fact as to whether defendant had notice of the hazardous condition. Accordingly, the Court reversed the Court of Appeals regarding defendant’s notice, reinstated the trial court’s order granting summary judgment in favor of defendant on that issue, and vacated the remainder of the Court of Appeals’ opinion. View "Lowrey v. LMPS & LMPJ, Inc." on Justia Law

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Plaintiff Bank of America brought an action against First American Title Insurance Company, Westminster Abstract Company, and others, alleging breach of contract and negligent misrepresentation in connection with mortgages that plaintiff had partially financed on four properties whose value had been fraudulently inflated and whose purchasers were straw buyers who had been paid for their participation. Shortly after closing, all four borrowers defaulted. After discovering the underlying fraud in the four loans during the foreclosure proceedings, plaintiff sued, among others, First American, which had issued closing protection letters that promised to reimburse plaintiff for actual losses incurred in connection with the closings if the losses arose from fraud or dishonesty, and Westminster, alleging that it had violated the terms of the closing instructions. The other defendants either defaulted or were dismissed. The Court of Appeals held that plaintiff’s claim against First American relating to the properties on which it had made full credit bids was barred by "New Freedom Mtg Corp v Globe Mtg Corp," (281 Mich App 63 (2008)). With respect to First American’s liability on the other two closings, the Court of Appeals concluded that the trial court properly granted summary disposition to First American and Westminster because plaintiff had failed to produce evidence that created a question of fact regarding whether Westminster knew of or participated in the underlying fraud in those closings. Finally, the Court of Appeals concluded that plaintiff had not established a link between Westminster’s alleged violations of the closing instructions and the claimed damages and, even if a link had been established, there were no damages because of plaintiff’s full credit bid at the foreclosure sale. The Supreme Court reversed, finding the Court of Appeals erred by concluding that plaintiff’s full credit bids barred its contract claims against the nonborrower third-party defendants. To the extent that New Freedom held that the full credit bid rule barred contract claims brought by a mortgagee against nonborrower third parties, it was overruled. Further, the closing instructions agreed to by plaintiff and Westminster constituted a contract upon which a breach of contract claim could be brought. Finally, the lower courts erred by relying on New Freedom to interpret the credit protection letters given that the terms of the letters in New Freedom differed materially from the ones at issue here. View "Bank of America, NA v. First American Title Ins. Co." on Justia Law

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Terri Sholberg died when the car she was driving hit a horse standing in the road. Diane Sholberg, as personal representative of her estate, sued Daniel Truman (the owner of the horse, which had escaped from its stall) and Robert and Marilyn Truman (the title owners of the farm that Daniel Truman operated). Other than being the title owners, defendants Robert and Marilyn Truman had nothing to do with the farm or the animals on it. The circuit court entered a default judgment against Daniel Truman, but granted summary judgment in defendants’ favor, concluding that they could not be held liable for a public nuisance because they were not in possession of the property. The Court of Appeals affirmed in part and reversed with regard to the public nuisance claim, holding that defendants’ ownership of the property from which the alleged nuisance arose was sufficient to allow a nuisance action against them. Plaintiff applied for leave to appeal with respect to an issue concerning violations of the Equine Activity Liability Act, and defendants filed a separate application for leave to appeal on the nuisance claim. The Supreme Court denied plaintiff’s application, and granted defendant's application, reversing reversed in part the Court of Appeals' judgment with respect to the public nuisance claim: defendants merely owned the property. Defendants never possessed or exercised any control over the property and had not even visited it in more than a decade. There was no evidence that defendants knew or had reason to know that Daniel Truman’s animals had been escaping the property when the accident happened. Because defendants did not control or possess the property or the horse, there was no basis for imposing tort liability on them for a public nuisance. "Daniel Truman was the person best able to prevent any harm to others, and given that defendants had resigned all charge and control over the property to him, he was the person exclusively responsible for the alleged public nuisance he created on the property." View "Estate of Sholberg v. Truman" on Justia Law

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The issue in this case involved two landowners’ facial challenge to the constitutionality of 18-59 of the Brighton Code of Ordinances (BCO), which created a rebuttable presumption that an unsafe structure could be demolished as a public nuisance if it was determined that the cost to repair the structure would exceed 100 percent of the structure’s true cash value as reflected in assessment tax rolls before the structure became unsafe. Specifically, the issue before the Supreme Court in this case was whether this unreasonable-to-repair presumption violated substantive and procedural due process protections by permitting demolition without affording the owner of the structure an option to repair as a matter of right. As a preliminary matter, the Court clarified that the landowners’ substantive due process and procedural due process claims implicated two separate constitutional rights, and that each claim must be analyzed under separate constitutional tests. The Court of Appeals erred by improperly conflating these analyses and subsequently determining that BCO 18-59 facially violated plaintiffs’ general due process rights. When each due process protection was separately examined pursuant to the proper test, the Supreme Court found that the ordinance did not violate either protection on its face. View "Leon v. City of Brighton" on Justia Law

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The issue before the Supreme Court in this case was whether the execution of a lease of tangible personal property constitutes "use" for purposes of the Use Tax Act (UTA). Petitioner purchased an aircraft from one company and immediately executed a five-year lease to another company that already had possession of the aircraft. The Department of Treasury assessed a use tax against petitioner based on the lease transaction, and the Michigan Tax Tribunal ultimately upheld the assessment. The Court of Appeals reversed, holding that petitioner did not “use” the aircraft because it ceded total control of the aircraft to the lessee by virtue of the lease and the lessee had uninterrupted possession of the aircraft before and during the lease. The Supreme Court concluded that because the right to allow others to use one’s personal property is a right incident to ownership, and a lease is an instrument by which an owner exercises that right, it follows that the execution of a lease is an exercise of a right or power over tangible personal property incident to the ownership of the property. Therefore, that constitutes "use" for purposes of the UTA. Accordingly, petitioner "used" the aircraft in question for purposes of the UTA when it executed a lease of the aircraft in Michigan, regardless of whether it ever had actual possession of the aircraft. View "NACG Leasing v. Dept. of Treasury" on Justia Law

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Devon Bailey sued Steven Schaaf, T.J. Realty, Inc. (doing business as Hi-Tech Protection), Evergreen Regency Townhomes, Ltd., Radney Management & Investments, and others for injuries suffered while at a friend's apartment in a complex owned and operated by Radney. Hi-Tech security guards William Baker and Chris Campbell were on duty and patrolling the complex on the night Bailey was injured. A resident had informed Baker and Campbell that Schaaf was threatening people with a gun at an outdoor gathering. Bailey alleged that Baker and Campbell ignored the warning. Sometime later they heard two gunshots; Schaaf shot Bailey twice in the back, rendering Bailey a paraplegic. Bailey alleged that Baker and Campbell were agents of Hi-Tech, and that Hi-Tech was an agent of Radney and Evergreen. Bailey asserted multiple claims against all defendants under theories of premises liability, negligent hiring and supervising, ordinary negligence, vicarious liability, and breach of contract. The trial court granted partial summary judgment to defendants; Bailey appealed. The Court of Appeals affirmed in part and reversed in part concluding in part that Evergreen and Radney owed Bailey a duty to call the police in response to an ongoing situation on the premises, extending the Supreme Court's decision in MacDonald v. PKT, Inc., (628 NW2d 33 (2001)) to the landlord-tenant context. In addition, the appellate court rejected Bailey's argument that he was a third-party beneficiary of the provision-of-security contract between Hi-Tech and Evergreen and that Hi-Tech did not owe Bailey a duty that was separate and distinct from Hi-Tech's duties under the Hi-Tech / Evergreen contract in effect at the time of Bailey's injuries. Upon review, the Supreme Court concluded that the Court of Appeals properly held that defendants were not entitled to summary judgment because, accepting Bailey's allegation as true, defendants had a duty to call the police. Bailey also alleged sufficient facts involving the existence of a contract for security services between the security company and the landlord, creating an agency relationship, and putting defendants on notice that their invitees and tenants faced a specific and imminent harm. The case was remanded to the appellate court for consideration of vicarious liability and negligence issues. View "Bailey v. Schaff" on Justia Law

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Hillsdale County Senior Services, Inc. (HCSS) filed an action against Hillsdale County, seeking mandamus to enforce the terms of a property-tax ballot proposition that provided for the levy of an additional 0.5 mill property tax in Hillsdale County to fund HCSS. The Hillsdale County voters approved the proposition in 2008 to raise funds for the provision of services to older persons by HCSS. Defendant entered into a contract with HCSS from January 1, 2009 through December 31, 2010, but did not levy and spend the full, voter-approved, 0.5 mill. The circuit court granted plaintiffs' writ for mandamus and ordered defendant to levy the entire 0.5 mill for the length of time approved by the voters. In an unpublished opinion, the Court of Appeals reversed the order, concluding that the circuit court lacked subject-matter jurisdiction over the case because the Tax Tribunal had exclusive and original jurisdiction over the matter. HCSS appealed, and the Supreme Court, after its review, agreed that the circuit court lacked subject-matter jurisdiction. Accordingly the Court of Appeals was affirmed. View "Hillsdale County Senior Services Center v. Hillsdale County" on Justia Law

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Elba Township brought an action against the Gratiot County Drain Commissioner seeking to enjoin the commissioner from consolidating the drainage districts associated with the No. 181-0 drain and its tributary drains. Elba Township argued that the consolidation proceedings had violated the Drain Code because the No. 181-0 drain petition for consolidation lacked the statutorily required number of freeholder signatures and the notice of the hearing by the board of determination had been deficient. Plaintiffs David Osborn, Mark Crumbaugh, Cloyd Cordray, and Rita Cordray intervened, similarly seeking declaratory and injunctive relief and claiming that the petition was defective and that the notice of the meeting of the board of determination was defective, resulting in a violation of their due process rights. With regard to the due process claim, plaintiffs’ primary complaint was that some of the property that would be affected by the drainage project lay outside the townships listed in the notice, although the notice stated that it was being sent to persons liable for an assessment. The drain commissioner moved for summary judgment, arguing that the appropriate number of signatures had been gathered and that the notice given appropriately informed those affected by the proposed consolidation of the date, time, and place of the board-of-determination hearing. Elba Township and plaintiffs filed cross-motions for summary judgment. The court granted the drain commissioner’s motion, finding that only 5 freeholder signatures were required on the petition rather than the 50 signatures the township claimed. Elba Township and the Osborn plaintiffs appealed. The Court of Appeals affirmed the trial court’s exercise of equitable jurisdiction, but reversed on the merits. Upon review, the Supreme Court concluded that the lower courts improperly exercised equitable jurisdiction over the signature-requirement question but properly exercised such jurisdiction over the question of notice. "The former question is purely statutory and, as such, there were no grounds on which the lower courts could properly exercise equitable jurisdiction. Though the exercise of equitable jurisdiction over the latter question was proper, we conclude that constitutional due process did not entitle plaintiffs to receive notice of the 'board of determination' hearing. The trial court’s order granting summary judgment for defendant was reinstated. View "Elba Township v. Gratiot County Drain Commissioner" on Justia Law

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The issue before the Supreme Court in this case was the manner in which defendant JPMorgan Chase Bank, N.A. (Chase), the successor in interest to Washington Mutual Bank (WaMu), acquired plaintiffs' mortgage. Plaintiffs' mortgage was among the assets held by WaMu when it collapsed in 2008. Specifically, the issue was whether defendant acquired plaintiffs' mortgage by "operation of law" and, if so, whether MCL 600.3204(3), applied to the acquisition of a mortgage by operation of law. Upon review of briefs submitted by the parties and the applicable statutory authority, the Supreme Court held that defendant did not acquire plaintiffs' mortgage by operation of law. Rather, defendant acquired that mortgage through a voluntary purchase agreement. Accordingly, defendant was required to comply with the provisions of MCL 600.3204. Furthermore, the Court held that the foreclosure sale in this case was voidable rather than void ab initio. Accordingly, the Court affirmed in part and reversed in part the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings. View "Kim v. J.P. Morgan Chase Bank, N.A." on Justia Law