CASTLE INVESTMENT CO V CITY OF DETROIT
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STATE OF MICHIGAN
COURT OF APPEALS
CASTLE INVESTMENT COMPANY,
UNPUBLISHED
March 19, 2002
Plaintiff-Appellant/Cross-Appellee,
v
No. 224411
Wayne Circuit Court
LC No. 98-836330-CZ
CITY OF DETROIT,
Defendant-Appellee/CrossAppellant.
Before: Cavanagh, P.J., and Doctoroff and Jansen, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court’s decision to grant defendant’s motion for
summary disposition and dismiss plaintiff’s complaint with prejudice. We affirm.
I
The historical facts of this case are, for the most part, uncontested by the parties. On
October 21, 1974, the Detroit city council declared an “emergency” and enacted an emergency
ordinance, 9-H, that required a certificate of approval from the city’s Buildings and Safety
Engineering Department (BSED) for the sale of one- and two-family homes. The ordinance was
effective in November 1974 and was set to expire in February 1975. Ordinance 9-H also
directed the BSED to promulgate rules and regulations for the home inspections, which the
department provided and which were placed on file and made available to the public. Ordinance
9-H did not require the city council to take action to approve the rules and regulations.
In response to a January 1975 letter from the mayor and a February 1975 public hearing,
the city council established a task force to work on a new ordinance for building inspections. In
the interim, the council passed Ordinance 104-H that directed the BSED to make available the
applicable rules and regulations for a certificate of approval. Again, the newly enacted ordinance
did not require city council approval of the inspection rules and regulations.
On June 8, 1976, the task force submitted proposed regulations to the city council.
Immediately thereafter, the city council passed Ordinance 124-H, which is the ordinance at issue
in this case. Unlike its predecessors, this new ordinance specifically required the BSED to
prepare a list of inspection guidelines and stated that the guidelines would not be effective until
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approved by the city council. The guidelines were made part of the public record, however,
there is no evidence that council ever approved them.
Plaintiff filed the instant complaint as a class action in November 1998. In its complaint,
plaintiff alleged that Ordinance 124-H, as amended by Ordinance 213-H,1 was invalid because
the ordinance required the city council to approve the guidelines for home inspection and the
council failed to do so. Plaintiff also alleged that because the council never approved the
guidelines, they are not effective and cannot be enforced, and the BSED was “usurping the
legislative law-making function in violation of the constitutional doctrine of separation of
powers.” Plaintiff sought damages for funds paid for inspections made under the invalid
ordinance and asked the court to enjoin defendant from present and future enforcement of the
ordinance and order an accounting of fees paid under the ordinance.
Defendant responded to plaintiff’s complaint with a motion for summary disposition
pursuant to MCR 2.116(C)(8). Defendant argued that the provision in the ordinance requiring
the city council to approve the guidelines was invalid because it conflicted with the separation of
powers provisions of the city charter by infringing on the rule-making power of the executive
branch of the city government and on the mayor’s veto power. Defendant further argued that
this invalid portion of the ordinance was severable and the remaining portions of the ordinance
would remain valid. Defendant also asserted that plaintiff failed to state a claim regarding the
constitutionality of the ordinance because it did not violate any provision of the Michigan or
United States Constitutions. Finally, defendant argued that invalidating the ordinance would
violate the intent of the city council in enacting the ordinance. The trial court denied defendant’s
motion in a written opinion and order that addressed only the first issue of defendant’s motion,
whether the guidelines approval requirement violated the separation of powers doctrine.
In June 1999, plaintiff moved for summary disposition pursuant to MCR 2.116(C)(10).
Plaintiff argued that because there was no genuine issue of fact that the city council did not
approve the guidelines, the guidelines were invalid and unenforceable. Plaintiff also argued that
the ordinance’s requirement that the council approve the guidelines did not conflict with the
executive branch’s rule-making power and that the invalid portion of the ordinance was not
severable. Defendant responded to plaintiff’s motion and filed a cross-motion for summary
disposition. Defendant argued that plaintiff’s challenge to the ordinance should be dismissed
because it was barred by laches and collateral estoppel. Defendant asserted that plaintiff failed to
challenge the ordinance within a reasonable time after it was enacted, and the procedural flaw
was an insufficient basis for overturning an ordinance that has been in effect for 23 years.
Defendant also claimed that public policy considerations for an ordinance that has been relied on
by the city and public for such an extended period of time should prevent a successful challenge.
Defendant further argued that, even if the guidelines were invalid, the Detroit City Code provides
for complete severability of all invalid provisions of an ordinance without affecting the validity
of the remaining portions of the ordinance. In addition, defendant argued that plaintiff was
1
The provisions of Ordinance 124-H have been codified in the Detroit City Code, Chapter 26.
Apparently, certain applicable sections of the code were amended in October 1997 by Ordinance
213-H. Those amendments are not at issue in this case.
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collaterally estopped from challenging the ordinance because plaintiff had unsuccessfully
challenged the same ordinance in an earlier case.
The trial court held a hearing on both motions in August 1999. After brief arguments, the
court stated on the record that it was denying plaintiff’s motion and granting defendant’s motion
based on laches and collateral estoppel. No further explanation of the court’s decision was
provided. In a written order, the court denied plaintiff’s motion and granted defendant’s motion
for the reasons stated on the record, and dismissed plaintiff’s complaint with prejudice.
II
Plaintiff first argues that the trial court erred when it dismissed plaintiff’s complaint
because the claim was not barred by laches. We disagree.
Laches is an equitable affirmative defense that remedies the general inconvenience that
results from a delay in the assertion of a legal right. Dep’t of Public Health v Rivergate Manor,
452 Mich 495, 507; 550 NW2d 515 (1996). Application of the doctrine of laches requires the
passage of time combined with a change in condition that would make it inequitable to enforce a
claim. Gallagher v Keefe, 232 Mich App 363, 369; 591 NW2d 297 (1998); In re Contempt of
United Stationers Supply Co, 239 Mich App 496, 504; 608 NW2d 105 (2000). The defendant
has the burden of proving that the plaintiff’s lack of due diligence resulted in some prejudice to
the defendant. Gallagher, supra. Each case should be determined on its own particular facts.
City of Troy v Papadelis (On Remand), 226 Mich App 90, 97; 572 NW2d 246 (1997).
In this case, plaintiff was challenging an ordinance that had been in effect and relied upon
by defendant for 22 years. Plaintiff insists that it raised the issue of the validity of the guidelines
shortly after it first discovered this procedural defect. However, it is apparent from the cases
cited by defendant that plaintiff’s counsel represented plaintiff or persons and entities similarly
situated to the instant plaintiff in court challenges of this same ordinance before 1998.2 Clearly,
plaintiff and its counsel had ample opportunity to investigate the validity of this ordinance in the
previous court challenges, and the failure to discover this technical error and challenge the
ordinance on this ground at an earlier date suggests that plaintiff has been less than diligent.
However, lack of due diligence or a long delay alone does not constitute laches, and
defendant must show that it was prejudiced by the delay or that allowing plaintiff to pursue its
claim would be inequitable. City of Troy, supra at 97. In this case, the prejudice to defendant is
clear. Defendant relied on the validity of this ordinance for more than 20 years, especially given
the fact that the ordinance has been unsuccessfully challenged in court on several occasions.3
2
Plaintiff’s counsel was involved in at least three cases that were appealed to this Court and
which challenged the validity of the ordinance at issue or the authority of the City of Detroit to
enforce the ordinance, including one in which the instant plaintiff was a party. Joy Management
Co v City of Detroit, 183 Mich App 334; 455 NW2d 55 (1990); Castle Investment Co, et al. v
City of Detroit, unpublished opinion per curiam of the Court of Appeals, issued May 24, 1996
(Docket No. 175553); City of Detroit v Sledge, 223 Mich App 43; 565 NW2d 690 (1997).
3
In addition to the cases listed in note 3, supra, the validity of this ordinance has also been
challenged in the following cases: Brand v Hartman, 122 Mich App 326; 332 NW2d 479 (1983);
(continued…)
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During that time, defendant collected innumerable fees and fines in reliance on the validity of the
ordinance and its accompanying guidelines. Were this Court or the trial court to declare the
ordinance invalid, defendant could face untold damages through reimbursement of fees to
thousands of potential plaintiffs, including all of the home buyers or sellers who have sold or
purchased property in the City of Detroit since 1976. It is apparent that allowing plaintiff to
pursue its claim would be inequitable and severely prejudicial to defendant.
In addition, we have denied long delayed challenges to ordinances affecting real estate
transactions because of public policy considerations. In Edel v Filer Township, 49 Mich App
210; 211 NW2d 547 (1973), this Court found that a zoning ordinance that had been in effect for
approximately 18 years should not be invalidated because the township failed to follow
procedural requirements in enacting the ordinance:
In the orderly process of handling real estate transactions where they are
affected by provisions of zoning ordinances and amendments, it is essential that
the members of the general public and the people buying or selling real estate
must be able to rely on the validity of the public record, to-wit: a zoning
ordinance and the zoning map issued in accordance with such zoning ordinance,
without the necessity of poring over musty files and searching newspaper
morgues, going back years in order to avoid a claim by other persons that there
was a failure to comply with some technical requirement of law in the adoption of
the ordinance in question. To hold otherwise would bring about chaotic
conditions beyond all comprehension in the transfer and usage of real estate in
any community having a zoning ordinance affecting such land. [Id. at 216,
quoting Northville Area Non-Profit Housing Corp v Walled Lake, 43 Mich App
424, 435-436; 204 NW2d 274 (1972).]
We believe the same considerations are applicable in this instant case. Defendant and
presumably thousands of home buyers and sellers have relied on the validity of the ordinance.
To now invalidate this ordinance would create “chaotic conditions beyond all comprehension,”
Edel, supra, as all of those potential plaintiffs line up to sue defendant to recover the fees or fines
they paid connected with the requirements of this ordinance. Therefore, we find no error in the
trial court’s conclusion that plaintiff’s claim was barred by laches.
III
Plaintiff next argues that the trial court erred when it determined that plaintiff’s claim was
barred by collateral estoppel. We agree, however we conclude that the error was harmless.
Collateral estoppel, also known as issue preclusion, bars relitigation of an issue in a
subsequent cause of action between the same parties or their privies if the prior proceeding
(…continued)
Butcher v City of Detroit, 131 Mich App 698; 347 NW2d 702 (1984); Butcher v City of Detroit,
156 Mich App 165; 401 NW2d 260 (1986).
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resulted in a valid, final judgment and the issue was actually determined in the prior action.
Ditmore v Michalik, 244 Mich App 569, 577; 625 NW2d 462 (2001). For collateral estoppel to
apply, the issue to be litigated in the second action must be identical and not merely similar to
the issue in the first action. Eaton Co Rd Comm’rs v Schultz, 205 Mich App 371, 376; 521
NW2d 847 (1994). The doctrine only bars relitigation of an issue that was actually litigated, i.e.,
put into issue by the pleadings, and submitted to and determined by the trier of fact.
VanDeventer v Michigan National Bank, 172 Mich App 456, 463; 432 NW2d 388 (1988).
Further, the parties in the second action must be the same as or privy to the parties in the first
action. Husted v Auto-Owners Ins Co, 213 Mich App 547, 556; 540 NW2d 743 (1995). A
person is privy to a party if the person has an interest in the matter affected by the judgment,
such as by inheritance, succession, or purchase. Id.
In this case, defendant argues that plaintiff’s claim is precluded by collateral estoppel
because plaintiff or its privies have already challenged the ordinance at issue. It appears that
plaintiff or its agents have sued defendant over issues involving this ordinance. See note 3,
supra. However, the issue whether the guidelines for home inspections are invalid because they
were not approved by the city council was not litigated in any of the cases cited by defendant.
Because collateral estoppel bars only the relitigation of an issue that was actually litigated in a
prior proceeding, VanDeventer, supra, defendant’s argument is without merit.
Because collateral estoppel does not apply to the instant case, the trial court erred when it
concluded that plaintiff’s claim was barred on that basis. However, this error is harmless
because the trial court correctly concluded that plaintiff’s claim was barred by laches. An error
in a ruling is not a ground for disturbing a judgment or order unless refusal to take this action
appears to be inconsistent with substantial justice. MCR 2.613(A). Because plaintiff’s claim
would have been dismissed on the basis of laches, the court’s erroneous conclusion that
dismissal was warranted due to collateral estoppel was not inconsistent with substantial justice.
IV
On cross-appeal, defendant argues that the trial court erred in denying its first motion for
summary disposition. In that motion, defendant claimed that the requirement in the ordinance
that the city council approve the guidelines is invalid because it conflicts with the separation of
powers provision of the city charter and that the invalid portion of the ordinance is severable
from rest of the ordinance. However, because we concluded that the trial court did not err in
granting defendant summary disposition on the ground that plaintiff’s claim was barred by
laches, then these issues are moot and we need not address them. An issue is moot when an
event occurs that renders it impossible for the reviewing court to grant relief. B P 7 v Bureau of
State Lottery, 231 Mich App 356, 359; 586 NW2d 117 (1998). Here, there is no meaningful
relief for the trial court’s denial of defendant’s first motion for summary disposition where the
court properly granted defendant’s second motion for summary disposition.
Affirmed.
/s/ Mark J. Cavanagh
/s/ Martin M. Doctoroff
/s/ Kathleen Jansen
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