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In the last year, the Michigan Court of Appeals and Michigan Supreme Court have issued multiple decisions that impact townships. Although this month’s E-letter could not cover all of those decisions, the E-Letter discusses five very notable decisions based on their substantial impact on townships not only in 2022, but in future years to come. The top five cases cover code enforcement through drones, standing for filing appeals to zoning decisions, the limits of a municipal officer’s ability to bind a township, and several marihuana licensing cases. This E-Letter explores those decisions in-depth and provides practical takeaways for Townships to consider. Most notably, municipalities received a string of decisions upholding marihuana licensing ordinances and issuance of marihuana licenses under those regulatory schemes. Townships should continue to watch this area of the law as pending cases regarding marihuana ordinances will likely be decided in 2023.

COURTS GRAPPLE WITH DRONES BEING USED FOR ORDINANCE VIOLATION

The Michigan Court of Appeals reviewed the use of drones by a Township in a zoning enforcement case for a second time after being remanded from the Michigan Supreme Court. The case originates from property owners appealing the denial of their motion to suppress (meaning to exclude) certain aerial photographs taken by the Township using a drone without the property owners’ permission, a warrant, or any other legal authorization. The township relied on the photos to support a civil action against the property owners for violating a zoning ordinance, creating a nuisance, and breaching a previous settlement agreement.

The court determined that the use of the drone violated the Fourth Amendment for being an unreasonable search and seizure, but upon remand from the Supreme Court was directed to further examine whether the exclusionary rule applied in a civil infraction action (where no fines were asserted) to enforce a zoning ordinance and abate nuisance violations. The exclusionary rule is a doctrine that prevents a government from using certain evidence gathered in violation of a constitutional right, such as obtaining evidence from a search or seizure in violation of the Fourth Amendment.

In analyzing whether the photographs should be excluded, the court reasoned that the use of drone evidence in a zoning infraction matter was a proceeding that would likely discourage the police from engaging in future misconduct since the police were not involved in such ordinance enforcement matters in the first place. The court further noted that as a civil matter with no fines or imprisonment, it was not a quasi-criminal matter.

The result was surprising to many as the court held that the exclusionary rule does not apply in this civil zoning infraction matter where fines were not sought. Accordingly, even if the Township violated the property owners’ Fourth Amendment constitutional rights, the violation did not require the photographs to be excluded from the proceeding. This means the photographs could be used to prove violations of the zoning ordinance.

Despite this ruling, it still raises the question of whether the use of a drone, even if suppression of evidence does not result, is an appropriate action when constitutional rights are being violated. Drone surveillance can be used to gather evidence for code enforcement, but a Township should ask for consent or obtain a search warrant from the court. Unauthorized drone use is still not recommended as the Township may be creating other potential legal and liability issues. Long Lake Township v. Maxon, Michigan Court of Appeals (2022).

SUPREME COURT CLARIFIES TEST FOR ANALYZING WHO CAN CHALLENGE CERTAIN ZONING DECISIONS

A developer owned land within a Township and sought to develop it into 23 residential condominiums and a marina adjacent to the Kalamazoo River channel and near Lake Michigan’s shoreline. Saugatuck Dunes Coastal Alliance, a private interest group, attempted to reverse the Township’s decision related to approval of the development by appealing to the Township’s Zoning Board of Appeals (“ZBA”). The ZBA affirmed the Township’s decision on grounds that the private interest group lacked standing, meaning that the interest group could not challenge the Township’s decision.

As a result, the Supreme Court analyzed the standard for determining how the interest group and other parties can challenge zoning decisions under the “aggrieved party” standard set forth in the Michigan Zoning Enabling Act (“MZEA”) and typically restated in most, if not all, local zoning ordinances. Based on the Court’s review of the statutes and other available authority, the Court held that to be a “party aggrieved” under MCL 125.3605 and MCL 125.3606, the appellant must meet three criteria.

First, the appellant must have participated in the challenged proceedings by taking a position on the contested decision, such as through a letter or oral public comment. Second, the appellant must claim some legally protected interest or protected personal, pecuniary, or property right that is likely to be affected by the challenged decision. Third, the appellant must provide some evidence of special damages arising from the challenged decision in the form of an actual or likely injury to or burden on their asserted interest or right that is different in kind or more significant in degree than the effects on others in the local community.

The court uses “others in the local community” to refer to persons or entities in the community, who suffer no injury or whose injury is merely an incidental inconvenience and excludes those who stand to suffer damage or injury to their protected interest or real property that relates to their reasonable use and enjoyment of it. The court identified factors that are relevant to determining special damages: (1) the type and scope of the change or activity proposed, approved, or denied; (2) the nature and importance of the protected right or interest asserted; (3) the immediacy and degree of the alleged injury and its relationship to the challenged decision as compared to others in the local community; and (4) if the party is a real-property owner or lessee, the proximity of the property to the proposed development or approval and the alleged effect on that real property.

In doing so, the court overruled prior precedent that limited the scope of the aggrieved party standard in certain respects.

The analysis for determining who is an “aggrieved party” under an applicable zoning ordinance and the MZEA, and accordingly, who can appeal a local zoning decision has been articulated in the Court’s multi-factor test. This new test will certainly create additional litigation in the lower courts as the trial and appellate courts apply it to zoning appeals that are authorized for an “aggrieved” party. Saugatuck Dunes Coastal Alliance v. Saugatuck Township (2022)

EVEN OUR FOUR-LEGGED FURY FRIENDS CANNOT ESTOP ENFORCEMENT OF A MUNICIPALITY’S ZONING ORDINANCE

This case pertains to a dog kennel/shelter that has about 60 to 75 dogs located within a Township. The defendant animal society did not have the necessary zoning approval for operating a dog shelter within the Township.

The animal society bought the property in the Township before checking zoning requirements.  After purchasing the property, the animal society asked the Township Zoning Administrator about the zoning requirements. The administrator said they “could apply for a kennel permit” with the county or purchase dog licenses for each dog. The animal society’s owner stated that she thought the zoning administrator “didn’t have a clue.” Ultimately, the county agreed to individually licensing the dogs.

Subsequently, the Township (not the county) received complaints about barking and filed suit against the animal society for not obtaining the necessary special use permit. In short, the county required individual licenses, and the Township required a special use permit; thus, Defendant was not compliant with the Township’s zoning ordinance.

The Township sought an injunction to require compliance. But, the animal society claimed that estoppel prohibited the Township from enforcing the ordinance. The animal society had contacted the Township, told that no local approvals were necessary from the zoning administrator, and relied upon such statements to proceed forward and only obtain county licenses.

The Court articulated the standard for indicating that municipalities generally are not estopped from enforcing zoning ordinances regardless of provisions made by their zoning officials, absent exceptional circumstances. As the Court explained, a township can be equitably estopped from enforcing a zoning ordinance when (1) a party by representation, admissions, or silence, intentionally or negligently induces another party to believe facts; (2) the other party justifiably relies and acts on this belief; and (3) the other party will be prejudiced if the first party is permitted to deny the existence of the facts.

Merely being misinformed about the provisions of an ordinance by a municipal official and expending some amount of money on that basis is insufficient grounds to estop the municipality from enforcing the ordinance. Thus, the same applied to the animal society, who also thought the Zoning Administrator “didn’t have a clue”, did not justifiably rely on the Zoning Administrator’s statements.

The Court noted the inquiry is whether the entire circumstances, viewed together, present a compelling reason to prohibit the municipality’s enforcement of its ordinance. Here the Court did not find that to be the case and determined that the zoning ordinance had to be satisfied. The facts of this case are not uncommon as applicants can receive different interpretations of a municipality’s ordinances. Regardless, the rule of law is that the ordinance controls and no individual official or officer can waive those requirements, whether intentionally or negligently, for an applicant. Township of Rose v. Devoted Friends Animal Society (2022).

COURT IS UNPHASED BY MUNICIPALITY SCORING MARIHUANA APPLICANTS AND PICKING LESS THAN THOSE WHO APPLIED

This case arises out of a dispute over the City of Mount Pleasant’s recreational marihuana permit scheme as well as issuance of licenses under the same. The City, pursuant to its ordinance, had a set of 9 factors to “score” marihuana facility applicants. The City only granted 3 permits for retailers, and the City received 10 applications.

The defendant was an applicant, and its score placed it in the 7th position out of 10. The defendant sued alleging substantive and procedural due process violations.

Courts are very hesitant to disturb a local government’s determination to award or deny permits for marihuana facilities. Here, the Court held that the City acted within its authority in denying the defendant’s application.

If the local government followed the procedures outlined in the Michigan marihuana statutes and its local ordinances, and the selection criteria and procedures are comprehensive and robust, courts will defer to a local government’s decision on marihuana permits.  Also, the court explains that being awarded a state license to operate a marihuana facility, or a local permit to operate a medical marihuana facility, does not constitute a legal entitlement to a recreational marihuana permit. Cary Investments v. City of Mount Pleasant (2022)

COURT UPHOLDS CREATION OF MARIHUANA REVIEW COMMITTEE AND PROVIDES SUPPORTIVE READING TO LOCAL AUTHORITY UNDER THE MICHIGAN’S ADULT-USE MARIHUANA ACTS

The Court of Appeals issued a second favorable marihuana licensing decision in 2022. This case pertains to disputes over the City’s denial of marihuana provisioning center permits. The City created a marihuana review committee (“Review Committee”) via ordinance. This Committee was tasked with reviewing, scoring, and ranking all marihuana facility permit applicants. The Committee would then make a recommendation to the City Council, which would vote to either approve or deny the marihuana facility permit. Thus, the Review Committee did not approve or disapprove a single applicant; only the City Council could approve the issuance of a permit.

Plaintiffs applied for permits and were denied. Plaintiffs argued that the undisputed evidence showed that the Review Committee violated the Open Meetings Act (“OMA”) by holding closed meetings that were required to be open to the public and did not otherwise comply with the requirements of the OMA. As the court explained, only “public bodies” are subject to the requirements under the OMA.  A public body is either a legislative body or a governing body that has been “empowered by state constitution, statute, charter, ordinance, resolution, or rule to exercise governmental or proprietary authority or perform a governmental or proprietary function . . . or a person or body that has been delegated the authority to act by a public body that itself is subject to the OMA.”

Thus, the inquiry by the Court was whether the Review Committee, in its own right, constituted a legislative body or governing body empowered to exercise governmental or proprietary authority or to perform a governmental or proprietary function (i.e. the relevant inquiry is whether the body had been delegated authority by a public body or whether the body had been granted independent authority to act.). The Court held that the plain language of the marijuana ordinance establishes that the Review Committee is neither a legislative body nor a governing body under the OMA, and the City did not delegate decision-making authority to the Review Committee. Because the Review Committee was not a public body subject to the OMA, it did not violate the OMA.

Here, the fact that the City Council retained the ultimate decision-making authority was very important. As the Court notes, even if in practice the City Council just rubber stamps the Committee’s recommendations, the Committee would still not be a “public body” because such a status is determined by the “four corners” of the governing document—the City’s marijuana ordinance—and not the Committees “actual” authority. Thus, reviewing bodies, such as the Review Committee, can be isolated from the requirements of the OMA if such entities are not granted independent authority, and the governing body of the municipality retains the ultimate decision-making authority.

The Court also explained the lack of a licensee’s property rights prior to issuance of a license. The Court explained that first-time applicants for licenses are not entitled to minimal due process. This is because a property right must be premised on more than a “mere unilateral expectation.” “A person must have more than an ‘abstract need or desire’ ” for a benefit in order to have a property interest in it; he or she must have a “ ‘legitimate claim of entitlement’ ” to the benefit. Because a first-time applicant for a license cannot show that he or she has an entitlement to the license, a first-time applicant has no property interest in the issuance of the license.

Marihuana cases (including application of competitive review factors) being decided before the Court of Appeals are turning out favorable! Municipalities that have followed their process, are transparent, apply the standards in their ordinance fairly and reasonably, and follow the OMA when applicable, are receiving a strong deference by the courts in light of the numerous marihuana licensing challenges that have arisen in the past few years. Pinebrook Warren v City of Warren, Michigan Court of Appeals (2022).

BONUS CASE: COURT ISSUES A THIRD MARIHUANA DECISION DEFERRING TO THE TOWNSHIP’S MARIHUANA PERMIT APPROVALS THAT FOLLOWED THE MICHIGAN MARIHUANA STATUTES AND LOCAL ORDINANCE

Before 2022 came to a close, the Michigan Court of Appeals was not yet done issuing decisions that supported local control and regulation of marihuana licensing schemes. In a third decision, the Court addressed a Township’s ordinance that limited the number of marihuana retailers within its boundary to one, and it required the Township Board to score three categories of information when deciding between competing applications: the background of the applicant, human resources, and area impact. Notably, the initial scoring was tied between Plaintiff and the successful applicant, but the Township awarded the permit to another applicant, not the Plaintiff. However, the record indicates that the initial scoring of the applications was done only by the Township’s supervisor.

The Township Board re-scored the applications. The successful applicant’s score was higher than the Plaintiff’s score. Plaintiff’s score was reduced because it no longer met the requirements for a medical-marijuana license and because its proposed building location had “poor visibility for drivers.”

Plaintiff sued the Township, alleging that the Township violated the due process and equal protection clauses of the Michigan Constitution and that the Township violated the Open Meetings Act. The court ruled for the Township. The court affirmed the holding of the trial court, ruling in favor of the Township. The court stated that the decision to award the license was not arbitrary or capricious because the record showed that the Township Board followed the procedures from Michigan’s marihuana statutes and its local ordinance. The Court showed strong deference to the Township’s decision regarding marihuana facility permits. Like Cary Investments, this case illustrates that courts often defer to municipal decisions in the face of a constitutional challenge to marihuana permit application procedures, so long as those procedures are reasonable, not arbitrary, and followed.

Thus, it is important to have robust procedures enacted through ordinances, both in the realm of marihuana facility permits and other discretionary administrative decisions. These procedures provide a basis to defend a municipal decision against a constitutional challenge to marihuana permit application procedures, so long as those procedures are reasonable and not arbitrary. Leoni Wellness, LLC v. Easton Township, Michigan Court of Appeals (2022)

CONCLUSION

Township decisions can cause litigation, but so long as Townships follow the statutory authority provided under the applicable statute and exercise their authority reasonably, courts generally uphold the lawfulness of Township decisions. 2023 will certainly prove to provide greater context and development for marihuana licensing and regulations as cases are still on appeal and making their way through the court system.

By Christopher S. Patterson

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.