On
July 1, 2010, the City of Troy privatized its building department by hiring
Safe Built, which performs the functions formerly performed by the city's
building department. Under the terms of the contract, Troy paid Safe Built 80
percent of the building department fees associated with Safe Built’s services,
and Troy retained the remaining 20 percent of the fees. The plaintiff
associations brought suit and moved for summary disposition claiming that
Troy’s building department fees violated the State Construction Code Act and
the Headlee Amendment. The plaintiffs contended that Troy’s contract with Safe
Built generated a revenue surplus that Troy was depositing in its general fund
and that constituted an unlawful tax increase under the Headlee Amendment. Troy
asserted that the trial court lacked jurisdiction because the plaintiffs had not
exhausted their administrative remedies before filing the complaint.
The
Oakland County Circuit Court determined that it lacked subject-matter
jurisdiction and dismissed the plaintiffs’ complaint. The plaintiffs appealed.
The
Court of Appeals affirmed the decision of the Circuit Court in an unpublished per
curiam opinion. The panel held that, because the Construction Code Act provided
for a grievance procedure in which the plaintiffs could have complained about
excessive fees, the plaintiffs were bound to exhaust this administrative remedy
before raising their claims in circuit court. Where such claims are
intermingled with constitutional claims (such as the plaintiff’s Headlee
Amendment claims in this case), the parties are still obligated to exhaust
their administrative remedies.
The plaintiffs filed an application for leave to appeal with the Supreme Court. On September 17, 2014, the Court ordered oral
argument on whether to grant the application or take other action.