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149150 - Michigan Ass'n of Home Builders v City of Troy

Michigan Association of Home Builders, Associated Builders and Contractors of Michigan, and Michigan Plumbing and Mechanical Contractor Association,
 
Gregory L. McClelland
 
Plaintiffs-Appellants,
 
v
(Appeal from Ct of Appeals)
 
 
(Oakland – Kumar, S.)
 
City of Troy,
 
Allan T. Motzny
 
Defendant-Appellee.
 

Summary

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The Court of Appeals affirmed the decision of the Circuit Court in an unpublished per curiam opinion.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.