Opinion
Nos. 356707 357862
07-14-2022
CARY INVESTMENTS, LLC, doing business as Consano Provisioning, Plaintiff-Appellant, v. CITY OF MOUNT PLEASANT, Defendant-Appellee.
Michael A. Komorn, Southfield and Alyssa L. McCormick for Cary Investments, LLC. Foster, Swift, Collins & Smith, PC, Grand Rapids (by Michael D. Homier and Laura J. Genovich ) for the city of Mount Pleasant.
Michael A. Komorn, Southfield and Alyssa L. McCormick for Cary Investments, LLC.
Foster, Swift, Collins & Smith, PC, Grand Rapids (by Michael D. Homier and Laura J. Genovich ) for the city of Mount Pleasant.
Before: Gleicher, C.J., and Gadola and Yates, JJ.
Yates, J. Michigan voters have generally decriminalized both medical and recreational use of marijuana as a matter of state law, but municipalities nonetheless have retained the power to limit or completely prohibit marijuana establishments within their boundaries. Beyond that, municipalities that permit such establishments can, by ordinance, require those establishments to obtain a municipal license, but a municipality cannot impose qualifications for licensure that are inconsistent with Michigan marijuana laws or with rules promulgated by the Department of Licensing and Regulatory Affairs. And if a municipality limits the number of available licenses, the municipality must "decide among competing applications by a competitive process intended to select applicants who are best suited to operate in compliance with" Michigan marijuana laws. See MCL 333.27959(4). Here, plaintiff, Cary Investments, LLC (Cary), doing business as Consano Provisioning, was one of 10 applicants for a license to act as a recreational-marijuana retailer, but defendant, city of Mount Pleasant (the City,) chose other applicants instead of Cary. Cary responded to that decision with jeremiads and litigation, but the City and the trial court rejected all of Cary's challenges. Because we agree with the trial court that the City acted within its authority in denying Cary's application for a license, we affirm as to every claim properly before us on appeal.
I. FACTUAL BACKGROUND
On September 9, 2019, the City adopted Ordinance No. 1046, authorizing the operation of three recreational-marijuana retailers within the city limits. The City accepted license applications beginning in January 2020, promising that if more than three applicants sought licenses, "the City will decide among competing applications by a competitive process intended to select applicants who are best suited to operate in compliance with" Michigan marijuana laws. See Mount Pleasant City Code, § 115.03(e)(1). By ordinance, the City set forth nine criteria to be considered, id. , and set up a selection committee consisting of the city clerk, the city planner, and the director of public safety. Mount Pleasant City Code, § 115.03(e)(2). The selection committee was assigned the task of holding a public meeting at which it would award points to each applicant "for each criterion that is satisfied" and, "based on the resulting scores, select applicants who are best suited to operate in compliance with" Michigan's marijuana laws. Mount Pleasant City Code, § 115.03(e)(3). By ordinance, the decision of the selection committee was deemed "final" and was "not appealable to the City Commission, City Zoning Board of Appeals, or any other City official or body." Id.
Ten applicants sought a license to operate as a recreational-marijuana retailer, so the City embarked on the competitive selection process prescribed by ordinance. That is, the selection committee conducted public meetings on July 10, August 12, and August 21, 2020, to score each of the 10 applicants on the nine criteria listed in Mount Pleasant City Code, § 115.03(e)(1). In the end, the selection committee awarded the highest scores to Lume Cannabis Co. (Lume) for two locations and House of Fire Provisioning for one location, so both of those applicants received conditional authorization to operate as recreational-marijuana retailers.
Cary finished seventh in the selection committee's scoring, so the City denied its application to operate as a recreational-marijuana retailer. In response, Cary began by expressing its displeasure during the public-comment period at a city commission meeting held on August 27, 2020. That prompted the city manager to send Cary a letter, explaining that "the City Ordinance does not allow for ... review or revision" of the selection committee's scoring. Undaunted, Cary requested a meeting with the city commission to discuss the matter, characterized the ordinance as unconstitutional and inconsistent with Michigan law, and threatened litigation. The city manager responded to Cary that "the City Commission is unable to grant the relief you appear to be requesting (awarding a license to your company)." Stymied by the City and its ordinance, Cary turned to the courts.
On December 10, 2020, Cary filed a one-count complaint against the City, setting forth allegations of due-process violations, undue influence, arbitrary scoring, antitrust violations, and a request for injunctive and declaratory relief. On January 4, 2021, the City moved for summary disposition under MCR 2.116(C)(4) and (8), asserting that the trial court lacked subject-matter jurisdiction and that the complaint failed to state a viable claim. On January 25, 2021, the trial court issued a five-page opinion and order awarding summary disposition to the City pursuant to both cited subrules of MCR 2.116(C). Cary filed a timely motion for reconsideration; the trial court denied the motion in a three-page written opinion issued on March 5, 2021. Cary also filed a proposed amended complaint on February 16, 2021, adding a mélange of new legal theories and a claim for wrongful denial of a request under the Michigan Freedom of Information Act, MCL 15.231 et seq. , to the hodgepodge of legal theories in the original complaint. On April 13, 2021, however, the trial court issued a four-page opinion denying leave to amend the complaint. That opinion and order also denied Cary's rather strange submission on March 30, 2021, styled as "Plaintiff's Motion in Opposition to Defendant's Motion in Opposition of Plaintiff's Motion for Leave to Amend Complaint," thereby cleaning up the last remnants of the action.
But before the trial court issued its final written opinion on April 13, 2021, Cary began filing appeals in this Court. Specifically, in a claim of appeal dated March 26, 2021 (Docket No. 356707), Cary told us that it was appealing the trial court's "final judgment and order entered on March 5, 2020 ...." As far as we can discern, however, that claim of appeal addressed the trial court's opinion and order issued on March 5, 2021, which denied Cary's motion for reconsideration. Next, in a claim of appeal dated May 4, 2021, Cary sought review of "a final judgment or order entered on April 13, 2021...." That filing appeared to be an attempt to pursue an appeal as of right from the trial court's opinion and order issued on April 13, 2021, denying Cary leave to amend its complaint and denying the odd motion from Cary opposing the City's opposition to the request for leave to amend. But we issued an order dismissing that claim of appeal for lack of jurisdiction because a trial court's postjudgment "order denying a motion for leave to amend a complaint ... is not a final order appealable of right." Cary Investments LLC v Mount Pleasant , unpublished order of the Court of Appeals, entered May 11, 2021 (Docket No. 357072). So Cary went back to the drawing board and filed an application for leave to appeal the trial court's opinion and order dated April 13, 2021, which we granted. Cary Investments LLC v Mount Pleasant , unpublished order of the Court of Appeals, entered November 30, 2021 (Docket No. 357862). Thus, what we have before us are Cary's appeals of the trial court's award of summary disposition under MCR 2.116(C)(4) and (8), the subsequent denial of Cary's motion for reconsideration, and the denial of leave to file Cary's proposed amended complaint. We must address, in turn, the various issues subsumed in all of those challenges presented by Cary.
II. LEGAL ANALYSIS
What's striking about this case is that there's so much less to it than meets the eye. But we must consider each of Cary's arguments about each ruling of the trial court at each stage of the proceedings. First, we must review de novo the trial court's ruling awarding summary disposition to the City in the written opinion and order issued on January 25, 2021. See El-Khalil v. Oakwood Healthcare, Inc , 504 Mich. 152, 159, 934 N.W.2d 665 (2019). Next, we must review for an abuse of discretion the trial court's denial of reconsideration to Cary in the written opinion and order issued on March 5, 2021. See Woods v. SLB Prop. Mgt., LLC , 277 Mich.App. 622, 629, 750 N.W.2d 228 (2008). Finally, we must review for an abuse of discretion the trial court's denial of Cary's motion to amend its complaint in the written opinion and order issued on April 13, 2021. See In re Kostin Estate , 278 Mich.App. 47, 51, 748 N.W.2d 583 (2008). "The determination that a trial court abused its discretion involves far more than a difference in judicial opinion." Id. "Rather, an abuse of discretion occurs only when the trial court's decision is outside the range of reasonable and principled outcomes." Id.
A. SUMMARY DISPOSITION
The trial court awarded summary disposition to the City under MCR 2.116(C)(4) and (8) in a written opinion issued on January 25, 2021. Summary disposition is appropriate under MCR 2.116(C)(4) if the trial court "lacks jurisdiction of the subject matter." "In deciding whether to grant a motion for summary disposition pursuant to MCR 2.116(C)(4), a court must consider ‘the affidavits, together with the pleadings, depositions, admissions, and documentary evidence then filed in the action or submitted by the parties ....’ " Henry v. Laborers’ Local 1191 , 495 Mich. 260, 273, 848 N.W.2d 130 (2014) (citation and brackets omitted). In contrast, because a "motion under MCR 2.116(C)(8) tests the legal sufficiency of a claim based on the factual allegations in the complaint," El-Khalil , 504 Mich. at 159, 934 N.W.2d 665, in "considering such a motion, a trial court must accept all factual allegations as true, deciding the motion on the pleadings alone," id. at 160, 934 N.W.2d 665. But if a summary-disposition motion based on MCR 2.116(C)(8) presented the trial court with evidence beyond the pleadings, "we treat the motion as having been brought and decided under MCR 2.116(C)(10) because it necessarily involved considering material outside the pleadings." Jawad A. Shah, M.D., PC v. State Farm Mut. Auto. Ins. Co. , 324 Mich.App. 182, 207, 920 N.W.2d 148 (2018). Summary disposition pursuant to MCR 2.116(C)(10) may be awarded only if "there is no genuine issue of material fact." El-Khalil , 504 Mich. at 160, 934 N.W.2d 665.
Turning first to the award of summary disposition under MCR 2.116(C)(4), we conclude that the trial court erred by deciding that it lacked subject-matter jurisdiction to address Cary's claim for relief set forth in its complaint. The trial court determined that "plaintiff's complaint is a disguised appeal that was not filed within 21 days after the Selection Committee's decision, as required by the Michigan Court Rules." Specifically, the trial court recast Cary's complaint as an appeal of a municipal body's decision that is "final and subject to appellate review by the circuit court pursuant to Const. 1963, art. 6, § 28." Carleton Sportsman's Club v. Exeter Twp. , 217 Mich.App. 195, 200, 550 N.W.2d 867 (1996). But the complaint frames Cary's claim as a matter of due process, not as an appeal. To be sure, when due-process claims simply "raise issues relative to the decision" of a local body, such as the selection committee, "and the procedures employed" by such a committee "in reaching that decision," "they do not establish separate causes of action," so they must be presented as an appeal. Krohn v. Saginaw , 175 Mich.App. 193, 198, 437 N.W.2d 260 (1988). But "an administrative body cannot rule on constitutional claims," Connell v. Lima Twp. , 336 Mich.App. 263, 285, 970 N.W.2d 354 (2021), so Cary's due-process claims that could not be raised before the selection committee may be presented to the circuit court in the first instance. Therefore, to the extent that Cary's due-process claims do more than challenge the "procedures employed" by the selection committee and its ultimate decision, we cannot uphold the trial court's award of summary disposition for the City under MCR 2.116(C)(4).
But we agree with the trial court that the City was entitled to summary disposition on the merits. Cary's complaint set forth a single claim with the heading: "Declaratory Judgment and Injunctive Relief." Although MCR 2.605 allows a plaintiff to seek a declaratory judgment and MCR 3.310 permits a plaintiff to request injunctive relief, those remedies must be predicated on a viable legal theory. Count one of the complaint simply asks for "a declaratory judgment that the City of Mt. Pleasant's denial of Plaintiff's [license] application violates Plaintiff's due process rights" and requests that the trial court "[e]njoin the City of Mt. Pleasant from denying Plaintiff to operate as a recreational marijuana retail facility" because of that due-process violation. Cary's theory of due process contains strands of two separate constitutional guarantees—substantive due process and procedural due process. See Bonner v. Brighton , 495 Mich. 209, 226, 848 N.W.2d 380 (2014) (noting that "the Due Process Clause offers two separate types of protections—substantive and procedural"). We shall address each of these two constitutional guarantees in turn.
The guarantee of substantive due process " ‘bar[s] certain government actions regardless of the fairness of the procedures used to implement them[.]’ " Mettler Walloon, L.L.C. v. Melrose Twp. , 281 Mich.App. 184, 197, 761 N.W.2d 293 (2008) (citation omitted). In substantive due-process "disputes over municipal actions, the focus is on whether there was egregious or arbitrary governmental conduct." Id. "[W]hen evaluating municipal conduct vis-à-vis a substantive due process claim, only the most egregious official conduct can be said to be arbitrary in the constitutional sense." Id. "To sustain a substantive due process claim against municipal actors, the governmental conduct must be so arbitrary and capricious as to shock the conscience." Id. at 198, 761 N.W.2d 293. Refusal to issue a permit is not the sort of municipal action that constitutes a violation of substantive due process. See id. at 197, 761 N.W.2d 293, quoting Cuyahoga Falls, Ohio v. Buckeye Community Hope Foundation , 538 U.S. 188, 198-199, 123 S.Ct. 1389, 155 L.Ed.2d 349 (2003). Thus, any effort by Cary to rely on substantive due process is a nonstarter.
The guarantee of procedural due process requires "notice and an opportunity to be heard" prior to a deprivation of life, liberty, or property. Bonner , 495 Mich. at 235, 848 N.W.2d 380. Also, procedural due process contemplates "a decision by an impartial decision-maker[.]" See id. at 238, 848 N.W.2d 380. But all that is required before deprivation of a property interest "is that the procedures at issue be tailored to ‘the capacities and circumstances of those who are to be heard’ to ensure that they are given a meaningful opportunity to present their case[.]" Id. at 238-239, 848 N.W.2d 380 (citation omitted). Moreover, no process at all is required if the aggrieved party lacks an enforceable property interest. See Mettler Walloon , 281 Mich.App. at 209, 761 N.W.2d 293 (" ‘A threshold requirement to a substantive or procedural due process claim is the plaintiff's showing of a liberty or property interest protected by the Constitution.’ ") (citation omitted). In this case, neither Cary's complaint nor the record before the trial court establishes that Cary had a property interest in a license or that Cary was deprived of procedural due process in any event.
As we have explained, "a first-time applicant" for a license "is not even entitled to minimal due process." Wong v. Riverview , 126 Mich.App. 589, 592, 337 N.W.2d 589 (1983). Unlike the holder of a license seeking renewal, a new applicant for a license has no property interest in any license to support a claim for deprivation of procedural due process. See id. at 592-593, 337 N.W.2d 589. We have noted that, "even though the first-time applicant has no right to procedural due process, this Court will review the city's decisions" with respect to the issuance of a license. Id. at 593, 337 N.W.2d 589. But "this review is extremely narrow." Id. "It is limited only to whether or not the city has acted arbitrarily and capriciously." Id. Nothing in the complaint or the record before the trial court even suggests that the City acted in an arbitrary and capricious manner when it solicited applications for licenses, prescribed and applied a scoring system, conducted public meetings to consider the applications, and ultimately awarded licenses to the applicants with the three highest aggregate scores.
Even if Cary had a property interest sufficient to trigger the protections of due process in its endeavor to obtain a license, neither the complaint nor the record before the trial court hints at conduct by the City amounting to a deprivation of due process. In developing and implementing its selection process, the City followed the Medical Marihuana Facilities Licensing Act (MMFLA), MCL 333.27101 et seq. , which spells out the process for municipalities that wish to issue licenses to medical-marijuana facilities. In an ordinance, the City prescribed a detailed scoring system for applicants and assigned a selection committee, which applied the scoring system at meetings held in public on three separate days. Following the MMFLA, the City afforded each license applicant an extraordinary amount of process before determining the applicants with the three highest scores. Cary finished seventh in the selection committee's scoring, but that result does not mean that Cary suffered a due-process violation. After all, the guarantee of procedural due process merely ensures a fair procedure, not any particular outcome, and the guarantee of substantive due process just serves as a safeguard against "governmental conduct" that is "so arbitrary and capricious as to shock the conscience." See Mettler Walloon , 281 Mich.App. at 198, 761 N.W.2d 293. Cary neither pleaded nor established anything of that sort, so the City was entitled to summary disposition on the pleadings under MCR 2.116(C)(8) and, because Cary presented materials beyond the pleadings, the City was entitled to summary disposition under MCR 2.116(C)(10) as well.
Michigan voters liberalized marijuana laws in two stages. Voters approved the medical use of marijuana in 2008 through the Michigan Medical Marihuana Act, MCL 333.26421 et seq. People v Kolanek , 491 Mich. 382, 393-394, 817 N.W.2d 528 (2012). That prompted our Legislature to enact the MMFLA in 2016 for licensing and regulating medical-marijuana facilities. The licensing provisions in the MMFLA instructed municipalities in issuing licenses to applicants who wished to participate in the medical-marijuana business. Then, in 2018, by initiated law, voters approved the Michigan Regulation and Taxation of Marihuana Act (MRTMA), MCL 333.27951 et seq. , which generally decriminalized recreational possession and use of marijuana for people 21 years of age or older and provided for the legal production and sale of marijuana. Brightmoore Gardens, LLC v. Marijuana Regulatory Agency , 337 Mich.App. 149, 153, 975 N.W.2d 52 (2021). After the MRTMA became law, municipalities turned to the MMFLA for guidance on issuing licenses to operate as marijuana retailers for customers eligible to purchase marijuana for recreational purposes under the MRTMA.
Cary contends that it suffered a due-process violation because it already had a license to operate a medical-marijuana provisioning center, so the City should have highly valued Cary when the City chose the recipients of three recreational-marijuana retailer licenses. But the City's decision to authorize Cary to operate a medical-marijuana facility did not obligate the City to subsequently approve Cary for a license to operate as a marijuana retailer for purchasers who wish to obtain marijuana for recreational purposes. Cary further contends that it was a victim of undue influence because Lume—a competing applicant that received two of the top three scores—threatened the City with litigation, thereby unduly influencing the City's selection process. How that assertion relates to Cary's due-process claim is a mystery that we have tried to solve despite a lack of guidance from Cary. At the second public meeting held on August 12, 2020, members of the selection committee took umbrage in response to Lume's letter. See Cary's Verified Complaint, ¶¶ 35-37. Thus, to the extent Lume used a threat of litigation to cow the selection committee, the public record indicates that its letter had precisely the opposite effect. Accordingly, although procedural due process requires "a decision by an impartial decision-maker," see Bonner , 495 Mich. at 238, 848 N.W.2d 380, neither Cary's complaint nor the evidence submitted to the trial court offers any indication that the selection committee was something less than an impartial decision-maker. Finally, Cary's allegations of arbitrary scoring by the selection committee ring hollow and do nothing to support a due-process claim. The right to due process guaranteed by the United States Constitution and the Michigan Constitution of 1963 does not empower courts to micromanage the decision-making of governmental entities. See Krohn , 175 Mich App at 198, 437 N.W.2d 260. Asking this Court to second-guess the selection committee's scoring of the numerous applicants competing for three licenses fundamentally misapprehends our role in enforcing the constitutional right to due process. Accordingly, because we conclude that the trial court acted correctly in granting the City summary disposition under MCR 2.116(C)(8) based upon the pleadings and that the materials beyond the pleadings justified an award of summary disposition under MCR 2.116(C)(10), we affirm the trial court's decision to grant summary disposition to the City.
Such a vendor is ordinarily described as an "adult-use retailer." Michigan law defines the concept as follows: " ‘Marihuana retailer’ means a person licensed to obtain marihuana from marihuana establishments and to sell or otherwise transfer marihuana to marihuana establishments and to individuals who are 21 years of age or older." MCL 333.27953(n).
Cary's reliance on the concept of undue influence to challenge actions of a municipal body seems both unprecedented and misplaced. Undue influence is regarded as an "equitable matter[ ]," see Adams v. Adams (On Reconsideration) , 276 Mich.App. 704, 714 n 5, 742 N.W.2d 399 (2007), which may be invoked for the purpose of setting aside a conveyance or instrument such as a will, a trust, or a deed, see, e.g., In re Karmey Estate , 468 Mich. 68, 69, 658 N.W.2d 796 (2003) (will); MCL 700.7406 (trust). This challenge to a licensing decision by a municipal body involves nothing even remotely like that.
Recently, our Supreme Court reaffirmed the reasoning of In re Williams’ Estate , 185 Mich 97, 118, 151 NW 731 (1915), which held that the assertion of undue influence requires a showing that the victim " ‘act[ed] under such coercion, compulsion, or constraint that his own free agency is destroyed.’ " (Citation omitted.) See In re Mardigian Estate , 502 Mich. 154, 182, 917 N.W.2d 325 (2018) (opinion by McCormack , J.); see also id. at 160, 917 N.W.2d 325 (opinion by Markman , C.J.) (noting that to establish undue influence, a party must establish that the "grantor was subjected to threats, misrepresentation, undue flattery, fraud, or physical or moral coercion sufficient to overpower volition, destroy free agency and impel the grantor to act against his inclination and free will") (quotation marks and citation omitted). Nothing in Cary's complaint or any of the evidence presented to the trial court comes anywhere near that stringent standard.
B. MOTION FOR RECONSIDERATION
After the trial court awarded summary disposition to the City, Cary moved for reconsideration, which the trial court denied on March 5, 2021. Cary's motion for reconsideration was nothing more than a regurgitation of the arguments it had made in opposition to the City's motion for summary disposition. Unsurprisingly, the trial court recognized the motion for what it was and denied it as a mere rerun of the initial contest over summary disposition. Cary notes correctly that motions for reconsideration under MCR 2.119(F) afford trial courts the opportunity "to revisit issues they previously decided, even if presented with a motion for reconsideration that offers nothing new to the court." Hill v City of Warren , 276 Mich.App. 299, 307, 740 N.W.2d 706 (2007). But the trial court in this case already declined Cary's invitation to exercise discretion in such a manner. Given our conclusion that the trial court properly granted summary disposition to the City, we certainly cannot say that the trial court's refusal to change its decision in response to Cary's motion for reconsideration was an abuse of discretion. See Woods , 277 Mich App at 629-630, 750 N.W.2d 228. C. MOTION TO AMEND
After losing on summary disposition, Cary moved to amend and presented the trial court with a proposed amended complaint. But before the trial court addressed that motion, Cary filed its first claim of appeal dated March 26, 2021. More than two weeks later, the trial court issued an opinion denying Cary leave to amend its complaint. "In general, once a claim of appeal is filed with this Court, the trial court may not amend the judgment appealed from except pursuant to an order of this Court, by stipulation of the parties, or as otherwise provided by law." Ypsilanti Fire Marshal v. Kircher (On Reconsideration) , 273 Mich.App. 496, 542, 730 N.W.2d 481 (2007) (citing MCR 7.208(A) ), amended in part on other grounds, 480 Mich. 910, 739 N.W.2d 622 (2007). "Indeed, the filing of a claim of appeal typically divests the circuit court of its jurisdiction to amend its final orders and judgements." Ypsilanti Fire Marshal , 273 Mich.App. at 542, 730 N.W.2d 481. Because Cary's motion requested permission to file an amended complaint after the trial court had dismissed the original complaint, the motion asked the circuit court to alter the order Cary had already appealed. Thus, the trial court lacked jurisdiction to address Cary's motion to amend its complaint during the pendency of this appeal. Therefore, on appeal, we cannot review the propriety of the trial court's denial of Cary's motion to amend its complaint.
Even if we could now consider Cary's challenge to the trial court's denial of leave to amend, we would struggle to find any good reason to authorize an amendment of the complaint. We question whether Cary could be entitled to meaningful relief because it finished seventh in the competition for three licenses to operate as a recreational-marijuana dealer. Consequently, that poor showing appears to divest Cary of standing to contest the City's award of the three licenses to other applicants because Cary would not be next in line even if all three of the licenses could not be used by the winning applicants, such as Lume. See Lansing Sch Ed Ass'n v. Lansing Bd. of Ed. , 487 Mich. 349, 355, 792 N.W.2d 686 (2010) ("[T]he standing inquiry focuses on whether a litigant ‘is a proper party to request adjudication of a particular issue and not whether the issue itself is justiciable.’ ") (citation omitted).
In Docket No. 356707, we affirm the circuit court's award of summary disposition in favor of the City under MCR 2.116(C)(8) and (10). In Docket No. 357862, we conclude that the trial court lacked jurisdiction to decide Cary's motion to amend its complaint.
Gleicher, C.J., and Gadola, J., concurred with Yates, J.