Heidi Marie Gumbleton v. Village of Holly ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
HEIDI MARIE GUMBLETON, Individually and UNPUBLISHED
on Behalf of Herself and All Others Similarly September 24, 2019
Situated,
Plaintiff-Appellant,
v No. 342025
Oakland Circuit Court
VILLAGE OF HOLLY, LC No. 2017-157734-CZ
Defendant-Appellee.
Before: BECKERING, P.J., and SAWYER and CAMERON, JJ.
PER CURIAM.
In this dispute regarding the use of government funds, plaintiff Heidi Marie Gumbleton,
in her individual and representative capacity, appeals as of right the trial court’s order granting
summary disposition under MCR 2.116(C)(10) in favor of defendant Village of Holly. Finding
no errors, we affirm.
Plaintiff owns a home in the Village of Holly (the Village) for which she received water
and sewer services provided by the Village and which bills she paid. In addition to usage fees,
the Village charged all users two mandatory capital charges—one each for water and sewer.
Plaintiff believed that these capital charges were being improperly assessed and used to generate
revenue to pay various employee salaries and to purchase an ambulance.
In March 2017, plaintiff filed suit against defendant, alleging that the capital charges
were unconstitutional taxes in violation of the Headlee Amendment, Const 1963, art 9, §§ 6, 25-
34, requesting a refund of all capital charges assessed or received by defendant, and seeking
class certification on behalf of all other water and sewer service recipients. Defendant sought
summary disposition under MCR 2.116(C)(8), contending that the capital charges were exempt
from Headlee because they were authorized by the Revenue Bond Act of 1933, MCL 141.101 et
seq., which was enacted before Headlee was ratified. The trial court agreed and granted
summary disposition on that basis, further concluding that any amendment to plaintiff’s Headlee
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claim would be futile, but permitting plaintiff to amend her complaint to add claims for violation
of the Revenue Bond Act.
About a month and a half after plaintiff filed her amended complaint,1 she filed a motion
to compel documents and requested an extension of the discovery deadline and to adjourn other
court dates. Defendant opposed plaintiff’s motion, in part because plaintiff was seeking 10
years’ worth of “irrelevant financial records encompassing every aspect of the Village’s financial
operations” and plaintiff had yet to review the almost 2,000 pages of “relevant and responsive
documents—including audited financials, billing and payment records, and budgets—which
allow[ed] Plaintiff to transparently ascertain, among other things, the Village’s revenues and
expenditures underlying its water and sewer capital charges.” The trial court entered an order
denying plaintiff’s motion to adjourn dates. The order also stated that the parties had informed
the trial court that the outstanding motions to compel had been resolved.
Shortly thereafter, on November 8, 2017, defendant moved for summary disposition
under MCR 2.116(C)(10) on plaintiff’s Revenue Bond Act claim. According to defendant, the
capital charges were adopted by resolution around June 9, 2009 under the Revenue Bond Act.
Defendant stated that its independently audited financials showed that it was not making extra
money on its capital charges, and also that it was not even charging enough to “cover the costs of
its annual debt service payments.” Specifically, between fiscal years 2010 and 2016, defendant
had received $2.7 million less than its debt payment obligations. Defendant noted that water and
sewer usage fees were charged separately from the capital charges, and that portions of the usage
fees were used to pay portions of employee salaries in addition to the costs of plaintiff’s
litigation against it. Defendant also explained that in October 2016, the village council approved
a seven-year, roughly $100,000 interfund loan, from its water fund to the general fund, to
purchase an ambulance. The village council elected to make this loan so that the water fund, not
a third-party for-profit bank, would benefit from the interest payments defendant was making.
Less than a week later, plaintiff filed an amended motion to compel defendant to produce
10 years’ worth of documents in roughly 12 categories as listed in her third request for
production. Plaintiff contended that her expert could not provide an opinion to respond to
defendant’s motion for summary disposition unless “all of the records” were provided.
Defendant replied by noting that as recently as November 7, 2017, plaintiff’s counsel had
admitted that plaintiff’s expert had not reviewed the 2,000 pages already produced and that the
breadth of documents plaintiff sought “would effectively allow Plaintiff to engage in a full-
blown, historical audit of the Village with no cause or justification.” Defendant also noted that
plaintiff had not explained why the documents defendant had already produced were insufficient
to permit plaintiff to assess the merits of her claim. After holding a hearing, the trial court
denied plaintiff’s motion.
1
Plaintiff’s amended complaint included additional counts that were not authorized by the trial
court. The parties stipulated to their dismissal without prejudice.
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Plaintiff subsequently filed a response to defendant’s (C)(10) motion and alleged that she
had “confirmed” her allegations with the testimony of Village President James Perkins and that
she was otherwise “hamstrung” on whether defendant was properly allocating the capital charges
because defendant refused to permit plaintiff’s expert to examine the records necessary to
determine whether funds were being properly allocated into and paid from the various water and
sewer funds. Defendant asserted that plaintiff’s bare assertion that discovery was incomplete,
without providing any indication of what facts were disputed or likely to be uncovered by further
discovery, would not preclude summary disposition and, further, that plaintiff had failed to rebut
any of its evidence in support of the (C)(10) motion.
The trial court determined that there were no genuine issues of material fact. It stated
that defendant’s capital charges were used to cover bond debt, which was permitted under the
Revenue Bond Act, and that the evidence showed that all of the expenditures about which
plaintiff complained had been made from usage fees, not capital charges. The trial court
acknowledged plaintiff’s request for additional discovery, but concluded that it was nothing
more than a fishing expedition in the absence of any independent evidence of a disputed material
fact. Plaintiff moved for reconsideration, which the trial court denied. Plaintiff then initiated
this appeal.
Plaintiff first alleges that the trial court erred by granting summary disposition under
MCR 2.116(C)(8) on her Headlee claim. We review de novo a trial court’s decision to grant
summary disposition. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich
App 362, 369; 775 NW2d 618 (2009). Summary disposition is appropriate under MCR
2.116(C)(8) if the plaintiff has failed to state a claim on which relief can be granted. Wade v
Dep’t of Corrections, 439 Mich. 158, 162; 483 NW2d 26 (1992). Under (C)(8), all well-pleaded
allegations must be both accepted as true and construed in the light most favorable to the
nonmoving party, but the court must test the legal sufficiency of the complaint considering only
the pleadings. MCR 2.116(G)(5); Wade, 439 Mich. at 162-163.
The trial court granted summary disposition on plaintiff’s Headlee claim because it
concluded that the capital charges were authorized under the Revenue Bond Act, which predated
ratification of the Headlee Amendment. See American Axle & Mfg, Inc v City of Hamtramck,
461 Mich. 352; 604 NW2d 330 (2000). Plaintiff concedes that the Revenue Bond Act predates
Headlee, but contends that because defendant allegedly used the capital charges for expenditures
“wholly unrelated to the payment of the bond,” her claim was not exempted under American
Axle. We disagree. Not only did plaintiff cite no caselaw to support this position, but adoption
of this position would unnecessarily complicate Headlee claims without providing any benefit.
First, taxpayers already have a cause of action under such circumstances. If a tax is
exempt from Headlee because it was enacted pursuant to previously authorized legislation, any
alleged misuse of those funds could be litigated as a violation of the statute that authorized the
imposition or use of the taxes in the first place. Second, these “Headlee violations” would be
premised solely on the alleged misuse of funds that were otherwise exempt from Headlee. To
pull these claims back under the umbrella of Headlee would be to ignore both the plain language
of the exemption and the entire purpose behind Headlee’s enactment—preventing the imposition
of taxes, not regulating their use. There is no benefit created by permitting such reasoning. The
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occurrence of a Headlee violation in these cases would be entirely determined by ascertaining
whether a municipality was misusing funds whose assessment was exempt from Headlee.
We reject plaintiff’s assertion that defendant has attempted to have it both ways.
Defendant was not arguing that the capital charges were a fee in one context but taxes in another.
Rather, defendant was pointing out that it simply did not matter if the capital charges were a fee
or a tax. If they were a fee, they were exempt from Headlee because Headlee only applies to
taxes. Bolt v City of Lansing, 459 Mich. 152, 158-159; 587 NW2d 264 (1998). On the other
hand, if the capital charges were taxes, they were authorized by law before Headlee was ratified,
and Headlee still did not apply. American Axle, 461 Mich. at 357. Accordingly, the trial court
properly granted summary disposition to defendant under (C)(8) on plaintiff’s Headlee claim
because the claim failed as a matter of law.
Plaintiff next alleges that the trial court erred by granting summary disposition under
MCR 2.116(C)(10) on her Revenue Bond Act claim. A party is entitled to summary disposition
under MCR 2.116(C)(10) when there are no genuine issues of material fact, and the moving
party is entitled to judgment as a matter of law. Barnard Mfg, 285 Mich. App. at 369. “[T]he
moving party must support its motion with affidavits, depositions, admissions, or other
documentary evidence in support of the grounds asserted.” Id. citing MCR 2.116(G)(3). When a
moving party properly supports its motion, the burden shifts to the nonmoving party to establish
that a genuine issue of disputed material fact exists. Id. The trial court may not weigh evidence,
make determinations of credibility, or otherwise decide questions of fact. Bank of America, NA v
Fidelity Nat’l Title Ins Co, 316 Mich. App. 480, 512-513; 892 NW2d 467 (2016). This Court’s
review is limited to “the evidence properly presented to the trial court.” Barnard Mfg, 285 Mich
App at 380.
Here defendant produced evidence showing that its capital charges were not used for
anything but its debt service, as permitted. MCR 2.116(G)(4) places the burden of establishing a
genuine issue of material fact on the opposing party—here, plaintiff. Id. at 377. A trial court
does not have a duty “to scour the lower court record in search of a basis for denying the moving
party’s motion.” Id. Only when a party refers to and relies on a specific piece of evidence, and
that evidence is filed in the action or submitted by a party, is the trial court required to consider
it. Id. Here, plaintiff failed to direct the trial court to any evidence that created a genuine issue
of material fact.
In opposing defendant’s properly supported (C)(10) motion, plaintiff contended that she
had “confirmed” her allegations of inappropriate use of the capital charges “by the deposition
testimony of the Village President, James Perkins, that money from the water fund has been used
to buy an ambulance . . . and to pay the salary of the Village Manager, among others.” However,
plaintiff referenced Exhibits B and C attached to her answer, neither of which is Perkins’s
testimony. Rather, Exhibit B is a two-page informational “addendum” of some type regarding
the ambulance purchase and Exhibit C is a spreadsheet that shows percentages of various village
employees being allocated to the “water” and “wastewater” (sewer) departments.
Plaintiff then directly quotes Perkins’ testimony two times. After the first quotation,
plaintiff provides no citation, and after the second quotation, plaintiff simply notes that Perkins’
deposition transcript is attached as Exhibit E, but provides no page citations. When plaintiff
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directly quotes Perkins’s testimony a third time, her citation advises: “(See Page 19 of Exhibit
B).” As noted, Exhibit B is a two-page document regarding the ambulance purchase and is
completely unrelated to the issue of the water fund paying for the defense of the lawsuit.
Plaintiff then notes that Deborah Bigger, defendant’s clerk/treasurer, testified that there are four
separate accounts that hold the funds received from users of defendant’s water and sewer
systems—the water usage fund, the water debt collection fund, the sewer usage fund, and the
sewer debt collection fund—and that the debt collection funds were “collected as the water and
sewer capital charges and applied only as allowed by the Revenue Bond Act.” Plaintiff then
correctly cites to Exhibit F attached to the answer, but again fails to provide a specific page
citation. These are all of the references to evidence contained in plaintiff’s response.
Comparing this record with what occurred in Barnard Mfg, we hold that the trial court
properly granted summary disposition under (C)(10) in favor of defendant because plaintiff “did
not set forth specific facts showing that there was a genuine issue for trial.” Barnard Mfg, 285
Mich. App. at 374. In Barnard Mfg, this Court noted that the trial court had been provided with
copies of the relevant deposition, but neither party had referred the trial court “to the relevant
testimony and there [was] no indication that the trial court elected to consider those sections on
its own initiative.” Id. at 380. Similarly, plaintiff in this case provided copies of the Perkins and
Bigger depositions, but failed to direct the trial court to the relevant pages within the transcripts.
Indeed, the sole time she used a page number, she referenced the wrong exhibit. Plaintiff’s
failure to provide page citations for the deposition testimony was, essentially, a request for the
trial court to scour the record for evidence to support her claim because only by reading the
entire deposition could the trial court determine the accuracy of her statements. After reviewing
the evidence “actually raised by the parties,” we conclude that the trial court did not err by
granting summary disposition. Id. at 381.
Plaintiff’s third claim on appeal is that the trial court abused its discretion when it denied
the parties’ joint motion to extend discovery and adjourn other court dates. This Court reviews
“for an abuse of discretion a trial court’s decision regarding a motion to extend discovery.”
Decker v Trux R US, Inc, 307 Mich. App. 472, 478; 861 NW2d 59 (2014). A trial court has
abused its discretion if its decision results in an outcome that falls outside the principled range of
outcomes. Id.
As an initial matter, the record is unclear regarding whether the trial court was ever aware
that defendant had agreed to join plaintiff’s motion to extend discovery and adjourn court dates.
The motion that was filed was not a joint motion. There is an e-mail reflecting that counsel for
both parties had agreed on how to handle discovery issues they were having and defendant’s
counsel indicated she would appear at the upcoming hearing on the motion and jointly seek an
extension of the scheduling order dates. However, the trial court’s order denying plaintiff’s
motion was entered two days before the scheduled hearing. Therefore, there is no way for this
Court to know whether the trial court ever received any indication that defendant was agreeable
to the requested extension. Nevertheless, even construing the circumstances as a joint request,
plaintiff has failed to explain how the trial court’s decision constituted an abuse of discretion.
Plaintiff’s entire argument on this issue consists of four sentences, one case citation, no record
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citations, and no analysis. Accordingly, we deem this issue abandoned.2 Mitcham v City of
Detroit, 355 Mich. 182, 203; 94 NW2d 388 (1959).
Plaintiff’s final claim on appeal is that the trial court erred by denying her motion to
compel defendant to produce all of the documents in plaintiff’s third request for production. We
also review for an abuse of discretion a trial court’s decision regarding a motion to compel.
Augustine v Allstate Ins Co, 292 Mich. App. 408, 419; 807 NW2d 77 (2011). Plaintiff argues that
the documents she sought were relevant and necessary to pursue her Revenue Bond Act claim.
However, the trial court made no rulings regarding the relevance or necessity of the documents
when denying plaintiff’s motion to compel. Instead, it noted that plaintiff could not state with
any specificity what documents she needed that she had not already been provided, in part
because her counsel had not reviewed all of the 2,000 pages already provided by defendant. The
trial court ordered plaintiff’s counsel to review the documents that had already been produced
and, if he still required additional documents, to file a new motion and provide specifics about
what documents were needed that had not been provided—not simply state that all of the
documents in the third request for production were needed. In light of the massive amounts of
documents requested, plaintiff’s admission at the hearing that the documents already produced
had still not been reviewed, and plaintiff’s continued inability to articulate with any specificity
what documents she needed but did not have, the trial court’s decision to deny plaintiff’s motion
to compel and require any subsequent motion to provide more specificity fell within the
principled range of outcomes. Decker, 307 Mich. App. at 478.
Affirmed.
/s/ Jane M. Beckering
/s/ David H. Sawyer
/s/ Thomas C. Cameron
2
The only sentence plaintiff includes that could be construed as an argument is that there was
insufficient time between the filing of her amended complaint and defendant’s motion for
summary disposition to conduct adequate discovery. Notably, the trial court’s denial of
plaintiff’s motion was entered on October 23, 2017, at least two weeks before defendant filed its
motion for summary disposition on November 8, 2017. Accordingly, defendant’s motion could
have played no part in plaintiff’s decision to request the extension and adjournment.
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