Rodney Woods v. City of Saginaw ( 2021 )

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
RODNEY WOODS, doing business as RODNEY UNPUBLISHED
WOODS BUILDER, January 7, 2021
Plaintiff-Appellant,
v No. 344025
Saginaw Circuit Court
CITY OF SAGINAW, LC No. 16-029129-CB
Defendant-Appellee.
ON REMAND
Before: REDFORD, P.J., and JANSEN and LETICA, JJ.
PER CURIAM.
In an order dated October 21, 2020, the Michigan Supreme Court reversed, in part, the
portion of this Court’s prior opinion in Woods v City of Saginaw, unpublished per curiam opinion
of the Court of Appeals, issued October 15, 2019 (Docket No. 344025) (Woods I), where we held
that “the trial court properly granted summary disposition of the plaintiff’s quantum meruit claim
under MCR 2.116(C)(8).” Woods v City of Saginaw, ___ Mich ___; 949 NW2d 456 (2020)
(Woods II). Our Supreme Court further held that:
The plaintiff’s amended complaint and attached exhibits were legally sufficient to
plead his claim that the defendant was unjustly enriched by extra-contractual work
completed by the plaintiff. See El-Khalil v Oakwood Healthcare, Inc, 504 Mich
152, 159-160; 934 NW2d 665 (2019); Wright v Genesee County, 504 Mich 410;
934 NW2d 805 (2019). Moreover, the Court of Appeals clearly erred by engaging
in appellate fact-finding when it stated that the plaintiff had been “fairly
compensated.” We REMAND this case to the Court of Appeals for consideration
of the plaintiff’s arguments regarding the trial court’s alternative ruling that granted
summary disposition to the defendant under MCR 2.116(C)(10). The plaintiff’s
motion to disqualify the trial judge is DENIED, without prejudice to the plaintiff
seeking such relief on remand. In all other respects, leave to appeal is DENIED,
-1-
because we are not persuaded that the remaining question presented should be
reviewed by this Court. [Woods II, __ Mich ___.]
Accordingly, we now consider whether defendant, the City of Saginaw, was entitled to summary
disposition under MCR 2.116(C)(10). Again, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In Woods I, we previously articulated that:
This case involved blight demolition efforts in the Saginaw area under the
Troubled Asset Relief Program (“TARP”). Defendant and the Saginaw County
Land Bank Authority (“SCLBA”) secured over $11,000,000 in TARP funds from
the Michigan State Housing Development Authority for blight elimination.
Defendant and the SCLBA entered into a partnership to demolish up to 950 blighted
properties. The SCLBA would be responsible for acquiring, owning, and
maintaining properties slated for demolition, and defendant would be responsible
for hiring demolition contractors and overseeing their work. In 2013, defendant
began soliciting bids from numerous demolition contractors to take on the role of
demolishing the blighted properties. One of these contractors was plaintiff, a sole
proprietor.
Defendant created a procedure in which each contractor submitted a “per
unit costs” for various services related to demolition. Such services included
foundation removal, tree removal, and asbestos removal. Each of these services
was assigned a particular number of points. Defendant would award demolition
work to the “highest qualified contractor with the lowest accepted and approved
bids” for a period of two years, and defendant had the option to extend this period
for a third year. . . .
Plaintiff submitted his bid proposal and “won” the bidding process. As the
highest ranked contractor, plaintiff had first pick of the demolition properties and
received 240 out of a total 480 initial properties. In total, plaintiff demolished
approximately 600 houses over the life of the contract. . . .
Plaintiff filed a three-count complaint. In Count I, a breach of contract
claim, plaintiff claimed that defendant increased the scope of the contract, and then
was not adequately compensated for the extra work performed. In Count II,
plaintiff sought relief under a quantum meruit theory for the extra work performed.
The extra work relevant to Count I and Count II was primarily related to grading
and seeding of the properties after demolition, which plaintiff claimed was not
included in the parties’ original contract. In support of his claim for additional
compensation, plaintiff attached a letter from John C. Stemple, Chief Inspector for
defendant, in which Stemple issued a change order acknowledging that plaintiff,
and other contractors, had been performing work beyond the original contract and
would receive additional compensation for prospective demolitions. Finally, in
Count III, plaintiff made a second claim for breach of contract, this time claiming
-2-
that defendant allocated demolitions to other contractors, thereby breaching an
implied covenant of good faith.
Defendant filed its first motion for summary disposition in October 2017,
which the trial court granted in part as to Count I, and denied in part as to Count II
and Count III. . . .
In March 2018, defendant filed a renewed motion for summary disposition
of Count II and Count III. The trial court granted summary disposition in favor of
defendant of Count II, plaintiff’s quantum meruit claim, under MCR 2.116(C)(8)
and (C)(10), and of Count III under MCR 2.116(C)(10) for the implied warranty of
good faith claim. [Woods I, unpub op at 1-2.]
Plaintiff appealed to this Court, and we affirmed. Woods I, unpub op at 1. Plaintiff again
appealed to our Supreme Court, and our Supreme Court reversed in part, concluding that the trial
court erroneously granted summary disposition of Count II under MCR 2.116(C)(8), and remanded
this matter back to this Court with the instructions to further evaluate whether defendant was
entitled to summary disposition of plaintiff’s quantum meruit claim under MCR 2.116(C)(10).
Woods II, ___ Mich ___. Additionally, our Supreme Court again affirmed the trial court’s
dismissal of plaintiff’s implied warranty of good faith claim under MCL 2.116(C)(10). Id.II. STANDARD OF REVIEW
On remand, we now consider whether defendant was entitled to summary disposition of
plaintiff’s quantum meruit claim under MCR 2.116(C)(10). A trial court’s ruling regarding a
motion for summary disposition is reviewed de novo. Heaton v Benton Constr Co, 286 Mich App
528, 531; 780 NW2d 618 (2009).
A motion under MCR 2.116(C)(10) tests the factual support of a plaintiff’s claim.
Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine
issue regarding any material fact and the moving party is entitled to judgment as a
matter of law. In reviewing a motion under MCR 2.116(C)(10), this Court
considers the pleadings, admissions, affidavits, and other relevant documentary
evidence of record in the light most favorable to the nonmoving party to determine
whether any genuine issue of material fact exists to warrant a trial. A genuine issue
of material fact exists when the record, giving the benefit of reasonable doubt to
the opposing party, leaves open an issue upon which reasonable minds might differ.
[Zaher v Miotke, 300 Mich App 132, 139-140; 832 NW2d 266 (2013) (quotations
marks and citations omitted).]
“Circumstantial evidence can be sufficient to establish a genuine issue of material fact, but mere
conjecture or speculation is insufficient.” McNeill-Marks v Midmichigan Med Ctr-Gratiot, 316
Mich App 1, 16; 891 NW2d 528 (2016). “This Court is liberal in finding genuine issues of material
fact.” Jimkoski v Shupe, 282 Mich App 1, 5; 763 NW2d 1 (2008). However, “this Court’s review
is limited to review of the evidence properly presented to the trial court.” Barnard Mfg Co, Inc v
Gates Performance Engineering, Inc, 285 Mich App 362, 380; 775 NW2d 618 (2009).
-3-
The moving party bears the initial burden of production, which may be satisfied “in one of
two ways.” Quinto v Cross & Peters Co, 451 Mich 358, 361; 547 NW2d 314 (1996). “First, the
moving party may submit affirmative evidence that negates an essential element of the nonmoving
party’s claim. Second, the moving party may demonstrate to the court that the nonmoving party’s
evidence is insufficient to establish an essential element of the nonmoving party’s claim.” Id.
at 362 (quotation marks and citation omitted). Once the moving party satisfies its burden in one
of those two ways, “[t]he burden then shifts to the opposing party to establish that a genuine issue
of disputed fact exists.” Id.III. ANALYSIS
Although the trial court erroneously granted summary disposition of plaintiff’s quantum
meruit claim under MCR 2.116(C)(8), we conclude that there were two distinct basis to grant
summary disposition in favor of defendants under MCR 2.116(C)(10).
A. EXISTENCE OF AN EXPRESS CONTRACT COVERING THE SAME SUBJECT
MATTER
As we noted in our prior opinion:
“The theory underlying quantum meruit recovery is that the law will imply
a contract in order to prevent unjust enrichment when one party inequitably receives
and retains a benefit from another.” [Morris Pumps v Centerline Piping, Inc, 273
Mich App 187, 194; 729 NW2d 898 (2006).] However, a party may not recover in
quantum meruit if an express contract between the parties covers the same subject
matter. Id.In this case, plaintiff seeks additional compensation for extra work
performed. Plaintiff relies heavily on the change order from Stemple to support his
claim that he should receive additional compensation for extra work performed on
demolition jobs before the change order was issued. However, based on the record
before us, the change order only applied to prospective demolitions; it was not to
have retroactive effect. [Woods I, unpub op at 3-4.]
Examining each of the specific claims contained within plaintiff’s complaint, we conclude
that the contract undoubtedly covered the alleged extra work. In his amended complaint, plaintiff
alleged the extra work performed was:
(1) prompt backfilling of soil following a structural demolition, (2)
bringing in, at the contractor’s expense, a minimum of three inches
of fresh topsoil, (3) uniformly grading all surfaces; (4) excavating
surfaces to encourage water runoff, and (5) seeding the topsoil with
clover and watering, if necessary.
Additionally, the contract provided: “Upon removal of below grade materials all excavations and
cavities in the earth shall be filled with clean yellow sand or clay materials and covered with a
minimum, after compaction, of four inches organic top soil approved in advance by the Chief
-4-
Inspector.” Included in this contractual obligation was (1) backfilling of soil and (2) bringing in
fresh topsoil, as alleged in plaintiff’s complaint.
The contract further provided:
In some cases the contractor may be directed by the City of
Saginaw to prepare the site for the application of grass seed and
apply seed. The site shall be graded smooth and seed applied using
the hydro-seed method of application. Application shall be made in
accordance with the seed supplier’s recommendations. Grass seed
shall be of a type that does not grow more than six inches in height
and shall be acceptable to the City for this application. The cost of
this service shall be determined on a cost per square foot basis.
This covered (3) the grading of all surfaces, (4) excavating surfaces to encourage water runoff, and
(5) seeding the topsoil with clover and watering alleged in plaintiff’s complaint. Moreover, the
bid included plaintiff’s proposed costs for a number of services, which explicitly included “Lot
Grading and Seeding.” Therefore, we conclude that the alleged extra work was explicitly covered
by the contract.
In short, because the relevant contents of the parties’ contractual agreement are undisputed,
there is no genuine issue of material fact for resolution at trial. See Calhoun Co v Blue Cross Blue
Shield Mich, 297 Mich App 1, 12; 824 NW2d 202 (2012) (“Construction and interpretation of a
contract are questions of law”). As a matter of law, because the parties had a written agreement
expressly governing the compensation to which plaintiff was entitled for the demolition work that
is the subject of this lawsuit, plaintiff cannot seek additional compensation for such work under a
quantum meruit theory. See Morris Pumps, 273 Mich App at 194, quoting Belle Isle Grill Corp v
Detroit, 256 Mich App 463, 478; 666 NW2d 271 (2003) (“a contract will be implied only if there
is no express contract covering the same subject matter”). See also Rory v Continental Ins Co,
473 Mich 457, 461; 703 NW2d 23 (2005) (“the judiciary is without authority to modify
unambiguous contracts or rebalance the contractual equities struck by the contracting parties”).
B. THE CITY CHARTER
Additionally, the City Charter prevents plaintiff from recovering under a quantum meruit
theory. Defendant’s Charter contains a section relevant to this appeal, Section 33, which provides:
Competitive bids for all purchases and public improvements shall be obtained
where practicable and contracts awarded to the lowest and best bidders. Sealed
bids shall be asked for in all transactions involving the expenditure of two thousand
dollars ($2,000) or more and the transaction evidenced by written contract
submitted to and approved by the council; provided that, in cases where it is clearly
to the city’s advantage to contract without competitive bidding, the council upon
recommendation of the manager may so authorize. Detailed purchasing and
contracting procedure shall be established by ordinance. The council may authorize
the making of public improvements by day labor.
-5-
In granting defendant summary disposition of plaintiff’s quantum meruit claim under MCR
2.116(C)(10), the trial court relied on the above-quoted portion of the Charter and, among other
authorities, Black v Common Council of City of Detroit, 119 Mich 571, 576-577; 78 NW 660(1899), in which our Supreme Court held:
Of every municipal corporation, the charter or statute by which it is created is its
organic act. Neither the corporation nor its officers can do any act, or make any
contract, or incur any liability not authorized thereby. . . . All acts beyond the scope
of the powers granted are void.
* * *
[A]s said in Spitzer v. Village of Blanchard, 82 Mich. [234, 246; 46 NW 400(1890)], “the limitation of power upon the common council appears in the public
statute, and is presumed to be known by all dealing with corporate authorities.”
Those who deal with the agents of municipal corporations must take notice
of the restrictions in their charters in respect to the powers of the corporation and
its agents, and the mode in which such powers may be exercised, and must see to it
that the contracts on which they rely are authorized by the charter.
In Hodges v. City of Buffalo, [2 Denio 110 (NY Sup Ct, 1846)], the plaintiff
insisted that, though the city had no express authority to make the expenditure, yet
the claim could be satisfied on the ground that, the plaintiff having furnished the
entertainment, the corporation had received the consideration, and was bound to
pay, although the engagement was made without legal authority. The court said in
that case:
“It is said to be analogous to a subsequent ratification by a corporation of
the unauthorized act of its agent. I cannot concur in this view of the case. The
doctrine referred to assumes that the principal had power to confer the requisite
authority in the first instance. It cannot be maintained that a corporation can by a
subsequent ratification make good an act of its agent which it could not have
directly empowered him to do.”
Where the contract is void, the contractor cannot recover of the corporation
in any form,–neither under the contract nor quantum meruit. All who deal with a
municipal corporation must see that the contract upon which they rely is within its
powers. Halstead v. [City of New York, 3 NY 430 (1850)]; Brady v. [City of New
York, 20 NY 312 (1859)]; Cowen v. Village of West Troy, 43 Barb 48 [NY Sup Ct,
1864]. [Some quotation marks and citations omitted; some emphases added.1]
1
Notably, neither the formatting nor all of substance of this block quote are accurately reflected
on Westlaw—the passage is quoted here as it appears in the official reporter.
-6-
Applying Black to this case, the trial court reasoned that because it “is undisputed that there is no
Council-approved written contract for [plaintiff’s] ‘extra work’ ” in this case (i.e., the allegedly
uncontracted-for work for which plaintiff sought a recovery in quantum meruit), it followed, as a
matter of law, that plaintiff could not recover in quantum meruit. On that basis, the trial court held
that defendant was entitled to summary disposition of the quantum meruit claim under MCR
2.116(C)(10).
In this Court, plaintiff argues that Black was wrongly decided, contending that it is contrary
to “the modern rule that an agent having apparent power can bind its principal.” However, plaintiff
concedes that he only raised that argument in this Court “for the purpose of issue preservation,”
and that whether Black was wrongly decided “is not a question for this Court to decide[.]” We
agree. Under the doctrine of vertical stare decisis, only our Supreme Court has the authority to
overrule Black, which remains binding on this Court unless and until the Supreme Court does so.
See generally In re AGD, 327 Mich App 332, 340; 933 NW2d 751 (2019) (discussing vertical stare
decisis and noting that until our Supreme Court overrules one of its earlier decisions, “all lower
courts and tribunals are bound by that prior decision and must follow it even if they believe that it
was wrongly decided or has become obsolete”) (quotation marks, citation, and emphasis omitted).
Recognizing that Black is both binding on this Court and seemingly fatal to his position,
plaintiff argued that Black is not dispositive because, in this case, the defendant city “wasn’t going
to pay any amount of money for demolition services—instead, it was going to procure and contract
for such services with the attendant costs being paid wholly by the [Saginaw County] Land Bank,”
by way of TARP grants. In other words, because the alleged extracontractual work in this case
“did not require the expenditure of any City funds, whether raised by tax, grant, or otherwise,”
plaintiff argued that his claim was not contrary to § 33 of the Charter, unlike the claim at issue in
Black.
In rejecting that same argument below, the trial court reasoned:
[Plaintiff] has provided no authority for this proposition and, on its face, the Charter
does not distinguish between transactions funded by locally raised tax revenues and
funds originating elsewhere. Rather, the Charter limitation applies to “all” City
transactions involving $2,000 or more. In any event, even assuming the City used
none of its own tax revenue but, rather, wholly relied on a state or federal grant, the
funds would presumably be the City’s upon acceptance of the “grant”.
In the end, [plaintiff] is suing the City for upwards of $232,000 of “extra
work”. For the City to be obligated for such a large expenditure, its Charter requires
that “the transaction [be] evidenced by written contract submitted to and approved
by the council”. It is undisputed that there is no Council-approved written contract
for [plaintiff’s] “extra work”.
We concur with the trial court’s analysis fully. “When reviewing the provisions of a home
rule city charter, we apply the same rules that we apply to the construction of statutes.” Barrow v
City of Detroit Election Comm, 301 Mich App 404, 413; 836 NW2d 498 (2013). Section 33 of
the Charter expressly applies to “all transactions involving the expenditure of two thousand dollars
($2,000) or more[.]” Because nothing in such language is ambiguous, it should be applied as
-7-
written. See id. at 414 (“Courts apply unambiguous statutes as written.”). Moreover, § 33 does
not specify that it is inapplicable when defendant anticipates that a given expenditure will be paid
for by grant funding or any other source of noncity funds. Therefore, it would be inappropriate to
construe the Charter as if it did, in fact, contain such language. See Johnson v USA Underwriters,
328 Mich App 223; 936 NW2d 834 (2019) (“we cannot read into the statute something that is not
there”). Finally, as the trial court aptly recognized, plaintiff has not sued the Saginaw County Land
Bank here—he has asserted his claims in this action against the defendant city. In other words, he
seeks a judgment that defendant—not the Land Bank—is liable to him in quantum meruit for in
excess of $2,000.
On the basis of the foregoing, we conclude that § 33 of the Charter precludes plaintiff from
recovering under a quantum meruit theory, and according, defendant was entitled to summary
disposition as a matter of law under MCR 2.116(C)(10).
Affirmed.
/s/ James Robert Redford
/s/ Kathleen Jansen
/s/ Anica Letica
-8-