If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

-1-

S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

MILFORD HILLS PROPERTIES, INC., and RPL 

OF MICHIGAN, INC.,

Plaintiffs-Appellees,

UNPUBLISHED

September 2, 2021

v Nos. 353249; 353489

Oakland Circuit Court

CHARTER TOWNSHIP OF MILFORD, LC No. 2017-162642-CZ

Defendant-Appellant.

Before: LETICA, P.J., and SERVITTO and M. J. KELLY, JJ.

PER CURIAM.

These consolidated cases arise from a zoning dispute. In Docket No. 353249, defendant,

the Charter Township of Milford, appeals as of right the circuit court’s opinion and order denying 

its motion for summary disposition insofar as defendant claimed governmental immunity in 

response to tort claims brought by plaintiffs, who are real estate developers frustrated at 

defendant’s refusal to rezone certain property to accommodate their aspirations. In Docket No. 

353489, defendant appeals that same order by leave granted1insofar as it denied defendant’s 

motions for summary disposition in connection with plaintiffs’ non-tort claims and also 

defendant’s invocation of an arbitration agreement. We affirm the trial court’s determination that 

defendant has not shown that the arbitration agreement should be enforced, but reverse the court’s 

denial of summary disposition in connection with all of plaintiffs’ claims.

I. FACTS

In or about 2002, defendant agreed to support plaintiffs’ construction of a wastewater 

treatment plant in connection with plaintiffs’ development of certain property. Plaintiffs sought 

approval of a plant with a capacity of 50,000 gallons per day, but defendant insisted on a capacity 

of 70,000 gallons per day. Plaintiffs agreed to construct a plant with the larger capacity on the 

 

1 Milford Hills Props Inc v Charter Twp of Milford, unpublished order of the Court of Appeals, 

entered July 9, 2020 (Docket No. 353489).
-2-

condition that they retain the right to use the anticipated excess of 20,000 gallons per day for the 

future development of property located on the west side of Milford Road. The parties entered into 

an agreement that stated that “the Township shall be obligated to use its ‘best efforts’ to 

expeditiously provide approval of all plans, paperwork, permits or otherwise to effectuate this 

Agreement.”

In 2017, plaintiffs began the process of developing the property on the west side of Milford 

Road. They applied to defendant’s planning commission to conditionally rezone the property to 

allow the construction of a development of a density that far exceeded the current zoning. 

Ultimately, the planning commission recommended that the request be denied, and defendant

adopted that recommendation.

The trial court’s order engendering these appeals noted the following particulars:

The parcels that make up the subject property are zoned for Restricted Office and 

Suburban Residential. Current zoning allows for the development of 22 homes and 

340,000 square feet of offices and necessary parking. Plaintiffs sought conditional 

rezoning of the subject property to build a single-family residential development.

The initial plan presented by Plaintiffs was to build 178 homes. Plaintiffs reduced 

the number of homes in subsequent presentations. Following the denial by the 

[zoning board of appeals], Plaintiffs filed an Appeal (which was voluntarily 

dismissed) and the instant action.

Plaintiffs’ complaint made issue of their rights to use any of their wastewater treatment 

plant’s excess capacity in connection with development of real property they acquired, which they 

described as follows: “By the early part of 2017, the Plaintiffs had obtained ownership of or 

development rights over nine (9) parcels of land consisting of over 66 acres situated in the Charter 

Township of Milford, . . . and generally located west of Milford Road . . . .” Plaintiffs further 

reported that “[a] portion of the Property is currently being utilized for a single-family home, with 

the remainder being vacant land.”

Plaintiffs set forth claims of breach of contract (Count I), promissory estoppel (Count II), 

taking without just compensation regarding the water-treatment plant (Count III) and the property 

(Count V), denial of substantive due process regarding the plant (Count IV) and the property 

(Count VI), tortious interference with prospective economic advantages (Count VII), fraudulent 

misrepresentation (Count VIII), and innocent misrepresentation (Count IX). Plaintiffs based their 

contract claim on the parties’ June 5, 2003 Working/Development Agreement for Operation of 

Community Sewer System (“capacity agreement”). That agreement recites that the parties earlier 

“entered into an ‘Agreement to Assume Responsibility for Operation of Community Sewer 

System,’ ” the provisions of which are not here at issue.

On February 15, 2019, defendant filed a motion for summary disposition, seeking dismissal 

of the contract and promissory estoppel claims on the grounds that plaintiff “failed to establish a 

contract or promise to rezone the subject property,” seeking dismissal of the tort claims “on 

grounds of governmental immunity,” citing MCL 691.1407, and seeking dismissal of the 

constitutional claims “because there is no genuine issue of material fact that Defendant’s zoning 
-3-

was not unreasonable, nor did it amount to a taking of Plaintiffs’ Property.” Proceedings were 

then stayed in deference to facilitation, which was not successful.

On December 18, 2019, plaintiffs filed a motion for summary disposition of Counts I 

through IV of their complaint on the ground that “there is no genuine issue as to any material fact 

sufficient for trial.” Defendant followed with a second motion for summary disposition, in which 

it stated that “[i]n addition to the reasons set forth in Defendant’s Motion for Summary Disposition, 

Defendants are entitled to dismissal of Plaintiffs’ claims based on the arbitration language in the 

Capacity Agreement.” After a hearing on the motions, the trial court issued an order stating that 

“neither party is entitled to summary disposition,” because “[t]here are numerous genuine issues 

of material fact and Defendant has not shown that the arbitration agreement should be enforced 

under the facts presented.” The court did not expressly address the issue of governmental 

immunity.

These appeals followed.

II. GOVERNMENTAL IMMUNITY

MCR 2.116(C)(7) authorizes motions for summary disposition premised upon “immunity 

granted by law . . . .” This Court reviews a trial court’s decision on a motion for summary 

disposition de novo as a question of law. Ford Credit Int’l, Inc v Dep’t of Treasury, 270 Mich 

App 530, 534; 716 NW2d 593 (2006). A motion for summary disposition based on governmental 

immunity is decided by examining all documentary evidence submitted by the parties, accepting 

all well-pleaded allegations as true, and construing all evidence and pleadings in the light most 

favorable to the nonmoving party. Tarlea v Crabtree, 263 Mich App 80, 87; 687 NW2d 333 

(2004).

Under the governmental tort liability act, MCL 691.1401 et seq., governmental agencies 

are immune from tort liability for actions taken in furtherance of governmental functions, with 

limited, specific exceptions. MCL 691.1407(1). “[T]he immunity conferred upon governmental 

agencies is broad, and the statutory exceptions thereto are to be narrowly construed.” Nawrocki v 

Macomb Co Rd Comm, 463 Mich 143, 158; 615 NW2d 702 (2000) (emphasis in original). “A 

plaintiff filing suit against a governmental agency must initially plead his claims in avoidance of 

governmental immunity.” Odom v Wayne Co, 482 Mich 459, 478-479; 760 NW2d 217 (2008).

A “governmental agency” for this purpose includes “this state or a political subdivision.” 

MCL 691.1401(a). A “political subdivision” includes a municipal corporation. MCL 691.1401(e). 

“ ‘Municipal corporation’ means a city, village, or township or a combination of 2 or more of these 

when acting jointly.” MCL 691.1401(d). A “governmental function” is “an activity that is 

expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, 

or other law.” MCL 691.1401(b). In this case, there is no dispute that defendant is a municipal 

corporation, or that its actions underlying this litigation were in furtherance of a governmental 

function. Even so, this issue has produced some unusual procedural history.

Two months after defendant claimed the appeal in connection with the governmental 

immunity issue, plaintiffs filed a motion in this Court to dismiss the appeal for mootness, 

explaining that, “[d]espite believing the tort claims to have merit, Plaintiffs/Appellees offered to 
-4-

dismiss the three tort claims with prejudice to streamline the issues for trial and to avoid appeal, 

and filed a motion for voluntary dismissal,” but that defendant objected, and the trial court ordered 

a stay of proceedings “before the motion to dismiss was heard.”

Plaintiffs’ motion below, a copy of which plaintiffs provided to this Court, stated that 

“plaintiffs have determined that it is the best interest of justice to dismiss the claims set forth in 

counts VII, VIII, and IX, which are based on State tort theory, as the defendant is likely to prevail 

under the theory of governmental immunity pertaining to these claims only.” Defendant’s 

response in opposition to the motion below correctly stated that the trial court lacked jurisdiction 

to act on the motion while the claim of appeal was pending, see MCR 2.614(D), and, alternatively,

that, “[h]aving litigated this matter through discovery, briefing and a hearing on a motion for 

summary disposition . . . , [the trial court’s] issuance of a decision, and the filing of an appeal,”

defendant “is entitled to a final decision that will provide full res judicata effect—that is, that can 

be used as the basis of issue and claim preclusion.” In answering the motion that plaintiffs filed 

in this Court, defendant stated that it “is entitled to proceed with its meritorious appeal of three tort 

claims and to a ruling from this Court reversing the trial court decision and to the full law of the 

case/collateral estoppel effect of any such ruling.”

This Court denied plaintiffs’ motion to dismiss “for failure to persuade the Court at this 

time that the appeal is moot.” Milford Hills Props Inc v Charter Twp of Milford, unpublished 

order of the Court of Appeals, entered July 1, 2020 (Docket No. 353249).

Having failed to achieve speedy dismissal of the tort claims below, or of the claim of appeal 

involving them in this Court, plaintiffs do not now offer searching argument in opposition to 

defendant’s claim of governmental tort immunity, but instead tacitly ask this Court to eschew 

deciding the issue on its merits while explicitly asking this Court to remand this case to the trial 

court in order that plaintiffs might move the court to allow them to amend their complaint in hopes 

of salvaging their tort claims. Plaintiffs explain as follows:

While Appellee could have moved to amend its complaint before or after 

the denial of summary disposition, Appellee chose not to do so in an effort to 

proceed to [trial] at once. Now, however, given the delay caused by this appeal, . .

. and the lengthy delay resulting from the unforeseeable COVID 19 pandemic, there 

remains no financial incentive for Appellee to now abandon these claims. Appellee 

should be given the opportunity to amend its complaint in the interest of justice 

given the information uncovered during discovery.

We note that plaintiffs on appeal do not expressly disclaim the concession they offered below, and 

also with an exhibit attached to their motion to dismiss in this Court, that “defendant is likely to 

prevail under the theory of governmental immunity pertaining to [the tort] claims,” but do appear 

to recognize that they require other avenues in order to maintain those theories of recovery, 

explaining that they now wish to “add claims and parties,” asserting that “[t]here is ample evidence 

of intentional misconduct, gross negligence, and bad faith dealing on the part of several 

Appellant’s employees and officers, which avoids the doctrine of governmental immunity.”

We decline to express any opinions about the propriety or merits of plaintiffs’ plans to 

amend their complaint in furtherance of their tort theories, because there has been no such decision 
-5-

below for this Court to review. The issue in this claim of appeal remains whether the trial court 

erred when it denied defendant’s motion for summary disposition of the tort claims insofar as it 

was predicated on governmental immunity. We conclude that it did err.

As noted, the trial court denied the parties’ cross-motions for summary disposition on the 

ground that “[t]here are numerous genuine issues of material fact,” and did so with no elaboration 

or differentiation of issues or defenses. We think it apparent that the court simply overlooked the 

immunity issue.

Plaintiffs’ complaint neither cited the governmental tort liability act nor otherwise 

mentioned immunity. Nor did plaintiffs plead facts in connection with its tort theories in terms 

that clearly implicated one of the statutory exceptions to governmental immunity.2 Defendant’s 

answer to the complaint was accompanied by a list of affirmative defenses, in which defendant 

invoked governmental immunity in connection with the claims of tortious interference and 

fraudulent or negligent misrepresentation. In their response to defendant’s affirmative defenses, 

plaintiffs stated in connection with each of defendant’s invocations of immunity only that “[t]he 

allegations contained in [the pertinent paragraph] are denied as untrue for the reasons set forth in 

Plaintiffs’ Complaint.” Those vague denials, at best, are invitations to study the complaint 

generally while trying to glean from it information that might be applicable to a statutory 

exception. We decline the invitation. See McIntosh v McIntosh, 282 Mich App 471, 485; 768 

NW2d 325 (2009) (“This Court will not search the record for factual support for a party’s claim.”).

As noted, defendant filed its first motion for summary disposition on February 15, 2019, 

which sought dismissal of the tort claims on the basis of governmental immunity. Proceedings 

were then stayed in deference to ongoing facilitation. Plaintiffs did not file their brief in opposition 

to defendant’s motion for summary disposition, and in support of their own motion for partial 

summary disposition, until December 18, 2019, after the stay had expired, thus 10 months after 

defendant filed its motion. In that brief, plaintiffs presented argument relating to contract law, 

promissory estoppel, takings, and substantive due process, but made no mention of defendant’s 

invocation of governmental immunity in connection with the claims of tortious interference with 

a business expectancy, or fraudulent or innocent misrepresentation. Further, plaintiffs cited MCR 

2.116(C)(8) (failure to state a claim), (C)(10) (no question of material fact), and (I)(2) (party 

opposing summary disposition entitled to judgment), but not (C)(7) (“immunity granted by law”).

As noted, defendant soon followed with its second motion for summary disposition, which 

effectively incorporated by reference its earlier one without repeating its particulars, thus including 

its claim of governmental immunity, and added an alternative request to refer the matter to 

arbitration.

 

2

“The statutory exceptions to the governmental immunity provided to the state and its agencies 

are the highway exception, MCL 691.1402; the motor-vehicle exception, MCL 691.1405; the 

public-building exception, MCL 691.1406; the proprietary-function exception, MCL 691.1413; 

the governmental-hospital exception, MCL 691.1407(4); and the sewage-disposal-system-event 

exception, MCL 691.1417(2) and (3).” Odom, 482 Mich at 478 n 62.
-6-

The perfunctory hearing on the cross-motions for summary disposition included no 

discussion of governmental immunity, and the written order that followed did not mention 

immunity beyond acknowledging in passing that defendants had invoked MCR 2.116(C)(7), along 

with (C)(8) and (C)(10).

Despite the trial court’s failure to indicate whether it offered the issue any serious or distinct 

consideration, we, in the interests of judicial economy, choose to proceed to decision de novo of 

the immunity question. We conclude that the trial court erred by failing to recognize defendant’s 

immunity with respect to plaintiffs’ tort claims.

Again, the statutory grant of governmental immunity is broad, and exceptions are to be 

construed narrowly. Nawrocki, 463 Mich at 158. And a plaintiff filing suit against a governmental 

agency must plead in avoidance of governmental immunity. Odom, 482 Mich at 478-479. As 

noted, plaintiffs made no effort to plead in avoidance of governmental immunity below, and even 

acknowledged in a document submitted to this Court that “defendant is likely to prevail under the 

theory of governmental immunity.” For these reasons, we reverse the result below as regards 

defendant’s claim of appeal, and remand this case to the trial court with instructions to grant 

defendant summary disposition in connection with plaintiffs’ tort claims for tortious interference 

with prospective economic advantages (Count VII), fraudulent misrepresentation (Count VIII), 

and innocent misrepresentation (Count IX).

III. NON-TORT CLAIMS

Defendant argues that the trial court also erred by failing to grant its motion for summary 

disposition in connection with plaintiffs’ non-tort claims.3 We agree.

When reviewing an order of summary disposition under MCR 2.116(C)(10), this Court 

examines all documentary evidence in the light most favorable to the nonmoving party to 

determine whether there exists a genuine issue of material fact. Ardt v Titan Ins Co, 233 Mich 

App 685, 688; 593 NW2d 215 (1999). “A motion for summary disposition under MCR 

2.116(C)(8) tests the legal sufficiency of a claim by the pleadings alone.” Smith v Stolberg, 231 

Mich App 256, 258; 586 NW2d 103 (1998). In reviewing a (C)(8) motion, this Court accepts as 

true all factual allegations supporting the claim “to determine whether the claim is so clearly 

unenforceable as a matter of law that no factual development could establish the claim and justify 

recovery.” Id.

 

3 Plaintiffs’ responsive briefing on appeal includes much advocacy of the merits of their positions 

below, and concludes by asking this Court to “either grant summary disposition in favor of 

Plaintiffs-Appellees pursuant to MCR 2.116(I)(2), or remand this matter in its entirety for trial.” 

But as defendant points out, plaintiffs did not file a cross-appeal, and thus are not entitled to ask 

for any change in the results below. See ABATE v Pub Serv Comm, 192 Mich App 19, 24; 480 

NW2d 585 (1991) (“an appellee that has not sought to cross appeal cannot obtain a decision more 

favorable than was rendered by the lower tribunal”). We thus look upon plaintiffs’ arguments 

about the merits of their positions simply as defending the trial court’s decision to deny defendant’s 

motion for summary disposition.
-7-

A. CONTRACT

Plaintiffs based their contract claim on language in the parties’ capacity agreement calling 

on defendant to use its best efforts to effectuate the agreement, including expeditiously approving 

attendant plans, paperwork, and permits. Plaintiffs thus rely on ¶ 3 of the agreement:

It is agreed that the parties shall cooperate and use their “best efforts” to 

effectuate the terms and provisions of the Agreement to Assume Responsibility and 

this Addendum. This includes, but is not limited to, the obligation on the part of 

the Developer to use its “best efforts” to complete the Community Sewer System 

and senior citizen portion of the Development in an expeditious fashion. Likewise, 

[defendant] shall be obligated to use its “best efforts” to expeditiously provide 

approval of all plans, paperwork, permits or otherwise to effectuate this Agreement 

and the Agreement to Assume Responsibility. This includes using its best efforts 

to cooperate with the Oakland County Road Commission or others in the granting 

of any easements necessary to effectuate the Agreement to Assume Responsibility 

or this Working/Development Agreement for Operation of Community Sewer 

System.

This provision says nothing about rezoning, and plaintiffs do not suggest that any part of the 

capacity agreement expressly addresses that subject.

The reservation of the right to use any excess capacity includes no express or implied 

guarantee that defendant would take whatever legislative action might be needed to accommodate 

any plan plaintiffs might devise for taking advantage of their excess capacity. Instead, this 

agreement called for “best efforts” to effectuate only specified goals—plaintiffs’ building a 

wastewater treatment plant and reserving the rights to use any excess capacity.

Further, defendant cites plausible authority for the proposition that it is doubtful whether

an agreement to rezone property or approve a future development plan would have been 

enforceable, on the ground that a governmental entity may not contract in derogation of its 

legislative authority. See Essexville v Carrollton Concrete Mix, Inc, 259 Mich App 257, 265; 673 

NW2d 815 (2003) (“The power to zone and rezone property is a legislative function.”); Harbor 

Land Co v Grosse Ile Twp, 22 Mich App 192, 205 n 4; 177 NW2d 176 (1970) (“The true test is 

whether the contract itself deprives a governing body, or its successor, of a discretion which public 

policy demands should be left unimpaired.” (Quotation marks and citation omitted.)); Sun 

Communities v Leroy Twp, 241 Mich App 665, 669; 617 NW2d 42 (2000) (“it is settled law in 

Michigan that the zoning and rezoning of property are legislative functions”); AFT Mich v 

Michigan, 303 Mich App 651, 663; 846 NW2d 583 (2014) (“one legislature cannot bind the power 

of a successive legislature”), aff’d 497 Mich 197 (2015).

Moreover, our Supreme Court has reiterated that “an agreement to agree is not enforceable 

where the document or contract that the parties agree to make is to contain any material term that 

is not already agreed on.” LaFontaine Saline, Inc v Chrysler Group, LLC, 496 Mich 26, 37; 852 

NW2d 78 (2014) (quotation marks and citation omitted). In this case, plaintiffs argue that the 

capacity agreement includes defendant’s agreement to agree in the future to new zoning 
-8-

particulars. However, neither the capacity agreement itself, nor anything else in the record, 

suggests that the parties had arrived at an understanding.

For these reasons, we conclude that the capacity agreement on its face did not obligate 

defendant to rezone the subject property to accommodate plaintiffs’ development aspirations, and, 

alternatively, that any such promise would have been unenforceable as an attempt to constrain 

defendant’s future legislative prerogatives. Accordingly, the trial court erred by failing to grant 

defendant summary disposition of plaintiffs’ contract claim.

B. PROMISSORY ESTOPPEL

The elements of promissory estoppel consist of

(1) a promise, (2) that the promisor should reasonably have expected to induce 

action of a definite and substantial character on the part of the promisee, (3) which 

in fact produced reliance or forbearance of that nature, and (4) in circumstances 

such that the promise must be enforced if injustice is to be avoided. [Ardt, 233 

Mich App at 692 (quotation marks and citation omitted).]

The doctrine should be applied cautiously, and “only where the facts are unquestionable and the 

wrong to be prevented undoubted.” Novak v Nationwide Mut Ins Co, 235 Mich App 675, 687; 599 

NW2d 546 (1999).

As the elements plainly indicate, promissory estoppel comes into play in situations that 

approach, but do not perfectly achieve, contract formation. Accordingly, that doctrine does not 

operate in controversies arising from a written contract. “ ‘Promissory estoppel is not a doctrine 

designed to give a party to a negotiated commercial bargain a second bite at the apple in the event 

it fails to prove breach of contract.’ ” Gen Aviation, Inc v Cessna Aircraft Co, 915 F2d 1038, 1042 

(CA 6, 1990), quoting Walker v KFC Corp, 728 F2d 1215, 1220 (CA 9, 1984). See also 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”) (concerning unjust enrichment).

In this case, the parties disagree over certain terms of their capacity agreement, but do not 

dispute that it constitutes a legally binding contract between them. Further, plaintiffs do not allege 

that some alternate set of negotiations, considerations, understandings, or circumstances shadowed 

those that culminated in the written capacity agreement, let alone that such unwritten machinations 

constituted an understanding entirely apart from what the capacity agreement covered. It would 

thus be an incautious extension of the doctrine of promissory estoppel to allow it to impose 

obligations on defendant apart from the provisions of the parties’ written contract. Accordingly, 

the trial court erred by failing to grant defendant summary disposition of plaintiffs’ promissory 

estoppel claim.

C. TAKINGS

In their complaint, plaintiffs alleged that defendant, “[b]y failing to approve Plaintiffs’

project on the Property, . . . has effected a complete denial of Plaintiffs’ reasonable use of the 

excess capacity” of the wastewater treatment plant, thus “an unconstitutional taking of the excess 

capacity available at the Plant without due compensation.” Plaintiffs additionally alleged that 
-9-

defendant’s “refusal to approve Plaintiffs’ request for conditional rezoning has resulted in 

Plaintiffs being deprived of any viable economical use” of the subject real property.

Both the United States and Michigan Constitutions prohibit the taking of private property 

for public purposes without due process and just compensation. US Const, Ams V and XIV, § 1; 

Const 1963, art 1, § 17 and art 10, § 2. “ ‘[T]he Fifth Amendment is violated when land-use 

regulation ‘does not substantially advance legitimate state interests or denies an owner 

economically viable use of his land.’ ” Lucas v South Carolina Coastal Council, 505 US 1003, 

1016; 112 S Ct 2886; 120 L Ed 2d 798 (1992) (emphasis added), quoting Agins v City of Tiburon, 

447 US 255, 260; 100 S Ct 2138; 65 L Ed 2d 106 (1980). In other words, “when the owner of real 

property has been called upon to sacrifice all economically beneficial uses in the name of the 

common good, that is, to leave his property economically idle, he has suffered a taking.” Lucas, 

505 US at 1019. Accordingly, “total regulatory takings must be compensated.” Id. at 1026.

In this case, the parties dispute the extent to which defendant’s refusal to rezone the subject 

property has deprived plaintiffs economic value in that property or their right to use any of the 

wastewater treatment plant’s excess capacity, and presumably those were among the “numerous 

genuine issues of material fact” causing the trial court to decide that summary disposition was not 

appropriate. Regardless, the court overlooked a purely legal basis for dismissal of the takings 

claims.

An exception to the requirement that the government compensate a property owner for a 

regulatory taking is when the regulation at issue simply mirrors a limitation on the use of the land 

that already existed under applicable property law or nuisance doctrine at the time the property 

was acquired. Lucas, 505 US at 1029-1031. “Where the State seeks to sustain regulation that 

deprives land of all economically beneficial use, . . . it may resist compensation only if the logically 

antecedent inquiry into the nature of the owner’s estate shows that the proscribed use interests 

were not part of his title to begin with.” Id. at 1027.

In this case, plaintiffs argue that, although they “acquired the Subject Property with the 

knowledge of its current zoning,” the parties’ capacity agreement induced plaintiffs to expect 

defendant to “exercise ‘best efforts’ to expeditiously provide approval of all plans, paperwork, 

permits or otherwise to effectuate the entire Capacity Agreement, thus giving Appellees a 

justifiable expectation that a rezoning application would be expeditiously approved.” Plaintiffs

thus concede that their development ambitions ran afoul of existing zoning. Because “the 

proscribed use interests were not part of [plaintiffs] title to begin with,” plaintiffs’ resort to 

constitutional takings doctrine is without merit. Accordingly, the trial court erred by failing to 

grant defendant summary disposition of plaintiffs’ takings claims.

D. SUBSTANTIVE DUE PROCESS

In their complaint, plaintiffs alleged that “failing to allow a rezoning that would allow 

Plaintiffs to use excess capacity that they were compelled by [defendant] to construct is a denial 

of . . . substantive due process . . . by irrational and arbitrary government action.” Plaintiffs 

elaborated, “In requiring Plaintiffs to construct additional capacity for which there is no user, and 

which serves no rational purpose, [defendant] has damaged plaintiffs.” Plaintiffs additionally 

alleged that “[f]ailing to allow a rezoning that would allow Plaintiffs to actually develop their 
-10-

Property is a denial of Plaintiffs’ substantive due process rights . . . by irrational and arbitrary 

government action,” elaborating that defendant “has exercised its police power through regulation 

that illegally prohibits the use of Plaintiffs’ Property,” and that “[t]he actions and omissions of 

[defendant] are unreasonable, arbitrary, confiscatory, illegal and unconstitutional.”

A person’s right to due process of law when facing certain kinds of adverse action at the 

hands of the state or one of its subdivisions is guaranteed under both the United States and 

Michigan Constitutions. US Const, Am XIV, § 1; Const 1963, art 1, § 17.

4

 “Due process protects 

vested property rights or entitlements.” Mich Ed Ass’n v State Bd of Ed, 163 Mich App 92, 98; 

414 NW2d 153 (1987). However, the constitutional due-process guarantees extend beyond merely 

insuring fair procedures in the implementation of governmental policy: “The Due Process Clause 

contains a substantive component that bars certain arbitrary, wrongful government actions 

‘regardless of the fairness of the procedures used to implement them.’ ” Zinermon v Burch, 494 

US 113, 125; 110 S Ct 975; 108 L Ed 2d 100 (1990), quoting Daniels v Williams, 474 US 327, 

331; 106 S Ct 662; 88 L Ed 2d 662 (1986). “[A] claim may be based on a denial of substantive 

due process where a plaintiff is deprived of property rights by irrational or arbitrary governmental 

action.” Bevan v Brandon Twp, 438 Mich 385, 391; 475 NW2d 37 (1991) (quotation marks and 

citation omitted). A party asserting that governmental action is not a proper exercise of the police 

power “must prove either that no public purpose is served by the act or that no reasonable 

relationship exists between the remedy adopted and the public purpose sought to be achieved.” 

Van Slooten v Larson, 410 Mich 21, 42-43; 299 NW2d 704 (1980).

The United States Supreme Court has expressed a general reluctance to expand the 

applicability of substantive due process. It decreed that “[w]here a particular Amendment provides 

an explicit textual source of constitutional protection against a particular sort of government 

behavior, that Amendment, not the more generalized notion of substantive due process, must be 

the guide for analyzing these claims.” Sacramento Co v Lewis, 523 US 833, 842; 118 S Ct 1708; 

140 L Ed 2d 1043 (1998) (alteration retained, quotation marks and citations omitted).

In this case, plaintiffs are arguing that defendant failed to keep promises on which plaintiffs 

detrimentally relied, thus their contract and promissory estoppel claims. And also, that defendant’s 

refusal to rezone the subject property stripped all value related to their investment-backed 

expectations concerning excess plant capacity and development of the subject property, thus their 

takings claims. To the extent that plaintiffs rely on the latter constitutional doctrine, their 

alternative invocation of substantive due process is inapt. Id.

Plaintiffs both assert that “[t]he conduct of [defendant] serves no legitimate governmental 

purpose,” and acknowledge that the existing zoning follows from a desire to maintain a lower 

density of land usage than what plaintiffs propose, effectively establishing “a park for the benefit 

of developments adjacent to the Subject Property” in the context of objecting to the frustration of 

their expectations, not challenging the legitimacy of preserving low-density land uses.

 

4 Our state constitution’s due-process provision is coextensive with that of the United States 

Constitution. Cummins v Robinson Twp, 283 Mich App 677, 700-701; 770 NW2d 421 (2009).
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We further observe that the bulk of plaintiffs’ argument under the rubric of substantive due 

process concerns defendant’s action or inaction based on defendant’s understanding of the parties’

capacity agreement along with defendant’s benign policy preferences. In protesting defendant’s 

alleged “breach the Capacity Agreement,” and resultant frustration of plaintiffs’ “justifiable 

expectation that a rezoning application would be expeditiously approved,” plaintiffs complain of

broken promises, not irrational governmental action. And by complaining that defendant “chose 

to ignore several lucid presentations made by Plaintiffs and the Appellant Township’s own 

Planner’s opinions that that there is no market for offices at the Subject Property and that master 

plan allows for residential development of the Subject Property,” plaintiffs are objecting to policy 

decisions, not seriously attempting to expose irrationality. Indeed, plaintiffs do not specifically 

assert that the zoning at issue was wholly irrational and thus a violation of substantive due process 

all along, but instead argue that such a violation came about as the result of defendant’s refusal to 

rezone the subject property as if such action were required by the capacity agreement.

Plaintiffs themselves acknowledge that, “[i]n order to sustain a substantive due process 

claim, an aggrieved party must have a legitimate claim to entitlement to, or a justifiable expectation 

in, a property right,” citing G M Engineers & Assoc, Inc v West Bloomfield Twp, 922 F2d 328 (CA 

6, 1990).5 In that persuasive6case, the plaintiff alleged that a municipality’s “denial . . . of 

proposed lot-splits deprived the plaintiff of liberty and property without due process of law and 

amounted to a taking of property.” Id. at 329. The federal Sixth Circuit held as follows:

The viability of plaintiff’s due process claim depends upon establishing that the 

local board did not have discretion to deny the proposed lot-split once the plaintiff 

complied with the mandatory minimal requirements. If . . . the board members had 

discretion as to whether or not to approve the proposal, then plaintiff had neither a 

legitimate claim of entitlement, nor a justifiable expectation, in approval of the 

proposed lot-split. [Id. at 331 (footnote, quotation marks, and citations omitted).]

After setting forth these principles, plaintiffs immediately complain that defendant 

breached the parties’ capacity agreement. Plaintiffs’ substantive due process claim, then, is 

ultimately derived from their contract claim, according to which plaintiffs assert that the parties’

capacity agreement left defendant without discretion to deny plaintiffs’ requests for rezoning. 

Because we have already concluded that no such contractual obligation existed, we conclude here 

that defendant did not lack the discretion to deny the request for rezoning, and thus that rejection 

of plaintiffs’ rezoning request did not provide a factual basis upon which to ground plaintiffs’

substantive due process claims.

 

5 See also Bevan v Brandon Twp, 438 Mich 385, 391; 475 NW2d 37 (1991) (“a claim may be 

based on a denial of substantive due process where a plaintiff is deprived of property rights by 

irrational or arbitrary governmental action” (quotation marks and citation omitted)).

6

“Although state courts are bound by the decisions of the United States Supreme Court construing 

federal law, there is no similar obligation with respect to decisions of the lower federal courts.” 

Abela v Gen Motors Corp, 469 Mich 603, 606; 677 NW2d 325 (2004) (citation omitted). The 

latter may, however, be consulted as persuasive authority. Id. at 607.
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For these reasons, the trial court erred by failing to grant defendant summary disposition 

of plaintiffs’ substantive due process claims.

IV. ARBITRATION

Defendant alternatively argues that, if any claims are not dismissed on their merits, the 

matter should be referred to arbitration to resolve a dispute over the amount of excess capacity. 

We agree with the trial court that defendant has failed to show that arbitration was in order.

The provision in the parties’ capacity agreement covering excess capacity includes the 

following:

Should there be a dispute between the parties as to whether there is Excess Capacity 

for the Developer, the parties shall attempt to work out their differences. Failing 

resolution, the parties shall have their dispute(s) arbitrated through the American 

Arbitration Association according to its rules then prevailing. The arbitrator shall 

be a competent engineer familiar with waste water treatment plants and similar 

operations. His decision shall be final and binding upon the parties and his award 

may be enforced in any circuit court or other court having appropriate jurisdiction 

thereof.

The provision covering amendments includes the following:

It is understood and agreed that to the extent that the Developer uses Excess 

Capacity, that the provisions relating to the maintenance and replacement escrow 

funds may need to be modified to better reflect the proportional costs for the 

operation, maintenance or replacement of the Community Sewer System. In that 

event, the parties agree to use their best efforts to negotiate in good faith an amendment that more fully and fairly reflects the proportional costs for operating, 

maintaining and replacing the Community Sewer System. Should the parties be 

unable to agree, the matter shall be submitted to arbitration in accordance with the 

arbitration provision set forth in Paragraph 2 above.

The agreement does not otherwise mention arbitration.

Defendant argues that “the gravamen of [plaintiffs’] claims is that they have been damaged 

because they cannot use (and be paid for) excess capacity,” and thus that “to determine any of their 

claimed damages under any theory, the amount of excess capacity will need to be determined.” 

According to defendant, “Until the amount of excess capacity is determined under the agreement, 

the Developers’ claims are premature, and the matter should be submitted to arbitration.” 

Plaintiffs, however, assert that defendant waived recourse to arbitration by failing to invoke it in a 

timely fashion, and also cite exhibits to show that the Department of Environmental Quality, as it 

was then named, had already determined the extent of the excess capacity, thus obviating any need 

to resort to arbitration for that determination.

On December 23, 2019, two years after defending this action, defendant, citing the first of 

the two arbitration provisions quoted above, filed what it styled as its “Second Motion for 

Summary Disposition to Enforce Arbitration Agreement,” asking the trial court to “grant its 
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Motion and Dismiss Plaintiffs’ Complaint in its entirety, or in the alternative dismiss Plaintiffs’

Complaint and/or order the parties to arbitration pursuant to the arbitration clause contained in the 

Capacity Agreement.” Defendant thus implied below that an arbitration provision covering only 

the factual question of the existence of excess capacity broadly covered plaintiffs’ contract and 

constitutional claims. On appeal, however, defendant suggests that arbitration is proper to 

determine only the existence, or extent, of excess capacity.

This situation seems potentially to raise issues concerning the scope of the arbitration 

provision, whether it must yield regardless to an administrative agency’s independent 

determination of excess capacity, and whether defendant waived recourse to arbitration for having 

failed to invoke that provision until two years into the litigation. See Madison Dist Pub Sch v 

Myers, 247 Mich App 583, 596; 637 NW2d 526 (2001) (“waiver of arbitration can occur when a 

party files a responsive pleading without asserting the right to arbitration”); Salesin v State Farm 

Fire & Cas Co, 229 Mich App 346, 356; 581 NW2d 781 (1998) (“In general, . . . defending an 

action without seeking to invoke a right to compel arbitration, constitutes a waiver of the right to 

arbitration.”).

The trial court eschewed wading into that thicket. Having stated that “[t]here are numerous 

genuine issues of material fact and Defendant has not shown that the arbitration agreement should 

be enforced under the facts presented,” the court implied that cutting away to arbitration for inquiry 

into the extent of excess capacity was premature at that time.

It logically follows that our conclusion that all of plaintiffs’ claims are without merit as a 

matter of law renders the issue of the extent to which the subject wastewater treatment plant has 

excess capacity moot in connection with those claims. We further conclude that the question of 

arbitration remains premature until and unless plaintiffs on remand persuade the trial court to allow 

them to amend their complaint to attempt to revive their tort claims by adding individual parties 

and new theories in avoidance of governmental immunity. For these reasons, we affirm the trial 

court insofar as it declared that “Defendant has not shown that the arbitration agreement should be 

enforced” at this time.

V. CONCLUSION

For the reasons stated, we affirm the trial court’s decision not to surrender this case to 

arbitration, but reverse the court’s decision to deny defendant’s motion for summary disposition 

in connection with each of plaintiffs’ claims as pleaded and supported.

Affirmed in part, reversed in part, and remanded for further proceedings consistent with 

this opinion. We do not retain jurisdiction.

/s/ Anica Letica

/s/ Deborah A. Servitto

/s/ Michael J. Kelly