MICHIGAN ASSOCIATION OF HOME BUILDERS v CITY OF TROY

Docket No. 149150. Argued on application for leave to appeal March 11, 2015. Decided 

June 4, 2015

The Michigan Association of Home Builders, the Associated Builders and Contractors of 

Michigan, and the Michigan Plumbing and Mechanical Contractors Association brought an 

action in the Oakland Circuit Court against the city of Troy, alleging that the city’s building 

department fees violated MCL 125.1522 (a provision of the Single State Construction Code Act, 

MCL 125.1501 et seq.) and Const 1963, art 9, § 31 (a provision of the Headlee Amendment). 

The city had entered into a contract with SafeBuilt Michigan, Inc., under which SafeBuilt 

assumed the duties of the city’s building inspection department. SafeBuilt received up to 80% of 

the building department fees associated with its services, and the city retained the rest. The 

court, Shalina D. Kumar, J., granted summary disposition in favor of the city, ruling that the 

court did not have jurisdiction over plaintiffs’ lawsuit because they had failed to exhaust their 

administrative remedies under MCL 125.1509b before filing their complaint. The Court of 

Appeals, JANSEN, P.J., and OWENS and SHAPIRO, JJ., affirmed in an unpublished opinion per 

curiam, issued March 13, 2014 (Docket No. 313688), agreeing that because the act provided an 

administrative procedure through which plaintiffs could have raised their claims, they were 

required to exhaust that administrative procedure before proceeding to circuit court. Plaintiffs 

applied for leave to appeal, and the Supreme Court ordered and heard oral argument on whether 

to grant plaintiffs’ application or take other peremptory action. 497 Mich 862 (2014).

In a unanimous memorandum opinion, the Supreme Court held:

The circuit court erred by concluding that plaintiffs were required to exhaust their

administrative remedies. The act creates a state construction code that applies throughout the 

state. Under MCL 125.1502a(v), the city is a governmental subdivision that has assumed 

responsibility for the administration and enforcement of the act and the code within its 

jurisdiction. Under MCL 125.1502a(t), an enforcing agency is the governmental agency that is 

responsible for administering and enforcing the code within a governmental subdivision (in this 

case the city’s building inspection department). MCL 125.1522(1) provides that the legislative 

body of a governmental subdivision (in this case, the Troy City Council) must establish 

reasonable fees that the governmental subdivision will charge for acts and services performed by 

the enforcing agency. MCL 125.1509b(1) states that the director of the Department of Licensing 

and Regulatory Affairs may conduct a performance evaluation of an enforcing agency to assure

Michigan Supreme Court

Lansing, Michigan

Syllabus Chief Justice:

Robert P. Young, Jr.

Justices:

Stephen J. Markman

Mary Beth Kelly

Brian K. Zahra

Bridget M. McCormack

David F. Viviano

Richard H. Bernstein

This syllabus constitutes no part of the opinion of the Court but has been 

prepared by the Reporter of Decisions for the convenience of the reader.

Reporter of Decisions:

Corbin R. Davis
that it is properly administering and enforcing the act and the code, and MCL 125.1509b(3)

establishes a procedure to appeal should the State Construction Code Commission issue a notice 

of its intent to withdraw a governmental subdivision’s responsibility for administering and 

enforcing the act and code after receiving the results of an evaluation. The performance 

evaluation is only done on the enforcing agency (the city’s building inspection department), and 

MCL 125.1509b establishes no administrative procedure pertaining to the legislative body that 

establishes fees under MCL 125.1522(1) (the city council). Because the administrative 

procedures established by MCL 125.1509b do not apply to the city’s legislative body, plaintiffs 

were not required to exhaust their administrative remedies.

Reversed and remanded.

©2015 State of Michigan
FILED June 4, 2015

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

SUPREME COURT

MICHIGAN ASSOCIATION OF HOME 

BUILDERS, ASSOCIATED BUILDERS 

AND CONTRACTORS OF MICHIGAN, 

and MICHIGAN PLUMBING AND 

MECHANICAL CONTRACTORS

ASSOCIATION,

Plaintiffs-Appellants,

v No. 149150

CITY OF TROY,

Defendant-Appellee.

BEFORE THE ENTIRE BENCH 

MEMORANDUM OPINION.

Plaintiffs, a group of associations representing builders, contractors, and plumbers,

filed suit against defendant, the city of Troy, claiming that defendant’s building 

department fees violated § 22 of the Single State Construction Code Act (CCA), MCL 

125.1522, as well as a provision of the Headlee Amendment, Const 1963, art 9, § 31. 

Michigan Supreme Court

Lansing, Michigan

OPINION Chief Justice:

Robert P. Young, Jr.

Justices:

Stephen J. Markman

Mary Beth Kelly

Brian K. Zahra

Bridget M. McCormack

David F. Viviano

Richard H. Bernstein
2

The circuit court granted summary disposition to defendant, holding that the court lacked 

jurisdiction over the matter because plaintiffs had failed to exhaust the administrative 

procedure outlined in § 9b of the CCA, MCL 125.1509b. 

The plain language of MCL 125.1509b, however, provides that the director1

may 

conduct performance evaluations of defendant’s “enforcing agency” and does not provide 

any administrative procedure relative to the entity responsible for establishing fees 

pursuant to MCL 125.1522(1): “[t]he legislative body of a governmental subdivision.” 

Because the administrative proceedings in § 9b do not purport to provide the director 

with the authority to evaluate defendant’s legislative body, the circuit court erred by 

granting summary disposition to defendant on the basis of plaintiffs’ failure to exhaust 

their administrative remedies. 

We reverse the judgment of the Court of Appeals and remand this case to the 

circuit court for further proceedings consistent with this opinion. 

I. FACTS AND PROCEDURAL HISTORY

After several years of operating its building department at a deficit, defendant—

which is a “governmental subdivision” within the meaning of the CCA2

—privatized the

building department in July 2010. It entered into a contract with SafeBuilt Michigan, 

 1 The “director” is the director of the Department of Licensing and Regulatory Affairs or 

an authorized representative of the director. See MCL 125.1502a(q) and (r). 

2 MCL 125.1502a(v) provides:

“Governmental subdivision” means a county, city, village, or

township that, in accordance with [MCL 125.1508a or MCL 125.1508b],

has assumed responsibility for administration and enforcement of this act 

and the code within its jurisdiction.
3

Inc.,

3 under which SafeBuilt assumed the duties of defendant’s building inspection 

department, which is the “enforcing agency” within the meaning of the CCA.4

 

On December 15, 2010, plaintiffs filed the instant complaint, seeking declaratory 

and injunctive relief. Plaintiffs claimed that the fees generated under the contractual 

arrangement with SafeBuilt produced “significant monthly surpluses”5 that were used to 

augment defendant’s general fund in violation of MCL 125.1522 and constituted an 

unlawful tax increase in violation of Const 1963, art 9, § 31. 

After discovery, plaintiffs moved for summary disposition under

MCR 2.116(C)(10), and defendant sought summary disposition under MCR 2.116(I)(2). 

After conducting a hearing, the circuit court granted summary disposition to defendant, 

ruling that the court did not have jurisdiction over plaintiffs’ lawsuit because plaintiffs 

had failed to exhaust their administrative remedies under § 9b of the CCA before filing 

their complaint.

 3 Under the terms of the contract, SafeBuilt received 80% of the building department fees 

associated with its services, and defendant retained the remaining 20%. The contract 

provided that if the fees totaled more than $1 million in a fiscal year, SafeBuilt’s 

compensation would be reduced to 75% of the fees.

4 MCL 125.1502a(t) provides:

“Enforcing agency” means the governmental agency that, in 

accordance with [MCL 125.1508a or MCL 125.1508b], is responsible for 

administration and enforcement of the code within a governmental 

subdivision.

5 The complaint alleges that defendant had retained $140,607.83 over a three-month 

period. 
4

Plaintiffs appealed, arguing that they were entitled to proceed in circuit court 

without first seeking administrative action. The Court of Appeals affirmed,

6 holding that

because § 9b of the CCA provided an administrative procedure in which plaintiffs could 

have raised their claim, plaintiffs were required to exhaust that administrative procedure

before proceeding to circuit court. Furthermore, the panel held that although plaintiffs’ 

complaint alleged a constitutional violation, plaintiffs were still required to exhaust their 

administrative remedies when the constitutional claim was intermingled with an issue 

properly before an administrative agency.7

 We ordered and heard oral argument on 

whether to grant plaintiffs’ application for leave to appeal or take other preemptory 

action.8

II. STANDARD OF REVIEW

We review de novo the grant or denial of a motion for summary disposition.9

Moreover, whether the circuit court has subject matter jurisdiction over a particular 

matter is a question of law that this Court reviews de novo.10 Additionally, to the extent 

that the resolution of this case involves questions of statutory interpretation, our review is 

also de novo.11

 6 Mich Ass’n of Home Builders v City of Troy, unpublished opinion per curiam of the 

Court of Appeals, issued March 13, 2014 (Docket No. 313688), p 4.

7 Id.

8 Mich Ass’n of Home Builders v City of Troy, 497 Mich 862 (2014).

9 Maiden v Rozwood, 461 Mich 109, 118, 597 NW2d 817 (1999). 

10 Travelers Ins Co v Detroit Edison Co, 465 Mich 185, 205; 631 NW2d 733 (2001).

11 Pohutski v City of Allen Park, 465 Mich 675, 681; 641 NW2d 219 (2002).
5

III. ANALYSIS

The CCA creates a state construction code that governs innumerable aspects 

related to the construction, use, and occupation of residential and commercial buildings 

and structures.

12 The CCA and the construction code “apply throughout the state,”13 and

the CCA provides that, except as otherwise provided, the director is responsible for 

administering and enforcing both the CCA and the construction code.14 The language

“except as otherwise provided”—an exception to the director’s plenary authority—

permits governmental subdivisions to assume responsibility for administering and 

enforcing, as well as prosecuting violations of, the CCA and construction code.

15

Plaintiffs contend that the transfer of building department monies to defendant’s 

general fund violates MCL 125.1522(1), which provides:

The legislative body of a governmental subdivision shall establish 

reasonable fees to be charged by the governmental subdivision for acts and 

services performed by the enforcing agency or construction board of 

appeals under this act, which fees shall be intended to bear a reasonable 

 12 MCL 125.1504(1) provides:

The director shall prepare and promulgate the state construction code 

consisting of rules governing the construction, use, and occupation of 

buildings and structures, including land area incidental to the buildings and 

structures, the manufacture and installation of building components and 

equipment, the construction and installation of premanufactured units, the 

standards and requirements for materials to be used in connection with the 

units, and other requirements relating to the safety, including safety from 

fire, and sanitation facilities of the buildings and structures.

13 MCL 125.1508a(1).

14 MCL 125.1508b(1).

15 MCL 125.1508b.
6

relation to the cost, including overhead, to the governmental subdivision of 

the acts and services, including, without limitation, those services and acts 

as, in case of an enforcing agency, issuance of building permits, 

examination of plans and specifications, inspection of construction 

undertaken pursuant to a building permit, and the issuance of certificates of 

use and occupancy, and, in case of a board of appeals, hearing appeals in 

accordance with this act. The enforcing agency shall collect the fees 

established under this subsection. The legislative body of a governmental 

subdivision shall only use fees generated under this section for the 

operation of the enforcing agency or the construction board of appeals, or 

both, and shall not use the fees for any other purpose. [Emphasis added.]

Defendant cites MCL 125.1509b as the basis of its claim that plaintiffs are 

required to exhaust their administrative remedies before proceeding to circuit court. This 

statutory provision provides in relevant part:

(1) The director, as prescribed in this section, may conduct a 

performance evaluation of an enforcing agency to assure that the 

administration and enforcement of this act and the code is being done 

pursuant to either [MCL 125.1508a or MCL 125.1508b]. A performance 

evaluation may only be conducted either at the request of the local 

enforcing agency or upon the receipt of a written complaint. . . .

(2) When conducting a performance evaluation of an enforcing 

agency, the director may request that the local enforcing agency accompany 

the director or other state inspectors on inspections. The inspections shall 

be for the enforcement of this act and the code. The enforcing agency shall 

maintain all official records and documents relating to applications for 

permits, inspection records including correction notices, orders to stop 

construction, and certificates of use and occupancy. The enforcing agency 

shall make available for review all official records between 8 a.m. and 5 

p.m. on business days.

(3) . . . The [State Construction Code Commission] may issue a 

notice of intent to withdraw the responsibility for the administration and 

enforcement of this act and the code from a governmental subdivision after 

receiving the results of a performance evaluation. The notice shall include 

the right to appeal within 30 business days after receipt of the notice of 

intent to withdraw the responsibility. [MCL 125.1509b (emphasis added).]
7

The plain language of MCL 125.1509b provides that the director may conduct a 

“performance evaluation” of the enforcing agency—here, the City of Troy Building 

Inspection Department—to assure that the “administration and enforcement of this act 

and the code is being done pursuant to either [MCL 125.1508a or 125.1508b].” The 

administrative proceeding articulated in MCL 125.1509b is simply inapplicable to the 

entity identified in MCL 125.1522(1) as being responsible for establishing the fees to be 

charged for building department services—the “legislative body” of the city of Troy. 

Defendant maintains that § 9b applies to the “entire city.” However, the 

Legislature made a clear distinction between the “enforcing agency” and the

“governmental subdivision.” Under the definitional sections of the CCA, the 

“governmental subdivision” is the municipality that has assumed responsibility for code 

enforcement,

16 whereas the “enforcing agency” is the governmental agency within the 

governmental subdivision that is responsible for code enforcement.

17 Had the Legislature 

intended to permit the director to conduct a performance evaluation of the Troy City 

Council, it surely could have said so. We presume that the Legislature intended the 

meaning of the words used in the statute, and we may not substitute alternative language 

for that used by the Legislature.18 Thus, the plain language of § 9b indicates that it 

applies only to the “enforcing agency” and not the “legislative body of a governmental 

 16 MCL 125.1502a(v).

17 MCL 125.1502a(t).

18 Lash v Traverse City, 479 Mich 180, 189; 735 NW2d 628 (2007).
8

subdivision.” For that reason, the circuit court erred by concluding that plaintiffs were 

required to exhaust the administrative remedy in MCL 125.1509b. 

The judgment of the Court of Appeals is reversed, and the case is remanded to the 

circuit court for further proceedings consistent with this opinion.

Robert P. Young, Jr.

Stephen J. Markman

Mary Beth Kelly

Brian K. Zahra

Bridget M. McCormack

David F. Viviano

Richard H. Bernstein