Court Opinion

ID: 8210489
Source: CourtListenerOpinion
Date Created: 2022-09-30 05:04:39.658469+00
Date Added: 2024-06-11T16:41:51.506505
License: Public Domain

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

RAMON JACKSON,                                                       UNPUBLISHED
                                                                     September 29, 2022
               Plaintiff-Appellant,

and

MALIK SHELTON, JOSEPH GRIFFIN, IVAN
GOLLMAN, JAMARR BILLINGSLEA, SABRINA
GREEN, KENNY HOLLOWAY, TERRANCE
FLETCHER, JANEE BYRD, and THERON
BARKSDALE,

               Plaintiffs,

v                                                                    No. 359881
                                                                     Wayne Circuit Court
MAYOR OF DETROIT, DETROIT CITY                                       LC No. 21-000621-CZ
COUNCIL MEMBERS, and DETROIT CHIEF
FINANCIAL OFFICER,

               Defendants-Appellees.

Before: CAVANAGH, P.J., and GARRETT and YATES, JJ.

PER CURIAM.

         Plaintiff, Ramon Jackson, led a group of concerned Detroit residents in sounding the alarm
about the city’s issuance of bonds without proper notification and authorization. Specifically, the
plaintiffs contended that Detroit issued bonds beyond the city’s borrowing limit and kept residents
uninformed about the city’s bonding efforts. The trial court, on summary disposition, carefully
considered the plaintiffs’ arguments and concluded that all of the defendants (the Mayor of Detroit,
the Detroit City Council Members, and Detroit Chief Financial Officer John Naglick (collectively
Detroit)) were entitled to prevail because the bonds were issued before plaintiffs filed suit. Under
the preclusive doctrine discussed in Bigger v Pontiac, 390 Mich 1; 210 NW2d 1 (1973), and Sessa
v Macomb Co, 220 Mich App 279; 559 NW2d 70 (1996), the issuance of bonds stops challenges
in their tracks because no meaningful remedy can be provided without harming bond-holders. We

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are bound to apply that preclusive doctrine to end this lawsuit, and we also conclude that Detroit
did not issue bonds in excess of the debt limit imposed by MCL 117.4a(2). Thus, we affirm.

                                  I. FACTUAL BACKGROUND

         In August 2020, plaintiffs, a group of Detroit residents appearing in propria persona, filed
a complaint seeking declaratory and injunctive relief under MCR 2.605. The complaint alleged
that Detroit issued unlimited tax general obligation bonds without the proper voter authorization
required by MCL 141.164. Plaintiffs asked the trial court to enter a declaratory judgment revoking
the “illegally issued bonds.”

        Detroit answered plaintiffs’ complaint and attached election ballots from 2004 and 2009
authorizing the issuance of unlimited tax general obligation bonds. Detroit included a table that
showed voter authorization of the city’s bonds and the remaining amounts still unissued as of June
2019. Detroit then moved for summary disposition pursuant to MCR 2.116(C)(10), asserting that
because the bonds had already been issued, plaintiffs’ claim was barred under Bigger and Sessa.
Detroit argued that even if plaintiffs’ claim was not barred, it had submitted evidence that voters
had authorized the issuance of the bonds. In support of its argument, Detroit attached an affidavit
from Naglick. In his affidavit, Naglick attested that Detroit’s net debt was currently under the debt
limit established by MCL 117.4a(2). Along with his affidavit, Naglick attached pages from the
appendix of Detroit’s “offering circular for the Proposal N bonds . . . .” This showed Detroit’s net
indebtedness and debt limitations as of December 31, 2020. It showed that, as of December 31,
2020, Detroit’s total debt limit was $2,081,898,768 and Detroit had $735,864,104 outstanding for
unlimited tax general obligation bonds and limited tax general obligation bonds.

        Instead of a response, plaintiffs filed a cross-motion for summary disposition under MCR
2.116(C)(9), contending that Detroit had issued bonds in 2014, 2016, 2018, and 2020 in violation
of the debt limit imposed by Article 7, § 11, of Michigan’s 1963 Constitution and MCL 117.4a(2).
But plaintiffs offered no evidence to support this assertion. Plaintiffs also argued that Detroit could
not rely upon voter authorization from the 2004 and 2009 elections to justify issuing bonds after
2009. According to plaintiffs, this was because Detroit’s population dropped after those elections
and because Detroit had used some of the proceeds from the bond sales to fund projects that voters
had not approved. Additionally, plaintiffs insisted that the preclusive doctrine from Bigger could
not apply because in this case, unlike in Bigger, voters had never approved the challenged bonds.
Detroit filed a response to the cross-motion by reiterating that the claim was barred and noting that
Naglick’s affidavit established authorization. Detroit contended that plaintiffs had furnished no
admissible evidence to contest Naglick’s affidavit.

        The trial court granted Detroit’s motion for summary disposition, concluding that
plaintiffs’ claim was barred by the preclusive doctrine discussed in Bigger and Sessa. The trial
court declined to consider plaintiffs’ claim that Detroit had issued bonds in excess of the statutory
debt limit because plaintiffs had not pleaded that claim in their complaint. Jackson now appeals.

                                      II. LEGAL ANALYSIS

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        Jackson argues that the trial court erred by granting summary disposition to Detroit and
ruling that plaintiffs’ claim was barred. This Court reviews de novo the grant or denial of a motion
for summary disposition. Saffian v Simmons, 477 Mich 8, 12; 727 NW2d 132 (2007).

        In Bigger, the city of Pontiac issued bonds to cover part of the cost of acquiring a stadium.
Bigger, 390 Mich at 3. A day after the bonds were sold, the plaintiffs sued, attacking the decision
to defer construction of the stadium’s dome and challenging terms of a lease agreement. Id. at 3-
4. Our Supreme Court dismissed the plaintiffs’ claim without considering the merits, reasoning
that the lawsuit was untimely and would have prevented an orderly process of adjudication. Id.
at 4-5; Sessa, 220 Mich App at 286.

        In Sessa, the plaintiffs challenged a municipality’s issuance of bonds after the bonds had
been sold and issued to investors. Sessa, 220 Mich App at 287. This Court held that the preclusive
doctrine from Bigger barred consideration of the merits of the claim. Id. at 286-287. This Court
emphasized that, because the plaintiffs had waited to sue until after the bonds had issued, the
interests of the third-party investors were at stake:

       An equally important aspect of the Bigger rule comes into play here where suit was
       not begun until after the bonds had been issued and sold on the open market. The
       interests of third parties, the bondholders, who are bona fide purchasers for value
       and who, at the time of purchase, were not on notice of any such challenge,
       represents a vested interest that the entertaining of such litigation on its merits could
       defeat. In this regard, therefore, the Bigger rule is distinct from the statute of
       limitations and simply obligates those who would challenge such action to move
       promptly. [Id. at 287 (citation omitted).]

        Here, like in Sessa, plaintiffs did not raise their challenge until the bonds were sold and
issued. In their complaint, plaintiffs challenged bonds issued by Detroit in 2014, 2016, 2018, and
2019, yet did not sue until August 21, 2020.1 By that time, the challenged bonds were already in
the hands of third-party investors, and Detroit had used the proceeds from the bond sales to make
public improvements. Under the preclusive doctrine discussed in Bigger and Sessa, plaintiffs did
not timely employ the judicial process, so the trial court correctly deemed their claim precluded.

        Jackson argues that this Court should not apply Bigger and Sessa because voters never
authorized the bonds at issue and because Detroit never provided notice of its intent to issue bonds.
Plaintiffs have not offered any evidence suggesting that Detroit failed to obtain voter authorization
to issue the bonds or that Detroit failed to provide notice of its intent to issue the bonds and of the
electorate’s right to a referendum. As the party that would carry the ultimate burden at trial, it was
plaintiffs’ burden to produce evidence to support their claim, not Detroit’s obligation to produce
evidence to refute it. Law Offices of Jeffrey Sherbow, PC v Fieger & Fieger, PC, 507 Mich 272,
304; 968 NW2d 367 (2021) (plaintiffs bear the ultimate burden of establishing elements of their

1
  Plaintiffs challenge the “2020 Prop N bond,” which was supposedly issued in February 2021.
But plaintiffs did not identify this bond in their complaint, nor is there any evidence showing that
such bond existed. We note that, in his affidavit, Naglick alluded to this Proposition N bond, but
Naglick provided no information about it other than that it was issued at some point in 2021.

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legal cause of action); Quinto v Cross & Peters Co, 451 Mich 358, 361-362; 547 NW2d 314 (1996)
(noting that party that will not bear the burden of proof at trial may move for summary disposition
on grounds that opposing party has not produced evidence in support of its claim). Furthermore,
Detroit came forward with evidence that it sought voter authorization to issue unlimited tax general
obligation bonds during the November 2, 2004, election and in the February 24, 2009, election.
Detroit also furnished a table showing that voters had authorized the issuance of $399,000,000 in
unlimited tax general obligation bonds.2 Also, Naglick attested that all outstanding unlimited tax
general obligation bonds issued by the city received voter authorization before the bonds were
issued.

        Jackson contends that, even if Detroit sought and obtained voter authorization in the 2004
and 2009 elections, this voter authorization was not necessarily valid after 2009. In presenting this
argument, Jackson directs our attention to Quaid v Detroit, 319 Mich 268; 29 NW2d 687 (1947).
In Quaid, our Supreme Court considered whether a lapse of time following voter approval
impliedly revoked authority to continue to issue bonds. Id. at 270-271. Reviewing authority from
other jurisdictions considering this question, our Supreme Court explained that “a mere lapse of
time” did not invalidate voter approval, but a lapse of time in combination with other circumstances
could indicate voter approval had been revoked. Id. at 273. Our Supreme Court identified several
circumstances relevant to deciding whether voter approval had lapsed, including whether the
proceeds from the bond sale would be used to finance the same project voters had previously
authorized, whether there had been a change in the physical makeup of the community since
authorization, and the city’s reason for delaying issuance. Id. Although our Supreme Court did
not hold so explicitly, it indicated that courts should give deference to a city’s decision to delay
issuance. Id. Applying this to the facts before it, our Supreme Court found the city’s delay of 19
years had not impliedly revoked the electorate’s approval:

       In the case at bar, it is conceded that the city was prevented from issuing the bonds
       here in question from 1932 until 1945 by conditions beyond its control, that the
       authority to issue said bonds had not been revoked, that the territorial and corporate
       limits of the city were the same as in 1928, that it had been considered by the city
       authorities that the issue was prevented by overall debt limitations imposed by
       statute and city charter, that the purpose of the present bond sale was the same as
       originally authorized, that the proceeds were to be used as originally proposed, and
       that there was no abuse of discretion or fraud shown. Under these conditions, we
       conclude that the delay in issuance of the bonds does not invalidate the approval by
       the electors. [Id. at 275.]

        Jackson suggests that, in this case, voters’ authorization from 2004 and 2009 was no longer
valid by 2014 because, after the 2009 election, Detroit declared bankruptcy and there was a decline
in Detroit’s population. Assuming, arguendo, that record evidence supports Jackson’s assertions

2
  We note the table shows that, as of June 30, 2019, $148,078,286 worth of unlimited tax general
obligation bonds remained unissued. Though these bonds remained unissued, plaintiffs did not
seek to prevent Detroit from issuing these bonds in their complaint, which challenged only bonds
already sold and issued.

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about Detroit’s bankruptcy and the decline in its population, this alone would not show that voter
authorizations from 2004 and 2009 were impliedly revoked. Quaid emphasized the importance of
considering a city’s reason for delaying issuance and giving deference to that stated reason. See
id. at 273. In the absence of evidence of Detroit’s reasoning for delaying issuance, we cannot
conclude that Detroit abused its discretion or committed fraud in delaying issuance of the bonds.
Thus, Jackson has failed to show that the voter authorizations from the 2004 and 2009 elections
were no longer valid after the 2009 election.

        Jackson next argues that the trial court erred by declining to consider plaintiffs’ claim that
Detroit was in excess of its debt limit pursuant to MCL 117.4a(2) when it issued bonds from 2014
through 2020. In their complaint, although plaintiffs cited MCL 117.4a(2), they did not allege that
Detroit had issued the bonds in excess of its debt limit. Because plaintiffs did not explicitly allege
that Detroit issued bonds in excess of its debt limit, the trial court declined to entertain this issue.
Jackson argues this was error.

        Regardless of whether the trial court should have considered plaintiffs’ claim, the trial court
reached the right result. Plaintiffs’ contention that Detroit issued bonds in excess of its debt limit
was a part of their claim that the bonds were invalid. And as already discussed, Bigger and Sessa
preclude considering the merits of a challenge to municipal bonds already sold and issued. Bigger,
390 Mich at 3-5; Sessa, 220 Mich App at 286-287. But even if plaintiffs’ claim were not barred
by Bigger and Sessa, plaintiffs failed to offer any evidence showing that Detroit was in excess of
its debt limit when it issued bonds from 2014 through 2020.

        As MCL 117.4a(2)(a) states: “Notwithstanding a charter provision to the contrary, the net
indebtedness incurred for all public purposes must not exceed . . . [t]en percent of the assessed
value of all the real and personal property in the city.” Under MCL 117.4a(9), when computing a
municipality’s debt limit under MCL 117.4a(2)(a), an “assessed value equivalent” may be added
to the assessed value of the real and personal property in the municipality. This assessed value
equivalent is calculated by dividing the sum of certain city revenues by the city’s millage rate for
the fiscal year. MCL 117.4a(9). In full, MCL 117.4a(9) provides as follows:

               In computing the net indebtedness for the purposes of subsection (2), there
       may be added to the assessed value of real and personal property in a city for a
       fiscal year an amount equal to the assessed value equivalent of certain city revenues
       as determined under this subsection. The assessed value equivalent must be
       calculated by dividing the sum of the following amounts by the city’s millage rate
       for the fiscal year:

               (a) The amount paid or the estimated amount required to be paid by the state
       to the city during the city’s fiscal year for the city’s use under the Glenn Steil state
       revenue sharing act of 1971, 1971 PA 140, MCL 141.901 to 141.921, and the
       amount of any eligible reimbursement to the city under the local community
       stabilization authority act, 2014 PA 86, MCL 123.1341 to 123.1362, except any
       amount distributed under section 17(4)(c) of the local community stabilization
       authority act, 2014 PA 86, MCL 123.1357, in excess of the city’s qualified loss.
       The department of treasury shall certify these amounts upon request. As used in

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       this subdivision, “qualified loss” means that term as defined in section 5 of the local
       community stabilization authority act, 2014 PA 86, MCL 123.1345.

               (b) The amount levied by the city for its own use during the city’s fiscal
       year from the specific tax levied under 1974 PA 198, MCL 207.551 to 207.572.

              (c) The amount levied by the city for its own use during the city’s fiscal year
       from the specific tax levied under the commercial redevelopment act, 1978 PA 255,
       MCL 207.651 to 207.668. [MCL 117.4a(9)(a), (b), and (c).]

        At least for the years 2014 through 2019, plaintiffs provided no evidence that identified the
sum of the revenues listed in MCL 117.4a(9) or the applicable millage rates. Without these figures,
Detroit’s assessed value equivalent under MCL 117.4a(9) cannot be calculated for 2014 through
2019, and so Detroit’s debt limit for those years cannot be determined. Hence, plaintiffs failed to
provide any evidence supporting their argument that Detroit was over its debt limit when it issued
bonds from 2014 through 2019.

        To the extent that Jackson argues that Detroit was over its debt limit when it issued bonds
in 2020 or 2021, Jackson identifies no evidence that Detroit issued any bonds after 2019. Naglick’s
affidavit alluded to bonds being sold in 2021, but Naglick’s affidavit shows that Detroit was under
its debt limit at the end of 2020. Specifically, Naglick’s affidavit reveals that, as of December 31,
2020, Detroit had an assessed value (represented as the state equivalent value) of $10,634,752,689,
and an assessed value equivalent of $10,184,234,991. The sum of these figures multiplied by 10%
yielded a debt limit of $2,081,898,768. And according to Naglick’s affidavit, Detroit had a total
of $735,864,104 in outstanding debt for unlimited tax general obligation bonds and limited tax
general obligation bonds.

        Jackson contends that Naglick miscalculated the assessed value equivalent, and thereby
inflated Detroit’s debt limit. In his brief on appeal, Jackson asserts that the sum of the revenues
specified in MCL 117.4a(9) for Detroit at the end of 2020 was $302,000,000, and he claims that
the millage rate for Detroit in 2020 was 69.6 mills. Even if these numbers were correct, they would
not show Detroit was over its debt limit for fiscal year 2020. If they were correct, it would show
Detroit had an assessed value equivalent of $4,339,080,459.77, the result of $302,000,000 divided
by the alleged millage rate of 69.6 mills (i.e., 302,000,000 divided by 0.0696). This assessed value
equivalent plus the assessed value of $10,634,752,689 (a figure Jackson does not contest) totals to
$14,973,833,148.77. Under that figure, Detroit would have a debt limit of $1,497,383,314.88. So,
with a total of $735,864,104 outstanding in unlimited tax general obligation bonds and limited tax
general obligation bonds at the end of fiscal year 2020, Detroit would still have been under its debt
limit.3

3
  In his reply brief, Jackson claims that the sum of the revenues specified in MCL 117.4a(9) was
$239,000,000 and that the millage rate for Detroit was 19.9520 mills. Using these figures, the
assessed value equivalent would be $11,978,748,997.59. Adding the assessed value of
$10,634,752,689 to that figure and multiplying by 10% yields a debt limit of $1,197,874,899.76.
In other words, even using these figures, Detroit would still be under its debt limit.

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        Jackson also contests Naglick’s averment that, by the end of 2020, Detroit had a total of
$735,864,104 outstanding debt for unlimited tax general obligation bonds and limited tax general
obligation bonds. In support of this, Jackson cites a document that states Detroit’s “total bonded
debt at June 30, 2020 was $2.10 billion . . . .” Even if this document were accurate, it would not
undermine Naglick’s affidavit. Under MCL 117.4a, not all bonded debt counts toward the debt
limit of a municipality. The cited documentation does not reveal what portion of the $2.1 billion
constituted bonded debt that was excludable under MCL 117.4a(4). Thus, this figure does not
refute the assertion in Naglick’s affidavit that Detroit had $735,864,104 outstanding for unlimited
tax general obligation bonds and limited tax general obligation bonds.

       We appreciate the plaintiffs’ concerns and their laudable efforts to obtain redress through
our courts, but we conclude that the trial court correctly granted summary disposition to Detroit.

       Affirmed.

                                                            /s/ Mark J. Cavanagh
                                                            /s/ Kristina Robinson Garrett
                                                            /s/ Christopher P. Yates

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