Court Opinion

ID: 6344627
Source: CourtListenerOpinion
Date Created: 2022-05-27 05:06:26.26915+00
Date Added: 2024-06-11T09:04:44.054550
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

JACK W. SWANSON, and all others similarly                              UNPUBLISHED
situated,                                                              May 26, 2022

               Plaintiff-Appellant,

v                                                                      No. 357711
                                                                       Court of Claims
STATE OF MICHIGAN and DEPARTMENT OF                                    LC No. 21-000083-MZ
STATE,

               Defendants-Appellees.

Before: GADOLA, P.J., and SERVITTO and REDFORD, JJ.

PER CURIAM.

       Plaintiff appeals as of right the Court of Claim’s order granting summary disposition in
defendants’ favor and dismissing plaintiff’s complaint. We affirm.

        In April 2021, plaintiff filed a verified class action complaint against defendants
concerning late fees assessed by the Michigan Secretary of State (SOS). Plaintiff asserted that he
bought a motorcycle during the COVID-19 pandemic (“the pandemic”), and, as he was required
to do under MCL 257.234, sought to register the motorcycle with the SOS within 15 days of his
purchase in order to obtain a new certificate of title in his name. According to plaintiff, due to
pandemic safety measures, the SOS had limited access to its offices to appointments only and that
appointments were often not available for weeks or months at a time. Plaintiff asserted that he
tried to make an appointment with several different SOS branches within the requisite 15-day
period, but no appointments were available. Plaintiff asserted that it was difficult to impossible to
obtain an appointment to transfer vehicle titles within the 15-day statutory period and that he and
others similarly situated were charged the $15.00 late fee set forth in MCL 257.234(3) for failing
to transfer the title within the 15 days. Plaintiff thus brought the proposed class action lawsuit on
behalf of himself and all others similarly situated, seeking a constructive trust to correct the alleged
inequity, and claiming an as-applied substantive due process violation (Art 1, Section 17 of
Michigan Constitution of 1963).

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        With their answer and affirmative defenses, defendants filed a motion to dismiss the
complaint. Defendants first asserted that the Court of Claims lacked jurisdiction over plaintiff’s
case. Defendants also asserted that because constructive trusts require fraud as an essential
element and the imposition of the statutory late fee is not fraudulent, plaintiff’s constructive trust
claim failed. They asserted that plaintiff’s claim of a due process violation also failed. Defendants
further pointed out that during the pandemic, public acts went into effect which prohibited late
fees on certain transactions, including title transfers. According to defendants, there was only a
small window of time where the late fee on title transfers was in effect during the pandemic and
plaintiff titled his motorcycle within the small window of time. Defendants asserted, however,
that the SOS provided vehicle owners with a remedy for the statutorily imposed late fees: vehicle
owners that were assessed a late fee could request a refund from the SOS. It is undisputed that
plaintiff did not request a refund of the late fee.

        Plaintiff thereafter moved for class certification, but on June 22, 2021, the Court of Claims
entered an opinion and order granting defendant’s motion to dismiss, thus rendering all other
outstanding motions moot. The court first determined that it had jurisdiction over plaintiff’s
claims. That being said, the court agreed that the availability of a refund of the late fee obviated
the need for the imposition of a constructive trust and it therefore dismissed plaintiff’s claim for
the same. With respect to plaintiff’s due process claim, the court noted that plaintiff did not
establish the “impossibility” of obtaining an appointment within 15 days of his purchase and, more
importantly, the availability of a refund for the fee defeated an assertion that the statute at issue
had been applied in an arbitrary manner. Plaintiff and others like him had the ability to avoid the
fee and, if they were unable to do so, could nevertheless obtain a refund of the late fee simply by
asking for one. The court thus dismissed plaintiff’s complaint under MCR 2.116(C)(10). This
appeal followed.

               “Appellate review of the grant or denial of a summary-disposition motion
       is de novo, and the court views the evidence in the light most favorable to the party
       opposing the motion.         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. 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.” [West v Gen
       Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003) (internal citation
       omitted)].

        “The proper interpretation and application of a court rule is a question of law, which we
review de novo.” Henry v Dow Chem Co, 484 Mich 483, 495; 772 NW2d 301 (2009). With
respect to class certification decisions, where a party challenges a trial court’s factual findings, a
review for clear error is appropriate, and where a party challenges a trial court’s exercise of
discretion, a review for abuse of discretion is appropriate. Id.

         “Class action litigation in Michigan is governed by the Michigan Court Rules, and MCR
3.501(A)(1) specifically sets forth the prerequisites for class certification.” Id. at 488. MCR 3.501
states, in relevant part:

       (A) Nature of Class Action.

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       (1) One or more members of a class may sue or be sued as representative parties on
       behalf of all members in a class action only if:

               (a) the class is so numerous that joinder of all members is impracticable;

               (b) there are questions of law or fact common to the members of the class
       that predominate over questions affecting only individual members;

              (c) the claims or defenses of the representative parties are typical of the
       claims or defenses of the class;

               (d) the representative parties will fairly and adequately assert and protect
       the interests of the class; and

                (e) the maintenance of the action as a class action will be superior to other
       available methods of adjudication in promoting the convenient administration of
       justice.

The party seeking class certification bears the burden of establishing each of the five prerequisites
set forth in MCR 3.501(A)(1), which are commonly referred to as numerosity, commonality,
typicality, adequacy, and superiority. Dow Chemical Co, 484 Mich at 488, 500.

        Plaintiff in this matter sought class certification for himself and persons purportedly like
himself that were unable to access a SOS branch office in order to transfer title to a vehicle within
the statutorily required time period. That time period is set forth in MCL 257.234:

       (1) The purchaser or transferee, unless the person is a licensed dealer, shall present
       or cause to be presented the certificate of title and registration certificate if plates
       are being transferred to another vehicle, assigned as provided in this act, to the
       secretary of state accompanied by the fees as provided by law, whereupon a new
       certificate of title and registration certificate shall be issued to the assignee. The
       certificate of title shall be mailed or delivered to the owner or another person the
       owner may direct in a separate instrument in a form the secretary of state shall
       prescribe.

                                                 ***

       (3) Unless the transfer is made and the fee paid within 15 days, the vehicle is
       considered to be without registration, the secretary of state may repossess the
       license plates, and transfer of the vehicle ownership may be effected and a valid
       registration acquired thereafter only upon payment of a transfer fee of $15.00 in
       addition to the fee provided for in section 806.1

        Addressing plaintiff’s claim for a constructive trust, we note that, “[a] constructive trust is
an equitable remedy created not by intent or by agreement, but by the operation of law” and may
be imposed when necessary for equity’s sake or to prevent unjust enrichment. In re Filibeck
Estate, 305 Mich App 550, 552–53; 853 NW2d 448 (2014). Thus, “such a trust may be imposed
when property has been obtained through fraud, misrepresentation, concealment, undue influence,

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duress, taking advantage of one’s weakness, or necessities, or any other similar circumstances
which render it unconscionable for the holder of the legal title to retain and enjoy the property.”
Kammer Asphalt Paving Co, Inc v E China Tp Sch, 443 Mich 176, 188; 504 NW2d 635 (1993)
(internal quotation marks and citations omitted).

        Plaintiff has not alleged that the late fee at issue was obtained through fraud,
misrepresentation, concealment, undue influence, duress or taking advantage of one’s weakness.
He has also provided no authority for the suggestion that the SOS itself created the difficulty of
making appointments within the 15-day window. Indeed, during certain months of the pandemic,
the vast majority of public and private businesses in Michigan were completely closed, and not of
their own volition. Nevertheless, plaintiff asserts that it is inequitable for the Secretary of State to
retain his, and others similarly situated, $15.00 late fee. We disagree.

         First, the SOS is not required to impose the $15.00 late fee. MCL 257.234(3) explicitly
provides that the Secretary of State may take certain actions if the vehicle title is not transferred
within 15 days, including the imposition of the late fee. “The Legislature’s use of the term . . .
‘may’ denotes permissive action.” Wilcoxon v City of Detroit Election Com’n, 301 Mich App 619,
631; 838 NW2d 183 (2013). Plaintiff has provided no authority indicating that the late fee is
illegal, unconstitutional, or otherwise unsound.

        Second, the evidence indicates that plaintiff purchased his motorcycle on July 9, 2020. He
asserted in his complaint that he sought to register the motorcycle with the SOS “immediately
thereafter.” He further asserted that he was unable to obtain an appointment within the 15-day
period. However, in response to defendants’ motion to dismiss, plaintiff provided no evidence
concerning his asserted attempts and failures to obtain an appointment. Instead, plaintiff provided
evidence that his counsel attempted to access the SOS appointment system in April 2021 and was
unable to obtain an appointment until August 2021. While attempts on that specific date may have
encountered problems or lack immediate availability, indeed even if many or most days
encountered long wait times until available appointments, that does not necessarily mean that
plaintiff was unable to obtain an appointment at any SOS branch at any and all times within 15
days of his motorcycle purchase date.

        Plaintiff also provided the affidavit of his counsel, wherein counsel indicated that his wife
was unable to obtain an appointment with the SOS for “months” after buying a camper and that
she was charged a late fee for failing to transfer tittle to the camper within 15 days, even when
such late fees were purportedly waived during the title transfer period. Plaintiff also attached
newspaper opinion articles that indicated obtaining appointments with the SOS during the
pandemic was difficult. However, in one of the articles, while a reporter was unable to get a same
day appointment at three different SOS branches for a specific day, another person indicated that
he was easily able to obtain a same-day appointment. Finally, plaintiff attached a printout showing
that on April 23, 2021, appointments were not available for a specific SOS branch until July 2021,
and a printout showing that when attempting to access the SOS website on June 1, 2021, he (or
counsel) received a “couldn’t load page” message.

       While the above is certainly evidence that the SOS appointment website periodically had
loading problems, and that appointments were difficult to obtain, that still does not mean that
appointments were completely unavailable at all branches on all dates that could be relevant to the

                                                  -4-
potential class. Plaintiff, for example, transferred his title on October 12, 2020. He has not
provided evidence that he made significant attempts to get an appointment at any and all available
SOS branches (within reason) within 15 days of his July 9, 2020 purchase date. The fact that the
SOS devoted several hours per day exclusively to same and next day appointments1 and that most
same and next day appointments apparently filled up quickly actually shows that people were able
to get same and next day appointments.

        Next, waiting to transfer a title past the 15 days and the resulting imposition of the late fee
is not new or novel. Defendants provided the affidavit of William James Fackler II, director of
the office of program support for the SOS to support their position. Fackler swore that he has
access to data regarding late fees imposed under MCL 257.234(3).2 Fackler swore that between
March 1, 2019 and February 29, 2020, there were 65,605 late fees imposed on private party sales
where the title to a vehicle was not transferred within 15 days. Of those, 1,765 transfers were
made more than 1,000 days after purchase and 18,725 transfers were made between 100 and 999
days after purchase. Thus, while plaintiff asserts that the limited access to SOS offices during the
pandemic prevented him from transferring the title of his vehicle within 15 days, it would be
difficult to verify which persons of the purported class fell into the same category as plaintiff or
instead simply did not transfer the title within 15 days for whatever reason, as 65,605 people did
in the year prior to the pandemic.

         Finally, and most importantly, defendants provided the affidavit of Gina Feguer,3 assistant
director of the office of financial services for the SOS, who swore that persons who purchased a
vehicle on or after March 1, 2020 and were assessed a late fee were eligible to receive a refund of
that late fee. According to Feguer, a person assessed the late fee could submit SOS Form A-226
or call the refund unit of the SOS to request a refund. Feguer swore that plaintiff would be eligible
for a refund of his $15.00 late fee if he submitted the form.

        Consistent with Feguer’s affidavit, Form A-226, which can be accessed at
https://www.michigan.gov/documents/a-226_18955_7.pdf, allows for a person to request a “title
refund.” While there are no explicit instructions with the form, and the form does not specifically
state that one could seek a refund of a title transfer late fee, the form does contain a space for
requesting a “title refund” and to provide an explanation for the request. There is no indication
that plaintiff was prevented from checking the box for “title refund” on the form and explaining
that he was requesting the refund of a late fee associated with a title transfer. According to Feguer,

1
 According to the SOS website, appointments can be made up to six months in advance, but certain
hours each day are reserved strictly for customers to book one day in advance.
https://www.michigan.gov/sos/0,4670,7-127--561580--,00.html.
2
    The affidavit actually states “MCL 258.234(3)” which we presume is a typographical error.
3
  Plaintiff asserts that the affidavit was unsigned. When initially submitted, the affidavit was in
fact signed, but not notarized, and contained a footnote indicating that a notarized copy “will be
forthcoming.” A notarized copy of the affidavit was filed with defendants’ reply to plaintiff’s
response to their motion to dismiss.

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such late fees were, in fact, refundable on request and plaintiff has provided no evidence to refute
Feguer’s sworn statements.

        Plaintiff has not claimed he attempted to receive a refund of the fee. He faults the SOS for
not making the availability of the refund more well-known. He also cites to Campbell-Ewald Co
v Gomez, 577 US 153; 136 S Ct 663; 193 L Ed 2d 571 (2016), as revised (Feb 9, 2016) for the
proposition that “a class action lawsuit cannot be dismissed by an actual payment—much less only
the potential opportunity of a payment—by the defendant(s) to a proposed class representative.”
However, that case involved a defendant who, prior to the deadline to file a motion for class
certification, proposed to settle the named plaintiff’s individual complaint and filed an offer of
judgment pursuant to the Federal Rules of Civil Procedure. There has been no offer of settlement
in this case. Rather, defendants simply point out that plaintiff has and always had the available
remedy of seeking a refund of his late fee, as did and do all others in his position.

        We agree with the Court of Claims that the availability of a refund of the $15.00 late fee
renders the need for a constructive trust unnecessary. Plaintiff has provided no real argument or
authority for his apparent positions that: the SOS is at fault for the lack of appointment availability;
that he attempted to get appointments every day of the 15-day period after he purchased his
motorcycle; that the SOS was required to waive the late fees; that the fee imposed was
unreasonable, illegal, or unconscionable, or; that he could not attempt to obtain a refund of the fee.
It is not unconscionable or inequitable for the SOS to collect a fee it is statutorily permitted to
impose and would refund upon request. There being no inequity, there is no need for a constructive
trust.

        Plaintiff next contends that the Court of Claims “weighed the briefing” rather than the
admissible evidence in granting defendants’ motion for summary disposition on the substantive
due process claim. We review decisions on motions for summary disposition brought under MCR
2.116(C)(10) de novo, viewing the evidence in a light most favorable to the non-moving party.
West, 469 Mich at 183. This dispute also concerns the constitutionality of the statutorily permitted
late fee, which we review de novo. Bonner v City of Brighton, 495 Mich 209, 221; 848 NW2d
380 (2014).

        The Due Process Clause provides that “[n]o State shall ... deprive any person of life, liberty,
or property, without due process of law[.]” U.S. Const., Am. XIV, § 1. “[D]espite the clause’s
reference to process, the United States Supreme Court has interpreted this clause to guarantee more
than fair process, and to cover a substantive sphere as well, barring certain government actions
regardless of the fairness of the procedures used to implement them. Mettler Walloon, LLC v
Melrose Tp, 281 Mich App 184, 197; 761 NW2d 293 (2008) (quotation marks and citations
omitted). Thus, there are two types of due process: procedural and substantive. In re Beck, 287
Mich App 400, 401; 788 NW2d 697 (2010). Plaintiff claimed only a substantive due process
violation in this matter. “The essence of a substantive due process claim is the arbitrary deprivation
of liberty or property interests.” Id. at 402.

       Due process does not guarantee against incorrect or questionable governmental decisions.
Mettler Walloon, 281 Mich App at 206. Instead, as this Court quoted approvingly:

                                                  -6-
        We have emphasized time and again that “[t]he touchstone of due process is
        protection of the individual against arbitrary action of government,” Wolff v
        McDonnell, 418 US 539, 558; [94 S Ct 2963; 41 L Ed 2d 935] (1974), whether the
        fault lies in a denial of fundamental procedural fairness, see, e.g., Fuentes v Shevin,
        407 US 67, 82; [92 S Ct 1983; 32 L Ed 2d 556] (1972) (the procedural due process
        guarantee protects against “arbitrary takings”), or in the exercise of power without
        any reasonable justification in the service of a legitimate governmental objective,
        see, e.g., Daniels v Williams, 474 US [327, 331; 106 S Ct 662; 88 L Ed 2d 662
        (1986) ] (the substantive due process guarantee protects against government power
        arbitrarily and oppressively exercised). [Mettler Walloon, 281 Mich App at 198]

“The underlying purpose of substantive due process is to secure the individual from the arbitrary
exercise of governmental power.” Cummins v Robinson Twp, 283 Mich App 677, 701; 770 NW2d
421 (2009), quoting People v Sierb, 456 Mich 519, 523; 581 NW2d 219 (1998). “While due
process protection in the substantive sense limits what the government may do in both its
legislative and its executive capacities, criteria to identify what is fatally arbitrary differ depending
on whether it is legislation or a specific act of a governmental officer that is at issue.” Mettler
Walloon, 281 Mich App at 198 (quotation marks and internal citations omitted).

        In this case, plaintiff does not contend below, and does not maintain on appeal, that the
statute permitting the late fee itself, i.e., a legislative act of the government, violated his substantive
due process rights. Instead, he appears to argue that the SOS’s enforcement of the statute violated
his substantive due process rights because the SOS made it impossible to avoid the late fee during
the pandemic. As such, plaintiff appears to be challenging, in effect, an action of the SOS in
applying the statute during the pandemic, making the question whether there was egregious or
arbitrary governmental conduct. Mettler Walloon, 281 Mich App at 197. “[W]hen executive
action is challenged in a substantive due process claim, the claimant must show that the action was
so arbitrary (in the constitutional sense) as to shock the conscience.” Id.at 197, 200.

        Plaintiff claims the Court of Claims held that defendant’s brief, not any evidence, cast
doubt on plaintiff’s claim. However, the court specifically stated in its opinion and order that, “the
evidence of record defeats plaintiff’s assertions that there is an arbitrary deprivation of property.”
Plaintiff also asserts that defendants attached no relevant evidence to their motion. However, as
we indicated when considering plaintiff’s constructive trust claim, defendants attached two
unrefuted affidavits and a relevant form to their motion.

        As also previously addressed, plaintiff provided evidence that the SOS appointment system
had trouble loading on a specific date counsel tried to make an appointment in June 2021 and
provided articles showing that people were frustrated with having to wait for appointments and the
limited availability of such appointments. Viewing the evidence in a light most favorable to
plaintiff, however, plaintiff has established nothing more than that there were difficulties on the
specific dates for which he attached documentary proof. Plaintiff provided no documentary
evidence of appointment attempts or lack of appointment availability from the date he purchased
his motorcycle, July 9, 2020, through the following 15-day window.

        Moreover, plaintiff misses the point that a substantive due process claim requires a showing
that there has been an arbitrary deprivation of liberty or property interests, i.e., an action so

                                                   -7-
arbitrary as to shock the conscience. Beck, 287 Mich App at 402. There is nothing arbitrary or
shocking about the SOS collecting a statutorily permitted late fee that has been in existence in
MCL 257.234 since that statute was enacted in 1987. There is also nothing shocking about the
SOS moving to an appointment-only system for purposes of public health and safety during a
pandemic. And there is nothing shocking about the SOS having difficulty accommodating every
person with their preferred specific appointment date or specific appointment time during its
limited availability. The system put into place allowed for plaintiff, and anyone in his similar
position, to call or attempt to make an online appointment twice per day, every day, for daily hours
exclusively reserved for same and next day appointments. It was not the SOS that made it
“impossible,” according to plaintiff, for him to get an appointment to transfer the title to his
motorcycle within 15 days; it was other people who also wanted appointments within that 15-day
window. That plaintiff, and others, were not successful in obtaining certain sought appointments
does not render the imposition of the late fee arbitrary. And, as previously indicated, that same
and next-day appointments were routinely filled very quickly supports the finding that obtaining
such appointments was not, as claimed by plaintiff “an impossibility.” Clearly, many people
obtained same and next day appointments.

         In short, there is no deprivation of property without due process where all persons are
simply required to comply with a title transfer deadline set forth in a statute or face a minimal late
fee and some, but not all, were unsuccessful in complying with the title transfer deadline. Finally,
the application of the late fee, as permitted by statute cannot be found to be arbitrary or conscience-
shocking when plaintiff (and all others similarly situated) did and presumably still does, have the
opportunity to request and obtain a refund of the $15.00 late fee. The Court of Claims thus did not
err in finding that there were no questions of material fact with respect to plaintiff’s claims and
that defendants were entitled to summary disposition in their favor.

       Affirmed. Defendants being the prevailing parties, may tax costs pursuant to MCR 7.219.

                                                               /s/ Michael F. Gadola
                                                               /s/ Deborah A. Servitto
                                                               /s/ James Robert Redford

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