Rodney Woods v. City of Saginaw

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

revision until final publication in the Michigan Appeals Reports.

STATE OF MICHIGAN

COURT OF APPEALS

RODNEY WOODS, doing business as RODNEY UNPUBLISHED

WOODS BUILDER, January 7, 2021

Plaintiff-Appellant,

v No. 344025

Saginaw Circuit Court

CITY OF SAGINAW, LC No. 16-029129-CB

Defendant-Appellee.

ON REMAND

Before: REDFORD, P.J., and JANSEN and LETICA, JJ.

PER CURIAM.

In an order dated October 21, 2020, the Michigan Supreme Court reversed, in part, the

portion of this Court’s prior opinion in Woods v City of Saginaw, unpublished per curiam opinion

of the Court of Appeals, issued October 15, 2019 (Docket No. 344025) (Woods I), where we held

that “the trial court properly granted summary disposition of the plaintiff’s quantum meruit claim

under MCR 2.116(C)(8).” Woods v City of Saginaw, ___ Mich ___; 949 NW2d 456 (2020)

(Woods II). Our Supreme Court further held that:

The plaintiff’s amended complaint and attached exhibits were legally sufficient to

plead his claim that the defendant was unjustly enriched by extra-contractual work

completed by the plaintiff. See El-Khalil v Oakwood Healthcare, Inc, 504 Mich

152, 159-160; 934 NW2d 665 (2019); Wright v Genesee County, 504 Mich 410;

934 NW2d 805 (2019). Moreover, the Court of Appeals clearly erred by engaging

in appellate fact-finding when it stated that the plaintiff had been “fairly

compensated.” We REMAND this case to the Court of Appeals for consideration

of the plaintiff’s arguments regarding the trial court’s alternative ruling that granted

summary disposition to the defendant under MCR 2.116(C)(10). The plaintiff’s

motion to disqualify the trial judge is DENIED, without prejudice to the plaintiff

seeking such relief on remand. In all other respects, leave to appeal is DENIED,

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because we are not persuaded that the remaining question presented should be

reviewed by this Court. [Woods II, __ Mich ___.]

Accordingly, we now consider whether defendant, the City of Saginaw, was entitled to summary

disposition under MCR 2.116(C)(10). Again, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In Woods I, we previously articulated that:

This case involved blight demolition efforts in the Saginaw area under the

Troubled Asset Relief Program (“TARP”). Defendant and the Saginaw County

Land Bank Authority (“SCLBA”) secured over $11,000,000 in TARP funds from

the Michigan State Housing Development Authority for blight elimination.

Defendant and the SCLBA entered into a partnership to demolish up to 950 blighted

properties. The SCLBA would be responsible for acquiring, owning, and

maintaining properties slated for demolition, and defendant would be responsible

for hiring demolition contractors and overseeing their work. In 2013, defendant

began soliciting bids from numerous demolition contractors to take on the role of

demolishing the blighted properties. One of these contractors was plaintiff, a sole

proprietor.

Defendant created a procedure in which each contractor submitted a “per

unit costs” for various services related to demolition. Such services included

foundation removal, tree removal, and asbestos removal. Each of these services

was assigned a particular number of points. Defendant would award demolition

work to the “highest qualified contractor with the lowest accepted and approved

bids” for a period of two years, and defendant had the option to extend this period

for a third year. . . .

Plaintiff submitted his bid proposal and “won” the bidding process. As the

highest ranked contractor, plaintiff had first pick of the demolition properties and

received 240 out of a total 480 initial properties. In total, plaintiff demolished

approximately 600 houses over the life of the contract. . . .

Plaintiff filed a three-count complaint. In Count I, a breach of contract

claim, plaintiff claimed that defendant increased the scope of the contract, and then

was not adequately compensated for the extra work performed. In Count II,

plaintiff sought relief under a quantum meruit theory for the extra work performed.

The extra work relevant to Count I and Count II was primarily related to grading

and seeding of the properties after demolition, which plaintiff claimed was not

included in the parties’ original contract. In support of his claim for additional

compensation, plaintiff attached a letter from John C. Stemple, Chief Inspector for

defendant, in which Stemple issued a change order acknowledging that plaintiff,

and other contractors, had been performing work beyond the original contract and

would receive additional compensation for prospective demolitions. Finally, in

Count III, plaintiff made a second claim for breach of contract, this time claiming

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that defendant allocated demolitions to other contractors, thereby breaching an

implied covenant of good faith.

Defendant filed its first motion for summary disposition in October 2017,

which the trial court granted in part as to Count I, and denied in part as to Count II

and Count III. . . .

In March 2018, defendant filed a renewed motion for summary disposition

of Count II and Count III. The trial court granted summary disposition in favor of

defendant of Count II, plaintiff’s quantum meruit claim, under MCR 2.116(C)(8)

and (C)(10), and of Count III under MCR 2.116(C)(10) for the implied warranty of

good faith claim. [Woods I, unpub op at 1-2.]

Plaintiff appealed to this Court, and we affirmed. Woods I, unpub op at 1. Plaintiff again

appealed to our Supreme Court, and our Supreme Court reversed in part, concluding that the trial

court erroneously granted summary disposition of Count II under MCR 2.116(C)(8), and remanded

this matter back to this Court with the instructions to further evaluate whether defendant was

entitled to summary disposition of plaintiff’s quantum meruit claim under MCR 2.116(C)(10).

Woods II, ___ Mich ___. Additionally, our Supreme Court again affirmed the trial court’s

dismissal of plaintiff’s implied warranty of good faith claim under MCL 2.116(C)(10). Id.

II. STANDARD OF REVIEW

On remand, we now consider whether defendant was entitled to summary disposition of

plaintiff’s quantum meruit claim under MCR 2.116(C)(10). A trial court’s ruling regarding a

motion for summary disposition is reviewed de novo. Heaton v Benton Constr Co, 286 Mich App

528, 531; 780 NW2d 618 (2009).

A motion under MCR 2.116(C)(10) tests the factual support of a plaintiff’s claim.

Summary disposition is appropriate under MCR 2.116(C)(10) if there is no genuine

issue regarding any material fact and the moving party is entitled to judgment as a

matter of law. In reviewing a motion under MCR 2.116(C)(10), this Court

considers the pleadings, admissions, affidavits, and other relevant documentary

evidence of record in the light most favorable to the nonmoving party to determine

whether any genuine issue of material fact exists to warrant a trial. A genuine issue

of material fact exists when the record, giving the benefit of reasonable doubt to

the opposing party, leaves open an issue upon which reasonable minds might differ.

[Zaher v Miotke, 300 Mich App 132, 139-140; 832 NW2d 266 (2013) (quotations

marks and citations omitted).]

“Circumstantial evidence can be sufficient to establish a genuine issue of material fact, but mere

conjecture or speculation is insufficient.” McNeill-Marks v Midmichigan Med Ctr-Gratiot, 316

Mich App 1, 16; 891 NW2d 528 (2016). “This Court is liberal in finding genuine issues of material

fact.” Jimkoski v Shupe, 282 Mich App 1, 5; 763 NW2d 1 (2008). However, “this Court’s review

is limited to review of the evidence properly presented to the trial court.” Barnard Mfg Co, Inc v

Gates Performance Engineering, Inc, 285 Mich App 362, 380; 775 NW2d 618 (2009).

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The moving party bears the initial burden of production, which may be satisfied “in one of

two ways.” Quinto v Cross & Peters Co, 451 Mich 358, 361; 547 NW2d 314 (1996). “First, the

moving party may submit affirmative evidence that negates an essential element of the nonmoving

party’s claim. Second, the moving party may demonstrate to the court that the nonmoving party’s

evidence is insufficient to establish an essential element of the nonmoving party’s claim.” Id.

at 362 (quotation marks and citation omitted). Once the moving party satisfies its burden in one

of those two ways, “[t]he burden then shifts to the opposing party to establish that a genuine issue

of disputed fact exists.” Id.

III. ANALYSIS

Although the trial court erroneously granted summary disposition of plaintiff’s quantum

meruit claim under MCR 2.116(C)(8), we conclude that there were two distinct basis to grant

summary disposition in favor of defendants under MCR 2.116(C)(10).

A. EXISTENCE OF AN EXPRESS CONTRACT COVERING THE SAME SUBJECT

MATTER

As we noted in our prior opinion:

“The theory underlying quantum meruit recovery is that the law will imply

a contract in order to prevent unjust enrichment when one party inequitably receives

and retains a benefit from another.” [Morris Pumps v Centerline Piping, Inc, 273

Mich App 187, 194; 729 NW2d 898 (2006).] However, a party may not recover in

quantum meruit if an express contract between the parties covers the same subject

matter. Id.

In this case, plaintiff seeks additional compensation for extra work

performed. Plaintiff relies heavily on the change order from Stemple to support his

claim that he should receive additional compensation for extra work performed on

demolition jobs before the change order was issued. However, based on the record

before us, the change order only applied to prospective demolitions; it was not to

have retroactive effect. [Woods I, unpub op at 3-4.]

Examining each of the specific claims contained within plaintiff’s complaint, we conclude

that the contract undoubtedly covered the alleged extra work. In his amended complaint, plaintiff

alleged the extra work performed was:

(1) prompt backfilling of soil following a structural demolition, (2)

bringing in, at the contractor’s expense, a minimum of three inches

of fresh topsoil, (3) uniformly grading all surfaces; (4) excavating

surfaces to encourage water runoff, and (5) seeding the topsoil with

clover and watering, if necessary.

Additionally, the contract provided: “Upon removal of below grade materials all excavations and

cavities in the earth shall be filled with clean yellow sand or clay materials and covered with a

minimum, after compaction, of four inches organic top soil approved in advance by the Chief

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Inspector.” Included in this contractual obligation was (1) backfilling of soil and (2) bringing in

fresh topsoil, as alleged in plaintiff’s complaint.

The contract further provided:

In some cases the contractor may be directed by the City of

Saginaw to prepare the site for the application of grass seed and

apply seed. The site shall be graded smooth and seed applied using

the hydro-seed method of application. Application shall be made in

accordance with the seed supplier’s recommendations. Grass seed

shall be of a type that does not grow more than six inches in height

and shall be acceptable to the City for this application. The cost of

this service shall be determined on a cost per square foot basis.

This covered (3) the grading of all surfaces, (4) excavating surfaces to encourage water runoff, and

(5) seeding the topsoil with clover and watering alleged in plaintiff’s complaint. Moreover, the

bid included plaintiff’s proposed costs for a number of services, which explicitly included “Lot

Grading and Seeding.” Therefore, we conclude that the alleged extra work was explicitly covered

by the contract.

In short, because the relevant contents of the parties’ contractual agreement are undisputed,

there is no genuine issue of material fact for resolution at trial. See Calhoun Co v Blue Cross Blue

Shield Mich, 297 Mich App 1, 12; 824 NW2d 202 (2012) (“Construction and interpretation of a

contract are questions of law”). As a matter of law, because the parties had a written agreement

expressly governing the compensation to which plaintiff was entitled for the demolition work that

is the subject of this lawsuit, plaintiff cannot seek additional compensation for such work under a

quantum meruit theory. See Morris Pumps, 273 Mich App at 194, quoting Belle Isle Grill Corp v

Detroit, 256 Mich App 463, 478; 666 NW2d 271 (2003) (“a contract will be implied only if there

is no express contract covering the same subject matter”). See also Rory v Continental Ins Co,

473 Mich 457, 461; 703 NW2d 23 (2005) (“the judiciary is without authority to modify

unambiguous contracts or rebalance the contractual equities struck by the contracting parties”).

B. THE CITY CHARTER

Additionally, the City Charter prevents plaintiff from recovering under a quantum meruit

theory. Defendant’s Charter contains a section relevant to this appeal, Section 33, which provides:

Competitive bids for all purchases and public improvements shall be obtained

where practicable and contracts awarded to the lowest and best bidders. Sealed

bids shall be asked for in all transactions involving the expenditure of two thousand

dollars ($2,000) or more and the transaction evidenced by written contract

submitted to and approved by the council; provided that, in cases where it is clearly

to the city’s advantage to contract without competitive bidding, the council upon

recommendation of the manager may so authorize. Detailed purchasing and

contracting procedure shall be established by ordinance. The council may authorize

the making of public improvements by day labor.

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In granting defendant summary disposition of plaintiff’s quantum meruit claim under MCR

2.116(C)(10), the trial court relied on the above-quoted portion of the Charter and, among other

authorities, Black v Common Council of City of Detroit, 119 Mich 571, 576-577; 78 NW 660

(1899), in which our Supreme Court held:

Of every municipal corporation, the charter or statute by which it is created is its

organic act. Neither the corporation nor its officers can do any act, or make any

contract, or incur any liability not authorized thereby. . . . All acts beyond the scope

of the powers granted are void.

* * *

[A]s said in Spitzer v. Village of Blanchard, 82 Mich. [234, 246; 46 NW 400

(1890)], “the limitation of power upon the common council appears in the public

statute, and is presumed to be known by all dealing with corporate authorities.”

Those who deal with the agents of municipal corporations must take notice

of the restrictions in their charters in respect to the powers of the corporation and

its agents, and the mode in which such powers may be exercised, and must see to it

that the contracts on which they rely are authorized by the charter.

In Hodges v. City of Buffalo, [2 Denio 110 (NY Sup Ct, 1846)], the plaintiff

insisted that, though the city had no express authority to make the expenditure, yet

the claim could be satisfied on the ground that, the plaintiff having furnished the

entertainment, the corporation had received the consideration, and was bound to

pay, although the engagement was made without legal authority. The court said in

that case:

“It is said to be analogous to a subsequent ratification by a corporation of

the unauthorized act of its agent. I cannot concur in this view of the case. The

doctrine referred to assumes that the principal had power to confer the requisite

authority in the first instance. It cannot be maintained that a corporation can by a

subsequent ratification make good an act of its agent which it could not have

directly empowered him to do.”

Where the contract is void, the contractor cannot recover of the corporation

in any form,–neither under the contract nor quantum meruit. All who deal with a

municipal corporation must see that the contract upon which they rely is within its

powers. Halstead v. [City of New York, 3 NY 430 (1850)]; Brady v. [City of New

York, 20 NY 312 (1859)]; Cowen v. Village of West Troy, 43 Barb 48 [NY Sup Ct,

1864]. [Some quotation marks and citations omitted; some emphases added.1]

1

Notably, neither the formatting nor all of substance of this block quote are accurately reflected

on Westlaw—the passage is quoted here as it appears in the official reporter.

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Applying Black to this case, the trial court reasoned that because it “is undisputed that there is no

Council-approved written contract for [plaintiff’s] ‘extra work’ ” in this case (i.e., the allegedly

uncontracted-for work for which plaintiff sought a recovery in quantum meruit), it followed, as a

matter of law, that plaintiff could not recover in quantum meruit. On that basis, the trial court held

that defendant was entitled to summary disposition of the quantum meruit claim under MCR

2.116(C)(10).

In this Court, plaintiff argues that Black was wrongly decided, contending that it is contrary

to “the modern rule that an agent having apparent power can bind its principal.” However, plaintiff

concedes that he only raised that argument in this Court “for the purpose of issue preservation,”

and that whether Black was wrongly decided “is not a question for this Court to decide[.]” We

agree. Under the doctrine of vertical stare decisis, only our Supreme Court has the authority to

overrule Black, which remains binding on this Court unless and until the Supreme Court does so.

See generally In re AGD, 327 Mich App 332, 340; 933 NW2d 751 (2019) (discussing vertical stare

decisis and noting that until our Supreme Court overrules one of its earlier decisions, “all lower

courts and tribunals are bound by that prior decision and must follow it even if they believe that it

was wrongly decided or has become obsolete”) (quotation marks, citation, and emphasis omitted).

Recognizing that Black is both binding on this Court and seemingly fatal to his position,

plaintiff argued that Black is not dispositive because, in this case, the defendant city “wasn’t going

to pay any amount of money for demolition services—instead, it was going to procure and contract

for such services with the attendant costs being paid wholly by the [Saginaw County] Land Bank,”

by way of TARP grants. In other words, because the alleged extracontractual work in this case

“did not require the expenditure of any City funds, whether raised by tax, grant, or otherwise,”

plaintiff argued that his claim was not contrary to § 33 of the Charter, unlike the claim at issue in

Black.

In rejecting that same argument below, the trial court reasoned:

[Plaintiff] has provided no authority for this proposition and, on its face, the Charter

does not distinguish between transactions funded by locally raised tax revenues and

funds originating elsewhere. Rather, the Charter limitation applies to “all” City

transactions involving $2,000 or more. In any event, even assuming the City used

none of its own tax revenue but, rather, wholly relied on a state or federal grant, the

funds would presumably be the City’s upon acceptance of the “grant”.

In the end, [plaintiff] is suing the City for upwards of $232,000 of “extra

work”. For the City to be obligated for such a large expenditure, its Charter requires

that “the transaction [be] evidenced by written contract submitted to and approved

by the council”. It is undisputed that there is no Council-approved written contract

for [plaintiff’s] “extra work”.

We concur with the trial court’s analysis fully. “When reviewing the provisions of a home

rule city charter, we apply the same rules that we apply to the construction of statutes.” Barrow v

City of Detroit Election Comm, 301 Mich App 404, 413; 836 NW2d 498 (2013). Section 33 of

the Charter expressly applies to “all transactions involving the expenditure of two thousand dollars

($2,000) or more[.]” Because nothing in such language is ambiguous, it should be applied as

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written. See id. at 414 (“Courts apply unambiguous statutes as written.”). Moreover, § 33 does

not specify that it is inapplicable when defendant anticipates that a given expenditure will be paid

for by grant funding or any other source of noncity funds. Therefore, it would be inappropriate to

construe the Charter as if it did, in fact, contain such language. See Johnson v USA Underwriters,

328 Mich App 223; 936 NW2d 834 (2019) (“we cannot read into the statute something that is not

there”). Finally, as the trial court aptly recognized, plaintiff has not sued the Saginaw County Land

Bank here—he has asserted his claims in this action against the defendant city. In other words, he

seeks a judgment that defendant—not the Land Bank—is liable to him in quantum meruit for in

excess of $2,000.

On the basis of the foregoing, we conclude that § 33 of the Charter precludes plaintiff from

recovering under a quantum meruit theory, and according, defendant was entitled to summary

disposition as a matter of law under MCR 2.116(C)(10).

Affirmed.

/s/ James Robert Redford

/s/ Kathleen Jansen

/s/ Anica Letica

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