MSC 149150 MICHIGAN ASSOCIATION OF HOME BUILDERS V CITY OF TROY Opinion on Application - Reverse CoA 06/04/2015

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Appeals, J ANSEN, P.J., and OWENS and S HAPIRO , JJ., affirmed in an unpublished opinion per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

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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

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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

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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.

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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.

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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).

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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.

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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).]

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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).

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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

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