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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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In <em><a href="http://publicdocs.courts.mi.gov:81/OPINIONS/FINAL/COA/20150611_C321414_56_321414.OPN.PDF" target="_blank" rel="noreferrer noopener">City of Huntington Woods v. City of Oak Park</a></em>, No. 321414, the Court of Appeals affirmed the partial summary disposition award to Defendants Oak Park and the 45th District Court, concluding that one-third of the monies allocated to the court’s building and retiree healthcare funds need not be distributed to Plaintiffs Huntington Woods and Pleasant Ridge under MCL 600.8379(1)(a) because they are “fees” rather than “costs” collected for the prosecution, adjudication, or processing of violations that occurred in those cities.  The Court further concluded that, under MCL 600.8104(2), Plaintiffs have a statutory obligation to provide financial support for the 45th District Court that serves them, even though it is located in Oak Park.

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The 45th District Court is seated within Oak Park’s political subdivision and serves Huntington Woods, Pleasant Ridge, Oak Park, and Royal Oak Township.&nbsp; The 45th district is a third-class district, meaning it consists of “1 or more political subdivisions within a county and in which each political subdivision comprising the district is responsible for maintaining, financing and operating the district court within its respective political subdivision except as otherwise provided in this act.”&nbsp; MCL 600.8103(3).&nbsp; In third-class districts in which the district court does not sit in each political subdivision within the district, one-third of specified fines and costs are to be paid to the nonseating political subdivision whose law was violated. MCL 600.8379(1)(c).&nbsp;

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In response to a 1995 State Court Administrative Office (SCAO) report detailing the inadequacies of the Oak Park court facilities, Oak Park created a municipal building construction fund, as well as a healthcare fund for court retirees, both of which were then funded by increased ticket fees charged by the court.&nbsp; A 2012 SCAO report calculated the court’s collections from violations occurring in Plaintiffs’ political subdivisions and distributed to Oak Park from FY 1996 through FY 2012.&nbsp; Based on this report, Plaintiffs alleged in their complaint that Defendants violated their statutory duty under MCL 600.8379 to disburse one-third of the costs and fees assessed for the building fund and the retirees’ healthcare fund from 1996 to 2011.&nbsp; Oak Park filed a counter-complaint seeking a declaratory judgment that Plaintiffs were required to contribute to the expense of operating the 45th District Court under MCL 600.8104, MCL 600.8621, and MCL 600.8271, and that their responsibility to do so was not limited to the amount of fines and costs allocated to Oak Park under the statutory one-third/two-thirds arrangement.&nbsp; The trial court granted partial summary disposition for Defendants, concluding that pursuant to “the clear language of MCL 600.8104 and MCL 600.8271(1), all political subdivisions,” including the parties, are “responsible for the funding of the 45th District Court.” The court further determined that funds designated for the building and retiree healthcare funds were “not fines and costs subject to distribution under MCL 600.8379.” &nbsp;Plaintiffs appealed.

First, Plaintiffs argued that MCL 600.8104 provides that where the district court serves more than one political subdivision, but sits in only one of them, the political subdivision where the court sits is responsible for the court’s financial operation of the court.&nbsp; The Court of Appeals disagreed.&nbsp; Under MCL 600.8104(2), Plaintiffs are not responsible for the expenses of maintaining, financing, or operating the 45th District Court in Oak Park, except as otherwise provided by MCL 600.8621, or other provisions of the act.&nbsp; MCL 600.8621 requires each district funding unit to contribute to the salaries of district court recorders and reporters, and MCL 600.8271(1) states that the governing body of each district funding unit “shall annually appropriate . . . funds for the operation of the district court in that district.”&nbsp; According to the Court of Appeals, these provisions clearly impose on all district funding units in a third-class district a duty to provide financial support for the district court, regardless of where the court is seated.

Further, the Court of Appeals rejected Plaintiffs’ contention that any obligation they have to support the 45th District Court is satisfied by the district court’s retention of two-thirds of the fines and costs assessed against litigants for legal violations that originate in their political subdivisions.&nbsp; The Court instead interpreted MCL 600.8379(1)(c) as merely providing a formula for revenue sharing.&nbsp; Plaintiffs also argued that Defendants agreed to refund one-third of revenues from tickets and fines originating in plaintiffs’ political subdivisions, and that Plaintiffs would not incur any additional expenses related to the operation of the 45th District Court.&nbsp; Plaintiffs’ 1974 resolutions state that, in return for abolishing their own courts and establishing the 45th District Court, they would not incur any expenses in connection with the new court’s operation and would receive one-third of all fines assessed which originated in their cities.&nbsp; MCL 600.8104(3) provides that district funding units “may agree among themselves to share any or all of the expenses of . . . operating the district court,” but “[t]o become effective such agreements must be approved by resolution adopted by the governing body of the respective political subdivisions entering into the agreement.” &nbsp;But Plaintiffs provided no evidence that Oak Park or the 45th District Court assented to their resolutions.

Finally, the Court of Appeals rejected Plaintiffs’ argument that the trial court erred in determining that the monies allocated to the building fund and the retiree healthcare fund were exempt from the one-third/two-thirds split of “[f]ines and costs,” because they are “fees” and not “costs.”&nbsp; According to the Court, neither assessment qualified as a “cost” within the definition of MCL 600.4801(a), as the charges were not collected for the prosecution, adjudication, or processing of criminal offenses, civil infractions, or other violations. &nbsp;Instead, monies assessed for the building and retiree healthcare funds come within the statutory definition of “fee,” which is defined as “any monetary amount, other than costs or a penalty, that the court is authorized to impose and collect pursuant to a conviction.” &nbsp;MCL 600.4801(b).&nbsp; Because a “fee” is not part of the allocation required by MCL 600.8379(1)(c), neither Oak Park nor the 45th District Court was required to distribute one-third of the assessment to Plaintiffs.

Labor and Employment

COA concludes that cities served by a district court located elsewhere must financially support that court, and are not entitled to share in court revenues collected for purposes other than prosecution

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