Key Points

  • The Sixth Circuit affirmed summary judgment for Lyon Township, Michigan, and supervisor John Dolan on GSL Holdings' class-of-one equal protection, procedural and substantive due process, and First Amendment retaliation claims.
  • A single earlier building permit issued to a neighboring owner without a septic permit, which the township conceded breached its policy, did not negate the township's rational basis for requiring GSL to obtain a county septic permit first.
  • Alleged hostility from the township's outside attorney and engineering consultant could not show animus because neither was a final decisionmaker on building permits.
  • Under Michigan law, GSL had no protected property interest in the permits because it performed no substantial construction after they allegedly issued.
  • The township attorney's instruction not to email the full board at once was a content-neutral, narrowly tailored restriction tied to Open Meetings Act compliance, whether or not the email actually violated the act.

A federal appeals court ruled Monday that a Michigan township did not violate a developer's constitutional rights when it refused to release building permits for a planned factory until the developer obtained a county septic permit, even though the township had let a neighboring property owner skip that step about four years earlier.

The U.S. Court of Appeals for the Sixth Circuit affirmed summary judgment for the Charter Township of Lyon Township and its supervisor, John Dolan, on GSL Holdings LLC's equal protection, due process and First Amendment retaliation claims. Circuit Judge Mathis wrote the published opinion for a panel that also included Circuit Judges White and Thapar. No judge wrote separately.

The court held that a single earlier exception to a permitting rule did not make later enforcement irrational, because the exception could have been a mistake. It held that hostility from the township's lawyer and an outside engineering consultant did not count, because neither had power over the permits. And under Michigan law, it held, a developer has no protected property interest in a permit until it has done substantial construction.

GSL owns a roughly six-acre parcel in an industrial park in the township. In December 2020 it leased the site to Moba Americas Inc., an egg-industry machinery maker, and agreed to use its "best reasonable efforts" to have a building ready by Oct. 1, 2021. The parcel had no public sewer access, so GSL needed a septic permit from the Oakland County Health Division. The county had denied an earlier application around 2018 and said it would not grant one unless GSL combined the parcel with an adjacent lot.

GSL did not apply for the septic permit until March 9, 2021, and still had not applied to combine the lots. On March 8, GSL representative Maria D'Agostini Lukosavich emailed the township's entire board of trustees to complain about delays. Township attorney Carol Rosati called the email "inappropriate" and later warned that it risked "a potential violation of [Michigan's] Open Meetings Act." An outside engineering consultant, Leslie Zawada, wrote to a colleague that Lukosavich "went too far on that email, copying the entire board."

Lukosavich said a township building coordinator told her in late March that foundation and shell permits were ready, but she never picked them up. On April 5 the coordinator wrote that, "[p]er [Township supervisor] John Dolan, it has been decided not to issue the building permit until after your utility [pre-construction meeting]," which required the septic permit. In May the township offered a hold-harmless agreement, a contract shifting risk to GSL, letting it build if it promised to extend the public sewer at its own expense should the septic permit fail. GSL called the terms unduly burdensome and never signed, and it later agreed with Moba to end the lease.

GSL pressed a class-of-one equal protection claim, which alleges that the government singled out one party for different treatment without any rational basis. It pointed to SW North America, the abutting landowner, which received a building permit around 2017 before its septic permit was approved. The panel assumed the two were similarly situated but held that GSL had not ruled out every conceivable reason for the different treatment.

"But it is conceivable, as the Township asserts, that its earlier decision to grant SWNA a building permit was simply a mistake," Judge Mathis wrote. The township conceded that the former coordinator who issued that permit breached township policy. A building official testified that he "would [n]ever approve a building . . . permit before sanitary conditions had been approved." One exception, the court said, was "insufficient for us to conclude that the Township lacked a rational basis for enforcing its policies four years later."

The court also rejected GSL's argument that ill will drove the decision. "Rarely are vengeful and spiteful actions rational," Judge Mathis wrote, but neither Rosati nor Zawada had the final say on building permits. "But attorneys are not final decisionmakers. Quite the opposite: attorneys abide by their clients' decisions," the opinion said. Zawada handled the engineering review but had no authority to issue permits, which rests with the building department.

On procedural due process, the court applied Michigan's vested-rights rule, under which a permit holder gains a protected interest only after "any tangible change in the land itself by excavation and construction." Even assuming the permits were validly issued, GSL pointed to no substantial construction. The panel acknowledged that this is a "strict rule" but said "Michigan courts have refused to weaken or back away from" it. The substantive due process claim failed because GSL never obtained the outside permits a township ordinance requires before construction and did not challenge the ordinance itself.

The First Amendment claim failed at the first step. The court treated Rosati's directive as a permissible time, place or manner restriction, a content-neutral limit on how speech occurs rather than what it says. It was tailored to the township's interest in complying with the Open Meetings Act, which requires a quorum of a public body to deliberate in public. Rosati "did not even bar GSL from contacting board members. She merely said that GSL cannot do so all at once via email," the court wrote.

GSL argued that the email was a "chance gathering" that could not have violated the act. "But to enforce a content-neutral restriction, the Township need not show that Lukosavich's email actually violated the Act," Judge Mathis wrote. "The Township's modest restriction on the way citizens may contact the board passes constitutional muster."

Cindy Rhodes Victor of The Victor Firm PLLC argued for GSL. Michael T. Berger of Rosati, Schultz, Joppich & Amtsbuechler PC argued for the township and Dolan.

The decision leaves in place the judgment of U.S. District Judge Matthew F. Leitman of the Eastern District of Michigan. GSL's two remaining claims settled shortly before trial. Because it affirmed on the merits, the panel did not reach GSL's challenges to Dolan's dismissal without a qualified immunity ruling or to the striking of its damages claims and damages expert.