Michael Long v. Liquor Control Commission
Michael Long v. Liquor Control Commission
Opinion
*63 In this inverse-condemnation action, the trial court granted summary disposition under MCR 2.116(C)(8) to defendant, the Liquor Control Commission (the LCC) and denied plaintiff, Michael Long's motion to amend his complaint. Plaintiff now appeals as of right. Because plaintiff failed to state a claim for inverse condemnation and amendment of his complaint would be futile, we affirm.
Plaintiff owns and operates a liquor store, known as Par-T-Pac, in Boyne City, Michigan. Since 1990, he has held a specially designated distributor (SDD) license, *677 which allows him to sell alcohol 1 for off-premises consumption under the Michigan Liquor Control Code, MCL 436.1101 et seq. See MCL 436.1111(12) ; *64 MCL 436.1533(4). In August 2013, the LCC issued an SDD license under the "resort" provision in MCL 436.1531(5) to Family Fare, LLC, which operates a supermarket in Boyne City. Under the MCL 436.1531(5) resort provision, Family Fare was able to obtain its SDD license without abiding by the quota and distance restrictions that would have otherwise applied to a new applicant for an SDD license. See MCL 436.1533(4) ; 2004 Annual Admin. Code R. 436.1133. 2 In other words, Family Fare was able to obtain an SDD license even though it is located less than 2,640 feet from plaintiff's store and even though Boyne City already had its quota of SDD liquor licenses based on the city's population. See MCL 436.1531(5) ; MCL 436.1533(4) ; 2004 Annual Admin. Code Supp., R. 436.1133.
On August 12, 2016, proceeding in propria persona , plaintiff filed a complaint in circuit court against the LCC. Plaintiff's complaint indicates that since Family Fare received its SDD license, Par-T-Pac has seen a significant reduction in sales and, as a result, the value of his own license has been significantly reduced. Plaintiff alleged that the loss of sales and the reduced value of the SDD license "essentially" amounted to an "Unfair Taking" of the liquor license and resulted in a "form of Eminent Domain" that "steals all of [plaintiff's] equity and value, and transfers it unfairly to Family Fare."
*65 In response to plaintiff's complaint, the LCC moved for summary disposition. Pertinent to this appeal, the LCC maintained that plaintiff failed to plead the elements of a de facto taking because there was no allegation that the LCC abused its legitimate powers in affirmative actions directly aimed at plaintiff's property and because the granting of a license to a private corporation to conduct a private business could not be regarded as the taking of private property by the government for public use. Before the trial court decided the LCC's motion for summary disposition, plaintiff obtained an attorney, and his attorney moved for leave to file an amended complaint. Plaintiff's proposed amended complaint contained one count of inverse condemnation, which was based on the theory that plaintiff had a property interest in his SDD license and that the LCC effectively took this property and transferred it to a private entity, namely Family Fare, for economic development. Following a hearing on the parties' motions, the trial court granted summary disposition to the LCC under MCR 2.116(C)(8), and it denied plaintiff's motion to amend his complaint, stating that the amendment would be futile. Plaintiff now appeals as of right.
On appeal, plaintiff argues that the trial court erred by granting summary disposition and by denying his motion to amend his complaint. Plaintiff contends that he has a property interest in his SDD license *678 and, in particular, a right to the protections afforded by the quota and distance requirements governing SDD licenses, which restricted competition and assured that plaintiff's license had a particular value. According to plaintiff, by exempting Family Fare from these requirements to promote tourism under the MCL 436.1531(5) resort provision, the LCC effectively transferred the value of plaintiff's property interests to *66 Family Fare for the benefit of the public. In contrast, the LCC maintains that, while plaintiff may have a property interest in his SDD license, that interest does not provide him with a property right to be free from competition or to enjoy set profits. Additionally, the LCC contends that, to the extent plaintiff has a property interest in his SDD license, his claims fail because any action taken by the LCC in issuing the license to Family Fare was not aimed directly at plaintiff's property.
As explained in this opinion, we agree with the LCC that plaintiff lacked a property right in being free from increased competition and that the LCC's actions in issuing an SDD license to Family Fare were not aimed directly at plaintiff's liquor license. In these circumstances, the trial court did not err by granting summary disposition to the LCC under MCR 2.116(C)(8), and the trial court did not abuse its discretion by denying plaintiff's motion to amend his complaint because any amendment would be futile.
I. STANDARDS OF REVIEW
We review de novo a trial court's decision to grant summary disposition.
Ligon v. Detroit
,
A trial court's decision on a motion to amend a complaint is reviewed for an abuse of discretion.
Trowell v. Providence Hosp. & Med. Ctrs., Inc.
,
II. ANALYSIS
"The Fifth Amendment of the United States Constitution and Article 10 of the Michigan Constitution both prohibit the taking of private property for public use without just compensation."
Dorman v. Clinton Twp.
,
Notably, as a preliminary matter, "[o]ne who asserts an uncompensated taking claim must first establish that a vested property right is affected."
In re Certified Question
,
In this case, analysis of whether plaintiff has a vested property right requires a determination of precisely
*69
what interests plaintiff claims have been taken by the LCC's actions. Plaintiff generally asserts that he has a property interest in his "liquor license," a proposition which the LCC does not dispute. See
Bundo v. Walled Lake
,
Considering plaintiff's allegations and arguments, in actuality, the property that plaintiff contends has been taken is not his liquor license, it is the right to be free from increased competition and to retain a set market share in the liquor industry in Boyne City given the quota and distance requirements that governed SDD licenses before Family Fare obtained its SDD license in 2013. This is reflected in plaintiff's arguments in his appellate brief, wherein he maintains that, before Family Fare received its SDD license, he "enjoyed the benefits of the State's regulation of the industry." Specifically, he asserts that his "business was protected from competition by quota and distance requirements," which prevented other private citizens or corporations from simply joining the market, and that these requirements ensured that plaintiff's "license had a particular *680 value." Similarly, at the hearing in the trial court, plaintiff's attorney asserted that plaintiff had "a right" to a "limited amount of competition" based on quota and distance requirements that served to protect the profitability of the licensee. He contended that, by obtaining a license, the licensee received "part of the market share" with limits on "the *70 level of competition" and that, in this case, the "status quo" consisted of only two SDD licenses in the market. In other words, plaintiff asserted that he had a property right, protected by the provisions of the Michigan Liquor Control Code, to a share of the liquor market premised on there being only two SDD licenses in Boyne City. According to plaintiff, by allowing the introduction of a third competitor into the market, the LCC has taken plaintiff's property by decreasing his share of the market, devaluing the resale value of plaintiff's license, and reducing his alcohol sales.
Fairly read, what plaintiff actually alleges is a loss of an oligopoly resulting from the increase of competition because of the issuance of a liquor license to Family Fare. Recognizing the property that plaintiff claims has been taken, the question becomes whether plaintiff possesses a property right to be free from increased competition in the sale of alcohol in Boyne City. See
Adams Outdoor Advertising
,
An individual who possesses an SDD license under the Michigan Liquor Control Code has the right to sell alcohol for off-premises consumption in accordance with the law. See MCL 436.1111(12) ; MCL 436.1533(4). But an SDD license does not provide a property right to be free from competition in the sale of liquor, to have a set share in the market, or to enjoy a particular level of alcohol sales or profitability. These rights are simply not afforded by the Michigan Liquor Control Code. To the contrary, by its express terms, MCL 436.1531(5) makes plain that, aside from SDD licenses issued in accordance with the quota restrictions in *71 MCL 436.1533(4), up to 15 additional SDD "resort" licenses may be issued in communities with a population of under 50,000 people, and these licenses may be issued for locations within 2,640 feet of an existing license. MCL 436.1531(5). 3 The possibility of these 15 additional licenses wholly undercuts plaintiff's assertion that he had a vested property right to a market share based on the existence of only two SDD licenses in Boyne City. Indeed, even under the quota restrictions, the number of SDD licenses in Boyne City could increase based on population growth, see MCL 436.1533(4), and the Michigan Liquor Control Code provides no assurance that a new SDD licensee would not affect plaintiff's business. The quota requirements could also be waived if there was no existing SDD licensee within two miles of the applicant's proposed location, MCL 436.1533(4), and, again, there is no guarantee that the entry of a competitor into the market would not affect plaintiff's business. Given that the law specifically allows for the issuance of additional SDD licenses, plaintiff cannot legitimately claim that he was entitled to retain a specific market share, to exclude competition from the market, or to enjoy a set level of sales or profits. In these circumstances, he has not shown a property interest in being free from competition under the Michigan Liquor Control Code, and his takings claim premised on the *681 LCC's issuance of an SDD "resort" license to Family Fare must fail.
In support of this conclusion, we note that-contrary to plaintiff's claim that he has a property right to a restricted liquor market-numerous other courts considering whether governmental action resulting in increased competition constitutes a "taking" have recognized
*72
that there is no constitutionally protected property right to be free from competition, to have a monopoly or oligopoly over an industry, or to obtain economic benefit from a license, even in industries in which governmental regulation had traditionally limited the amount of competition. See, e.g.,
Illinois Transp. Trade Ass'n v. Chicago
,
In sum, plaintiff does not have a property right to be free from increased competition, and he cannot state a
*75
claim for inverse condemnation by asserting that the LCC took part of his market share by allowing increased competition. Additionally, to the extent plaintiff has a property interest in his SDD license, he cannot plead a viable claim of inverse condemnation because the issuing of a license to Family Fare did not constitute governmental action aimed directly at plaintiff's liquor license. Consequently, the trial court properly granted the LCC's motion for summary disposition under MCR 2.116(C)(8). The trial court did not abuse its discretion by denying plaintiff's motion to amend his complaint because any amendment would have been futile.
Lewandowski
,
Affirmed.
HOEKSTRA, P.J., and STEPHENS and SHAPIRO, JJ., concurred.
An SDD license allows a person to distribute "spirits and mixed spirit drink," MCL 436.1111(12), and "spirits" is defined, in part, as "a beverage that contains alcohol." For ease of reference in this opinion, we use the term "alcohol."
Generally, MCL 436.1533(4) limits the number of SDD liquor licenses to 1 for each 3,000 persons, or fraction of 3,000, in the population of a city, incorporated village, or township. In terms of the geographical spacing between SDD licenses, Rule 436.1133 has prohibited the LCC from granting a license or allowing the transfer of a license's location "if there [was] an existing [SDD] license located within 2,640 feet of the proposed site." The LCC has voted to repeal Rule 436.1133, but the rule was in effect when Family Fare obtained its SDD license in 2013.
The licenses may be issued to established merchants whose business is to attract and accommodate tourists and visitors in a resort area.
Although decisions of other state courts and lower federal courts are not binding on this Court, we may consider them as persuasive authority.
Travelers Prop. Cas. Co. of America v. Peaker Servs., Inc.
,
While
Ankersen
is not binding because it was decided before 1990, it may be considered for its persuasive value. See MCR 7.215(J)(1) ;
In re Stillwell Trust
,
Case-law data current through December 31, 2025. Source: CourtListener bulk data.