GSL Holdings, LLC v. Lyon Township

District Court, E.D. Michigan·Decided July 31, 2023·No. 2:21-cv-11664·Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

GSL HOLDINGS, LLC,

Plaintiff, v. Case No. 21-11664 Honorable Victoria A. Roberts THE CHARTER TOWNSHIP OF LYON,

Defendant. /

ORDER: 1) AMENDING ORDER DENYING MOTIONS FOR RECONSIDERATION [ECF NO. 70]; AND 2) DENYING DEFENDANT’S SECOND MOTION FOR SUMMARY JUDGMENT [ECF NO. 78]

I. INTRODUCTION GSL Holdings, LLC (“GSL”), a real estate developer, filed suit against Lyon Township (the “Township”) alleging that the Township prevented it from developing a real estate project. Before the Court is the Township’s second motion for summary judgment. The Township argues that, if GSL prevails on liability, GSL cannot establish damages as a matter of law because the Township did not proximately cause harm to GSL. 1 The Court heard oral argument on July 25, 2023. Because GSL has a viable claim for damages in at least one of its

asserted damage categories, summary judgment is improper. The Court DENIES the Township’s motion. The Court also AMENDS its Order Denying Motions for Reconsideration, to the extent that it conflicts with the analysis

below. II. BRIEF FACTUAL BACKGROUND In the Township’s first motion for summary judgment, the Court granted it

in part and denied it in part. See [ECF No. 64]. The Court held that one of GSL’s retaliation claims (in which GSL argued that the Township retaliated against it for filing a lawsuit), and GSL’s Freedom of Information Act (“FOIA”) claim (which is not the subject of this motion), would proceed to trial. See id.

The parties submitted a Joint Final Pretrial Order (“JFPTO”). There, GSL states that the Township engaged in three retaliatory acts:

1) the “speculative building status” retaliation: when GSL applied to obtain speculative building status on the property in question (which is necessary for potential tenants to obtain tax abatements), the Township denied GSL’s application;

2) the “IDD” retaliation: the Township revoked only the portion of an Industrial Development District (“IDD #11”) that GSL’s property was located in, and left the remaining portions of the District intact; and

3) the “sewer connection” retaliation: when GSL sought to connect to 2 a sewer line from the back of its lot, the Township refused to allow the connection, and changed its ordinances to explicitly prohibit GSL from making the connection.

See [ECF No. 82] (GSL’s response to the Township’s second summary judgment motion, saying same). GSL seeks actual and compensatory damages in the form of lost income, increased costs of construction, and loss of goodwill and business reputation.

After the parties submitted the JFPTO, the Township filed a second motion for summary judgment, arguing that GSL could not establish these

damages as a matter of law because the Township did not, and could not have, proximately caused harm to GSL. The Township also argues that GSL’s damages are impermissibly speculative.

The underlying factual basis for this case is set forth in the Court’s order granting in part and denying in part the Township’s first summary judgment

motion. See [ECF No. 64]. This motion concerns only whether, assuming GSL establishes liability, it

can collect damages in the categories it lists in the parties’ JFPTO. [ECF No. 78, PageID.3035]. 3 III. LEGAL STANDARD “The Court shall grant summary judgment if the movant shows that there

is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is deemed material only if it “might affect the outcome of the lawsuit under the governing

substantive law.” Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994). The movant bears the initial burden to inform the Court of the basis for the motion and must identify portions of the record that demonstrate the absence of a genuine dispute as to any material fact. Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986). If the movant satisfies this burden, the non-moving party must set forth specific facts showing a genuine issue for trial. Id. at 324.

A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Claims that are not supported by admissible evidence are insufficient to establish a factual dispute, as is

the mere existence of a scintilla of evidence in support of the non-movant’s position. Alexander v. CareSource, 576 F.3d 551, 560 (6th Cir. 2009). The Court must view all submitted evidence, facts, and reasonable

inferences in the light most favorable to the non-moving party. See 4 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970).

The district court may not weigh evidence or assess the credibility of witnesses in deciding the motion. See Adams v. Metiva, 31 F.3d 375, 378 (6th Cir.1994). The necessary inquiry for this Court is “whether the evidence

presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (internal quotes omitted). IV. ANALYSIS

In the JFPTO, GSL includes the following categories of damages that it alleges GSL incurred because of the Township’s retaliatory acts: 1) Under the terms of the Moba lease with what would have been the existing tenant, GSL would have received at least $8,337,638.00 in rental payments and reimbursements over the initial 10-year term.

2) Lost rents and reimbursements had a tenant occupied the building as planned on October 1, 2021 through September 30, 2023 is $1,118,607 (September 30, 2023 is the soonest the building would be complete for a new tenant if a lease were signed today).

3) Plaintiff has not been able to attract another tenant and mitigate its lost rent from the Moba lease because of the Township’s retaliatory action of not processing its application for speculative building tax exemption and then disbanding the district. Plaintiff believes that it would have a tenant but for the Township’s actions, based on its track record as a developer.

4) Plaintiff also has incurred or will incur $155,000 in increased costs 5 for having to construct the septic field rather than connect to the existing sewer line.

5) More importantly, the increase in overall cost of building construction is $1,635,100 as a result of inflationary pressure on construction supplies and labor in the last two years.

6) Further, the loss of value from January 1, 2022 to May 1, 2023 is $4,420,043 as a result of a rising interest rate environment. Valuation based on the capitalization of an income stream is a common valuation method of an income producing asset such as this.

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