Naturale & Co. v. Eck – Do It For The Caselaw

Holding: The court affirmed the summary judgment in favor of the City, ruling that the plaintiff had no constitutionally protected property interest because the city clerk lacked the authority to grant the exemption.
Standard: De novo review for summary judgment.
Vote: Unanimous decision by a panel of three judges.
Practical effect: The decision reinforces that unauthorized statements by municipal employees cannot override formal ordinances to create vested property rights in regulatory licenses.

The Sixth Circuit affirmed the district court's grant of summary judgment to the City of Hamtramck, holding that a city clerk lacked the authority to create a constitutionally protected property interest in a marijuana license through oral assurances.

Background

In early 2021, Hamtramck Investment Group sought to open a marijuana dispensary in Hamtramck, Michigan. After meeting with the city clerk, the group believed it could operate despite an impending ban on new retailers. The city subsequently passed an ordinance prohibiting new dispensaries. When the state denied a license due to the city’s non-compliance with the new ordinance, the group sued under Section nineteen eighty-three of Title forty-two of the United States Code, alleging a substantive due process violation.

The court’s reasoning

The court determined that the Due Process Clause protects only those property interests created by existing rules or understandings stemming from an independent source such as state law. Under Michigan law, a municipal officer can bind a municipality only if empowered by the city charter, ordinance, or other laws. The record showed the city clerk had limited duties and no authority to abrogate or modify city ordinances. Therefore, the clerk’s alleged oral assurances could not create a legitimate claim of entitlement to a license.

Persons dealing with a municipal corporation through its officers must at their peril take notice of the authority of the particular officer to bind the corporation, and, if his act is beyond the limits of his authority, the municipality is not bound.

Sittler v. Bd. of Control of Mich. Coll. of Mining & Tech., 53 N.W.2d 681, 687–88 (Mich. 1952)

What it means going forward

The decision reinforces that unauthorized statements by municipal employees cannot override formal ordinances to create vested property rights in regulatory licenses.