Opinion
No. 333700 No. 333813
07-11-2017
IN RE BGP, Minor. In re JSP, Minor.
The Law Office of Dion E. Roddy, PLLC (by Dion E. Roddy ), for the adoptive petitioners. Speaker Law Firm PLLC (by Liisa R. Speaker and Jennifer M. Alberts ) for American Adoptions, Inc. Amici Curiae: Warner Norcross & Judd LLP (by Jonathon Lauderbach, Conor B. Dugan, and Emily S. Rucker ) for Bethany Christian Services. Lauran F. Howard for the American Academy of Adoption Attorneys. Williams Williams Rattner & Plunkett, PC (by Donna Marie Medina ), and Conklin Law Firm (by Mary M. Conklin ) for Supporting Members of the State Bar of Michigan Whose Adoption Cases Comprise a Significant Portion of Their Legal Practice. Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Laura Moody, Chief Legal Counsel, and Jonathon S. Ludwig, Assistant Attorney General, for the Michigan Department of Health and Human Services.
The Law Office of Dion E. Roddy, PLLC (by Dion E. Roddy ), for the adoptive petitioners.
Speaker Law Firm PLLC (by Liisa R. Speaker and Jennifer M. Alberts ) for American Adoptions, Inc.
Amici Curiae: Warner Norcross & Judd LLP (by Jonathon Lauderbach, Conor B. Dugan, and Emily S. Rucker ) for Bethany Christian Services.
Lauran F. Howard for the American Academy of Adoption Attorneys.
Williams Williams Rattner & Plunkett, PC (by Donna Marie Medina ), and Conklin Law Firm (by Mary M. Conklin ) for Supporting Members of the State Bar of Michigan Whose Adoption Cases Comprise a Significant Portion of Their Legal Practice.
Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Laura Moody, Chief Legal Counsel, and Jonathon S. Ludwig, Assistant Attorney General, for the Michigan Department of Health and Human Services.
Before: Saad, P.J., and Meter and Murray, JJ.
Saad, P.J.
In these consolidated cases, nonparty American Adoptions, Inc., appeals the circuit court orders that disallowed the payment of administrative and marketing fees by the adoptive parents related to the adoption of two minors in Michigan. For the reasons provided below, we reverse in part and remand.
American Adoptions was not a party in the respective trial court proceedings, but because the trial court denied fees that were to be paid to it, American Adoptions filed the appeal in this Court.
I. BACKGROUND
Both cases arise from the adoption of a minor child under the Michigan Adoption Code, MCL 710.21 et seq. These cases specifically involve the fees paid by the respective adoptive parents (petitioners) for services ostensibly related to the adoption process. American Adoptions is a not-for-profit adoption agency based in Kansas, petitioners reside outside of Michigan, and the adoptee children were born in Michigan.
The petitioners in Docket No. 333700 reside in Hawaii, and the petitioners in Docket No. 333813 reside in Nebraska.
As required by MCL 710.54(7), the adoptive parents in each case submitted a verified accounting and a supplement to their verified accounting, which detailed the payments made purportedly in connection with their adoption of children born in Michigan. In both cases, petitioners identified American Adoptions as the payee of the administrative fee and American Family Media as the payee of the marketing fee. Petitioners attached, in addition to other documents, a letter from American Adoptions that explained its fees. The letters were written by Wade Morris, the Director of Community Resources for American Adoptions, and addressed to petitioners' attorney (same attorney in each case). Presumably, Morris's letters did not refer to any marketing fees because American Family Media—and not American Adoptions—received the marketing fees from petitioners. With respect to the administrative fees, Morris stated the following, in pertinent part:
The submitted letters in both cases are essentially the same except for the background information pertaining to the respective petitioners and the respective adoptee children.
This fee covers other general overhead expenses relating to various administrative functions of American Adoptions or other Adoption Professionals, including but not limited to the many and various administrative functions that American Adoptions or other Adoption Professionals undertake
prior to an adoption opportunity. This fee is fully refundable if
the adoption opportunity is ultimately unsuccessful.[ ]
Morris provided a nonexhaustive list of examples of overhead expenses: contract labor, IT services, its legal fees, postage, payroll, health insurance, professional insurance, telephone, medical records, office supplies, and rent.
Morris provided a nonexhaustive list of examples of overhead expenses: contract labor, IT services, its legal fees, postage, payroll, health insurance, professional insurance, telephone, medical records, office supplies, and rent.
Morris explained that American Adoptions' monthly cost for such overhead expenses totaled approximately $267,000.
The circuit court approved all of the requested fees and costs, with the exception of the administrative fees and marketing fees. In Docket No. 333700, the circuit court disallowed the $7,250 administrative fee and the $4,000 marketing fee. In Docket No. 333813, the circuit court rejected the $4,495 administrative fee and the $10,000 marketing fee. The circuit court in both cases did not provide any explanation for its denial of these particular fees.
American Adoptions unsuccessfully sought to have the trial court reconsider its decision in both cases.
II. DUE PROCESS
American Adoptions argues on appeal that it was denied due process because it was unable to participate in a hearing related to the approval of the fees. We review this unpreserved constitutional issue for plain error affecting substantial rights. Demski v. Petlick , 309 Mich.App. 404, 463, 873 N.W.2d 596 (2015).
Although American Adoptions raised the issue in its respective motions for reconsideration, "[w]here an issue is first presented in a motion for reconsideration, it is not properly preserved." Vushaj v. Farm Bureau Gen. Ins. Co. of Mich. , 284 Mich.App. 513, 519, 773 N.W.2d 758 (2009).
The United States and Michigan Constitutions provide that "[n]o person may be deprived of life, liberty, or property without due process of law." Murphy–DuBay v. Dep't of Licensing & Regulatory Affairs , 311 Mich.App. 539, 558, 876 N.W.2d 598 (2015), citing U.S. Const., Am. V and Am. XIV, § 1 ; Const. 1963, art. 1, § 17. Thus, "[d]ue-process protections are only required when a life, liberty, or property interest is at stake." Id. "To have a protected property interest, one must possess more than a unilateral expectation to the claimed interest; the claimant must have a legitimate claim of entitlement." York v. Civil Serv. Comm. , 263 Mich.App. 694, 702–703, 689 N.W.2d 533 (2004) (quotation marks and citation omitted). Here, there is no doubt that American Adoptions had a property interest in the administrative fees because the adoptive parents were contractually bound to pay these fees to American Adoptions.
However, American Adoptions did not have a property interest in any marketing/advertising fee because it was not the recipient of such a fee (American Family Media was), and there is nothing in the record to show that American Adoptions was entitled to a portion of any marketing fee. Additionally, American Adoptions stated in its briefs on appeal that, although it recommends American Family Media to its clients, these prospective adoptive parents are free to hire any media company they desire. Accordingly, with respect to the marketing fees, American Adoptions was not entitled to due process.
At its core, "[d]ue process requires the opportunity to be heard at a meaningful time and in a meaningful manner." Id. at 702, 689 N.W.2d 533 (quotation marks and citations omitted). Here, American Adoptions cannot show how any plain error affected its substantial rights. First, although American Adoptions may not have been formally invited to participate in the proceedings in the circuit court because it was not a party to the adoption, it nonetheless was able to successfully present its views regarding the administrative fees to the circuit court through the "fee explanation" letters written by Morris. Thus, the court received materials to consider when reviewing petitioners' request to approve the fees, and among those materials was American Adoptions' letters outlining what the administrative fees covered. Importantly, "an oral hearing is not necessary to provide a meaningful opportunity to be heard." English v. Blue Cross Blue Shield of Mich. , 263 Mich.App. 449, 460,688 N.W.2d 523 (2004). Consequently, American Adoptions has failed to prove any plain error by virtue of the fact that no formal hearing was held.
In fact, counsel for American Adoptions at oral argument in this Court took the position that the letters written by Morris were sufficient to convey American Adoptions' interests and position, such that no further hearing should have been necessary. Counsel instead claimed that a hearing was necessary only when the court issued the adverse decision. We find no support for the view that an adverse decision acts to implicate or trigger due process. The key is whether there was a meaningful opportunity to be heard before the decision was rendered, and in this case, the information American Adoptions wanted to present to the trial court was indeed presented.
III. ADMINISTRATIVE FEES
American Adoptions claims that the circuit court erred when it denied the approval of the administrative fees. We review the circuit court's decision for an abuse of discretion. See In re KMN , 309 Mich. App. 274, 294, 870 N.W.2d 75 (2015). And we review issues of statutory interpretation de novo. Auto–Owners Ins. Co. v. Dep't of Treasury , 313 Mich.App. 56, 68–69, 880 N.W.2d 337 (2015).
" MCL 710.54 of the Michigan Adoption Code governs authorized charges and fees in adoption cases." In re MJG , 320 Mich. App. 310, 906 N.W.2d 815 (2017) (Docket No. 332928), slip op. at 4, 2017 WL 2960374. The statute provides as follows:
(1) Except for charges and fees approved by the court, a person shall not pay or give, offer to pay or give, or request, receive, or accept any money or other consideration or thing of value, directly or indirectly, in connection with any of the following:
(a) The placing of a child for adoption.
(b) The registration, recording, or communication of the existence of a child available for adoption.
(c) A release.
(d) A consent.
(e) A petition.
(2) Except for a child placing agency's preparation of a preplacement assessment described in section 23f of this chapter or investigation under section 46 of this chapter, a person shall not be compensated for the following activities:
(a) Assisting a parent or guardian in evaluating a potential adoptive parent.
(b) Assisting a potential adoptive parent in evaluating a parent or guardian or adoptee.
(c) Referring a prospective adoptive parent to a parent or guardian of a child for purposes of adoption.
(d) Referring a parent or guardian of a child to a prospective adoptive parent for purposes of adoption.
(3) An adoptive parent may pay the reasonable and actual charge for all of the following:
(a) The services of a child placing agency in connection with an adoption.
(b) Medical, hospital, nursing, or pharmaceutical expenses incurred by the birth mother or the adoptee in connection with the birth or any illness of the adoptee, if not covered by the birth
parent's private health care payment or benefits plan or by Medicaid.
(c) Counseling services related to the adoption for a parent, a guardian, or the adoptee.
(d) Living expenses of a mother before the birth of the child and for no more than 6 weeks after the birth.
(e) Expenses incurred in ascertaining the information required under this chapter about an adoptee and the adoptee's biological family.
(f) Legal fees charged for consultation and legal advice, preparation of papers, and representation in connection with an adoption proceeding, including legal services performed for a biological parent or a guardian and necessary court costs in an adoption proceeding.
(g) Traveling expenses necessitated by the adoption.
(4) An adoptive parent shall pay the reasonable and actual charge for preparation of the preplacement assessment and any additional investigation ordered pursuant to section 46 of this chapter.
(5) A prospective adoptive parent shall pay for counseling for the parent or guardian related to the adoption, unless the parent or guardian waives the counseling pursuant to section 29 or 44.
(6) A payment authorized by subsection (3) shall not be made contingent on the placement of the child for adoption, release of the child, consent to the adoption, or cooperation in the completion of the adoption. If the adoption is not completed, an individual who has made payments authorized by subsection (3) may not recover them.
(7) At least 7 days before formal placement of a child under section 51 of this chapter, the following documents shall be filed with the court:
(a) A verified accounting signed by the petitioner itemizing all payments or disbursements of money or anything of value made or agreed to be made by or on behalf of the petitioner in connection with the adoption. The accounting shall include the date and amount of each payment or disbursement made, the name and address of each recipient, and the purpose of each payment or disbursement. Receipts shall be attached to the accounting.
(b) A verified statement of the attorney for each petitioner
itemizing the services performed and any fee, compensation, or other thing of value received by, or agreed to be paid to, the attorney for, or incidental to, the adoption of the child. If the attorney is an adoption attorney representing a party in a direct placement adoption, the verified statement shall contain the following statements:
(i ) The attorney meets the requirements for an adoption attorney under section 22 of this chapter.
(ii ) The attorney did not request or receive any compensation for services described in section 54(2) of this chapter.
(c) A verified statement of the attorney for each parent of the adoptee itemizing the services performed and any fee, compensation, or other thing of value received by, or agreed to be paid to, the attorney for, or incidental to, the adoption of the child. If the attorney is an adoption attorney representing a party in a direct placement adoption, the verified statement shall contain the following statements:
(i ) The attorney meets the requirements for an adoption attorney under section 22 of this chapter.
(ii ) The attorney did not request or receive any compensation for services described in section 54(2) of this chapter.
(d) A verified statement of the child placing agency or the department itemizing the services performed and any fee, compensation, or other thing of value received by, or agreed to be paid to, the child placing agency or the department for, or incidental to, the adoption of the child, and containing a statement that the child placing agency or the department did not request or receive any compensation for services described in section 54(2) of this chapter.
(8) At least 21 days before the entry of the final order of adoption, the documents described in subsection (7) shall be updated and filed with the court.
(9) To assure compliance with limitations imposed by this section and section 55 of this chapter and by section 14 of Act No. 116 of the Public Acts of 1973, being section 722.124 of the Michigan Compiled Laws, the court may require sworn testimony from persons who were involved in any way in informing, notifying, exchanging information, identifying, locating, assisting, or in any other way participating in the contracts or arrangements that, directly or indirectly, led to placement of the individual for adoption.
(10) The court shall approve or disapprove all fees and expenses. Acceptance or retention of amounts in excess of those approved by the court constitutes a violation of this section.
(11) A person who violates this section is guilty of a misdemeanor punishable by imprisonment for not more than 90 days or a fine of not more than $100.00, or both, for the first violation, and of a felony punishable by imprisonment for not more than 4 years or a fine of not more than $2,000.00, or both, for each subsequent violation. The court may enjoin from further violations any person who violates this section. [ MCL 710.54.]
At the outset, while "the plain language of MCL 710.54(10) requires court approval of ‘all fees and expenses,’ " this must be read in context with the initial requirement under MCL 710.54(7)(a) that only those payments or disbursements that were made "in connection with the adoption" need to be submitted. In re MJG , 320 Mich. App. at ––– – ––––, slip op at 7-8, 906 N.W.2d 815. Simply put, "if a fee is for a service that is not related to the adoption itself, then it does not fall within the scope of the statute, and the circuit court has no authority to preclude the expense." Id. at ––––, slip op. at 8, 906 N.W.2d 815. Thus, the approval process of MCL 710.54 is only implicated if the fee at issue is for a service that is connected with the adoption itself. Id. at ––––, slip op. at 8, 906 N.W.2d 815. Once it is determined that a particular fee is subject to court approval, the statutory scheme is as follows:
MCL 710.54(1) merely prohibits charges and fees for the items enumerated in that subsection, unless the charges and fees are approved by the court. Thus, absent any authorization from a court, the expenses listed in MCL 710.54(2) are squarely prohibited. The statute similarly prohibits compensation for the activities in MCL 710.54(2) unless they are done for particular purposes and are performed by a "child placing agency," [as defined in MCL 710.22(k) ].... MCL 710.54(3) lists the charges that adoptive parents may pay. Because such charges are authorized under Subsection (3), the circuit court must approve fees that fall under this subsection if they represent reasonable
and actual charges. MCL 710.54(3). [ Id. , at ––––, slip op. at 8, 906 N.W.2d 815.]
Importantly, the list of allowable expenses for adoptive parents under Subsection (3) is exclusive. Id. at ––––, slip op. at 8, 906 N.W.2d 815. Further, " MCL 710.54(4) and (5) list fees that adoptive parents must pay, and, thus, the circuit court is also required to approve fees that fall under these subsections" as well. Id. at ––––, slip op. at 8, 906 N.W.2d 815.
In its briefs on appeal, American Adoptions initially claimed that it is entitled to its administrative fees because, as a child-placing agency, the fees are explicitly permitted under MCL 710.54(3)(a). A "child placing agency" is defined as "a private organization licensed under 1973 PA 116, MCL 722.111 to 722.128, to place children for adoption." MCL 710.22(k). However, there is no evidence that American Adoptions is licensed under 1973 PA 116. Indeed, American Adoptions has conceded in its reply briefs on appeal that it does not qualify as a child-placing agency.
Instead, in its reply briefs, American Adoptions asserts that the administrative fees should have been approved because they are not prohibited under MCL 710.54(1) or (2). But merely because a fee is not prohibited under MCL 710.54(1) or (2) does not mean that it is automatically allowable. If the fee is properly before the court, it must also be authorized under some other subsection.
American Adoptions fails to identify which subsection authorizes these administrative fees. However, this failure is not fatal to its appeal because after reviewing the administrative services, we do not believe that these services were specifically performed in connection with the adoptions that occurred here. In other words, American Adoptions' administrative overhead expenses did not have a relationship in fact with the particular adoptions, which means that the court was not authorized to rule on the appropriateness of the fees. See In re MJG , 320 Mich. App. at ––––, slip op. at 8, 906 N.W.2d 815. Here, the fee was for overhead expenses that were not specifically related to any particular adoption. Indeed, the expenses were for items such as general contract labor, IT services, payroll, health insurance, professional insurance, office supplies, and rent. Due to the nature of what these overhead services entailed, we hold that the services were not connected, or related in fact, to the two adoptions. As a result, the circuit court had no authority to deny these fees. On remand, the circuit court is to approve these administrative fees.
We agree with American Adoptions' view that the mere fact that a petitioner lists fees on the approval form does not mean that they all necessarily fall under the scope of the statute. It is incumbent on the circuit court, when disapproving fees, to ensure that they fall under the scope of the statute. Because the failure to properly disclose fees can be a criminal offense, MCL 710.54(11), petitioners may be inclined to list more than is actually required under the statute.
IV. MARKETING FEES
American Adoptions also argues that the circuit court erred when it failed to approve the $4,000 and $10,000 marketing fees in the two cases. While we held in a companion case, In re MFG, id. , at ––––, ––––, slip op. at 10, 13, 906 N.W.2d 815, that these types of marketing fees fall outside the scope of the statute and that therefore a court has no authority to deny such fees, we hold that American Adoptions lacks standing to raise this issue here.
To have standing, a party must have a legally protected interest that is in jeopardy of being adversely affected. The
party must have a special injury or right, or substantial interest, that will be detrimentally affected in a manner different from the citizenry at large .... A plaintiff must assert his own legal rights and interests and cannot rest his claim to relief on the legal rights or interests of third parties. [ People v. Sledge , 312 Mich.App. 516, 525, 879 N.W.2d 884 (2015) (quotation marks and citations omitted).]
The record is clear that the marketing fees were initially paid to a company called American Family Media, LLC. This is undisputed as (1) petitioners' verified accounting forms show that the money was paid to American Family Media, (2) the refunded money (after the court disapproved the fee) was issued to petitioners by American Family Media, (3) American Adoptions in its fee-explanation letters did not refer to the marketing fees, (4) American Adoptions acknowledged in its filings with this Court and the circuit court that the marketing fees are "from a separate company, American Family Media, LLC," and (5) American Adoptions allows adoptive parents to utilize the media company of their choice. Because there is no evidence of any connection between the marketing fees at issue and American Adoptions, we hold that American Adoptions lacks standing to challenge the denial of the marketing fees. No decision we make on this issue can affect American Adoptions. The only parties who would have standing to challenge the denial of the marketing fees are petitioners and American Family Media. This is distinguishable from the facts in In re MJG , where the appellant firm was the recipient of the marketing fee and had an identifiable interest in the matter. In re MJG , 320 Mich. App. at ––––, ––––, slip op. at 3, 10, 906 N.W.2d 815. Accordingly, because American Adoptions lacks standing, we decline to address the circuit court's denial of the marketing fees.
Likewise, American Adoptions is precluded from raising any First Amendment issues related to the marketing fee.
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In both Docket No. 333700 and Docket No. 333813, we reverse in part and remand for proceedings consistent with this opinion. We do not retain jurisdiction. No taxable costs because no party on appeal prevailed in full.
Meter and Murray, JJ., concurred with Saad, P.J.