Good Business or No Business LLC v. Detroit, City of

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
The City of Detroit is one of hundreds of municipalities that participate in
Michigan’s Fire Insurance Withholding Program (“FIW Program”). (See ECF No. 15,
PageID.92.) The program, codified at Michigan Compiled Laws § 500.2227, was
“designed to encourage property owners to use the proceeds of major fire insurance
claims to rehabilitate or remove damaged buildings” by empowering cities to create
“special escrow accounts to claim and hold” a portion of a property owner’s “insurance
awards” until the property is repaired or cleared. (ECF No. 15-12, PageID.157
(Detroit City Council Resolution adopting the program).) If the property owner fails
to repair or clear their fire-damaged property, and the City ultimately incurs costs
for undertaking such repair or demolition, it may use the funds held in escrow to
reimburse itself. (See id.) If the property owner complies with local orders to demolish
or remedy building code violations, the previously withheld insurance proceeds are
returned. Mich. Comp. Laws § 500.2227(5).
GOOD BUSINESS OR NO BUSINESS
LLC and all those similarly situated,
Plaintiff,
v.
CITY OF DETROIT,
Defendant.
Case No. 25-10308
Honorable Laurie J. Michelson
OPINION AND ORDER GRANTING MICHIGAN ATTORNEY
GENERAL’S MOTION TO INTERVENE [19]
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Plaintiff Good Business or No Business LLC is a property owner whose fire
insurance proceeds were withheld by Detroit pursuant to the FIW Program. (ECF
No. 1.) It brings this suit to challenge that withholding as an unconstitutional
“taking.” (See, e.g., id. at PageID.2.) After the case was certified to the attorney
general as raising a constitutional challenge to the FIW Program (ECF No. 18),
Michigan Attorney General Dana Nessel filed the instant motion to intervene in
defense of the statute (ECF No. 19). The question presently before the Court is
whether 28 U.S.C. § 2403(b) permits her to intervene.
On November 13, 2024, fire overtook a residential property—950 Mount
Vernon in Detroit, Michigan—owned by Good Business. (Id. at PageID.3.) Sometime
thereafter, City of Detroit inspectors visited the charred home, photographed it,
deemed 	it 	unsafe, 	and 	recommended 	emergency 	demolition. 	(ECF 	No. 	15-2,
PageID.112–132; ECF No. 15-6, PageID.130, 131.) On November 18, the insurer
covering 950 Mount Vernon notified the City that it would withhold 25% of the
insurance payout due to Good Business in accordance with the FIW Program. (ECF
No. 15-5, PageID.127–128.) The following day, November 19, the City ordered
emergency demolition of the property and instructed Good Business to comply with
the order or forfeit its withheld insurance funds. (See ECF No. 15-7, PageID.133–
139.) Good Business allegedly failed to comply with this order (ECF No. 15,
PageID.96–97), so the City itself scheduled and paid for demolition of the property.
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(Id.) As such, the City remains in possession of Good Business’ withheld insurance
funds. (ECF No. 1, PageID.4.)
On February 2, 2025, Good Business filed this lawsuit against the City to
secure return of its withheld funds. (ECF No. 1.) Good Business alleges, on behalf of
itself and others similarly situated (id. at PageID.6), that the City violated the
Takings Clause of the U.S. Constitution when it “seized” the plaintiff’s insurance
funds pursuant to the FIW Program (id. at PageID.9–11) and is therefore liable
pursuant to 42 U.S.C. § 1983 and Monell v. Department of Social Services, 436 U.S.
658 (1978) (id. at PageID.7).
On April 7, 2025, Good Business filed a motion requesting guidance on whether
it was required to certify this case to the Michigan Attorney General pursuant to 28
U.S.C. § 2403(b) and Federal Rule of Civil Procedure 5.1. (ECF No. 16.) After a status
conference with the Court, the parties stipulated that the City would give notice to
the attorney general. (ECF No. 17.) Good Business nevertheless maintained that its
complaint “does not directly challenge the constitutionality of the statute.” (Id.)
On June 4, 2025, Attorney General Dana Nessel timely filed a motion to
exercise her right to intervene pursuant to 28 U.S.C. § 2403(b). (ECF No. 19.) The
City of Detroit supports Nessel’s intervention. (ECF No. 23.) Good Business opposes
it. (ECF No. 21.) Given the adequate briefing, the Court considers the motion without
further argument. See E.D. Mich. LR 7.1(f).
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Good 	Business’ 	argument 	against 	intervention 	is 	complex, 	but 	can 	be
simplified as follows: the statute through which Nessel claims an unqualified right to
intervene, 28 U.S.C.§ 2403(b), only allows a state to intervene, and not its attorney
general. (ECF No. 21, PageID.204.) So if Nessel is permitted to intervene under
§2403(b), says Good Business, she would be merely acting as the state’s legal
representative, and that the state itself must be construed as the intervenor-
defendant. (Id.) And because a state is not a “person” susceptible to suit under 42
U.S.C. § 1983, no claims can be made against it. (Id. at PageID.205–206.) With no
possible claim against Michigan under § 1983, the state would only act as some sort
of “roving non-party litigating amicus” to the case, seeking a mere advisory opinion.
(Id. at PageID.206.) As such, Good Business concludes, there would be no actionable
“case or controversy” between itself and the state, and thus this Court would lack
Article III jurisdiction over the case. (See, e.g., id. at PageID.205–206.)
Because Good Business’ argument fails at its first step—§ 2403(b) does give
Nessel an independent right to intervene—Nessel’s motion to intervene (ECF No. 19)
is GRANTED.
The Federal Rules of Civil Procedure provide two pathways by which a person
or entity may “intervene” in a suit they are not otherwise party to: intervention of
right and permissive intervention. Fed. R. Civ. P. 24(a)–(b). Nessel asserts an
unqualified statutory right to intervene under 28 U.S.C. § 2403(b) (ECF No. 19,
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PageID.178), so this Court will deal only with the provisions regarding intervention
of right in Rule 24(a).
Recognizing the “importance of ensuring that States have a fair opportunity to
defend 	their 	laws 	in 	federal 	court,” 	Congress 	enacted 	§ 2403(b) 	to 	facilitate
intervention 	by 	states 	where 	cases 	pending 	in 	federal 	court 	challenge 	the
constitutionality of the state’s laws. See Cameron v. EMW Women’s Surgical Ctr.,
P.S.C., 595 U.S. 267, 278 (2022). The statute reads, in relevant part:
In any action, suit, or proceeding in a court of the United States to which
a State or any agency, officer, or employee thereof is not a party, wherein
the constitutionality of any statute of that State affecting the public
interest is drawn in question, the court shall certify such fact to the
attorney general of the State, and shall permit the State to intervene for
presentation of evidence, if evidence is otherwise admissible in the case,
and for argument on the question of constitutionality.
28 U.S.C. § 2403(b).
Federal 	Rule 	of 	Civil 	Procedure 	5.1(a)(1)(b) 	“implements” 	§ 2403(b) 	by
outlining the process through which state attorneys general are to receive notice of
cases in which the right to intervene under § 2403(b) may apply. See Fed. R. Civ. P.
5.1, Advisory Committee’s Note to 2006 Amendment (“Rule 5.1 implements 28 U.S.C.
§ 2403, 	replacing 	the 	final 	three 	sentences 	of 	Rule 	24(c) . . . . The 	notice 	of
constitutional 	question 	will 	ensure 	that 	the 	attorney 	general 	is 	notified 	of
constitutional challenges and has an opportunity to exercise the statutory right to
intervene . . . .”). Once notice is provided pursuant to Rule 5.1(a)(1)(B), 28 U.S.C
§ 2403(b) mandates that a state seeking to defend the constitutionality of the
challenged 	statue 	be 	permitted 	to 	intervene. 	28 	U.S.C 	§ 2403(b) 	(“[T]he
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court . . . shall permit the State to intervene . . . for argument on the question of
constitutionality.” (emphasis added)).
Once joined, an intervenor assumes “all the rights of a party and [is] subject to
all liabilities of a party as to court costs.” Id. It is true that in a § 1983 case like this,
the state cannot be liable for money damages. Will v. Mich. Dep’t. of State Police, 491
U.S. 58, 71 (1989). A state’s intervention pursuant to § 2403(b) does not change that.
Tennessee v. Garner, 471 U.S. 1, 22 (1985) (“The State is a party only by virtue of 28
U.S.C. § 2403(b) and is not subject to liability [under § 1983].”). An intervening state,
however, may still be liable for attorney’s fees under § 1983. Freed v. Thomas
(“Freed”), 137 F.4th 552, 558 (6th Cir. 2025) (holding that “neither sovereign
immunity nor § 2403(b) prohibits a fee award” against a state intervenor).
As an initial matter, Good Business contests whether its claim necessarily
“draws 	into 	question” 	the 	constitutionality 	of 	Michigan 	Compiled 	Laws
§ 500.2227(9)–(10) and thus whether § 2403(b) is applicable here. (See [Good Business
response] (quoting 28 U.S.C. § 2403(b)).) Good Business asserts that it is not
challenging the constitutionality of the FIW Program itself, but merely Detroit’s
“administration” of it. (See, e.g., ECF No. 21, PageID.210–211.) But this Court already
considered and effectively rejected this argument when it ordered Detroit to certify
this case to the attorney general—an order to which both parties stipulated. (ECF
No. 17, PageID.171.)
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In any event, it bears repeating that Good Business’ challenge to Detroit’s so-
called “administration” of the FIW Program is necessarily a challenge to the program
itself. Good Business’ claim is not that Detroit improperly administered the FIW
Program but rather that it acted in accordance with it. (See ECF No. 1, PageID.9
(alleging the Detroit acted unlawfully “pursuant to” the FIW program).) Its complaint
contains no claims that Detroit erroneously applied, failed to comply with, or
otherwise departed from the FIW Program procedures established by the state. (See
generally ECF No. 1.) It follows that it is the FIW Program that generated the
supposedly unconstitutional conduct, not some independent action taken by Detroit.
Accordingly, this lawsuit does “draw into question” the constitutionality of Michigan
Compiled Laws § 500.2227 within the meaning of 28 U.S.C. § 2403(b).
Having concluded that § 2403(b) applies in this case, the Court must determine
whether the statute permits the Attorney General to intervene herself, or if Good
Business is right that “only the State, not the Attorney General, has been authorized
to intervene pursuant to 28 U.S.C. § 2403(b).” (See ECF No. 21, PageID.212.)
This 	question 	is 	also 	easily 	answered: 	“Section 	2403(b) 	has 	long 	been
understood to ‘authorize[] intervention by a state attorney general.’” Lindke v. King,
19-11905, 2024 WL 4520338, at *2 (E.D. Mich. Oct. 17, 2024) (alteration in original)
(quoting Yniguez v. State of Arizona, 939 F.2d 727, 730 (9th Cir. 1991)); see also
Oakland Fam. Rests., Inc. v. Am. Dairy Queen Corp., 21-12530, 2024 WL 473480, at
*1 (E.D. Mich. Jan. 10, 2025) (“28 U.S.C § 2403(b) gives the Attorney General the
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unconditional right to intervene . . . .”); Lowden v. Clare County, No. 09-11209, 2011
WL 1304869, at *1 (E.D. Mich. April 6, 2011) (noting that the Michigan attorney
general was permitted to intervene pursuant to § 2403(b) in a § 1983 case); Merrill v.
Addison, 763 F.2d 80, 81–82 (2d. Cir. 1985) (“[W]e notified the Attorney General of
the State of New York that the appeal [challenging the constitutionality of a state
law 	in 	the 	§ 1983 	suit] 	was 	pending 	and 	granted 	him 	the 	opportunity 	to
respond. . . . [the 	attorney 	general] 	sought 	permission 	to 	intervene 	as 	a 	party
defendant, which was granted.”).
Even the Supreme Court has said that 28 U.S.C. §2403(b) gives state attorneys
general an independent right to intervene. Take Arizonans for Official English v.
Arizona, 520 U.S. 43, 55 (1997), a 42 U.S.C. § 1983 case where Arizona’s attorney
general wanted to defend a state constitutional provision on appeal, but the governor
did not. Although the state executive branch was split, the Court nevertheless found
that the attorney general retained a right to intervene pursuant to § 2403(b). See id.
at 74 (“[T]he [Arizona] Attorney General had, at a minimum, a right secured by
Congress . . . to present argument on appeal ‘on the question of constitutionality.’”
(quoting 28 U.S.C § 2403(b))); see also id. (noting that the state attorney general had
an “independent interest in defending” the law in question).
This reading of the statute is supported by the Advisory Committee notes to
Federal Rule of Civil Procedure 5.1, which explain that Rule 5.1 was designed to, in
part, “ensure that the attorney general . . . has an opportunity to exercise the
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statutory right to intervene.” See Advisory Committee Notes to 2006 Amendment,
Fed. R. Civ. P. 5.1 (emphasis added)).
In sum, this Court must, like many others have, read 28 U.S.C. § 2403(b) to
authorize intervention by Nessel.
Finding, as this Court does, that § 2403(b) creates an independent right to
intervene 	by 	state 	attorneys 	general 	does 	not 	fully 	address 	Good 	Business’
arguments. The more precise (and indeed more difficult, but likely irrelevant)
question raised by Good Business is whether an attorney general who intervenes
pursuant to § 2403(b) necessarily represents the state itself. (See ECF No. 21,
PageID.204.) This question sounds less in statutory interpretation and more in state
constitutional law: that is, does a state attorney general intervening under § 2403(b)
always speak for the state? Good Business says yes and asks this Court to find the
same. (See id.)
But the answer to that question belongs to the state itself. See, e.g., Va. House
of Delegates v. Bethune-Hill, 587 U.S. 658, 663–64 (2019) (“‘[A] State must be able to
designate agents to represent it in federal court.’ . . . [T]he choice belongs to [the
state].”). As the Supreme Court has made clear, states enjoy broad discretion to decide
which state officers or entities can, or cannot, represent the state in federal court:
Generally, 	States 	themselves 	are 	immune 	from 	suit 	in 	federal
court. . . . of course, a State will as a practical matter often retain a
strong interest in [litigation that implicates the constitutionality of its
laws]. To defend its practical interests, the State may choose to mount a
legal defense of the named official defendants and speak with a “single
voice,” often through an attorney general. Still, not every State has
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structured itself this way. Some have chosen to authorize multiple
officials to defend their practical interests in cases like these.
Berger v. North Carolina State Conference of the NAACP, 597 U.S. 179, 184
(2022) (emphasis added) (citations omitted).
As such, the question of whether an attorney general intervening under
§ 2403(b) must be construed as “speaking” on behalf of the state is for the state to
resolve in the first instance—not this Court. See Ne. Ohio Coal. for the Homeless v.
Blackwell, 467 F.3d 999, 1009 (6th Cir. 2006) (“[W]ary of determining an issue of Ohio
constitutional and common law where unnecessary, we decline to wade into the
debate 	regarding 	the 	parameters 	of 	the 	[state] 	Attorney 	General’s 	litigation
authority.”); see also Cameron, 595 U.S. at 277 (“Respect for state sovereignty must
also take into account the authority of a State to structure its executive branch in a
way that empowers multiple officials to defend its sovereign interests in federal
court.”); see also Berger, 597 U.S. at 191–92 (“[federal courts should respect] a State’s
chosen 	means 	of 	diffusing 	its 	sovereign 	powers 	among 	various 	branches 	and
officials . . . . This Court’s teachings on these scores have been many, clear, and
recent.”). Put differently, state law determines which state officers have substantive
authority to defend its laws in federal court—not federal procedural rules.
And under Michigan law, the attorney general is not only obligated to
represent the State in any tribunal when “requested by the governor, or either branch
of the legislature,” but also personally empowered to defend a challenged statute
“when in [her] own judgment the interests of the state require it” see Mich. Comp.
Laws. § 14.28 (emphasis added)).” And Nessel has determined here that the interests
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of the state require defense of the FIW program. (See, e.g., ECF No. 19, PageID.193,
195). Thus, Nessel will be allowed to intervene in her capacity as attorney general.
With 	Nessel 	construed 	as 	the 	proper 	intervenor-defendant, 	none 	of 	the
convoluted Article III challenges raised by Good Business adhere. (See id. at
PageID.204–205.)
Good Business raises a final, challenging legal question: Does “Section 2403(b)
exceed Article III’s limits by allowing intervention without a traditional injury-in-
fact”? (Id. at PageID.207.) Good Business says that under Transunion LLC v.
Ramirez, 594 U.S. 413 (2021), it does. (Id.); see also TransUnion LLC, 594 U.S. at 427
(“Congress may create causes of action for plaintiffs to sue defendants who violate
those legal prohibitions or obligations. But under Article III, an injury in law is not
an injury in fact.”).
To be sure, the same argument could be made in reference to numerous
statutes that may create a cause of action in the absence of an actual case or
controversy. But the Sixth Circuit, having recently had opportunity to opine on the
constitutionality of § 2403(b) in Freed, declined to do so. See Freed, 137 F.4th at 558–
59 (interpreting whether a state intervening pursuant to §2403(b) in a § 1983 case
could be liable for attorney’s fees). The Supreme Court also had occasion to do so in
Cameron, which came a year after Transunion, and also declined to do so. See 595
U.S. at 278.
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As such, this Court sees no reason to do so either. Especially not where Good
Business 	has 	failed 	to 	properly 	raise 	or 	brief 	a 	challenge 	to 	§ 2403(b)’s
constitutionality. See, e.g., E.D. Mich. LR 9.1(b).
For the foregoing reasons, Nessel’s motion to intervene (ECF No. 19) is
GRANTED.
IT IS SO ORDERED.
Dated: October 20, 2025
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES DISTRICT JUDGE
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