886 N.W.2d 772
Mich. Ct. App.2015Background
- NL Ventures (plaintiff) owned property leased to Awrey Bakeries (tenant); the City of Livonia (defendant) placed water/sewer arrearages and liens against the property for unpaid service.
- Trial court granted plaintiff summary disposition, voiding the City’s accumulated water/sewer charges and liens because the City allegedly failed to follow its ordinance for placing arrearages on the tax roll.
- Appeal focused on interaction among three statutory schemes: 1939 PA 178 (MCL 123.161 et seq.), the Revenue Bond Act of 1933 (MCL 141.101 et seq.), and Livonia’s water-rate ordinances.
- Key disputed legal questions: whether liens arose automatically and were invalidated by the City’s procedural noncompliance with its ordinance; whether plaintiff (landlord) could avoid liability without filing statutory affidavit/notice; and whether plaintiff’s tort claims are barred by governmental immunity.
- The Court of Appeals vacated the trial court’s ruling, holding liens were created by statute and not invalidated by the City’s failure to follow the ordinance; remanded for determination of which charges remain enforceable under statutory time limits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of water/sewer liens | City’s failure to place arrearages on tax roll per its ordinance voids liens | Statutes (1939 Act and Bond Act) create automatic liens and ordinance noncompliance does not negate them | Liens arise by statute and are not invalidated by City’s procedural failure; trial court reversed |
| Whether City had to immediately certify delinquencies to tax roll | Plaintiff: ordinance required placement and nonplacement voids enforcement | City: Bond Act gives discretion ("may") and ordinance prescribes method; no immediate certification mandated | Bond Act discretionary; ordinance governs timing/method but does not extinguish statutory lien |
| Landlord avoidance of liability for tenant’s arrearages | Plaintiff: City knew tenant was user so landlord should be relieved | City: landlord failed to file the statutory affidavit/notice required to avoid liability | Landlord’s affirmative statutory steps (affidavit/notice) required; plaintiff did not comply, so cannot avoid liability |
| Tort claims (estoppel, unjust enrichment, tortious interference, conspiracy) and governmental immunity | Plaintiff: City’s subordination agreement and actions waived/enriched/ interfered with plaintiff’s rights | City: actions in collecting/enforcing utility charges are governmental functions; immunity applies | Claims dismissed: plaintiff failed to plead facts overcoming governmental immunity or establish equitable estoppel/unjust enrichment against City |
Key Cases Cited
- Omelenchuk v. City of Warren, 466 Mich. 524 (interpretation of statutes reviewed de novo)
- Waltz v. Wyse, 469 Mich. 642 (statutes in pari materia should be read together)
- Browder v. Int’l Fid. Ins. Co., 413 Mich. 603 (use of mandatory "shall")
- Van v. Zahorik, 460 Mich. 320 (elements of equitable estoppel)
- Laurence G. Wolf Capital Mgmt. Trust v. City of Ferndale, 269 Mich. App. 265 (governmental immunity framework)
- Citizens Ins. Co. v. Bloomfield Twp., 209 Mich. App. 484 (operation of municipal water supply is a governmental function)
- Tarlea v. Crabtree, 263 Mich. App. 80 (requirements to plead exceptions to governmental immunity)