Sau-Tuk Industries, Inc. v. Allegan County
316 Mich. App. 122
| Mich. Ct. App. | 2016Background
- Sau-Tuk owned industrial property leased to Michigan Wood Pellet, LLC (MWP); the lease made the tenant responsible for utility charges but Sau-Tuk did not provide written notice and a copy of the lease to Holland’s Board of Public Works (BPW) until March 8, 2012 (after charges were incurred).
- BPW provided electric and water service, initially required MWP to post a surety bond because MWP lacked credit history, and billed MWP directly; MWP later fell behind and charges became delinquent.
- Under MCL 141.121(3) and Holland ordinances, utility charges may be a lien on the premises and the landlord can avoid liens by filing written notice with a copy of the lease (or affidavit for water) before services are furnished; if notice is filed, BPW must suspend service until security is posted.
- Allegan County Treasurer certified the delinquent utility charges for collection like taxes and foreclosed; Sau-Tuk sued for declaratory relief and opposed foreclosure, arguing actual BPW knowledge satisfied the statute and that estoppel should apply.
- The trial court granted summary disposition to the county, held Sau-Tuk failed to comply with the statute/ordinance so liens attached when services were supplied, and rejected equitable estoppel; foreclosure judgment followed and was appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether actual knowledge of tenant’s obligation satisfies MCL 141.121(3)/Holland §9‑6 written‑notice requirement | Sau‑Tuk: BPW had actual knowledge (bonding, direct billing), so strict written notice was not required; substantial compliance or purpose served | County: Statute/ordinance mandates written landlord notice with a copy of the lease filed before services; actual knowledge insufficient | Court: Written notice by owner with lease is required; actual notice does not satisfy the clear statutory/ordinance requirement |
| When the utility lien "attaches" to property (upon service vs. only when certified on tax roll) | Sau‑Tuk: Lien does not attach until charges are certified and entered on the tax roll | County: Liens arise by operation of law when services are provided; certification is the mechanism to collect/enforce on tax roll | Court: Liens arise and become effective immediately when services are furnished; certification is later procedural step to enforce via tax roll |
| Whether equitable estoppel bars enforcement of liens because BPW’s conduct induced reliance | Sau‑Tuk: BPW’s actions (requiring bond, billing tenant) led Sau‑Tuk reasonably to rely that notice/formalities were unnecessary | County: Sau‑Tuk was chargeable with knowledge of ordinance; no justifiable reliance or lack of means to learn the law | Court: Estoppel fails—Sau‑Tuk presented no evidence of justified ignorance or reliance and a municipality is not estopped under these facts |
Key Cases Cited
- Maiden v. Rozwood, 461 Mich 109 (Mich 1999) (summary‑disposition standard and evidence viewed for nonmoving party)
- Gilliam v. Hi‑Temp Prod., Inc., 260 Mich App 98 (Mich. Ct. App. 2004) (clear statutory/ordinance language must be enforced as written)
- Bonner v. Brighton, 495 Mich 209 (Mich 2014) (municipal ordinances interpreted like statutes; plain‑language inquiry)
- Van v. Zahorik, 460 Mich 320 (Mich 1999) (elements and limits of equitable estoppel against public entities)
- Brown Bark I, LP v. Traverse City Light & Power Dep’t, 736 F Supp 2d 1099 (W.D. Mich. 2010) (utility liens under MCL 141.121(3) arise by operation of law)