Sylvan Township v. City of Chelsea
313 Mich. App. 305
Mich. Ct. App.2015Background
- Sylvan Township issued bonds (originally $12.5M; later refunded to $9.4M) to fund township water/sewer improvements; special assessments intended to help repay were later invalidated by separate litigation.
- Chelsea was a village that incorporated as a home-rule city (charter adopted March 2004); incorporation took territory that had been within Sylvan Township.
- Sylvan alleges that under MCL 117.14 (Home Rule City Act) Chelsea, as a new city, assumed a proportionate share of Sylvan’s pre-incorporation liabilities (about 41% by Sylvan’s calculation) and seeks declaratory relief and contribution.
- Chelsea moved for summary disposition asserting res judicata, equitable estoppel, waiver, laches, and statute-of-limitations defenses; trial court granted the motion, barring Sylvan’s claim.
- Court of Appeals reversed: it held the Boundary Commission lacked authority to adjudicate MCL 117.14 succession claims (so res judicata inapplicable), found no evidentiary basis for equitable estoppel or waiver of MCL 117.14 in the settlement, and left open limitations/laches questions for further factual development. The court also ruled on how to compute Chelsea’s share of any liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sylvan’s claim is barred by res judicata from Boundary Commission proceedings | Sylvan: Commission lacked authority to finally resolve succession/allocation under MCL 117.14; claim not precluded | Chelsea: Sylvan raised the issue during incorporation proceedings and thus is precluded | Held: Res judicata does not bar Sylvan; Commission could not determine MCL 117.14 succession claims |
| Whether Sylvan is estopped from asserting MCL 117.14 liability against Chelsea | Sylvan: made no representation or conduct inducing Chelsea to forgo rights | Chelsea: settlement and delay constituted waiver/silence inducing reliance; prejudice exists | Held: No evidence Sylvan induced Chelsea’s reliance; equitable estoppel improper |
| Whether Sylvan waived MCL 117.14 rights in the incorporation settlement | Sylvan: waiver language limited to Commission docket/claims about petition sufficiency; did not waive succession claims | Chelsea: settlement language and conduct waived or foreclosed later claims | Held: Waiver did not encompass MCL 117.14 succession/assumption claims; no waiver proved |
| How to calculate Chelsea’s share of any assumed liabilities | Sylvan: include assessed value of territory taken (including former village area) to compute ~41% share | Chelsea: argued village territory should not count or that statute limits coverage to annexations from townships | Held: Territory taxable by the township that Chelsea could not lawfully have been taxed on (e.g., former village property Sylvan could not tax for these bonds) must be excluded; liability share must be computed by assessed valuation of property lawfully taxable to pay that specific liability |
Key Cases Cited
- Pierson Sand & Gravel, Inc. v. Keeler Brass Co., 460 Mich 372 (doctrine and purposes of res judicata)
- Dart v. Dart, 460 Mich 573 (res judicata elements)
- Washington v. Sinai Hosp. of Greater Detroit, 478 Mich 412 (de novo review of equitable/legal doctrines)
- McDonald v. Farm Bureau Ins. Co., 480 Mich 191 (elements of equitable estoppel)
- Township of Dearborn v. City of Dearborn, 308 Mich 284 (discussion of incorporation effects on township territory and liabilities)
- Lichon v. American Ins. Co., 435 Mich 408 (equitable estoppel by silence: when silence may induce estoppel)
- Sziber v. Stout, 419 Mich 514 (accrual rule for contribution claims)
- Tkachik v. Mandeville, 487 Mich 38 (nature of equitable accounting/contribution claims)