Trahey v. City of Inkster
311 Mich. App. 582
Mich. Ct. App.2015Background
- Trahey challenged Inkster's water/sewer rates effective July 1, 2012, and a July 2012 bill based on an inside meter; trial court reduced rates, ordered credits, and held estoppel against collection from Trahey for the July 2012 bill.
- The city appealed the rate-reduction portion and related credits; the court later issued postjudgment orders; this Court reversed in part, vacated orders, and remanded for further proceedings on the July 2012 bill.
- The core dispute centered on whether the “negative cash assets”/DEP component of the rate was properly included and whether the rate was reasonable under Inkster Charter §14.3; the trial court found unjust enrichment and estoppel notions applicable.
- There was extensive briefing on mootness and compliance with the judgment, with the appellate court ultimately vacating the postjudgment orders and remanding on related issues.
- The opinion discusses the standard of review for rate cases and lays out the evidentiary burden for challenging municipal utility rates; it relies on Michigan authority interpreting reasonableness, ratemaking, and equitable doctrines.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were Inkster’s water/sewer rates reasonable under the charter? | Trahey contends rates were unreasonable and lacked standards. | Inkster argues presumption of reasonableness; burden on plaintiff to prove unreasonableness. | Rates not unreasonable; reversed on that basis and remanded for July 2012 bill issue. |
| Was the 50% reduction of the DEP/negative cash assets component proper? | Trahey argued component was not attributable to water/sewer debt and should be reduced. | Inkster contends adjustments lack evidentiary support and would improper retroactive ratemaking. | Trial court erred; reversed and remanded for no-cause-of-action judgment for city; not supported by evidence. |
| Did retroactive ratemaking apply to include DEP in rates? | Rate should not reflect past debts; challenged retroactive effect. | Past expenses may be considered; no retroactive adjustment of established rates. | No retroactive ratemaking; DEP inclusion permissible for continued operation. |
| Was Trahey's July 2012 bill unjustly enriched or estopped? | Equitable estoppel barred collection for past usage. | Charter prohibits free service; lack of evidence that plaintiff actually consumed services. | Equitable estoppel inappropriate; insufficient proof of actual usage; remand on evidence of actual receipt. |
| Do postjudgment orders sustain on appeal, or are they vacated? | City credits occurred; mootness undermines appeal. | Credits were involuntary; issues remain appealable. | Vacated postjudgment orders; remand on July 2012 bill; no retained jurisdiction. |
Key Cases Cited
- City of Novi v. Detroit, 433 Mich 414 (1989) (presumption of reasonableness in municipal rates; burden on challenger)
- Jackson Co v City of Jackson, 302 Mich App 90 (2013) (rate reasonableness; evidentiary standards)
- In re Application of Consumers Energy Co for Rate Increase, 291 Mich App 106 (2010) (cost-based ratemaking and balancing considerations)
- Mich Bell Tel Co v Pub Serv Comm, 315 Mich 533 (1946) (past costs may be considered; rate structure may reflect delays in debt service)
- Sigal v Detroit, 140 Mich App 39 (1985) (equitable estoppel not typically available against public utilities for payment of services)
- Indus Lease-Back Corp v Romulus Twp, 23 Mich App 449 (1970) (voluntary satisfaction does not moot an appeal?)
- Ahrenberg Mech Contracting, Inc v Howlett, 451 Mich 74 (1996) (equitable doctrines reviewed de novo; public utilities and contracts)