Split decision in water, sewer suit against township

July 20, 2018

A class action suit against Bloomfield Township filed in April 2016 by the law firm Hanley Kickham, which has been largely successful suing municipalities for excessive water and sewer fees, received a mixed ruling from Oakland County Circuit Court Judge Dan O'Brien on Thursday, July 12, ruling for the township in some instances, and for the plaintiff class in others.

 

Hanley Kickham lawyers argued that Bloomfield Township, like other municipalities, had raised taxes in violation of the Headlee Tax Limitation amendment. O’Brien did not award any damages and urged the opposing parties to continue negotiating.

 

Bloomfield Township residents who had paid the township for water and sewer services since March 31, 2010, had been included in the Oakland County Circuit County suit, Youmans v. Charter Township Bloomfield, which challenged Bloomfield Township's imposition of water and sewer charges as a tax in excess of rates imposed by Southeast Oakland County Water Authority (SOCWA), which resells water to Bloomfield Township from the city of Detroit, and Oakland County Water Resources Commission, which provides sewer services for the township.  

 

The case was tried before O'Brien for the full month of February 2018, who took the case under advisement until July 12. He then read his verdict out loud, over a period of approximately four hours, to the court room, with the ruling not released n writing as some rulings have not yet been determined.

 

“There were seven issues that were made by the plaintiff, over how the township sewer and water department levies its rates,” said Bloomfield Township Attorney Bill Hampton. “The biggest issue was, should the water and sewer rates be paid to the water and sewer fund or to the general fund, which is funded by taxpayer property taxes. 

 

One issue under contention in the lawsuit was the way the township prepares and utilizes its water and sewer charges, and whether it violates the Headlee Amendment by constituting a tax, out of the general fund, or a fee, by being paid out of the water and sewer fund.

 

“If something benefits water and sewer customers, it generally is charged to the water and sewer fund,” Hampton said, explaining that water and sewer are user charges, “so you wouldn't want it paid out of the general fund.” 

 

He said there are also about 210 tax exempt water and sewer properties in the township – such as schools, religious institutions – “but they consume water, but they are tax exempt users because they're not paying into it.”

 

Judge O'Brien ruled in favor of Bloomfield Township, that there was no violation of the Headlee Amendment, “that none of the various issues were a fee,” Hampton reported.

 

Regarding the stormwater charge in the lawsuit, where the plaintiff was requesting $475,000, asserting that the township had overcharged water and sewer customers over the years on pass through fees levied by the Oakland County, O'Brien ruled in favor of Bloomfield Township.

 

On other counts, such as other post employment benefits, known as OPEB, which are medical expenses for retirees, the plaintiffs requested a judgement of $1.058 million, and while the judge found in favor of the plaintiff class, they were not awarded any damages, but were order an unspecified remedy.

 

For rent of a township water and sewer facility, which is in a separate building which pays Bloomfield Township rent, similar to the 48th District Court, the plaintiff requested $1.75 million; the judge ruled in favor of the plaintiff class, but again, did not award damages, but did order a remedy.

 

For water that is used to fight fires in the township, the “public fire protection remedy,” which the plaintiff asserted was money water and sewer customers should not have been paying, they requested $8.4 million for The Maine Curve analysis theory, which deals with stormwater management hydrology and floodwater control, based on population. Judge O'Brien rejected this analysis, ruling for the township.

 

In a second part of public fire protection remedy, the plaintiff class requested $3.7 million based on a violation of the Revenue Bond Act of 1933, which permits bonding for public improvements. Judge O'Brien ruled in favor of the plaintiff, but did not award damages but did order an unspecified remedy.

 

In the lost water category, which was broken down into three categories, the court found in favor of the plaintiff for tap water, but ordered no damages. They were seeking $3.5 million. 

 

For leaks and breaks in water lines, O'Brien told the court he was awarding the plaintiff damages, but that he was leaving  it up to the two sides to come up with what the damages, if any, should be.

 

Approximately 350 township residents are on wells, and are sewer-only customers. The plaintiff sought a claim of damages of $2.1 million for those customers, which O'Brien did not rule out, but did not rule in favor of either. Once again, he told lawyers of both sides it was up to them to work it out.

 

The last claim, on non-rate revenue, which includes interest and penalties, the plaintiffs requests $2.9 million, calculations the court rejected. However, once again, O'Brien did not rule for either party, and did not rule on what damages could, or couldn't be, saying at one point, “They could be as low as $1,” if the plaintiff prevailed.

 

“Until I get the transcript, it doesn't appear the judge ordered a dime against the township,” Hampton said. “But I believe the judge felt there needed to be more transparency in laying out the (water and sewer) rate memos, more clarity and more detail in how the rates are formulated. In those instances where he is ordering a remedy but no damages, I believe he is ordering more transparency in how the township develops its water and sewer rates.”

 

Hampton said it is not a final judgement yet, and there will not be an appeal until a final judgement is given, which could be several months yet. 

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