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  • By Lisa Brody

Plaintiffs awarded $5.4 million more in water suit

Oakland County Circuit Court Judge Dan O'Brien awarded $5.4 million in damages in two parts of a class action suit against Bloomfield Township on Monday, March 18, determining the township should not have been integrating water loss costs into operations, as well as deciding that the township had overcharged sewer customers, and township attorneys said they plan to appeal.

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, asserted there has been an effort on the part of the municipalities to raise revenue in violation of the Headlee amendment. 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. There were seven issues under contention in the lawsuit. A previous portion of the class action lawsuit had been awarded to the plaintiffs, in the amount of $3.8 million, in September 2018, and has been appealed by Bloomfield Township.

Mark Roberts of Secrest Wardle, attorney for Bloomfield Township, said following the verdict, “The initial judgement of $3.6 million for water rates is contrary to about 25 years of township rate setting,” he said, noting that typically the category of water loss costs are integrated into operations maintenance. “The judge interpreted this as separate, and ordered it paid out of the general fund.”

Another aspect of the award was for revenues received for tap fees and late fees, “and other revenues coming into the system other than the sale of water,” Roberts said, noting the costs are spread out amongst all the water customers to determine the water rate. “You want to generate enough revenue to operate the system. The plaintiff contended the township didn't deduct the non-rate revenue from the cost of operating the system, and as a result, the plaintiff asserted, the township was overcharging our customers.”

He said the plaintiff never presented any evidence of total costs versus total revenues. “They just cherrypicked figures from our budgets, and from that budget, the judge awarded the plaintiffs $2,925,063.”

Roger Young, lead counsel on the appeal for the township, said, “We would argue that the judge has a profound misunderstanding of the facts of the case and we are going to argue vigorously and get this overturned on appeal. The position we are going to be taking is you don't cherrypick but have to present a case in totality.”

He said the Michigan Court of Appeals ruled in favor of the cities of Taylor and Westland on June 29, 2018, in similar class action water cases.

O'Brien also awarded the plaintiffs almost $2.2 million over the township's methodology of sewer and water collection, determining they had overestimated sewer flow and therefore were collecting all the revenue needed from their water and sewer customers, and additional revenue from sewer customers was excess.

Roberts said that was not accurate. “I don't agree with the ruling, and I believe the judge made an error in law and in fact.

“Either way, the taxpayers will be paying for this,” he noted. Both portions will be appealed, but it could be as long as 18 months until the Court of Appeals makes a ruling.

Over the last several years, Kickham Hanley PLLC of Royal Oak has filed water and sewer lawsuits against several other municipalities, in the name of a resident, as class action suits. They came to settlements with Royal Oak, for $2 million; Ferndale, for $4.2 million; Waterford for $1.4 million; and Birmingham, for $2.8 million, along with other communities. A class action lawsuit against the city of Westland was dismissed.

“The days of settlement are over,” Young, of Young and Associates, said.

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