Legislature, Court Jump into the Sewer Back Up Cesspool

After years of avoiding the sewer overflow issue, the legislature and Michigan Supreme Court finally jumped into the mess in early 2002 after most or all of the insurers in the state were forced to restrict or eliminate coverage for the exposure. Public Act 222 of 2001 (effective January 2, 2002) and the supreme court decision in Pohutski v Allen Park/Jones v Farmington Hills may help clarify municipal liability for sewer back ups - at least going forward, that is. For the thousands of homeowners with claims already pending when the Pohutski/Jones decision came down - and the governmental agencies that have millions at stake - the waters have been significantly muddied.

Under PA 222 (2001), governmental agencies are now responsible for direct and indirect storm or sewer back ups that are the result of a construction, design, maintenance, operation or repair defect that is more than 50% the cause of a plaintiff's injuries or damages. Plaintiffs are required to report claims in writing within 45 days, and damages for pain and suffering are only recoverable in cases of death, serious impairment of a body function or permanent, serious disfigurement. The new statute may limit some claims against governmental agencies - particularly in instances where the loss is minor - and it will help clarify the standard that they will be held to when the back ups occur. It is unlikely, however, that governments will see any significant relief from liability for catastrophic back up events. It is clear that in those cases, the new statute won't prevent courts from subjecting governmental defendants to jury trials no matter what circumstances caused the flooding.

In Pohutski/Jones, the Supreme Court confirmed that going forward, there is no trespass-nuisance exception to governmental immunity, and that Public Act 222 is the new legal standard in sewer back up cases. While that is helpful, the court chose to add a major layer of confusion to the thousands of claims and millions of dollars in lawsuits that are already awaiting resolution by ruling that those cases must be decided under the 1988 Hadfield v Oakland County Drain Commissioner case. The problem with Hadfield is that it was so poorly written and confusing that nobody has ever been able to agree on what it means. The same circumstances that might result in a dismissal by one judge applying Hadfield might result in a holding of strict liability by another. Although Pohutski contains a vague message directing the lower courts to reconsider some of their previous rulings on how the law should apply, circuit court judges will have great difficulty resolving the legal questions raised by the decision on a consistent basis. The net result for the homeowners, businesses and governmental defendants who must continue to try and sort these cases out will be prolonged litigation, greater uncertainty and increased costs.

Is it all doom and gloom? No. Even though Pohutski and PA 222 have their shortcomings and can't possibly answer all of the issues connected to sewer back ups, at least on a prospective basis, they are both a step in the right direction.