CITY OF DETROIT, BY DETROIT WATER v. State, Civ. A. No. 81-74116.

Citation594 F. Supp. 574
Decision Date28 September 1984
Docket NumberCiv. A. No. 81-74116.
PartiesCITY OF DETROIT, a Michigan Municipal Corporation, By and Through DETROIT WATER AND SEWERAGE DEPARTMENT, Plaintiffs, v. STATE of Michigan, Michigan State Department of Transportation, County of Wayne and Wayne County Road Commission, Defendants.
CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)

Lynn Ferris, Asst. Corp. Counsel, City of Detroit, Detroit, Mich., for plaintiffs.

James A. Hourihan, John R. Gerstein, John S. Stanton, Washington, D.C., for Wayne Co. Road Com'n.

MEMORANDUM OPINION

FEIKENS, Chief Judge.

The Detroit Water and Sewerage Department (DWSD) and the City of Detroit bring this action to compel the Wayne County Road Commission (WCRC) to pay the reasonable value of DWSD's collection, transportation and treatment of stormwater that runs off WCRC roads located within the City of Detroit. Plaintiffs argue that they are entitled to payment for these services based on the following theories: the binding effect of two settlement agreements approved by this court, an implied contract, quantum meruit, the requirements of the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. §§ 1251-1376 (1982), and the provisions of Michigan's Revenue Bond Act, Mich.Comp.Laws §§ 141.101-141.139 (1970).

In an earlier opinion in this case, City of Detroit v. State of Michigan, 538 F.Supp. 1169 (E.D.Mich.1982), I held that there was no federal subject matter jurisdiction, reasoning that the FWPCA did not create a private cause of action on behalf of Plaintiffs. However, because the remaining claims were brought in furtherance of the receivership created by this court in United States v. City of Detroit, No. 77-71100 (E.D.Mich.), I held that I had ancillary jurisdiction over these claims.

Both sides now argue that this case can be decided in their favor by summary judgment. After careful consideration of their competing motions, including a review of the papers, depositions, and interrogatories filed by the parties, I conclude that even if the record is viewed in the light most favorable to Plaintiffs, Plaintiffs clearly have not raised a genuine issue with respect to any material fact. See County of Oakland v. City of Berkley, 742 F.2d 289 at 297 (6th Cir.1984); Arrasmith v. Pennsylvania Railroad Co., 410 F.2d 1311, 1313 (6th Cir.1969). Accordingly, WCRC's motion for summary judgment is granted and Plaintiffs' motion for summary judgment is denied.

I. BACKGROUND

The undisputed facts relevant to disposition of these motions are as follows. In 1940, Detroit began to operate a wastewater treatment plant, which treated water flowing through a combined sewer system. A combined sewer system funnels stormwater runoff and sewage through a common system.

According to Plaintiffs, when the system began operation in 1940, no charges were assessed to any user of the Detroit sewage system for stormwater flows. More specifically, although WCRC had assumed jurisdiction over some roads in Detroit since 1912, WCRC was not charged for stormwater that ran off roads within its jurisdiction. Deposition of William B. Carney, at 17 ("Carney Deposition"). Indeed, WCRC was not charged for such runoff at any time prior to January 1, 1980. Id. at 17, 19, 92. Similarly, the City of Detroit "has never paid Detroit Water and Sewerage Department (DWSD) for the treatment of stormwater runoff from City streets." Plaintiffs' Subsequent Answer to Defendant WCRC's Interrogatories, at 2. See also Carney Deposition, at 92.

In 1977, the Environmental Protection Agency (EPA) sued the City of Detroit, DWSD, and the State of Michigan, alleging that Detroit's sewage system did not satisfy the requirements of the FWPCA. Following negotiations between the parties, a consent judgment was entered by this court, requiring the City to adopt a user charge system and have it fully implemented and effective on all bills after January 1, 1980.

A rate plan was adopted by the Detroit City Council on September 19, 1979, and was later approved by the EPA. On October 4, 1979, this court took jurisdiction over all challenges to this plan and ordered that "all users, customers and rate payers of the system" would be bound by the results of any challenges unless they notified the court of their desire to opt out. Order Re Rate Challenges, United States v. City of Detroit, No. 77-71100 (E.D.Mich. Oct. 4, 1979). Prior to a hearing on these challenges, the parties reached a settlement agreement, which was filed with this court on June 30, 1980. On August 26, 1980, this court ordered that "all users, customers and rate payers of DWSD's sewage system shall be bound by the Settlement Agreement." Order of Dismissal Re Rate Challenges, United States v. City of Detroit, No. 77-71100 (E.D.Mich. Aug. 26, 1980).

On March 9, 1981, this court assumed ancillary jurisdiction over challenges to treatment rates that were to become effective on July 1, 1981, again ordering that "users, customers and rate payers of the system" would be bound by the proceedings unless they opted out. Order Re Rate Challenges, United States v. City of Detroit, No. 77-71100 (E.D.Mich. March 9, 1981). After challenges were filed, the parties reached an amicable settlement agreement. Users, customers, and rate payers of the system were afforded an opportunity to object to this agreement, and an order was later issued providing that the terms of the agreement were "binding upon the DWSD and all customers, users, and rate payers." Order of Dismissal Re Rate Challenges, United States v. City of Detroit, No. 77-71100 (E.D.Mich. July 21, 1982).

At issue in this case is DWSD's right to charge WCRC for a portion of the costs associated with stormwater that runs off WCRC roads in the City of Detroit and flows into the treatment system. To compute this charge for the 1980-81 and subsequent rates DWSD first estimated the system's total cost that was attributable to stormwater runoff within the City of Detroit. Carney Deposition, at 51-52, 67, 69. This cost was then allocated between three classes: residential water users, nonresidential users, and state and county roads, based on their relative impervious acreage. Plaintiffs' Answers to Interrogatories From WCRC, at 2.

Hence, in contrast to the practice of the preceding forty years, as of 1980, WCRC was billed for the estimated cost of treating stormwater that ran off roads under WCRC's jurisdiction. At the same time, Plaintiffs continued their practice of not charging the City of Detroit for treatment of water running off streets within the City of Detroit's jurisdiction (i.e., "city streets"). Carney Deposition, at 62. The costs of treating this water from city streets were allocated among the three classes that were paying for runoff in the City of Detroit. Id. at 68. Consequently, in addition to being charged for the estimated costs of water running off roads within WCRC's jurisdiction, WCRC was charged a proportionate share of the cost of treating stormwater running off the city streets. Id.

WCRC has refused to pay any stormwater runoff charge, alleging that stormwater that runs off its roads is not attributable to WCRC and that WCRC should not be considered a user of Detroit's treatment facility. Additionally, focusing on the forty year practice that preceded this charge, WCRC argues that the charge is contrary to an implied contract between Plaintiffs and WCRC and is precluded by the doctrines of equitable estoppel, waiver and laches. Finally, WCRC posits that the charge is arbitrary and capricious, and violates the proportionality requirement of section 1284(b)(1)(A) of the FWPCA. 33 U.S.C. § 1284(b)(1)(A) (1982).

II. DISCUSSION

As I have noted, Plaintiffs have advanced a number of theories on which WCRC might be found liable for runoff charges. Having previously rejected Plaintiffs' cause of action under the FWPCA, I now consider the Plaintiffs' remaining counts in turn.

A. Quasi Contract

The gravamen of Plaintiffs' contractual claim is that a contract should be implied in law based on the Plaintiffs' provision of services to WCRC.1 A contract implied in law is constructive and does not require a meeting of the minds; it is "imposed by fiction of law, to enable justice to be accomplished, even in case no contract was intended." Cascaden v. Magryta, 247 Mich. 267, 270, 225 N.W. 511, 512 (1929); see also Moll v. Wayne County, 332 Mich. 274, 278, 50 N.W.2d 881, 883 (1952), overruled on other grounds, Brown v. State Department of Military Affairs, 386 Mich. 194, 191 N.W.2d 347 (1971). The process of imposing such contracts "to prevent unjust enrichment is an activity which courts should approach with some caution." Hollowell v. Career Decisions, Inc., 100 Mich. App. 561, 570, 298 N.W.2d 915, 920 (1980); see also Cascaden, 247 Mich. at 270, 225 N.W. at 512. "The essential elements of such a claim are (1) receipt of a benefit by the defendant from the plaintiff and (2) which benefit it is inequitable that the defendant retain." Hollowell, 100 Mich.App. at 570, 298 N.W.2d at 920; see also Moll, 332 Mich.App. at 278-79, 50 N.W.2d at 883.

After reviewing the parties' arguments and those material facts that are not in dispute, I have concluded that this clearly is not a case in which a benefit has been received by WCRC, or in which it would be inequitable for WCRC not to compensate Plaintiffs. These conclusions are compelled by a number of considerations.

Initially, I cannot agree with Plaintiffs that WCRC receives a benefit from the treatment of stormwater simply because some of that water runs off WCRC's roads before entering the sewer system. As Plaintiffs concede, WCRC does not create this volume of flow and cannot be held directly responsible for it. Supplemental Brief in Support of Plaintiff's Motion for Summary Judgment, at 10, 11. "Stormwater, unlike sewage or other industrial waste, is obviously a result of weather conditions and the amount of rainfall treated and therefore is not a...

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