Morley v. Mich. Sugar Co.

• Decision Date: 18 November 2021
• Docket Number: 354085
• Parties: MIKKIE MORLEY, JONATHAN MORLEY, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellants/Cross-Appellees, v. MICHIGAN SUGAR COMPANY, Defendant-Appellee/Cross-Appellant.
• Court: Court of Appeal of Michigan — District of US

MIKKIE MORLEY, JONATHAN MORLEY, on Behalf of Themselves and All Others Similarly Situated, Plaintiffs-Appellants/Cross-Appellees, v. MICHIGAN SUGAR COMPANY, Defendant-Appellee/Cross-Appellant.

No. 354085

Court of Appeals of Michigan

November 18, 2021

UNPUBLISHED

Bay Circuit Court LC No. 19-003525-NZ

Before: Swartzle, P.J., and Sawyer and Letica, JJ.

PER CURIAM.

Michigan Sugar Company has been processing beets and turning them into sugar since 1901. This process has the unfortunate side effect of creating strong odors that expand to the homes in the surrounding area. Mikkie and Jonathan Morley purchased a home near Michigan Sugar in May 2016; they did not notice any odors when they first moved in, but did notice them in the fall. The Morleys sued Michigan Sugar alleging both nuisance and negligence. The trial court granted summary disposition to Michigan Sugar, concluding that although the Morleys alleged a sufficient injury to sustain their negligence claim, they failed to exhaust their administrative remedies as required to sustain their nuisance claim and the statute of limitations barred the Morleys' negligence claim. As explained below, we affirm dismissal of both claims, albeit for a different reason with respect to the negligence claim.

I. BACKGROUND

Michigan Sugar, previously known as Monitor Sugar Company, began sugar-processing operations in 1901. The 175-acre processing facility is located in Bay City, Michigan, adjacent to residential neighborhoods. Michigan Sugar uses the facility to process sugar beets into "sugar, molasses, and other organic byproducts which it sells for other uses, including animal feed." Michigan Sugar's primary sugar product is sold under the brand labels "Pioneer Sugar" and "Big Chief Sugar."

As alleged by the Morleys in their class-action complaint Michigan Sugar's processing operation is separated into "campaigns" that start in the fall and end in the spring. During each campaign Michigan Sugar processes beets and turns them into table sugar. This process creates a large amount of waste, and the waste creates noxious odors. Given the size of Michigan Sugar's operation, the noxious odors caused by this process extend to the surrounding area.

In 2003, a group of individuals who lived and owned property near Michigan Sugar's plant filed a class-action lawsuit against Michigan Sugar's predecessor. The parties eventually settled the dispute, and Monitor Sugar agreed to alter its operating procedures in specified ways to mitigate the odors and dust that were invading the relevant properties. So long as Monitor Sugar remained in compliance with the settlement agreement for a period of two years after final court approval of the settlement agreement, all of the plaintiffs in the certified class were precluded from filing a lawsuit related to Monitor Sugar's emissions of air contaminants, odors, or particulates. The plaintiffs however, were permitted to communicate with Monitor Sugar and the Michigan Department of Environmental Quality^[1] regarding any such issues during those two years. The settlement agreement required all of the plaintiffs to release Monitor Sugar from any claims regarding the diminishment in value of their property resulting from Monitor Sugar's actions any time before final approval. The release ran with the property, and all subsequent transfers of ownership of class member real estate required advising the prospective owner "of the existence of this settlement in writing prior to any transfer of the interest."

The company's mitigation efforts worked and the noxious odors lessened for a few years. But a new class-action lawsuit was filed in 2016 against the successor company, Michigan Sugar, by homeowners and residents located within 1 ½ miles of the facility. The plaintiffs in that 2016 action alleged that the number of documented complaints to the EGLE had risen dramatically since 2009, culminating in a seven-fold increase between 2014 and 2015.^[2] The plaintiffs alleged that these complaints related to noxious odors from Michigan Sugar's facility and that these odors amounted to a nuisance and negligence. Michigan Sugar moved for summary disposition, arguing that the plaintiffs' claims were time-barred by the applicable three-year statute of limitations and that the plaintiffs failed to allege a physical injury to support their negligence claims. The trial court denied Michigan Sugar's motion, and Michigan Sugar appealed to this Court. This Court reversed, concluding that because the plaintiffs' allegations revealed several complaints occurring before November 7, 2013—the date three years before the plaintiffs filed the complaint— "[a]lthough the record reflects that the number of complaints increased during 2013 and thereafter, plaintiffs' allegations establish that the alleged wrong caused [the] plaintiffs' alleged nuisance injuries long before November 7, 2013." Burton v Mich. Sugar Co, unpublished per curiam opinion of the Court of Appeals, issued March 14, 2019 (Docket No. 341155), p 6. Because this issue was dispositive, this Court declined to address Michigan Sugar's contention that the plaintiffs had failed to assert a present physical injury to property or person. Id. Consistent with this Court's opinion, the circuit court dismissed the Burton complaint as time-barred.

The Morleys filed the instant class-action complaint about five months later. The Morleys alleged that a properly operated sugar beet-processing plant would not cause noxious odors. They further alleged that the noxious odors created by Michigan Sugar's plant deprived them of the use and enjoyment of their property and amounted to a nuisance and negligence. According to the Morleys, many residents complained about Michigan Sugar to the EGLE, resulting in the EGLE issuing at least 15 rule violations to Michigan Sugar in 2016 and 2017. The Morleys, however, did not allege that they filed any complaints with the EGLE.

Michigan Sugar responded by moving for summary disposition, arguing that the Morleys' nuisance claim was barred because they failed to exhaust their administrative remedies under the Michigan Agricultural Processing Act, MCL 289.821 et seq. Michigan Sugar based this argument, in part, on a memorandum of understanding between the Michigan Department of Agriculture and Rural Development (MDARD) and the EGLE, under which the former department delegated its duty to "[i]nvestigate environmental and nuisance complaints involving agricultural processing operations" to the EGLE. Michigan Sugar additionally argued that the statute of limitations barred the Morleys' negligence and nuisance claims and that the Morleys failed to allege a sufficient physical injury to sustain their negligence claim.

The trial court concluded that the Morleys failed to exhaust their administrative remedies and that it was bound by this Court's prior opinion in Burton to conclude that the statute of limitations barred the Morleys' claims, but that the Morleys did allege a physical injury. Thus, the trial court granted summary disposition to Michigan Sugar on exhaustion and statute-of-limitations grounds, but denied summary disposition on the physical-injury ground. This appeal followed.

II. ANALYSIS

A. EXHAUSTION OF ADMINISTRATIVE REMEDIES

The Morleys argue that the trial court erred by concluding that they failed to exhaust their administrative remedies under the Michigan Agricultural Processing Act. "We review de novo a trial court's decision to grant or deny a motion for summary disposition." Sherman v City of St Joseph, 332 Mich.App. 626, 632; 957 N.W.2d 838 (2020) (citations omitted). This Court also reviews de novo questions regarding jurisdiction raised under MCR 2.116(C)(4). Meisner Law Group, PC v Weston Downs Condo Ass'n, 321 Mich.App. 702, 713-714; 909 N.W.2d 890 (2017). "Summary disposition for lack of jurisdiction under MCR 2.116(C)(4) is proper when a plaintiff has failed to exhaust its administrative remedies." Braun v Ann Arbor Charter Twp, 262 Mich.App. 154, 157; 683 N.W.2d 755 (2004).

As explained by this Court in Meisner Law Group, 321 Mich.App. at 714:

A trial court is duty-bound to recognize the limits of its subject-matter jurisdiction, and it must dismiss an action when subject-matter jurisdiction is not present.

MCR 2.116(C)(4) permits a trial court to dismiss a complaint when the court lacks jurisdiction of the subject matter. A motion under Subrule (C)(4) may be supported or opposed by affidavits, depositions, admissions, or other documentary evidence. When affidavits, depositions, admissions, or other documentary evidence are submitted with a motion under MCR 2.116(C)(4), they must be considered by the court. So, when reviewing a motion for summary disposition brought under MCR 2.116(C)(4) that asserts the court lacks subject-matter jurisdiction, the court must determine whether the pleadings demonstrate that the defendant is entitled to judgment as a matter of law, or whether the affidavits and other proofs show that there was no genuine issue of material fact. [Cleaned up.]

A plaintiff need not pursue administrative remedies if doing so would be futile through no fault of the plaintiff. Manor House Apartments v City of Warren, 204 Mich.App. 603 605; 516 N.W.2d 530 (1994). It is the plaintiff's burden to show that administrative remedies have been exhausted or doing so would be futile. Cummins v Robinson Twp, 283 Mich.App. 677, 713; 770 N.W.2d 421 (2009). When construing a statute, we do not defer to the construction adopted by a trial court or administrative agency. Stirling v County of Leelanau, ___ Mich. App___, ___; ___N.W.2d ___(2021) (Docket No. 353117), slip op at 2 & n 2. "With respect to statutory interpretation, this Court is required to give effect to ...