Trahey v. City of Inkster, Docket Nos. 320161

• Decision Date: 18 August 2015
• Docket Number: 324564.,Docket Nos. 320161
• Citation: Trahey v. City of Inkster, 311 Mich.App. 582, 876 N.W.2d 582 (Mich. App. 2015)
• Parties: TRAHEY v. CITY OF INKSTER.
• Court: Court of Appeal of Michigan

311 Mich.App. 582

876 N.W.2d 582

TRAHEY

v.CITY OF INKSTER.

Docket Nos. 320161

324564.

Court of Appeals of Michigan.

Submitted Aug. 11, 2015, at Detroit.

Decided Aug. 18, 2015, at 9:10 a.m.

The Nolen Law Firm (by Byron H. Nolen, Plymouth), for Terrance D. Trahey.

The Smith Appellate Law Firm (by Michael F. Smith ) and Allen Brothers PLLC (by Suzanne P. Bartos and David W. Jones, Detroit), for the city of Inkster.

Mark K. Wasvary, PC (by Mark K. Wasvary, Rochester), and Aaron D. Cox for Singh Housing & Investment, LLC, Great Lakes Affordable Housing, LLC, and Gregory Hayden.

Before: OWENS, P.J., and SAAD and GADOLA, JJ.

GADOLA, J.

This case involves plaintiff Terrance D. Trahey's challenge to the water and sewer rates established by the city of Inkster (the city), commencing July 1, 2012. Plaintiff also challenged a bill he received for water and sewer services in July 2012 for $6,903.64¹ after the city installed a new water meter at plaintiff's home and determined that the new meter had a higher reading than the outside meter used to determine plaintiff's prior billings.

In Docket No. 320161, the city appeals as of right a January 23, 2014 judgment, entered following a bench trial. As part of that judgment, the court reduced water and sewer rates for the period beginning July 1, 2012, to the date of the judgment; required that residents be refunded, through a credit to be applied to future water and sewer bills, the difference between the amount owed given the reduced rates and the amount they had paid; and held that the city was estopped from collecting the amount billed to plaintiff for the usage determined from the inside meter in July 2012. In Docket No. 324564, the city appeals, by delayed leave granted, two postjudgment orders entered in response to plaintiff's motion to show cause why the city was not complying with the January 23, 2014 judgment.² In an order dated June 4, 2014, the trial court determined that the city was not in compliance with the January 23, 2014 judgment and ordered the city to follow the terms of the judgment. In an order dated June 16, 2014, the trial court determined that each of the 8,425 water and sewer accounts at issue should be credited $303.78 by June 27, 2014, based on a total credit amount of $2,559,321.63. In Docket No. 320161, we reverse the portion of the trial court's January 23, 2014 judgment reducing the city's water and sewer rates, but remand for further proceedings on the issue of plaintiff's July 2012 water and sewer bill. In Docket No. 324564, we vacate the trial court's June 4 and June 16, 2014 postjudgment orders in their entirety.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff filed the complaint in this case in February 2013. Plaintiff brought the case as a class action, but it was never certified as a class action. Plaintiff's second amended complaint alleged that the city's decision to raise the combined water and sewer rate to $14.64 per unit of water usage violated certain provisions of both the Headlee Amendment, Const. 1963, art. 9, §§ 25 and 31, and § 14.3 of the Inkster Charter, which requires just and reasonable rates. Plaintiff also alleged that the Inkster City Council was grossly negligent by voting to purchase new "smart" water meters without first researching the health concerns and technical problems associated with the meters. Plaintiff asserted that the old metering system consisted of an inside meter connected to an outside meter, which a city employee could read without entering the business or residential property. He alleged that the city was unjustly enriched by charging businesses and residential customers for differences between the inside and outside readings after the new meters were installed or, alternatively, by using the newly established rate of $14.64 to calculate the charge.

When plaintiff filed his second amended complaint, the trial court also granted plaintiff's request for a preliminary injunction, which precluded the city from shutting off water and sewer services for business and residential customers as long as the customers paid their quarterly water bills at a rate of $12.73 per unit. In June 2013, the trial court granted the city's motion for summary disposition with respect to plaintiff's claim that the water and sewer rate violated the Headlee Amendment, but denied summary disposition with respect to plaintiff's claims under the Inkster Charter and for unjust enrichment. Plaintiff then filed a third amended complaint asserting only claims based on the Inkster Charter and the theory of unjust enrichment.

At the bench trial, the city's counsel advised the court that if it determined the city's water and sewer rates were unreasonable, any reduction to the rates would be credited to all residents, regardless of whether the case was certified as a class action. Evidence presented at trial established that the city had entered into a consent agreement with the state of Michigan under former 2011 PA 4³ before raising the combined water and sewer rate to $14.64, effective July 1, 2012. As part of the consent agreement, the city adopted a deficit elimination plan (DEP) for various accounts, including the account associated with the water and sewer department. Testimony revealed that $5.36 of the $14.64 per unit combined water and sewer rate was intended to pay down debt.

The trial court determined that, as a result of past improper borrowing between the city's various funds, at least some of the water and sewer department's debt was not attributable to past water and sewer costs. The court concluded that the debt component of the water and sewer rate should therefore be reduced by 50% under a theory of unjust enrichment, which would reduce the water and sewer rate of $14.64 by $2.68 per unit. After plaintiff's counsel informed the court that the water and sewer rates had again increased effective July 1, 2013, the trial court determined that the debt component of that rate should also be reduced by 50% and refunded to the city's residents.

With respect to plaintiff's claim regarding his July 2012 water bill, the trial court determined that the city was equitably estopped from collecting any charge for past unpaid water usage because when plaintiff purchased his home in 2011, he received information that the title company handling the closing for the sale found no outstanding water bill with the city. Therefore, the trial court determined that the city would be unjustly enriched if it was allowed to collect for the past unpaid usage from plaintiff.

On January 23, 2014, the trial court entered a judgment requiring the city to refund residents the difference between the amount owed given the rates set by the court and the amount the residents had paid over the relevant 16–month period through a water and sewer credit. The court also ordered the city to issue plaintiff a $3,389.14 credit to his water and sewer account for the improper July 2012 water bill. The city appealed the court's judgment in Docket No. 320161.

In April 2014, while the city's appeal was pending before this Court, plaintiff filed a motion to show cause, contending that the city was not in compliance with the January 23, 2014 judgment. At a hearing on June 2, 2014, the city's counsel informed the trial court that the city had credited plaintiff's water and sewer account in May 2014 for the entire amount awarded in the judgment. However, the court found that the city was not in compliance with the other aspects of the judgment. On June 4, 2014, the court ordered the city to issue the appropriate credits to the city's residents in light of the reduced water and sewer rates previously ordered by the court. The court also ordered the city's treasurer to appear to address the city's failure to pay attorney fees and costs to plaintiff's counsel pursuant to a separate January 23, 2014 order. On June 16, 2014, the court ordered the city to credit each of the 8,425 water and sewer accounts at issue $303.78, based on a total credit amount of $2,559,321.63.

II. MOOTNESS

As a preliminary matter, plaintiff argues that the city's appeal of the January 23, 2014 judgment is moot because the city complied with the terms of the trial court's June 16, 2014 order, thereby satisfying the terms of the January 2014 judgment. Plaintiff adds that, with respect to the city's appeal in Docket No. 324564, the city's challenge to the portion of the judgment resolving his responsibility for his July 2012 water bill is also moot because the city credited the appropriate amount before the trial court entered the June 4 and June 16, 2014 orders. The city concedes that it made the credits required by the June 16, 2014 order, but argues that this appeal is not moot because the credits were made involuntarily.

An issue is moot when "an event occurs that renders it impossible for a reviewing court to grant relief." B P 7 v. State Lottery Bureau, 231 Mich.App. 356, 359, 586 N.W.2d 117 (1998). A voluntary satisfaction of a judgment may render a case moot. Horowitz v. Rott, 235 Mich. 369, 372, 209 N.W. 131 (1926). If, however, the judgment is involuntarily satisfied, the appeal is not moot. See Becker v. Halliday, 218 Mich.App. 576, 578–580, 554 N.W.2d 67 (1996) ; see also Kusmierz v. Schmitt, 268 Mich.App. 731, 740 n. 3, 708 N.W.2d 151 (2005), rev'd in part on other grounds 477 Mich. 934, 723 N.W.2d 833 (2006). Generally, "payment or performance following the invocation or threatened exercise of a court's contempt power should not be regarded as voluntary or as constituting a waiver of the right to challenge the court's order." Indus. Lease–Back Corp. v. Romulus Twp., 23 Mich.App. 449, 452, 178 N.W.2d 819 (1970).

In this case, the city filed its appeal from the court's January 23, 2014 judgment before the trial court entered the June 2014 postjudgment orders requiring compliance with the judgment. This Court denied the city's motion for a stay pending the appeal of that judgment. Trahey v. City of Inkster,...