In 2001 the State of Michigan enacted Public Act 222 (MCL 691.1416 seq.) to provide a statutory exception to governmental immunity for sanitary sewer backups onto real property. Prior to Act 222, the legal theory used by plaintiffs to recover for sewer backup events was the Trespass-Nuisance exception. That common law action carried strict liability for property damages upon a simple showing that sewage or water in a basement came through a sanitary drain. Following a number of unusually large rainstorms from 1998-2000, this law led to a number of class action suits with no statutory basis and no practical defense. Legal actions followed that essentially eliminated the Trespass-Nuisance cause of action. In its place, the legislature passed Public Act 222. Its purpose is set forth to “afford property owners, individuals and government agencies greater efficiency, certainty and consistency in the provision of relief from damages or physical injuries caused by a sewage disposal event.” The Act establishes a form of negligence action that requires showing a “defect” within the sewer system that a community knew or should have known about, which was a substantial proximate cause of claimant’s damages.
In practice, Act 222 has proven to be a fundamental failure and its continued application poses a threat to infrastructure repairs, government budgets and taxpayers throughout the State. For example, Act 222 contains insufficient notice periods for claimants and a community’s time to investigate and respond. These are complicated hydraulic events that are usually accompanied, if not solely caused, by unusual wet weather. The statutory notice period to a claimant that a different governmental entity’s sewer system may be a cause of their backup is so short that communities routinely copy all other adjoining locations with every claim they have received. The notice of claim itself has no statutory requirements for sufficiency beyond the 45 day limitation period. Most notices are one paragraph, devoid of any facts related to “defects” or causes. Various insurance companies now routinely file notices as subrogees for any claims they resolve and almost never cite any causation. On an individual basis, these incidents can be manageable problems. When the suit involves regional events, such as June 5 and 6, 2010 or August 11, 2014, the statute leads to unintended and fiscally catastrophic risk for Michigan communities.
Public Act 222 places no limits on claims for damages. Insurance companies all cap flood damages. Municipal liability pools no longer offer flood policies or offer limited coverage. No entity offers full coverage for flood damages. It does not allow an entity to assert dispositive defense when a system was constructed to conform to specific engineering requirements that have been revised over the scores of years most systems were built. Act 222 does not recognize a community’s right to prioritize fiscal spending of limited resources between competing public necessities like police, fire or any other category of expenditures. It ignores the impact of unusual wet weather events. Its vague or overly-broad definition of “defects” allows the same types of cases to be brought that were common under Trespass-Nuisance. It does not take into consideration the regional nature of modern sewer systems. It ignores the reality that costs associated with sewer system maintenance and construction usually entail seeking state or federal funds. It does not recognize that a “reasonable time” to perform system upgrades, modification and underground construction is better measured in a decade than a year. In the common class action 3-4 years passes between the event and any resolution.
Unless Act 222 is reformed, issues will continue to delay relief, engender inconsistent results and impair fiscally rational budgets for communities.
Greg Roberts is a partner in our Livonia office where he concentrates his practice on municipal law, personal injury defense litigation, law enforcement, and employment and labor law. He may be reached at (734) 261-2400 or firstname.lastname@example.org.