MICHIGAN SUPREME COURT REFUSES TO RESTRICT INVERSE CONDEMNATION IN FLINT WATER CASE

Last week, the Michigan Supreme Court declined to adopt a narrow view of the unique or special injury element in inverse condemnation, allowing Flint water plaintiffs’ case to proceed.

The tragic events in Flint, Michigan relating to tainted water are well-known throughout the country.  Not surprisingly, they resulted in litigation.  Last week, the Michigan Supreme Court issued 132 pages of competing opinions. A clear majority of the Court declined to dismiss inverse condemnation claims made by Flint residents.  

First, the Court explained what inverse condemnation involves. “A claim of inverse condemnation is ‘a cause of action against a governmental defendant to recover the value of property which has been taken . . . even though no formal exercise of the power of eminent domain has been attempted by the taking agency.’  …  ‘Inverse condemnation can occur without a physical taking of the property; a diminution in the value of the property or a partial destruction can constitute a ‘taking.’” The majority then identified the elements for inverse condemnation. The Court did not break any new ground, relying upon past precedents. “‘[A]  plaintiff  alleging  inverse  condemnation  must  prove  a  causal  connection between the government’s action and the alleged damages.’ … Government actions directed at a plaintiff’s property must have ‘the effect of limiting the use of the property.’ … ‘[A]ll of the [defendants’] actions in the aggregate, as opposed to just one incident, must be analyzed to determine the extent of the taking.’ … A plaintiff ‘must establish (1) that the government’s actions were a substantial cause of the decline of the property’s value and (2) that the government abused its powers in affirmative actions directly aimed at the property.’”

The Court then identified a limiting factor, the requirement that “[t]he  right  to  just  compensation,  in  the  context  of  an  inverse condemnation  suit  for  diminution  in  value . . . exists  only  where  the landowner can allege a unique or special injury, that is, an injury that is different in kind, not simply in degree, from the harm suffered by all persons similarly situated.” The interesting part of the Court’s inverse condemnation discussion centers on their evaluation of this element. Obviously, whether a landowner suffers a unique or special injury is dependent upon the group of people to which the landowner is compared. If an entire community is affected by a government’s action and the comparative group is that community, then their injury is not unique. This is essentially what the defendants argued. “[D]efendants attempt to define those similarly situated to plaintiffs as other Flint water users. Defendants then contend that plaintiffs’ injury is no different in kind from the harm suffered by those individuals and, thus, plaintiffs’ inverse-condemnation claim fails.” The Court rejected this narrow view based upon multiple precedents from both the United States and Michigan Supreme Courts.

“In Richards v Washington Terminal Co, 233 US 546, 554; 34 S Ct 654; 58 L Ed 1088 (1914), the United States Supreme Court held that residents whose homes were located near a railroad tunnel could not state a claim of inverse condemnation for cracks in their homes caused by vibrations from adjacent trains, because anyone living near a railroad risked similar harm. However, the Court concluded that the plaintiffs could state a claim of inverse condemnation for damage caused by a fanning system within the tunnel that blew pollutants into their homes, because that harm was unique to the plaintiffs given how the plaintiffs’ property was particularly situated in relation to the rail tunnel.”

“[I]n Thom v State Highway Comm’r, 376 Mich 608, 628; 138 NW2d 322 (1965), this Court concluded that compensation must be awarded to a farmer whose property was ‘destroy[ed] or . . . interfere[d] [with] seriously’ by a change in the grade of an improved road passing by his land.”

The Supreme Court analyzed these cases to identify the comparative group for purposes of establishing whether injuries are unique, asserting that “the United States Supreme Court and this Court have compared the plaintiffs to a generalized group of individuals.” For example, “the United States Supreme Court compared the plaintiffs to all property owners who lived next to the railway, not those whose property was also in close proximity to the rail tunnel’s fan system…. Although members of the public share a ‘common burden’ for the benefit of railroads that includes noise and vibration, the direct fanning of train pollution into a home was deemed to be a unique and uncommon burden that rendered the harm a compensable taking.”

The Supreme Court also engaged in an interesting analysis about the second element of inverse condemnation, the requirement that government actions were directed at the plaintiffs’ property. “With respect to the second element of an inverse-condemnation claim, defendants argue that plaintiffs have failed to allege that they abused their powers and took affirmative actions  directed  at  plaintiffs’ property.    Again,  we  disagree. Plaintiffs  allege  that defendants  committed  an  affirmative  act  directed  at  their  property when the state defendants authorized the city defendants to use the Flint River as an interim water source while both sets of defendants knew that using the river could result in harm to property.  Defendants then allegedly concealed or misrepresented data and made false statements about the safety of the river water in an attempt to downplay the risk of its use and consumption.” As it relates to this issue, defendants from the State of Michigan pointed the finger at the defendants from the City of Flint.The facts identified by the Court to allow the case to proceed against the state actors include both approval of the City’s plan and after-the-fact efforts to cover up the negative impacts. The Court does not state whether it was necessary to allege both actions or whether either action standing alone sufficed to bring the claim. Logically, if the switch from one water source to another was required to be approved by the State, then that approval standing alone should suffice to create joint liability. Further, given that the Supreme Court previously recognized compensation for a temporary taking is payable for the “period during which the taking was effective,” Poirier v Grand Blanc Twp, 167 Mich App 770, 777; 423 NW2d 351 (1988), an allegation that a party participated in a cover up that extended the period of the taking should also be actionable.

This case is positive for property owners alleging inverse condemnation. While it does not change the underlying elements for a claim, the Supreme Court clarifies the elements and rejected the narrow views asserted by the defendants.

I have extensive experience handling inverse condemnation matters.  Please feel free to contact me if you are experiencing government action that you believe may be actionable.