ZAC shareholders Andrea Johnson and Amy Applin, assisted by associate Jessica Kingston, scored two victories – one from the trial court and another from the Michigan Court of Appeals – in a complicated multimillion dollar lawsuit that several municipalities have been litigating since 2012.
The suit centered around the Southern Regional Interceptor sewer system that was intended to transport wastewater from Hanover Township and Liberty Township to a treatment facility operated by Leoni Township. The sanitation project, initiated under a state statute enabling Michigan counties to establish public works and acquire sewage disposal systems, was funded by a 2006 bond contract with Jackson County and Leoni Township. Under the contract, Leoni Township was obligated to make note and bond payments, with contributions from the other townships for additional funds if needed. When Leoni Township failed to meet its financial obligations, it sought increases from the other townships – including ZAC’s client, Columbia Township – and eventually filed suit in 2012 against the other municipalities to recover the funds.
In 2013, Columbia Township succeeded on a motion for summary disposition that sought to dismiss Leoni Township’s action on the grounds that the governing statute gave only Jackson County—and not Leoni Township—the authority to direct the townships to increase their contributions. The Jackson County Circuit Court granted the motion in December 2013 and dismissed the case, holding that since Jackson County didn’t file the suit, Leoni Township did not have standing under this contract to bring the action. Leoni Township appealed, but in an opinion issued on July 20, 2017, the Michigan Court of Appeals affirmed the grant of summary disposition, agreeing with Amy’s compelling argument in support of the trial court’s decision.
While the appeal was pending, Leoni Township failed to tender the June 1, 2015 and December 1, 2015 bond payments to Jackson County, forcing the County to cover the obligations. The County and its Board of Public Works then sued Leoni Township for breach of contract and account stated pursuant to the bond contract. Leoni Township then filed a third-party complaint against the other townships, which added additional claims for relief but essentially attempted to re-litigate the prior action that was dismissed.
Andrea filed another motion for summary disposition on Columbia Township’s behalf. The motion was originally denied by the trial court. After an amendment of the complaint and a subsequent motion for summary disposition and motion for reconsideration of the original denial, the court reversed its opinion and dismissed all claims against Columbia Township in a June 27, 2017 opinion and order.
Given the size and scope of the wastewater treatment project and the public bond issue that funded it, Columbia Township faced millions of dollars in potential exposure in these matters, which Andrea and Amy helped them to avoid.