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A Better Partnership
February 01, 2016

COA – Municipality allowed to treat water service arrearages as a lien and place them on municipality’s tax rolls

By reading three statutes, which all relate to the collection of monies for water services, together as a one law, the Court of Appeals held that a municipality could place water service arrearages on the municipality’s tax rolls in NL Ventures VI Farmington, LLC v. City of Livonia, No. 323144.  The trial court erred in reading MCL 141.101, et seq., MCL 123.161 et seq., and Livonia Ordinances, § 13.08.010, et seq. as separate, unrelated statutes.  Because these statutes “provide mechanisms for the collection for water services that have been rendered but where payment . . . has fallen into arrears,” they had to be read as one law.  Accordingly, the City of Livonia (the “City”) was permitted to place the water service arrearages of NL Ventures VI Farmington, LLC (“NL Ventures”) on the municipality’s tax rolls.  Further, the Court concluded that NL Venture’s claims against the City for tortious interference and civil conspiracy were shielded by governmental immunity because the City was engaged in a governmental function in collecting water charges.
The City used its authority under Livonia Ordinances, § 13.08.010, et seq. to place NL Venture’s delinquent water service charges on the City’s tax rolls.  NL Venture’s filed this lawsuit challenging the City’s placement of the arrearages on the City’s tax rolls.  In its analysis, the Court looked to the statutory language due to the lack of published case law.  Under MCL 123.161 et seq., a municipality can collect water service charges and to provide a lien on the property to which the water was supplied.  In addition, a municipality has discretion in the manner in which it collects on these liens.  MCL 141.101 et seq., prohibits free service furnished by a public improvement to a person or corporation and gives discretion to a municipality to adopt ordinances to provide for the adequate operation of a public improvement.  Using the power and discretion given to it by these two statutory schemes, the City passed Livonia Ordinances, § 13.08.010, et seq., which allows the City to take the lien placed on a property for delinquent water service charges and ultimately to place it on the City tax roll.  The Court of Appeals upheld this ordinance and the City’s exercise of authority.  In holding that the trial court erred in failing to read all three statutory schemes together as one law the Court vacated the trial court’s ruling and remanded the case for further proceedings.
NL Ventures also claimed tortious interference and civil conspiracy against the City.  It claimed that the City interfered with a lease with its tenant, Awrey Bakeries, LLC.  The Court of Appeals dismissed these claims due to the City’s governmental immunity.  According to the Court, NL Ventures failed to allege that the tortious interference occurred while the City was engaged in a nongovernmental function or that a statutory exception to governmental immunity applied. 

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