By Ben Solis
Staff Writer
Posted: May 21, 2023 1:07 PM

The battle over who is to blame for flooding when the Edenville Dam breached in 2020, leading to a downstream failure of the nearby Sanford Dam, is at a crossroads before the Court of Appeals, as affected residents and the state – the defendants in the case – await a resolution on whether claims for damages can proceed.

On Thursday, attorneys for those residents, who sued the state shortly after the event, held a rally and press conference decrying what they called undue delays in the court proceedings by the state raising a governmental immunity defense. The attorneys also said the state has sought appeals that have stayed the case while the Court of Appeals decides the matter without any discovery taking place.

However, the Department of Attorney General, representing the defendant state agencies in Krieger, et al v. Department of Environment, Great Lakes and Energy, et al (COA Docket Nos. 359895-919), have said that the government takings claims raised by the residents is misplaced and that they are protected by governmental immunity. It has also argued that the legal strategy employed by the plaintiffs is forbidden, and that the affected land was never put to public use, let alone the plaintiffs' property that was damaged in the flooding.

Krieger is a class action suit claiming that EGLE and the Department of Natural Resources failed to properly monitor the dam and contributed to the disaster, which could have been averted with proper oversight. The destruction of those residents' personal property, the lawsuit argues, amounts to de facto taking and infringes on their constitutional rights.

The plaintiffs are seeking punitive and compensatory damages, a declaration that EGLE's and DNR's conduct was unconstitutional and an injunctive order to remediate flood damage to private property. The lawsuits also seek to have the court appoint a monitor who will assist in the development of remedial plans including but not limited to repairs and replacement of private property (See Gongwer Michigan Report, June 8, 2020).

The case is currently pending before an appellate panel and awaiting a ruling after being fully briefed several weeks ago.

On Thursday, attorneys Ven Johnson of Ven Johnson Law and Robert Palmer of Pitt McGehee Palmer Bonanni & Stern Group gathered with residents to express their displeasure with the fact that the state has delayed proceedings some three years removed from the flooding event. During that time, some residents have had to pay mortgages on destroyed homes while also paying to live elsewhere.

"We're still on appeal on an issue that the state claims is barred by governmental immunity when it clearly is not. … We normally have deposition after deposition and all sorts of things we could show you that documents what the state did in order to completely ignore a problem that they knew for years was – not if but when – going to happen," Johnson said, surrounded by Sanford residents. "And we have nothing to show for it because the state, who we pay, these folks pay, paid them to do their job which they didn't do. And even worse, they caused the actual catastrophic loss by adding water to a horrible situation, which again, they knew was going to happen. But we have nothing to show for it because of governmental immunity."

Palmer said similarly, stating his belief that the state should be helping these residents in their time of need instead of trying to have the case thrown out and attacking the plaintiff's main argument on appeal.

"I think the state of Michigan should help us but at the same time, I think they should get the message that we are not going away," Palmer said. "We are here, we are fighting this battle as vigorously as we can. We're fighting it on all fronts. We're in all courts. And hopefully in the next couple of months, we'll be back in front of the courts arguing our case because we are not going away. We are here with these people."

The case was initially filed in the Court of Claims, but the state raised a motion for summary disposition based on governmental immunity. Johnson's law firm responded by arguing that governmental immunity in this matter doesn't apply because the plaintiffs raised a constitutional inverse condemnation claim, which is, in their view, a governmental takings claim, said Chris Desmond, an appellate attorney with Ven Johnson Law, in a separate interview with Gongwer News Service.

Michigan courts have held that a governmental immunity defense doesn't exist under a constitutional claim like the one raised by Desmond and Johnson's firm, which was supported by the Court of Claims.

"Just because the government says we're immune doesn't mean it's really the sort of case in which governmental immunity was contemplated as a defense that could lead to an automatic appeal," Desmond said.

However, a Michigan court rule amended in 2002 states that the judiciary must provide an interlocutory right to appeal and automatic stay of proceedings if a party appeals a trial court's denial of governmental immunity.

As such, the state filed an appeal on August 6, 2021, under MCR 7.202 attempting to overturn the Court of Claims order, court records show. On November 8, 2021, a Court of Appeals panel dismissed the state's appeal for lack of jurisdiction. A request for consideration was denied on December 21, 2021.

The state next filed an application for leave to appeal in January 2022, which the Court of Appeals later granted to attach the Court of Claims' order allowing the inverse condemnation claims to proceed. The appeal also stayed proceedings in the Court of Claims, which Johnson and his firm attempted to have lifted but was denied on January 12 of this year.

The case has been fully briefed and the Court of Appeals heard arguments in the matter several weeks ago, and Desmond said his firm is now in a holding period as the Court of Appeals weighs a ruling.

It remains unclear when a ruling will be issued.

While the plaintiffs have asserted that the Court of Claims was correct in allowing the constitutional claims to move forward, the briefs on appeal filed between July 7, 2022, and September 20, 2022, argue otherwise.

The state argued that the plaintiffs' allegations repeatedly cite from, quote, and refer to publicly available government documents – but they mischaracterize those documents. The state further argued that the plaintiffs' allegations contradict what were described as readily accessible public knowledge, and that nothing about Michigan's jurisprudence required courts to assume the truth of an allegation "that the sky is green without looking out the window to see that it is blue."

In that regard, the state argued that the matter arises from a tragic failure of privately owned and operated infrastructure, that the Edenville dam's owners are now bankrupt, and that as part of their effort to recover against someone, the plaintiffs filed what the state called misguided lawsuits against EGLE and DNR.

Although the plaintiffs allege the state negligently regulated the dam, their negligence claims are barred by law and the plaintiffs' attempted to circumvent governmental immunity by labeling their tort claims as inverse condemnation claims, the state argued.

Therefore, the state believes the Court of Claims erroneously allowed claims to proceed despite settled law forbidding the strategy.

Additionally, the state argued that the defendants' regulation of the privately owned and operated Edenville Dam does not even put the dam to a "public use," let alone put the plaintiffs' properties to a public use. Nor is regulation of the private third-party dam an affirmative act specifically aimed at the plaintiffs' property, the state said in its filings.

If the court allowed the claims to proceed, there would be no limit on inverse condemnation claims if people whose property is damaged by a private third party can pursue the government under the Takings Clause simply because the government regulated that private third party.

Aside from the issues in the lawsuit, the Michigan Supreme Court is revisiting the court rule that gives the state or its agents an automatic right to appeal when governmental immunity is denied.

The proposed amendment to MCR 7.202 and MCR 7.209 went out for public comment after being issued on December 21, 2021, and the comment period expired on April 1 of this year. More than 300 comments were collected on the matter, of which Johnson said his firm commented and advocated for the rule to be changed.

Although the public comment period has ended, a public hearing on the amendment is scheduled for Wednesday, June 7, via Zoom beginning at 9:30 a.m. The hearing will offer the public a chance to give supplemental or additional comments on the proposal, and can also be collected as written comments submitted during the hearing.

Asked if the high court's potential amendment would affect the case, Desmond said it was unlikely as the case could be decided before a decision is made on the court rule.

The legal wrangling notwithstanding, Johnson said there remain continued hardships for the residents who were affected by a wholly manmade and state-made catastrophe.

Sanford Village Councilmember Carl Hammond on Thursday recalled being in the thick of the evacuation when the dams failed and expressed dismay that they still have not been able to return home or to life as it once was before the event in May 2020.

"When you go downtown, you see that there's been a lot that's been rebuilt and those businessmen had decided to stay and rebuild, and build this community back," Hammond said. "Every one of them and every one of these people you see behind me are facing double mortgages that we won't pay off in our lifetime. But we stayed and we're rebuilding. The state of Michigan isn't helping us. Those people are elected by the by the public. They're supposed to be there to protect us."

Hammond, who has lived in Sanford since 1967, said residents knew there were problems with the dams in the 1980s.

"The can has been kicked down the road for 35 years. They knew that these dams were going to fail," he said. "The state of Michigan and the federal government kicked the can down the road several times. …They knew that this could happen, but they had no way to fix it. No way to work with private individuals. Now that it's happened, we're going to pay the price."