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Posted on: June 8, 2017

City of Taylor prevails against water and sewer class-action lawsuit

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The City of Taylor’s aggressive resistance to a class action lawsuit that would have raided its water fund has paid off, as Wayne County Circuit Court Judge David J. Allen dismissed the case today (June 8, 2017).

“We will continue to defend the interests of our residents against unwarranted actions like these,” Mayor Rick Sollars said after learning of the dismissal. “Our residents pay water rates to be used for the purposes of maintaining and improving our water system. That’s exactly how we use our funds. They are not collected to be then handed away to line someone’s pockets as the result of an unwarranted lawsuit.”

Taylor was one of many area cities targeted by Kickham Hanley PLLC, a Royal Oak law firm. The lawsuit  against the City (referred to as Leonard Bohn v. the City of Taylor) contended that its rates are higher than necessary to finance the actual costs of providing water and sewage disposal services; that the City has unlawfully included in its rates an additional charge that is used not to cover actual expenses on providing water and sewer services, but rather to fund the City’s general governmental obligations; and that the City includes in its rates an amount to cover the costs the City incurs for the public fire protection services provided by the water supply system.

But Howard & Howard Attorneys PLLC, representing the City, called the lawsuit “frivolous” and Judge Allen apparently agreed.

In the conclusion of his brief in granting the dismissal of the lawsuit, the judge wrote that “It appears that the Plaintiff has abandoned his claims related to any water rate ‘overcharges.’ Accordingly, those claims should be dismissed. Plaintiff’s claim for sewer rate ‘overcharges’ should also be dismissed because there is no evidence that this rate is an unlawful tax or that the sewer rate is unreasonable. Further, all of the Plaintiff’s claims related to an alleged public fire protection charge as part of water rates should be dismissed because Plaintiff has not met his burden of establishing that such a charge even exists.”

In 2009, Taylor had a sewer fund of roughly $6.2M in unrestricted cash and investments. By June 2016, it had grown to $12.8M. Kickham Hanley claimed that the City rates constituted an unlawful tax and that its rates were unreasonable. But the firm never proved that the rates were unreasonable; in fact, one of its key expert witnesses testified that he did not know what work needed to be done on Taylor’s system, how much money was needed in its reserves, and what a “reasonable rate” for sewer services represented.

In fact, Taylor’s water and sewer rates (as of April 4, 2017) were the second-lowest among 13 surrounding communities.

As to the allegation that the City was using water and sewer funding unlawfully as a fire protection charge, the judge ruled that the allegation was never proven and no evidence was seen to support the claim.

To view the entire court brief, click here

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