Farms agrees to $4 million settlement in 2011 sewage backup lawsuits

By: K. Michelle Moran | Grosse Pointe Times | Published October 3, 2017

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GROSSE POINTE FARMS — More than six years after hundreds of Grosse Pointe Farms residents experienced basement sewage backups — with some homes being hit as many as three times in a matter of months — the city has reached a settlement in class action litigation spurred by the backups.

During a special meeting Sept. 25, the Farms City Council unanimously approved a proposed settlement of $4 million for all claims related to the 2011 flooding, which included widespread sewage backups in May and September. Some homes also experienced backups in July 2011, but the focus of the lawsuits against the city were the May and September 2011 events. The settlement, if it gets final approval from Wayne County Circuit Court and the plaintiffs, would resolve 593 residential claims, Farms officials said.

“This is the second-largest settlement achieved by this firm for (a lawsuit against) a single city,” said attorney David Dubin, of the Detroit-based firm of Liddle & Dubin P.C., which handled the case.

He said an estimated 355 households were involved in litigation against the city.

“The settlement provides for a $4 million fund for those affected by the backups,” Dubin said. “This is a wonderful settlement for the residents who have been participants (in legal action against the city).”

City Attorney William Burgess said the city has “been a party in 16 related flooding cases” from 2011, but those cases, for the purposes of the Sept. 25 meeting, “have proceeded on a class basis.”

The settlement “includes no admission of fault on the part of the city,” according to a press release.

The city’s liability insurance carrier isn’t providing any of the funding toward the settlement, City Councilman John Gillooly said after the meeting.

Mayor James Farquhar said after the meeting that the city believes it should be able to cover the settlement costs without raising the current millage rate. Although the city will likely need a new bond to cover the settlement — and additional system improvements — he said some other debt will be coming off the tax rolls soon, and with the Farms’ AAA bond rating, it should be able to get financing at the best available rates.

“We’re hoping to maintain the millage (rate),” Farquhar said. “I think we can (cover the costs) without costing the taxpayers any more money.”

The city’s Budget and Audit Committee has met already to discuss financing for the settlement and forthcoming improvements.

“This represents a significant investment towards those who live and work in the city of Grosse Pointe Farms, and financing and putting these lawsuits to closure and committing to millions in future infrastructure repairs will be of great benefit not only to those whose basements were (flooded) but also to everyone who lives in the city,” Gillooly said after the meeting.

As part of the settlement, the city has agreed to allocate additional funding toward future sewer system improvements, Burgess said. Those improvements would likely be decided upon after the current study of the city’s remaining combined sewer system district, the Inland District. Burgess said the city was “not prepared now” to say when it would be undertaking more improvements or how much those would cost; he said city officials don’t expect to know that until next year.

About 20 years ago, for the purposes of a sewer separation project, the Farms was split into two districts, with Ridge Road as the rough dividing line: The 880 acres from Ridge to Lake Shore Road constituted the Lakeside District, and the 907 acres west of Ridge constituted the Inland District. Circa 1999, the formerly combined storm and wastewater sewage lines were separated in the Lakeside District, which freed up some capacity in the remaining combined sewer system. The steep price tag prevented the city from separating its entire sewer system 20 years ago; in 2011, engineers from Hubbell, Roth and Clark said that the cost to separate the Inland District circa 1999 was approximately $28 million, even without disconnecting all of the home footing drains.

Residents also need to take steps to protect their homes and those of their neighbors against potential future backups by disconnecting downspouts, installing backflow preventers, and having lateral lines from the house to the street snaked out every couple of years because tree roots can get into and clog these lines, Gillooly said.

“It’s very important for the residents to be proactive,” Gillooly said. “The residents have to take part; the city has to take part.”

The Farms won’t be involved with the individual claim allocations, said Burgess, pointing out that this will be handled by attorneys representing the residents and Wayne County Circuit Court. He said the court needs to approve the final settlement.

The legal battle hasn’t been cheap. City Manager Shane Reeside said by email that over the past six years, the Farms’ “total legal costs have approached $1 million.”

Dubin said other sewage backup lawsuits his firm handled for claims from May 2011 were settled several years ago. The appeal period in this case alone took roughly three years, he said.

“They had counsel that represented them very well,” Dubin said of the Farms.

Because of the length of the litigation, Dubin said some of the affected residents have since moved, and some have died. He said the attorneys have tried to keep track of everyone involved in the litigation.

The city acknowledged that this has been a long process.

“We’ve participated in fairly lengthy settlement negotiations,” Burgess said.

Now that the suit has been settled, Dubin said residents who were part of the lawsuit will have until Nov. 17 to submit their claims to his office. Anyone who wishes to raise an objection to the settlement must submit that in writing to his office by Oct. 30, he said. Dubin said his firm sent out notices to residents involved in the suit on Sept. 28 with the forms, so anyone who hasn’t gotten their paperwork by this week should contact Katie at Liddle & Dubin at (313) 392-0015.

Some residents impacted by the backups aren’t eligible for the settlement. Dubin said only residents who signed on to the class-action lawsuit by the deadline several years ago are entitled to a share of the settlement. Dubin declined to provide the range that settlement victims are likely to receive, but did say that those with the most damage would receive the highest shares. The idea, said Dubin, is to make the victims as whole as possible, based on the amount of damage they experienced.

“There is a possibility the settlement could be revoked,” Burgess said. He said that if 10 percent or more of the residents involved in the litigation, or 10 percent or more worth of claims — $400,000 or more — were to opt out of the settlement, the city retains the option to revoke the settlement.

If the settlement does go through, “the city will, of course, receive full and final release from all of the claims,” Burgess said.

Dubin said that the reason residents experienced the sewage backups was “human neglect,” placing blame for the incidents on the city and what he said was a failure to take appropriate steps to make sure such backups never occurred.

Without the lawsuit, said Dubin, “there would have been no incentive (for the city) to make improvements to the Kerby Road pump station. … It’s cheaper to discharge (sewage) into people’s basements than to spend millions to make improvements.”

Reeside staunchly refuted that allegation, saying that the city has long had a practice of fixing and upgrading its infrastructure.

“Over the past 20 years, the city has averaged more than $1.5 million annually in improvements to the infrastructure of the city’s sewer system,” Reeside said by email. “This includes $3.5 million in upgrades and installation of a generator at the Kerby Road Pump Station subsequent to 2011. The city has and continues to significantly invest in critical infrastructure.”

At the time of the 2011 backups, city officials and the city’s engineers determined that a combination of unusually heavy rains and DTE Energy power surges that impacted the Kerby Road pump station led to the basement flooding.

“It has been six years of legal challenges and negotiations, and going to trial could take many more years,” Farquhar said in a prepared statement. “The flooding in 2011 was a significant hardship to many of our residents, and we believe that it is in everyone’s best interest to move forward as a community and to continue our improvements to the system.”

While residents have gone on with their lives and have repaired their homes, the sentimental items lost to the backups have proven to be the hardest ones to accept. Residents told stories of keepsakes, photos, wedding dresses and other cherished objects that had to be thrown away after they became contaminated with sewage.

“Really, at the end of the day, the emotional distress associated with your loss and sense of security cannot be compensated,” Dubin said. “No matter how much money, that can never be replaced.”

Liddle & Dubin is also representing residents in Grosse Pointe City and Park who experienced basement sewage backups in 2016. Dubin said at press time that those cases were “still in the discovery phase.”