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Published in Michigan Environmental Law Journal, Spring–Summer 2016, Vol. 34, No. 1, Issue 101 [view full issue].
Cite: 34 Mich Env Law J 1 (2016)

Court of Appeals Invokes Doctrine of Primary Jurisdiction to Dismiss Environmental Tort Claims "Entangled by Administrative Law"

by Douglas G. McClure, Conlin, McKenney & Philbrick, PC

Liable parties remediating groundwater contamination are required by the Natural Resources and Environmental Protection Act (NREPA) to provide notice to offsite property owners when the contamination migrates to below their properties.[1] Sending a notice of offsite migration of contamination can sometimes lead the recipient to sue, alleging that the contamination resulted from negligence, or constitutes a nuisance condition, or a trespass. Such lawsuits can include allegations that the contamination has reduced the fair market value of the noticed party's property, and may also include claims for statutory relief under Part 201 or Part 213 of NREPA. There are high hurdles to environmental tort claims in Michigan. In 1992, the Michigan Supreme Court held that an alleged diminution in fair market value is not a legally significant interference with use and enjoyment of property to support a nuisance claim.[2] In 2005, the Supreme Court held that "mere" exposure to a hazardous substance is not a legally cognizable tort injury, and that a plaintiff must allege and prove a "present physical injury" in order to have a legally cognizable claim in tort.[3] In 2013, the Supreme Court held that damages for emotional distress were not recoverable in cases of environmental contamination of property.[4]

In Carson City Hospital v. Quick-Sav Food Stores, Ltd.[5], decided on April 28, 2016, the Michigan Court of Appeals used a different and potentially broader rationale for dismissing environmental tort claims—the doctrine of primary jurisdiction.

Drawing on the precedents set in two non-environmental cases, Attorney General v. Blue Cross Blue Shield of MI[6] and Travelers Ins. Co. v. Detroit Edison Co.[7], the Court of Appeals held that it was "compelled to conclude that the trial court properly invoked the doctrine of primary jurisdiction" and upheld the dismissal of plaintiff's complaint, including claims for negligence, trespass, and nuisance, because the Michigan Department of Environmental Quality (MDEQ) had not yet issued or approved a final corrective action plan to address the contamination complained of by the plaintiff.

The facts underlying plaintiff's tort claims were relatively strong. The plaintiff's property operated as a family health clinic, often considered to be a risk-sensitive use by MDEQ. The migrating contamination was detected not only in groundwater below plaintiff's clinic, but also in the soil below the clinic and the air inside the clinic, above cleanup levels. The clinic was located directly adjacent to the defendant's property, which operated a gas station and store, at which hundreds of gallons of gasoline had been released into soil and groundwater. During soil testing activities below the clinic's building, the plaintiff's expert detected a strong and clearly discernible odor of gasoline. In addition, gasoline vapor odors in indoor air were reported to the City of Ithaca by several homes and businesses in the vicinity of the defendant's site. An indoor air mitigation system had been installed at the plaintiff clinic's property, and elevated concentrations remained in soil and groundwater below the clinic's property. The contamination in Carson City Hospital was, at the time of the dismissal, being overseen by the MDEQ pursuant to Part 213, but there was no administrative order in place. The cleanup plan submitted by the defendant to MDEQ was untimely under Part 213, and had been rejected for substantive reasons by MDEQ. At the time of the dismissal, a revised plan had still not been submitted to MDEQ.

Nonetheless, the Court of Appeals agreed with the trial court that the case should be dismissed on the ground of primary jurisdiction. The court held that "The doctrine of primary jurisdiction reflects a recognition by the courts that legislatively-created administrative agencies are intended to be repositories of expertise and special competence uniquely equipped to examine facts and develop public policy within a particular field."[8] The court ruled that "primary jurisdiction must be considered by courts of general jurisdiction whenever concurrent original subject matter jurisdiction relative to a disputed issue exists in both a court and administrative agency."[9] The court held that, considering the stage of the MDEQ's involvement at the time of summary disposition, "litigation entailing a potential award of damages to compensate the clinic for response costs, lost business, or diminution in property value, as well as equitable or declaratory relief with respect to remediation and corrective actions, was simply premature and could have undermined and conflicted with the determinations yet to be made by the MDEQ."[10]

If, for example, the final corrective measures would eliminate exposure pathways between the residual contamination and the plaintiff property's occupants, or would reliably restrict exposure through an institutional control, then this might affect whether and to what extent the plaintiff could prove the remaining contamination had any legally significant interference with the future use and enjoyment of plaintiff's property.

It is not hard to see that the reasoning of this decision is easily adapted to other cleanups overseen by MDEQ or EPA under Part 201, Part 111, RCRA, and CERCLA.

[1] See, e.g., MCL 324.20114(1)(b); 324.21309a(3).

[2] Adkins v. Thomas Solvent, 440 Mich 293 (1992).

[3] Henry v. Dow Chemical Co., 473 Mich 63 (2005).

[4] Price v. High Pointe Oil, 493 Mich 238 (2013).

[5] Carson City Hospital v. Quick-Sav Food Stores, Ltd., decided on April 28, 2016, Docket No. 325187 (unpublished).

[6] Attorney General v. Blue Cross Blue Shield of MI, 291 Mich App 64; 810 NW 2d 603 (2010).

[7] Travelers Ins. Co. v. Detroit Edison Co., 465 Mich 185; 631 NW 2d 733 (2001).

[8] Carson City Hospital v. Quick-Sav Food Stores, Ltd., p. 8.

[9] Id. at p. 9 (emphasis added).

[10] Id. at 11.