Supreme Court Upholds Distinction Between Agency and Owner Necessity Appellate Rights

Agencies enjoy an appeal of right of adverse decisions regarding necessity while owners must seek leave.

The Uniform Condemnation Procedures Act  “provides standards for the acquisition of property by an agency, the conduct of condemnation actions, and the determination of just compensation.” MCL 213.52(1). As its title indicates, it establishes the procedural rules that govern condemnation cases. Some aspects of the UCPA are friendly to owners, like the provisions that require reimbursement of attorney fees and expert expenses, while others are favorable to agencies. This Michigan Supreme Court recently confirmed that a rule relating to appeals of challenges to takings benefits agencies.

In Consumers Energy Company v Storm, the Michigan Supreme Court reversed the Court of Appeals and held that agencies enjoy an appeal of right when a trial court holds that necessity for a taking does not exist. MCL 213.56 governs challenges to necessity.  A necessity challenge asserts that there is a defect in the taking that prevents an agency from proceeding.  MCL 213.66(6) governs appeals from trial court determinations of such challenges.  “An order of the court upholding or determining public necessity or upholding the validity of the condemnation proceeding is appealable to the court of appeals only by leave of that court pursuant to the general court rules. In the absence of a timely filed appeal of the order, an appeal shall not be granted and the order is not appealable as part of an appeal from a judgment as to just compensation.”

In Consumers v Storm, the Supreme Court recognized that this language forces an owner that unsuccessfully challenges necessity to seek leave to appeal.  This means that the owner must ask for permission from the Court of Appeals to review the merits of the trial court’s decision.  Further, if the Court of Appeals does not grant that permission, the issue can never be appealed.  While I do not pretend to be knowledgeable about every kind of civil litigation, I am unaware of any other area of civil law where a class of litigant never enjoys a right to appeal.  The issue in Consumers v Storm was whether Consumers enjoyed a right to appeal or was also forced to seek leave.  The trial court had held that necessity was lacking and the Court of Appeals held that Consumers’ appeal was improper because it had not sought leave.  The Supreme Court unanimously overturned the Court of Appeals, holding that an agency is not required to seek leave and may appeal by right.

Frankly, I do not find fault with the Supreme Court’s reasoning.  The Supreme Court recognized that “in interpreting a statute, we consider both the plain meaning of the critical word or phrase as well as its placement and purpose in the statutory scheme.”  The sentence in MCL 213.56 references both an order “upholding” or “determining” public necessity.  MCL 213.66 provides different standards for a review of necessity based on whether the agency is public, like a road commission, drain commission, city or the state, versus private, such as utility companies like Consumers.  The word “upholding” clearly references only decisions adverse to the property owner in an action instituted by a public agency, where trial courts must be deferential to the agency’s judgment. “Determining” clearly references only decisions adverse to the property owner in an action instituted by a private agency, where the MCL 213.56(3) expressly requires the trial court to “determine the public necessity.”  Since the Supreme Court’s role is to interpret the law as created by the legislature, it cannot be faulted for applying it as written.  Whether it is fair to allow a trial court to disturb private ownership of property without allowing the owner a right to appeal is a question better asked of the legislature. 

It will be interesting to see how the Court of Appeals handles the underlying trial court ruling that was adverse to Consumers and found that there was no necessity.  Based on my experience, Consumers can be aggressive about litigating necessity and procedural issues.

If you have any questions about eminent domain law, please do not hesitate to contact me.