Court Upholds City Ordinance Assessing Costs against Owners of Abandoned Homes

The Michigan Court of Appeals recently upheld a challenge to a Battle Creek ordinance imposing a fee against the owners of abandoned residential property.

In Kenefick v City of Battle Creek, __ Mich App __ (2009) (approved for publication July 2, 2009), a city ordinance requiring owners of abandoned homes to pay a "monitoring fee" was challenged on grounds that it was both unconstitutionally vague and violated the Equal Protection Clause. Both arguments failed to persuade the Court of Appeals.

"When these common dictionary definitions are viewed in context of the language of the entire ordinance—the stated purpose of which is to eliminate dangerous and unsightly blight, we conclude that a person of ordinary intelligence would be placed on fair notice of what the ordinance requires or proscribes."

In addressing the Equal Protection Argument, the Court of Appeals applied the rational basis test and concluded the ordinance was constitutional.

"The ordinance’s stated purpose is to overcome the detrimental affects of neighborhood blight and reduce enforcement costs associated with the blight. This Court has held 'protecting and promoting public health, safety, and general welfare are legitimate governmental interests . . . and protecting aesthetic value is included in the concept of the general welfare.' (citation omitted) Thus, the general reduction of blight is undisputedly a legitimate governmental purpose."

A copy of the slip opinion can be found here.

Questions? Contact Peter Cavanaugh or call (248) 543-8320.

Michigan Seller Disclosure Act (SDA): Innocent Misrepresentation Not a Claim under SDA Rules Michigan Court of Appeals

Holding that innocent misrepresentation is not a viable theory of liability under the Seller Disclosure Act (SDA) (MCL 565.951, et seq), the Michigan Court of Appeals recently reversed a judgment awarding Plaintiffs $86,813 in damages and costs and remanded the case for entry of a judgment in favor of the Defendant-Sellers. Roberts v Saffell, ___ Mich App ___ (2008) (Lawyers Weekly No. 07-67463 - 12 pages) (published opinion) (Markey, J., joined by Wilder, J.) (White, J., dissenting). On appeal from the Leelanau County Circuit Court; Rodgers, J.. Click here for the slip opinion.

In this case, Plaintiffs asserted that Defendants failed to disclose a termite infestation in the home they purchased from Defendants. Prior to trial, Plaintiffs successfully moved for dismissal of all claims, except one for innocent misrepresentation. This claim was based on Defendants' "No" answer on their Seller Disclosure Statement in response to the item "History of infestation, if any: (termites, carpenter ants, etc.)"

The Court of Appeals found nothing in the plain terms of the act requiring a transferor of property covered by the SDA "to exercise ordinary care to discover defects in the property being transferred." The act requires a transferor "to answer all items required by MCL 565.957 honestly, based on information actually known to the transferor at the time the SDS is completed." Apart from the SDS, the Legislature had not modified the rule of caveat emptor and its common law exceptions imposing liability for fraud.

A transferor cannot "be held liable for any errors, inaccuracies, or omissions in the SDS unless they were within his personal knowledge." Since liability for innocent misrepresentation can be imposed "without regard to whether the party making the representation knew it was false or was acting in good faith and because MCL 565.955(1) precludes imposition of liability on transferors who lack personal knowledge with respect to errors, inaccuracies, or omissions in an SDS, there is no liability for a disclosure made on an SDS under a theory of innocent misrepresentation."