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### STATE OF MICHIGAN

COURT OF APPEALS

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA,

Plaintiff-Appellee/Cross-Appellant, UNPUBLISHED September 13, 2016

v No. 327787

Kent Circuit Court CITY OF GRAND RAPIDS, LC No. 13-003873-NZ

Defendant-Appellant/CrossAppellee.

Before: M URRAY , P.J., and H OEKSTRA and B ECKERING , JJ.

P ER C URIAM

.

Defendant, the City of Grand Rapids (the City), appeals as of right the opinion and order of the trial court that denied its motion for summary dispositi on on the ground of governmental immunity under MCR 2.116(C)(7). Plaintiff, Travelers Property Casualty Company of America, as subrogee of Calvin College, cr oss-appeals from the same orde r that also denied its competing motion for summary disposition pursuant to MCR 2.116(C)(10). B ecause material questions of fact remain regarding (1) whether the City knew, or with reason able diligence should have known, about the defect in the sew er line and (2) whether the d efect was a substantial proximate cause of the sewer event and resulting property damage, we affi rm the trial court’s denial of both motions for summary disposition and remand for further proceedi ngs.

On May 11, 2011, sewage and/or water flooded the first floors of two Calvin College apartment buildings located on Burton Street SE in Grand Rapids . Near the two apartment buildings in question sits “manhole 15109,” a “drop manhole” fe d by two sewer pipes: a 12-inch pipe coming from the west and an 8-inch pipe coming from the ea st. On the day the apartment buildings flooded, the 8-inch pipe failed near manhole 15109, c ausing Burton Street to collapse. As a result of the flooding in the apartment buildings, plainti ff, Calvin College’s insurer, paid over $400,000 in remediation expenses.

Plaintiff then filed suit against the City under the “sewage d isposal system event” exception to governmental immunity, seeking to recover damages in excess of $400,000. See MCL 691.1416-MCL 691.1419. The parties filed cross-motions for summary disposition, focusing their arguments on (1) whether the City knew, or in th e exercise of reasonable diligence should have known, about the def ect in the 8-inch pipe and (2) whether the defect in that pipe-2- was a substantial proximate cause of the flooding. Important t o these issues, the City had video footage from September 2010 of manhole 15109 as well as the nea rby 8- and 12-inch pipes. Plaintiff retained an expert in sewer pipe analysis, Stephan Bi chler, who opined based on his viewing of the sewer video that there were defects in the 8-inc h pipe which caused the sewer failure and resulting property damage. In contrast, the City o ffered testimony from various employees to support its assertions that it did not know, and c ould not have known, of any defect because the video footage showed no defects and, in fact, the defect which specifically caused the failure in the pipe could not have been visible because it was on the bottom of the pipe, under sewage flowing in the pipe. The City also maintained that seve re rainfall contributed to the sewer backup and that, because it was a defect in the bottom of the pipe which caused the backup, Bichler’s causation testimony amounted to mere speculat ion.

Considering the conflicting evidence presented, the trial court determined that fact questions remained in regard to the City’s knowledge of the def ect and the issue of proximate causation. For this reason, the trial court denied the City’s motion for summary disposition under MCR 2.116(C)(7) as well as plaintiff’s motion for summary disposition under MCR 2.116(C)(10). The City now appeal s as of right and plaintiff h as filed a cross-appeal.

On appeal, the City again argues that it is entitled to summar y disposition under MCR 2.116(C)(7) because it is a governmental agency and plaintiff h as failed to show the applicability of the sewage system disposal event exception to governmental i mmunity. In particular, consistent with its arguments in the trial court, the City argu es that plaintiff cannot show that the City knew, or should have known, of a defect in the 8-inch pipe because the video does not depict any defect in the 8-inch pipe and the defect in questionwould not have been visible because it was underneath sewage on the bottom of the pipe. Th e City also argues that severe rain played a significant role in the flooding of the apartment buildings and that, because a defect in the bottom of the pipe cause d the backup, Bichler’s causatio n testimony is mere speculation. Like the trial court, we conclude that material questions of fa ct remain with respect to these issues, such that the City is not entitled to summary dispositi on.

This Court reviews de novo a trial court’s decision on a motio n for summary disposition. Ernsting v Ave Maria College , 274 Mich App 506, 509; 736 NW2d 574 (2007). “Further, the determination regarding the ap plicability of governmental immun ity and a statutory exception to governmental immunity is a question of law that is also subject to review de novo.” Snead v
John Carlo, Inc , 294 Mich App 343, 354; 813 NW2d 294 (2011). When a claim is barred by governmental immunity, the moving party is entitled to summary disposition under MCR 2.116(C)(7). Odom v Wayne Co , 482 Mich 459, 466; 760 NW2d 217 (2008). “Under MCR 2.116(C)(7), all well-pleaded allegations must be accepted as t rue and construed in favor of the nonmoving party, unless contradict ed by affidavits, depositions , admissions, or other documentary evidence submitted by the parties.” Willet v Waterford Charter Twp , 271 Mich App 38, 45; 718 NW2d 386 (2006) (citations and quotation marks omitted). Any documentary evidence submitted by the parties must be considered “in a ligh t most favorable to the nonmoving party.” Snead , 294 Mich App at 354. “If no [material] facts are in dispute, or if reasonable minds could not differ regarding the legal effect of the facts, the question whether the claim is barred by governmental immunity is an issue of law.” Willett , 271 Mich App at 45 (citations and quotation marks omitted). “If, however, a perti nent factual dispute exists, summary disposition is not appropriate.” Snead , 294 Mich App at 354.-3- A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Cannon Twp v Rockford Pub Sch , 311 Mich App 403, 411; 875 NW2d 242 (2015). “When deciding a motion for summary disposition under MCR 2.116(C)(10 ), a court must consider the pleadings, affidavits, depositions, admissions, and other docum entary evidence submitted in the light most favorable to the nonmoving party.” Ernsting , 274 Mich App at 509-510. “Summary disposition is proper under MCR 2.116(C)(10) if the documentary evidence shows that there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a

matter of law.” Id . at 509. “There is a genuine issue of material fact when reas onable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party.” Allison v AEW Capital Mgt, LLP , 481 Mich 419, 425; 751 NW2d 8 (2008).

“Under the governmental tort liability act, MCL 691.1401 et seq., governmental agencies are immune from tort liability when engaged in a governmental f unction.” Nawrocki v Macomb

Co Rd Com'n , 463 Mich 143, 156; 615 NW2d 702 (2000). This immunity from t ort liability “is expressed in the broadest possi ble language—it extends immunity to all governmental agencies

for alltort liability whenever they are engaged in the exercise or di scharge of a governmental

function.” Id. There are statutory exceptions to governmental immunity; but, t hese exceptions must be “narrowly construed.” Cannon Twp , 311 Mich App at 415.

The statutory exception at issue in the present case is the se wage disposal system event exception, set forth in MCL 691.1416 through MCL 691.1419. In relevant part, MCL 691.1417(2) provides that “[a] governmental agency is immune fr om tort liability for the overflow or backup of a sewage disposal system unless the overf low or backup is a sewage disposal system event and the governmental agency is an appropr iate governmental agency.” In other words, in crafting this exception, the Legislature “inten ded to provide limited relief to persons who suffer damages as a result of a ‘sewage disposal sy stem event.’” Willett , 271 Mich App at 46. In order to avoid governmental immunity under this exception, a claimant must show all of the following elements:

(1) that the claimant suffered property damage or physical inju ries caused by a sewage disposal system event;

(2) that the governmental agency against which the claim is mad e is “an appropriate governmental agency”;

(3) that “[t]he sewage dis posal system had a defect”;

(4) that “[t]he governmental agency knew, or in the exercise of reasonable diligence should have known, about the defect”;

(5) that “[t]he governmental agency, having the legal authority to do so, failed to take reasonable steps in a reasonable amount of time to repair, correct, or remedy the defect”;

(6) that “[t]he defect was a substantial proximate cause of the event and the property damage or physical injury”;-4- (7) “reasonable proof of ownershi p and the value of [any] damag ed personal property”; and

(8) that the claimant provided notice [to the governmental agen cy of the claim] as set forth in MCL 691.1419 [ Cannon Twp , 311 Mich App at 415–416 (citations omitted).]

In this case, for purposes of thi s appeal, the parties dispute requirements (4) and (6).

We turn first to requirement (4), which requires plaintiff to show that the City “knew, or in the exercise of reasonable diligence should have known, abou t the defect.” As defined by statute, the term “defect” refe rs to “a construction, design, m aintenance, operation, or repair defect.” MCL 691.1416(e). Under plaintiff’s theory of the cas e, the defect in this case was the failure of the 8-inch pipe near manhole 15109. Importantly, Ci ty employees videotaped manhole 15109 as well as portions of the 8-inch pipe where the failure in question occurred. After viewing this footage, Bichler opined that, at the time the foot age was taken, the 8-inch pipe was “on the verge of catastrophic failure.” More fully, as set for th at the Daubert 1 hearing, Bichler explained his observations of the pipe as follows:

From what the camera showed, it was still outside of the pipe, but the picture swung over and I was able to get a few still shots of what the interior of the pipe looked like. Just inside the pipe, past the drop, there was a radial crack, which is a crack that goes around the pipe. That was obviously a very w ide crack. On the left side of the pipe, there was a longitudinal crack that went approximately - - I would say about 18 inches, maybe two feet back to another eithe r radial crack or wide joint. There was aggregate from outside of the pipe, mayb e even possibly a piece of the pipe itself ha nging down inside the pipe.

It was obvious by the pitch of the incoming pipe and the water that over a long course of time that the manhole had shifted and probably s ank a little bit, cracking the pipe radially a long time ago. And just over the course of years, possibly even decades, the - - it got worse, just vibration, gr ound water coming up and, you know, raising and dropping. There was clearly evidenc e of continuous water, infiltration coming through the crack. The pipes were s tained. There were rust stains on them, and that means that there’s continuous wat er. It’s always coming in.

So from - - and it also appeared that the pipe - - the top of the pipe had probably shifted over just a - - just a little bit. So that in dicated to me that if I had been able to see the entire periphery of the pipe - - I already knew that there was a large crack on the left-hand side, and it had shifted a little bit. The pipe was out - - that tells me that over the other side, there is a correspond ing crack. So you

1 Daubert v Merrell Dow Pharm, Inc , 509 US 579; 113 S Ct 2786; 125 L Ed 2d 469 (1993).-5- have the whole basic top of that pipe was cracked, shifted, and ready to drop. And that’s what I saw on the [vi deo from] 28th of September, 20 10.

Similarly, in his deposition testimony, Bichler explained, base d on his observations of cracking and other symptoms in the video, that the defect in the 8-inch pipe had “started a long time ago and over the course of time got worse and worse” until, as show n in the September video, “the structural integrity of the pipe [was] gone.” In other words, in September of 2010, several

months before the ultimate break o f the 8-inch pipe that caused the sewer backup in question on May 11, 2011, the City had actual video footage of that particu lar section of pipe showing longstanding cracks and other flaw s so noticeable that an exper t is willing to opine that the pipe was “on the verge of catastrophic failure.”

Despite the City’s possession of this video footage and the op inion of plaintiff’s expert regarding the defective condition of the pipe as of September o f 2010, the City offers two basic arguments to support its conclusion that it neither knew, nor i n the exercise of reasonable diligence should have known, about the defect in the 8-inch pip e. First, the City notes that several of its employees have viewed the video in question and are willing to opine that there

were no cracks or other defects visible in the video to suggest an impending “catastrophic

failure.” 2 However, we conclude that the st ructural integrity of the pip e is plainly an issue for experts familiar with sewer pipes, and at this stage the differ ence of opinion among those who have viewed the video merely evinces the existence of a questio n of fact regarding the condition of the 8-inch pipe as of September of 2010. See Robins v Garg , 276 Mich App 351, 363; 741 NW2d 49 (2007); Lincoln v Gupta , 142 Mich App 615, 627; 370 NW2d 312 (1985). Thus, the opinion of the City’s employees regarding the pipe’s condition as depicted in the video does not entitle the City to summary disposition.

Second, the City also argues that the statutory phrase “the de fect” must be accorded a narrow construction, such that knowledge of cracks or other def ects on the top of the pipe cannot be equated with knowledge of the break on the bottom of the pip e which actually caused the sewer event. In this respect, the City notes that the evidence from one of the workers excavating the failed pipe after the incident on May 11, 2011 establishes that the break on the 8-inch pipe

was on the bottom of the pipe, on a portion of the pipe that was under sewage an d thus not possibly visible in the video. 3 We recognize that MCL 691.1417(3)(c) and (e) refer to “ the defect,” and thus we agree with the proposition that the sewer disposal system event exception

2 The various City employees contend that the video simply shows “crusting” typical of asbestos concrete pipe of that age. They contend that there were not an y visible cracks, blockages or other irregularities.

3 The pipe was destroyed during its removal, and Bichler was not at the site of the failure to personally observe the break in the pipe on May 11, 2011. The first-hand account of the pipe’s condition on removal comes mainly from Chuck Thebo of Wyoming E xcavators, Inc., who assisted with the repair of the sewer. According to Thebo, the pipe was “intact and still circular, upon its removal” and he noted no damage to the top of the pipe . However, he averred in an affidavit that the pipe “was e roded-through and thinned at the bottom of the pipe.”-6- contemplates knowledge of the particular defect causing the sew er event, not simply some defect in the system. See Robinson v Detroit , 462 Mich 439, 461-462; 613 NW2d 307 (2000) (recognizing that “the” is a “definite article” with “a particu larizing effect”).

Nonetheless, even if we were to narrowly pinpoint “the defect” in this case as the crack on the bottom of the pipe, we fi nd the City’s argument that it could not have know n of this defect to be unpersuasive for two reasons. First, as a factual matter , this argument i gnores Bichler’s description of “radial cracks” i n the pipe. In particular, at his deposition Bichler noted a “radial crack, which is a crack, which goes around the circumference of the pipe.” He specified that it “looked like the top of that [crack] was open” and that “the si des on the bottoms of both sides had evidence of slow leaks mineral deposit buildup.” In other words, although it is true that sewage obscured the bottom of the pipe, Bichler described crack ing around the visible circumference of the pipe’s interior and, viewing the evidence in a light most favorable to plaintiff, a reasonable inference from Bichler’s testimony is t hat damage extended under the

sewage.

Second, the City’s argument also fails to acknowledge that MCL 691.1417(3)(c) is satisfied, not only if the City actually knew of the defect, bu t also if, in the ex ercise of reasonable diligence, the City should have known , about the defect. In this rega rd, based on his observations of defects in the video, Bichle r opined that action should have been taken to the repair the pipe, such as the use of a “cured-in-p lace sectional liner” that woul d have involved placement of a “brand new pipe, strong pipe inside the old pipe,” whereby that the “old broken pipe” is glued to the new pipe “as part of the structure.” Moreover, a City empl oyee, Dan Simila, acknowledged in an affidavit that, had cracks been found in the pipe in Sept ember of 2010, a work order would have been issued, “including further inspection with a tractor or crawler camera, so that the problems could be remedied.” In other words, viewing the evide nce in a light most favorable to plaintiff, the video depicted catastrophic cracking in the area where the break occurred on the 8- inch pipe, and this visible damage warranted further inspection and repair in September of 2010. Given this evidence, reasonable minds could conclude that, in t he exercise of reasonable diligence, the City should have discovered the erosion and crac king to the bottom of the 8-inch pipe. Overall, given Bichler’s expert opinion, and viewing the evidence in a light most favorable to plaintiff, we agree with the trial court that plaintiff has set forth sufficient evidence to create a material question of fact in terms of whether the City knew, or in the exercise of reasonable diligence should have known, about the defect in the 8-inch pip e. See MCL 691.1417(3)(c). For this reason, the City was not e ntitled to summary dispositi on on this basis.

Turning to requirement (6), we a lso conclude that a question o f fact remains in terms of whether the defect in the 8-inch pipe was a substantial proxima te cause of the sewer event and the property damage to the apa rtment buildings. For purposes o f the sewer disposal system event exception, a “ ‘[s]ubstantial proximate cause’ means a proximat e cause that was 50% or more of the cause of the event and the property damage or physical inju ry.” MCL 691.1416( l ). Relevant to this issue, Bichler opined th at the structural integrity of the 8-inch pipe was compromised and that this caused the break resulting in the sewer backup and su bsequent damage. He explained that the apartment buildings were on the two lateral lines clos est to the break in the 8-inch main pipe, meaning that when the break occurred, sewage backed-up to those laterals and flooded the buildings.-7- Notably, the City conc edes in its brief on appeal that the bre ak to the bottom of the 8-inch pipe caused, or at least contribu ted to, the sewer back-up. Indisputing the question of proximate causation, the City argues that plaintiff’s causation theory mu st nevertheless fail because (1) Bichler did not identify the part icular crack to the bottom of the pipe in the September video and (2) heavy rain also contributed to the sewer back-up. As we ha ve discussed, the evidence is sufficient to support the conclusion that the City should have known about the defect on the bottom of the pipe and we find Bichler’s causation evidence reg arding the failed structural integrity of the pipe sufficient to survive a motion for summar y disposition. Indeed, aside from deterioration of the pipe, no other explanation for the break i n the pipe has been presented. In

terms of whether rainfall also c ontributed to the back-up and h ow much of the damage can be attributed to rainfall, we note that plaintiff disputes this po int and has in fact offered evidence in the form of eyewitness descriptions to establish that it was se wage—not rainwater—flooding the apartment buildings. On this rec ord, a fact question remains i n terms of whether the defect in the 8-inch pipe was a substantial proximate cause of the sewer even t and resulting property damage. See MCL 691.1417(3)(e). Consequently, the City was not entitle d to summary disposition on

this basis.

Having resolved the City’s appeal, we now turn briefly to plai ntiff’s cross-appeal. According to plaintiff, summary disposition should have been gr anted to plaintiff under MCR 2.116(C)(10) because the undisputed evidence unquestionably sho ws the presence of a defect in the 8-inch pipe which was a substantial proximate cause of the property damage in question. As we have discussed, questions of fact remain that preclude summa ry disposition, particularly in light of the City’s evidence that the September video did not depict any defects. If the video showed a normal looking pipe, as the City’s employees maintain, the City cannot have known of any defect and there is no basis for Bichler’s causation testim ony. Likewise, the parties dispute

whether rainfall contributed to the property damage and, if so, how much of the damage may be attributed to rain. Because questions of fact remain, the tria l court properly denied plaintiff’s motion for summary disposition.

Affirmed, but remanded for further proceedings. We do not ret ain jurisdiction.

/s/ Christopher M. Murray

/s/ Joel P. Hoekstra /s/ Jane M. Beckering