Detroit Immune From Tort Action

Post number 5367

City Leased to a Private Entity the Maintenance and Control of Sewer Systems and had no obligation for its failure. 

In American Select Insurance Co., et al. v. Great Lakes Water Authority, et al., No. 23-cv-11942, United States District Court, E.D. Michigan, Southern Division (June 2, 2026) involved Plaintiff insurers who had paid claims to approximately 1,400 insured homeowners for flood damage caused by June 25–26, 2021 sewer overflows/backups in the Detroit metro area.

The insurers sued the City of Detroit, the Detroit Water and Sewerage Department (DWSD), and the Great Lakes Water Authority (GLWA) as subrogees, alleging three sewer-system defects: (1) insufficient overall system capacity to handle the storm, (2) defects at the Freud Pumping Station, and (3) defects at the Conner Creek Pumping Station.

FACTS

The Detroit Defendants historically operated the whole system, but under a 2015 40-year lease, GLWA assumed exclusive control, operation, and maintenance responsibility for the regional portion of the sewer system, including the pumping stations at issue.

Plaintiffs amended their complaint several times. In the Third Amended Complaint, they attempted to cure earlier pleading deficiencies by alleging a generally accepted design standard for combined sewer systems and asserting that the June 2021 rainfall did not exceed that standard.

LAW

Under Michigan’s Governmental Tort Liability Act (GTLA), governmental agencies are broadly immune from tort liability when engaged in a governmental function. Plaintiffs therefore had to plead facts bringing their claim within the Sewage Disposal System Event (SDSE) exception.

To invoke the SDSE exception, a plaintiff must plausibly allege:

  1. the defendant was an appropriate governmental agency;
  2. the sewage disposal system had a defect;
  3. the agency knew or should have known of the defect;
  4. the agency, having legal authority to do so, failed to take reasonable steps in a reasonable time to repair/correct/remedy the defect; and
  5. the defect was a substantial proximate cause of the sewage disposal event and resulting damage.

Under the lease GLWA — not the City — had authority over defects in leased regional facilities.

DISCUSSION / ANALYSIS

Capacity Defect (Detroit Defendants)

The court held Plaintiffs had plausibly alleged a capacity defect. Unlike prior pleadings, the Third Amended Complaint identified a generally accepted capacity standard, alleged the storm rainfall stayed below that standard, and claimed Defendants knew of the deficiency and failed to expand system capacity.

Freud and Conner Creek Pumping Station Defects (Detroit Defendants)

As to the Detroit Defendants, the court found Plaintiffs could not satisfy the “legal authority” element of the SDSE exception. The lease transferred exclusive authority, control, and repair obligations for the leased regional facilities — including the Freud and Conner Creek stations — to GLWA.

GLWA’s Motion

For the capacity defect, the same reasoning that saved the claim against the Detroit Defendants also applied to GLWA — and perhaps more strongly, because the rainfall gauge was within GLWA’s service area.

To the extent GLWA tried to incorporate the Detroit Defendants’ arguments, those arguments did not fit GLWA because the core point was that GLWA, not the Detroit Defendants, held repair authority.

CONCLUSION

The court granted in part and denied in part the Detroit Defendants’ motion and denied GLWA’s motion entirely:

GLWA:

Motion denied in full, so Plaintiffs’ claims based on the capacity defect and the two pumping-station defects may proceed against GLWA.

Detroit

The Detroit Defendants’ motion to dismiss was DENIED with respect to the Capacity Defect and granted in all other respects; and the GLWA’s motion for judgment on the pleadings was denied in its entirety.

ZALMA OPINION

Because the complaint omitted three critical allegations to state a viable claim:

  1. whether the system failed to meet generally accepted design standards for similarly-situated municipalities,
  2. whether the storm was of a magnitude above or below the capacity that a system built to generally accepted standards could have handled; and
  3. the how or why the system should have had an increased capacity.

GLWA must go to trial and the city is immune.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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