Highland Park v. Detroit et al
Filing
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OPINION and ORDER Dismissing Case for Lack of Subject Matter Jurisdiction and Finding as Moot: 17 Motion to Dismiss, 16 Motion to Dismiss, 27 Motion for Leave To Request Judicial Notice, 28 Motion for Leave to File. Signed by District Judge Stephen J. Murphy, III. (DPar)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CITY OF HIGHLAND PARK,
Plaintiff,
v.
Case No. 2:17-cv-12993
HONORABLE STEPHEN J. MURPHY, III
CITY OF DETROIT, et al.,
Defendants.
______________________________/
OPINION AND ORDER DISMISSING CASE AND FINDING
DEFENDANTS' MOTIONS TO DISMISS [16, 17] MOOT
On September 12, 2017, Plaintiff filed a complaint that alleged three claims against
Defendants City of Detroit ("Detroit"), Detroit Water and Sewerage Department
("DWSD"), and Great Lakes Water Authority ("GLWA") (collectively, "Defendants"). ECF
1. Plaintiff's claims all relate to a 1996 federal court consent judgment ("Consent
Judgment") between Plaintiff and Detroit, which was issued as one discrete part in a long
history of litigation between the parties. As recently as 2013, Detroit sued Highland Park
alleging claims that included breach of contract for Highland Park's alleged failure to
timely pay its sewer rates. See Detroit v. City of Highland Park, 2:13-cv-14827 (E.D.
Mich.) (hereinafter "Detroit I"), ECF 1. Detroit relied upon the Consent Judgment as the
basis of the federal court's jurisdiction over its breach-of-contract claim. Id. The Court
(Cox, J.), dismissed the claim for lack of subject-matter jurisdiction. Detroit I, ECF 11.
Detroit subsequently filed the same case against Highland Park in state court,
which found in Detroit's favor but later stayed judgment pending resolution of a
counterclaim filed in the case by Highland Park. ECF 20, 27-1. In that state court
counterclaim, Highland Park sought a declaratory judgment that the Consent Judgment
currently governs sewage rates between the parties and constitutes Highland Park's sole
payment obligation to Detroit. ECF 16-9.
Subsequently, Highland Park filed the present lawsuit. Plaintiff brings a breach-ofcontract claim and seeks declaratory judgment that it is in compliance with the Consent
Judgment and that GLWA is in contempt of court for breaching the Consent Judgment.
ECF 1. Plaintiff asserts federal court jurisdiction over the complaint based on "the Court's
inherent power to enforce its own judgments" regarding the Consent Judgment. Id. at 6–
7. The Court finds, however, that it does not have subject-matter jurisdiction over the
breach-of-contract claim and will further exercise its discretion to decline jurisdiction over
the two declaratory judgment claims.
DISCUSSION
I.
Breach-of-Contract Claim
"Federal courts are courts of limited jurisdiction . . . . It is to be presumed that a
cause lies outside this limited jurisdiction, and the burden of establishing the contrary
rests upon the party asserting jurisdiction[.]" Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994) (citations omitted). Further, "federal courts have an independent
obligation to investigate and police the boundaries of their own jurisdiction." Douglas v.
E.F. Baldwin & Assocs., Inc., 150 F.3d 604, 607 (6th Cir. 1998) (citation omitted),
abrogated on other grounds by Thomas v. Miller, 489 F.3d 293 (6th Cir. 2007); see also
Walbridge Aldinger Co. v. City of Detroit, 296 F. App'x 527, 531 (6th Cir. 2008) (citing
Bender v. Williamsport Arena Sch. Dist., 475 U.S. 543, 541, 546–47 (1986)).
2
Having reviewed Plaintiff's complaint, the Court is not satisfied of its subject-matter
jurisdiction over the breach-of-contract claim. In 2014, the Court (Cox, J.) dismissed for
lack of subject-matter jurisdiction a similar lawsuit brought by Detroit against Plaintiff. See
Detroit I, ECF 11. Detroit sued Highland Park in federal court for failing to pay its sewage
bills on time. See Detroit I, ECF I. Judge Cox dismissed the entire case, concluding that
the Consent Judgment did not give the Court perpetual jurisdiction over billing disputes
between the two parties. Detroit I, ECF 11, PgID 135.
Judge Cox construed such disputes as "garden-variety, state-law breach of
contract claims" and found that over the decades between the consent judgment and
2014, the parties had "enter[ed] into different oral and written agreements." Id.; see also
Detroit I, ECF 1-4, 1-5 (containing exhibits of Detroit's letter accepting Highland Park's
new rate proposal in 2009 and an affidavit from DWSD's Deputy Director that Highland
Park made the proposal as a way to pay its past-due arrearages). Here, Plaintiff charges
that Detroit breached the Consent Judgment by charging Plaintiff higher sewage rates
than those outlined in the Consent Judgment. Particularly in light of Judge Cox's finding
of intervening agreements between the parties, the Court agrees that it does not retain
perpetual jurisdiction over breach-of-contract claims arising out of the Consent Judgment.
The Court accordingly concludes it lacks subject-matter jurisdiction over Plaintiff's
ordinary breach-of-contract claim, which can effectively be resolved in state court.
II.
Declaratory Judgment Claims
The Declaratory Judgment Act confers upon federal courts the ability to "declare
the rights and other legal relations of any interested party seeking such declaration." 28
U.S.C. § 2201. Courts possess "unique and substantial discretion in deciding whether to
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declare the rights of litigants." See W. World Ins. Co. v. Hoey, 773 F.3d 755, 758 (6th Cir.
2014) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)). Courts consider five
factors in determining whether to exercise jurisdiction over a declaratory judgment action;
(1) whether it would settle the controversy, (2) whether it would be useful to clarifying the
parties' legal relations; (3) whether it is being used merely to create res judicata, (4)
whether it would offend principles of federalism, and (5) whether there is a better, more
effective remedy available. Id. at 759 (quoting Scottsdale Ins. Co. v. Flowers, 513 F.3d
546, 554, 560 (6th Cir. 2008)). In weighing the factors, each factor is not always equally
weighed. "For example, a relatively efficient declaratory judgment (factors 1, 2, and 5)
could very well be inappropriate if hearing the case would be unfair (factor 3) or would
offend the bundle of principles we generally label 'federalism' (factor 4)." Western World,
773 F.3d at 759.
Here, after weighing the factors, the Court finds that it would be unfair and offend
principles of federalism to exercise jurisdiction over Plaintiff's declaratory judgment
claims. Plaintiff seeks the Court's declaration that it is in compliance with the Consent
Judgment and that GLWA is in contempt of court for violating the consent order. ECF 1,
PgID 14, 22. A declaratory judgment would clarify the parties' legal relations and could
possibly settle the controversy. Determining the declaratory judgment claims would also,
however, inequitably create res judicata for Plaintiff in a pending state court action, see
ECF 27-1,1 and offend principles of federalism.
1
The Court will not address Defendants' Rooker-Feldman argument or whether the statecourt judgment is final. The Court cites the state court order only to demonstrate the
ongoing nature of the suit as it relates to claims presented in this case.
4
Essentially, Plaintiff seeks to have the Court decide here both parties' state court
breach-of-contract claims, simply clothed as a different cause of action. As discussed
above, another federal court has already determined that there are intervening rate
agreements between the parties and that the Consent Judgment does not create a
continuous federal forum for the parties' billing disputes. Detroit I, ECF 11, PgID 135. As
a result of that determination, the parties' billing dispute has been ongoing in state court.
See ECF 16-8 (Detroit's amended state court complaint). The Court will not permit Plaintiff
to circumvent the Court’s previous, adverse decision by framing the billing dispute as a
declaratory judgment action rather than a breach-of-contract claim. The declaratory
judgment claims exhibit a "close nexus between underlying factual and legal issues and
state law," which weighs against the Court exercising jurisdiction over the claims. W.
World, 773 F.3d at 759 (quoting Flowers, 513 F.3d at 560).
Moreover, the overlap described above extends to Plaintiff's still-pending statecourt counterclaim, and a declaratory judgment would therefore create res judicata for
issues in the state court, which also weighs against the Court exercising jurisdiction here.
Plaintiff's request that the Court enjoin collection of the monetary damages that the state
court initially awarded to Defendants demonstrates the res judicata concerns that are
raised in the case. ECF 1, PgID 22–23. Although the request regards alteration of the
effectiveness of a past judgment, it also reflects an attempt to use a federal forum to
strategically circumvent a state adjudicatory body. Furthermore, the state-court judgment
was stayed in light of Plaintiff's counterclaim, which would further exacerbate the res
judicata effects of any declaratory judgment entered here by the Court. Accordingly, the
Court will decline to exercise its jurisdiction over the issues still pending in state court.
5
For the above-stated reasons, resolution by the Court of the declaratory judgment
claims would present a danger to fairness and principles of federalism, which outweigh
any efficiency of a declaratory judgment action. The Court will exercise its substantial
discretion and decline to exercise jurisdiction over Plaintiff's declaratory judgment claims.
ORDER
WHEREFORE, it is hereby ORDERED that the case is DISMISSED for lack of
subject-matter jurisdiction.
IT IS FURTHER ORDERED that Defendants' motions to dismiss [16, 17] are
MOOT.
IT IS FURTHER ORDERED that the Clerk of the Court shall CLOSE THE CASE.
SO ORDERED.
s/Stephen J. Murphy, III
STEPHEN J. MURPHY, III
United States District Judge
Dated: September 29, 2018
I hereby certify that a copy of the foregoing document was served upon the parties and/or
counsel of record on September 29, 2018, by electronic and/or ordinary mail.
s/David P. Parker
Case Manager
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