No. 142117-8

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Background
The city of Cadillac and Wexford County entered into two contracts, one in 1977 and one in 1980, under which the city agreed to provide wastewater collection and treatment for local townships that bordered two polluted lakes. The contracts required a “buy-in” payment from the townships at a price equivalent to the proportion of each township’s projected use of the city’s wastewater treatment system. The contracts provided that the contracts would be in effect until 2017, but could be renewed for successive ten-year terms by the parties’ agreement.

In November 2006, the city notified the townships that it did not intend to renew the contracts upon their expiration in May 2017. Haring Township filed a complaint alleging that the city had a legal obligation to continue providing wastewater treatment and disposal service to it after the “ostensible” expiration of the 1980 contract on May 12, 2017. Shortly thereafter, Selma and Clam Lake Townships filed a complaint asserting a similar claim under the 1977 contract, initiating a second lawsuit. The plaintiff townships claimed that, by virtue of the contracts, they had purchased capacity in the city’s wastewater treatment system. Because of this ownership interest, the plaintiff townships argued, the contracts’ expiration dates were ambiguous. The townships also contended that, because the city had provided wastewater treatment services to the townships for 30 years, the city was a “public utility” that was required to continue providing such services, absent a qualifying basis for stopping services.

The trial court consolidated the cases and granted summary disposition to the city. The trial court reasoned that the contracts contained clear and explicit termination language that was controlling, and that none of the townships’ arguments entitled them to receive wastewater treatment services beyond the contracts’ expiration.

Haring and Selma appealed, and the Court of Appeals consolidated the appeals. In a split, published opinion, the Court of Appeals rejected the townships’ arguments and affirmed the trial court’s ruling. The Court of Appeals majority held that the contracts’ termination date was controlling; that nothing in the contracts indicated that the townships had purchased an ownership interest in the capacity of the city’s system; and that the city did not have an obligation, as a public utility, to continue providing sewer service to the townships after the contracts’ termination date. In a dissenting opinion, one judge opined that the matter was not ripe for judicial review because the contracts did not expire until 2017; a future city council could decide to renew the contracts, the judge said. The townships appeal.

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