Daily Development for
Tuesday, April 30, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

Thanks to DIRT reader Howard Lax for putting us on to this one.

LANDOWNER LIABILITY; GOVERNMENTAL IMMUNITY: City government is not liable under "nuisance-trespass" theory for fire damage caused by fire spreading from abandoned buildings as to which City has issued demolition order and has sought transfer of title from the State (which acquired it in a tax sale) if the City had not yet obtained formal legal title at time of fire. Continental Paper and Supply Co., Inc. v. City of Detroit, Docket No. 10046 (Mich. April 4, 1996.) The fire had started in an abandoned warehouse. The owners of the warehouse had long since stopped paying attention to it, and it had placed at auction in 1985 for nonpayment of taxes. No one bid at the sale, and, under Michigan law, title to the property passed to the State of Michigan on May 6, 1986, subject to a six month redemption right in the record owners. In January, 1987, the State recorded its deed to the property.

In November, 1986, the City of Detroit had applied to have all properties in the City acquired by the State as a consequence of failed tax sales transferred to the City. A process was required to terminate due process rights of all persons other than the record owner in such properties, and consequently it was not until April, 1988, that the State conveyed to the City title to all of the 1986 tax acquisition properties in the City, including the property in question.

In March, 1987, after the State recorded its deed, but more than a year prior to the final recordation of any deed to the City, the warehouses were destroyed by arson, and the fire spread to the neighboring buildings of Plaintiff in this case, causing almost $3 million in damages.

During the above period, a parallel process was occurring by which the City was trying to effectuate the demolition of the buildings. The City conducted a hearing in October, 1986, and in December, 1986, issued an order compelling the demolition of the buildings and instructing the City Engineer to solicit bids for the work. Although the order was issued to the original owners of the property, at the time of the order it appears that their sole interest in the property was a statutory redemption right, which right expired three days later.

The Plaintiff argued that the City was liable either because it "owned or controlled" the property from which a dangrous nuisance spread, injuring Plaintiff's property. The court is vague about whether either ownership or control would be sufficient for liability, if there was no other demonstrated act of negligence or breach of duty, but dodges that question by holding, simply, that the City did not "own or control" the property in question.

Predictably, the court was punctillious about the significance of the recording of the state deed. Although Plaintiff argued that all that was necessary to accomplish final, formal ownership of the property was "a little paper pushing," the truth was that these papers had not been pushed at the time of the fire.

As to the question of control, Plaintiff argued that the demolition order and ensuing process had effectively demonstrated that the City had taken control of the property. The court makes a rather obscure reference to the Restatement of Torts Section 167, to suggest that one not in title or possession is liable as an owner only when one's agent has taken "entire charge of the land." At another point, the court alludes to an "absolute level of control" that must be necessary.

Prior Michigan authority had held that a landowner was not liable for injury caused by dangerous conditions on property where the City had ordered demolition and, in preparing for such demolition, had barred the owner from making use of the property. By negative implication, the Plaintiff argued that the prior case demonstrated that the City was liable under such circumstances. Here, however, the court pointed out that the City had not barred the owner from using the property and, as of the time of the fire, was making no use of the property itself and had not turned possession rights over to a demolition contractor.

Reiterating that the City had not taken any steps to assert physical control over the land, the court held that the mere declaration of a demolition order is not, in and of itself, an exercise of sufficient control to impose liability upon the City as a possessor.

Comment: The opinion, candidly, is rather poorly written, and does not account well for the fact that the State, and not the original owners, was really the only other party with a legal interest in the property. The Plaintiff was probably correct that only a little "red tape" stood between the City and absolute title to the property. Still, one assumes that until the State had actually deeded the property to the City, the City could have withdrawn its request for the property, and was not the technical owner.

Where, in fact, there are no private owners, and the State is a mere stakeholder under state law, and the City exercises its prerogative to carry out demolition on the property, the question of whether the City, by default, is the one in possession is a much closer issue than the court suggests. Pointing to the City's failure to exclude or control the original owners is a red herring. The owners were ignoring the property and, in any event, as of the time of the fire, had no legal right to be there.

The normal assumption is that all property in in the control of someone, and that "someone" usually is the record owner. That was the State here. If, pursuant to legal processes, another public agency assumes such control over the property as to take bids for the demolition of all structures on the property, and simultaneously seeks ownership, there does seem to be an argument that, for all practical purposes, the City of Detroit "owned" this property.

Perhaps the court should have dug deeper for a rationale protecting the City from liability for arson on properties abandoned to it. The approach taken by the Court is likely to cause some difficulties in other contexts.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233.

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