Governor Rick Snyder recently signed Public Act 333 (the “Business Court Act”), establishing a separate business court in Michigan. These courts will provide a unique forum for resolving complex disputes between business organizations, disputes within a business or nonprofit organization, and disputes involving a business transaction. The business courts are expected to improve efficiency and generate more consistent results through the appointment of judges who specialize in business and finance.

Under the new law, commencing on January 1, 2013, each Michigan circuit court with three or more judges must create a business court. The Michigan Supreme Court will appoint judges to the business court who will serve six-year terms and will be assigned cases by a blind draw. Business disputes involving an amount in controversy over $25,000 will be heard by judges with specialized knowledge of business and finance, alleviating some of the burden these suits currently place on circuit courts.

The new business court will have jurisdiction over a wide range of “business or commercial disputes” which includes actions where all the parties are “business enterprises.” The term “business enterprises” is similarly broad and includes for-profit and not-for-profit corporations as well as “any other entity in which a business may be lawfully conducted”. The range of issues of classified as a “business or commercial dispute is equally broad and includes but is not limited to the following: issues involving software and technology, the internal organization of business entities, contractual agreements in business dealings, commercial transactions, commercial insurance policies, and commercial real property. However, the bill specifically excludes disputes pertaining to personal injury, product liability, family, criminal, and probate matters, condemnation, landlord-tenant issues, foreclosures, motor vehicle and individual insurance disputes, employment discrimination, civil rights, disability, workers compensation matters, and appeals from a lower court.

The impact that such business court will have on disputes involving environmental matters is still unclear because environmental litigation involves a layer of complexity that goes beyond what is found in typical business or commercial matters. Whether or not a suit involving environmental law will be heard in the new business court will depend upon the matters asserted and the parties involved in the dispute.

Because most environmental suits involve a business entity, it is likely many of them will be resolved in the business court, as long as the suit meets the amount in controversy requirement. The types of environmental cases that might be assigned to a business court include:

  • A corporate real estate purchaser suing a corporate seller for indemnification pursuant to the terms of a purchase agreement;
  • A business filing suit against another business to recover costs incurred in cleaning up a predecessor’s contamination;
  • A business suing an adjacent business for contamination that has migrated onto its property.

On the other hand, because the parties must be business enterprises, the courts would not hear environmental cases brought by individual homeowners against adjacent businesses, or individuals against businesses for personal injuries allegedly caused by contaminants or pollutants emitted by a business. Likewise, a homeowner would not have to file a nuisance suit against a business in the new court.

However, because non-profits are included in the definition of “business enterprise), if the homeowners bring their action against a business as a non-profit homeowner’s association, they may be required to file the action in the business court. Similarly, a non-profit environmental group pursing an environmental claim against a company under a statute like the Michigan Environmental Protection Act (something that is not typically seen as a business type dispute) may be required to file the action in the new business court. And what happens if a company asks that the non-profit’s litigation be assigned to the business court or the court assigns it sua sponte? Those decisions cannot be appealed to the court of appeals. (§308(1)(d))

It is also unclear whether environmental litigation between a company and a governmental agency would be heard by the new court. Although it’s pretty clear that a governmental agency issuing a permit is not engaging in typical business activity (and the Business Court Act proscribes appeals of agency decisions), it is less clear when the government sells contaminated land or engages in polluting conduct as part of activity that many businesses engage in. Such cases may be “business court worthy.”

Although there are some uncertainties as to whether particular environmental disputes will be heard in the business court, it is possible that the new business court will play a large role in deciding environmental cases.

(Thank you to Kylie Angileri who assisted with the preparation of this blog.)