By Jon King, Michigan Advance
Several months after the state of Michigan was awarded a nearly $120 million default judgment against the owner of a failed mid-Michigan dam, a judge has denied his bankruptcy filing.
Michigan Attorney General Dana Nessel on Thursday announced the ruling against Lee Mueller, former operator of Boyce Hydro and the Edenville Dam, which failed in 2020, forcing the evacuation of more than 10,000 people and damaging thousands of homes and businesses.
Mueller pursued bankruptcy in the U.S. Bankruptcy Court in Las Vegas, Nevada, in an attempt to dissolve the $119.8 million judgment awarded in November by the U.S. District Court for the Western District of Michigan. However, Nessel said that on February 9, the bankruptcy court dismissed the petition, concluding Mueller’s effort “smacked of bad faith.”
“Mr. Mueller has repeatedly made inaccurate representations to two different courts in his attempts to evade accountability and money judgments for his responsibility for the Edenville Dam disaster,” said Nessel. “I am grateful that the courts have continued to see through Lee Mueller’s obvious attempts to manipulate these proceedings in order to protect himself at the expense of the thousands of Michigan residents whose lives he’s devastated.”
Nessel said that her office filed a motion to dismiss Mueller’s bankruptcy petition after he sought Chapter 13 court protection in which a person’s debts do not exceed $2.75 million.
“Mueller swore in his petition that the amount of his debt owed to the State of Michigan was ‘unknown,’ contending it should not be counted toward his eligibility limit,” stated the release.
The motion filed by Nessel’s office argued that Mueller had filed with full knowledge that his debts would far exceed the eligibility limit. The court agreed and noted that “bankruptcy relief is afforded to honest but unfortunate debtors,” and that in Mueller’s case, the “honest” part of that equation “is key” to why he could not obtain relief.
Concluding that Mueller’s statements were “the kind of egregious behavior that warrants a finding of bad faith,” the court dismissed his case.
The Edenville and Sanford dams both failed on the evening of May 19, 2020, during heavy rainfall. The subsequent flooding down the Titabawassee River caused two more dams upstream, the Smallwood and Secord dams, to also overflow.
All four dams were owned by Boyce Hydro, which had its permit to generate hydro-power revoked in September 2018 by the Federal Energy Regulatory Commission (FERC), which had been preceded by more than a decade of safety and regulatory violations by the private company.
Mueller previously made a similar attempt to persuade the U.S. Bankruptcy Court for the Eastern District of Michigan to protect Boyce Hydro, which was also rejected.
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