Author(s): Thomas R. Paxton, John J. Gillooly, Matthew J. Malleis

From the Editor by
John J. Gillooly

‘Tis the Season…

A sure sign that the holiday season is in full swing is the number of questions we get from municipal clients about holiday parties and gifts. To avoid legal and ethical problems during this time of giving, please keep the following pointers in mind:

The Spending Rules. A municipality’s authority to spend money comes from either the Michigan Constitution or the Michigan Compiled Laws: A municipality may only spend money for a public purpose. A public purpose exists when the money spent confers a direct benefit of a general character to a significant part of the public.

May a municipality spend public monies on holiday parties, gifts, or donations to charities? We strongly recommend not doing so. The same rules prohibit the use of public funds to buy birthday cakes, flowers, lunches, or to throw a great local leader a retirement party. In deciding whether to spend public monies, ask yourself: Is the money spent for a legitimate public purpose relating to the reasons why a municipality exists? If the answer is no, save yourself a lot of grief: Take up a collection for the gift. Do not write a check from your general fund.

May a government employee accept a gift of cash or services from a resident? Michigan law addresses the obvious concern that allowing public officials to accept gifts from members of the community could influence them to treat those persons more favorably while carrying out their official civic duties:

  • A public officer or employee shall not solicit or accept a gift or loan of money, goods, services, or other thing of value . . . which tends to influence the manner in which the public officer or employee . . . performs official duties. MCL 15.342(4).
  • [A] public officer or employee shall not engage in or accept employment or render services for a private or public interest when that employment or service is incompatible or in conflict with that discharge of the officer or employee’s official duties or when that employment may tend to impair his or her independence of judgment or action in the performance of official duties. MCL 15.342(6).

Kindly thank the giver, but refuse the gift. While residents or businesses that do business in your municipality may have good intentions in offering cash or other items of value to an employee, Michigan law disfavors the acceptance of such items on an individual basis. Please do not hesitate to call me directly if you have any questions. Most importantly, GLM hopes that you and yours have a very safe, happy, and healthy holiday season.

Got A Naughty Plaintiff? Consider The Wrongful Conduct Doctrine

by Matthew J. Malleis

Anytime a claim is made or a suit is filed, be sure to take the time to consider whether Michigan’s Wrongful Conduct Doctrine might apply. Often a plaintiff may have been participating in illegal activities when injured. If this is the case, the Wrongful Conduct Doctrine may bar the plaintiff’s recovery.

The Wrongful Conduct Doctrine states that where a plaintiff’s lawsuit is premised in whole or in part on his own illegal conduct, he cannot recover. The Michigan Supreme Court explained the modern application of a venerable old rule in the case of ,Orzel v Scott Drug Co, 449 Mich 550 (1995). In the Orzel case, the plaintiff became addicted over time to amphetamines which eventually caused severe mental illness and insanity. Plaintiff obtained the drugs from several sources, including buying them on the street, buying them from co-workers, and lying to physicians at weight-loss clinics, claiming to need the drugs to lose weight. He filled these prescriptions at Scott Drug, a pharmacy. Many times plaintiff refilled prescriptions too early, and he likewise would fill prescriptions bearing names different than his own. Plaintiff claimed the pharmacy was responsible for his addiction and resulting mental illness. The Supreme Court held that the Wrongful Conduct Doctrine barred plaintiff’s claims.

As generally applied the Wrongful Conduct Doctrine fits two distinct fact patterns. Taken together, these two considerations form the wrongful conduct doctrine:

1. When a plaintiff’s suit is based in whole or part his own illegal conduct or immoral activity he cannot recover; and

2. When a plaintiff’s suit is based on his own illegal conduct, and a defendant has participated equally in the wrongful activity, plaintiff’s claims are generally barred as well.

Two hurdles must be overcome to avail yourself of this doctrine. First, the plaintiff’s conduct must violate a serious penal or criminal statute. Second, there must be a sufficient causative connection between the illegal activity and the plaintiff’s asserted damages. Just because plaintiff was acting illegally, does not automatically mean the claim is barred. Plaintiff’s conduct must be prohibited by a penal or criminal statute. Conduct that violates safety statues, like traffic statues, speed laws, licensing statues, pedestrian statutes, and work place safety statues, generally will not preclude recovery.

In one notable case, Morning v Bishop of Marquette, 345 Mich 130 (1956), plaintiff fell on church property after playing bingo, which at that time was against the law. This illegal activity was held by the court not to be a substantial cause of her injury, and her claim for damages was not precluded.

As to the illegal activity, and the plaintiff’s asserted damages, courts have set out what the connection needs to look like. Below are some cases where courts found plaintiff’s damages and the illegal activity were related, and barred plaintiff’s recovery.

  • Budwit v Herr, 339 Mich 265 (1954); Murderer wanting insurance proceeds of victim.
  • Cook v Wolverine Stockard Co., 344 Mich 207 (1955); Breach of illegal contracts.
  • McDonald v Hall, 193 Mich 50 (1916); Breach of illegal contracts.
  • Pantly v Garris, Garris & Garris, 180 Mich App 768 (1989); Plaintiff committed perjury and sued her attorney for malpractice.
  • Glazier v Lee, 171 Mich App 216 (1988); Plaintiff murdered his girlfriend, and sued his psychologist for malpractice resulting in the murder.
  • Imperial Kosher Catering v Travelers Indement, Co., 73 Mich App 543 (1977); Shareholder committed arson, and sued for insurance proceeds.
  • Stopera v Dimarco, 218 Mich App 565 (1996); Plaintiff contracted a sexually transmitted disease in an adulterous relationship.
  • Fick v Lustig, Unpublished Court of Appeals, No. 198026 (1997); Plaintiff died after using illegally obtaining prescription drugs, and sued.

Courts apply this doctrine in more commonplace cases as well. The unpublished case Bart v Goal Tender Sports Pub, et al, Unpublished Court of Appeals, No. 262605 (2005), illustrates that the doctrine is alive and well, and has broad application. In Bart, the Michigan Court of Appeals upheld the dismissal of plaintiff’s case, where the plaintiff was intoxicated, and gave her keys to a visibly intoxicated defendant. The defendant was driving, he crashed the car, and the passenger/plaintiff was killed. The Court held that plaintiff’s claims were

barred, as her activity violated MCL 251.265(2) when she permitted the visibly intoxicated defendant to drive her car. The court held that this statute was not a mere safety statute, but instead a serious 5 year felony. The connection between the violation of that statute and the injuries that were suffered was clear and the case was properly dismissed.

This author worked on another Michigan case where the underage plaintiff stole liquor from the home of a friend’s parents, and subsequently died after falling down the stairs of the home of another friend. The Wrongful Conduct Doctrine was successfully asserted. Because the decedent plaintiff stole the liquor that was consumed, and that was causally related to the injury for which plaintiff had sued, the case was barred. In an interesting aside, while examining the facts in cases of this type, it was noted that a common factor is the presence of alcohol or other intoxicating substances. Along with the Wrongful Conduct Doctrine, keep in mind MCL 600.2955(a). This statute bars a plaintiff’s recovery of both economic and non-economic damages where plaintiff is “impaired” due to alcohol or controlled substances, and that impairment was 50% or more of the cause of the accident. This is an ABSOLUTE defense to the suit, and no recovery is permitted, whatsoever. Stay tuned for more on this defense in future issues of Gov Law.

Beware of the Promises You Make: Confidentiality of Settlement Agreements by Thomas R. Paxton

Recently, a city, beleaguered by a host of lawsuits by disgruntled former employees, negotiated settlements with its insurers and the employees. They asked that the employees agree to keep the terms and existence of the agreements confidential. The city hoped that this would deter ‘copycat’ lawsuits motivated only by the desire for quick cash. The employees also gained the promise that the details of their personal, financial and employment situations would remain confidential. Along came a local newspaper and demanded that the city disclose the terms of the settlement agreements under the Michigan Freedom of Information Act. The Wayne County Circuit Court held that the city was required to disclose the information. So what good is such a confidentiality clause?

The Freedom of Information Act (“FIOA”) MCLA 15.231 et seq, provides for the disclosure of certain documents and excepts others. There are no specific exemptions for settlement agreements. The state courts have declared that a municipality or governmental organization cannot avoid the duty to disclose by contracting to maintain confidentiality in a settlement agreement. Bradley v Saranac Community Schools Bd Of Ed, 455 Mich 285 (1997). This policy was upheld by Judge MacDonald of the Wayne County Circuit Court in a recent case. There has been no decision from the court of appeals as to the propriety of Judge MacDonald’s ruling.

Clearly this makes it difficult to reduce the “copy cat” effect. However, in previously unreported cases, the Court of Appeals has suggested that careful crafting of the settlement agreement may allow for the enforcement of such agreements. In Huron v Bd of Control of Eastern Michigan University, Unpublished Court of Appeals, No. 203719, issued January 22, 1999, the court seemed to suggest that if the individual settling with the governmental entity maintained that the disclosure of the information “would constitute a clearly unwarranted invasion of an individual’s privacy”, the agreement may be exempt from disclosure. The Court referred to the clearly stated exception in the Act that protects an individual’s privacy. MCLA 15.243(1)(a). The Court in Huron held “while defendant might have had justification for denying disclosure under the privacy exemption”, the plaintiff attorney represented that his client waived the right against disclosure under the privacy exemption. A well crafted release that carefully considers the specific language of the act and recognizes a Plaintiff’s right to privacy, might still provide some protection. Further, skillful language may deter plaintiff’s or their attorneys from disclosing the information.

It is clear that the courts are inclined to promote disclosure. Therefore, it is even more important that settlement agreements be carefully drafted to ensure that the parties’ intent is carried out.