Author(s): Jami E. Leach, Matthew LaBeau

There are six statutory exceptions to the broad grant of governmental immunity in Michigan. This is the fourth installment in a series of articles that will provide a summary of each exception. We started with the highway exception – one of the most used and most litigated exceptions. In February we talked about the “motor vehicle exception”. April’s issue discussed the “public building exception”. Today we will briefly address the “proprietary function exception”. Remember that the exceptions to immunity are very narrowly construed – therefore attention to each word in the statute is imperative. As always, if you have any questions or need some assistance on this or any governmental issue, please feel free to contact one of our nine offices.

PROPRIETARY FUNCTION EXCEPTION

A governmental agency does not enjoy immunity for injuries or damages sustained as the result of a proprietary function. MCLA 691.1413 provides:

The immunity of the governmental agency shall not apply to actions to recover for bodily injury or property damage arising out of the performance of a proprietary function as defined in this section. Proprietary function shall mean any activity which is conducted primarily for the purpose of producing a pecuniary profit for the governmental agency, excluding, however, any activity normally supported by taxes or fees.

  • To be deemed a proprietary function, an activity must satisfy two tests. The activity must be conducted primarily for the purpose of producing a pecuniary profit. Second, the activity may not normally be supported by taxes or fees.
  • Plaintiffs sued defendant municipality claiming that odors from its expanded wastewater treatment plant negatively impacted their business and constituted a “trespass and/or trespass/nuisance and/or nuisance per se.” Previously, the municipality had expanded the plant to allow it to accept waste from a neighboring township. Because the defendant expanded the plant to accept waste from the neighboring community and charged that community a fee for accepting the waste, plaintiffs argued that operation of the plant was a proprietary function for which defendants did not have governmental immunity. The Court of Appeals held that it was not a proprietary function because the plant was not operated for the primary purpose of producing a profit. The fees and charges collected for wastewater treatment were not placed in defendant’s general fund or used to fund activities other than the operation of the plant. Moreover, defendant’s charter provided that the rates charge to users of the system were to be only those fees necessary for the operation and maintenance of the system. Finally, under the contract between the defendant and the neighboring township, the fees collected for the use of the system were only to be used for operation and maintenance of the plant and could not be used to fund unrelated activities. R.J. Inn, Inc. v Howell, unpublished opinion per curiam of the Court of Appeals, issued March 6, 2007 (Docket No.271852).
  • Not a proprietary function if revenue used to self sustain, i.e., public lighting department, airport, water department, health clinic, athletic programs.
  • Proprietary function where run for profit, i.e., landfill generating millions of dollars, land or building leases for profit.
  • Intercollegiate Athletics Not a Proprietary Function.

Plaintiff was struck in the head an injured by a hockey puck while she was a spectator during a college hockey game at defendant Michigan State University’s ice area. The court rejected plaintiff’s argument that defendant was not immune from tort liability because the injury resulted from a proprietary function. The court relied on Harris v University of Michigan Board of Regents, 219 Mich App 679 (1996) in holding that intercollegiate athletics is a governmental function for the purposes of governmental immunity. Ward v Mich State Univ, unpublished per curiam opinion of the Michigan Court of Appeals, dated January 27, 2009 (Docket No. 281087).

Municipal Law Update by Matthew LaBeau

Plaintiff Provides Insufficient Notice of Slip and Fall on Municipal Property

On March 2, 2006, Plaintiff fell on an icy sidewalk near his home and injured his hip. On March 26, 2006, Plaintiff’s counsel provided the City of Dearborn with a letter stating, among other things, that the fall occurred “in the area of 5034 Middlesex” and that his client “fell due to the defective sidewalk.” Plaintiff later filed suit against Defendant Dearborn. Dearborn’s motion for summary disposition on the basis that the notice was legally insufficient was denied by the trial court. The trial court found that the notice was compliant because the police investigated and took pictures, and city workers tagged the sidewalk before the accident. Defendant Dearborn appealed.

The Michigan Court of Appeals reversed. The Court first noted that MCL 691.1404 required a claimant to provide notice that “shall specify the exact location and nature of the defect…” The police report and photographs revealed that the actual fall occurred next door at 5026 Middlesex, not 5034 Middlesex. Therefore, the exact location of the fall was not provided. Furthermore, the trial court improperly relied on the police report as notice, since the police report recorded the incident as occurring at 5026 Middlesex, which could lead Defendant to believe there were two separate incidents. Finally, the notice failed to describe the nature of the defect, instead merely referring to a “defective sidewalk.” The Court found that the police photographs were of no assistance since the defect was not readily apparent from the photographs. Mawri v. City of Dearborn, unpublished per curiam opinion of the Michigan Court of Appeals, dated August 6, 2009 (Docket No. 283893).

Plaintiff Rebuts Inference that Sidewalk Was Maintained In Reasonable Repair

On June 23, 2006, Plaintiff, a 16 year old girl, was riding her bike on a sidewalk in the City of Ann Arbor. Plaintiff struck a raised slab of concrete obscured by vegetation, lost control of her bike, and hit a tree. As a result of the incident, Plaintiff injured her hand. The slab of sidewalk was raised 1f” at its greatest height, the height of which was hidden by grass and other vegetation. The slab was adjacent to a tree and had been broken into two pieces. Plaintiff filed suit against the Defendant City of Ann Arbor. Defendant filed a motion for summary disposition on the basis that it was entitled to governmental immunity because the discontinuity in the sidewalk was less than 2″ under MCL 691.1402a(2). The trial court denied the motion, finding a question of fact remained as to whether plaintiff had successfully rebutted the inference created by MCL 691.1402a(2). Defendant Ann Arbor appealed.

The Michigan Court of Appeals affirmed. The Court stressed that MCL 691.1402a(2) created a rebuttable inference, meaning that Plaintiff’s claim would be barred by governmental immunity unless Plaintiff could come forward with some evidence to rebut the inference that the sidewalk was maintained in reasonable repair. The Court found that the there was ample evidence to rebut the inference. Plaintiff proffered evidence that the height of the walkway’s raised edge was obscured by vegetation and other debris so that it could not be seen by Plaintiff. Additional evidence demonstrated that the slab was broken into two pieces and had shifted so that it was no longer level. Handley v. Ann Arbor, unpublished per curiam opinion of the Michigan Court of Appeals, dated July 30, 2009 (Docket No. 284135)

The Highway Exception Applies to a Partially Closed Roadway

Plaintiff was injured while riding a bicycle on a sidewalk along Eight Mile Road in the City of Warren. A portion of the sidewalk had been removed and new concrete had been poured earlier in the day. At the end of the newly poured cement was a wooden slat used to form the cement, which was adjacent to a ditch and another wooden slat closer to the curb. Plaintiff rode over the newly poured cement, not knowing it was still wet. She turned to assess the traffic and did not initially see that the cement ahead of her was missing. When she realized the situation, she applied her brakes and the bicycle stopped abruptly in the wet cement, throwing her over the handlebars. Plaintiff filed suit against the City of Warren. The City filed a motion for summary disposition on the basis that the highway exception does not apply when a highway is under repair. The motion was denied by the trial court. The City appealed.

The Michigan Court of Appeals affirmed in part and reversed in part. The Court found that Defendant’s duty to maintain the highway in reasonable repair did not create a duty to place warning signs or barriers at points of special hazards. To the extent that Plaintiff’s claims relied on this theory, Defendant’s motion should have been granted. In affirming the remainder of the trial court’s ruling, the Court held that the highway exception is limited only when a road is closed to through traffic, not just when the highway is under repair. The Court noted that the status of a sidewalk for purposes of governmental immunity depends on whether the adjacent highway is covered by the exception. In this instance, while the sidewalk and parking lane of the street were closed, the normal traffic lanes remained open. The Court found that Defendant failed to cite any authority indicating that partial closure was sufficient to suspend the statutory duty to maintain the roadway. Patrick v. City of Warren et al, unpublished per curiam opinion of the Michigan Court of Appeals, dated August 4, 2009 (Docket No. 284291).

Building Inspector Was Not The Proximate Cause of Plaintiff’s Damages

Plaintiff purchased a home, then brought suit against the builder, its owner, the defendant township, and Paul Wilcox, the township’s building inspector, asserting negligent construction, breach of contract and warranties, and misrepresentation. Specifically, Plaintiff claimed that the home was built over the natural underground watercourse and drain resulting in constant saturation of the new home requiring constant pumping and causing leaks, cracks, and infiltration. The Defendant Wilcox filed a motion for summary disposition on the basis that he did not act with gross negligence and was not the proximate cause of Plaintiff’s injuries. The trial court denied the motion. Wilcox appealed on the issue of causation.

The Michigan Court of Appeals reversed. While Wilcox approved the faulty construction site and the finished building, this alone did not relieve the builder from his responsibility for the decision to build on unsuitable ground. Also, since Plaintiff claimed that Wilcox should have consulted with the drain commissioner, who would have alerted the builder of the problems with the site, Plaintiff admitted that the builder had other individuals to rely on when deciding to build on the property. Since the builder at least shared responsibility for proceeding on an unsuitable site, Wilcox’s role in the matter was not the “one most immediate, efficient, and direct cause” of Plaintiff’s damages. Instead, the defects were more immediately and directly caused by those who actually performed the construction work. Smylie, et al v. Dryden Construction, et al, unpublished per curiam opinion of the Michigan Court of Appeals, dated July 14, 2009 (Docket No. 286243).

Prosecutor’s Actions Were Protected by Absolute Immunity

On the evening of September 4, 2004, police officers were dispatched to the property of Robert Seaman in response to a call claiming that a person was being restrained after being observed breaking into vehicles. Upon arrival, the officers found Plaintiff Cady being assisted up from the ground. Cady provided conflicting accounts, first stating that his vehicle was hit by a water balloon as he drove by the Seaman residence and was assaulted when he tried to investigate, then later stating he stopped at what he believed was his friend’s house and he was jumped. Officers smelled alcohol on Cady’s breath, and a breathalyzer test revealed a .101 blood-alcohol level. The four individuals at the Seaman residence told officers that Cady came onto the property and assaulted Robert Seaman and the other individuals restrained Cady until the authorities arrived. Eventually, Cady was arrested and charged with misdemeanor counts of assault and battery.

In April 2005, Cady executed a Deferred Prosecution Agreement (DPA), which provided that if Cady pursued civil claims against the victims or other participants in the altercation, criminal charges would be re-issued. Five months later, Cady sued the individuals at the party. The criminal charges were reinstituted against Cady, but he was eventually acquitted. Cady then filed a claim pursuant to 42 USC 1983 against County Prosecutor Broughton alleging prosecutorial misconduct. Broughton’s motion for summary judgment was granted by the trial court, which found that the issuance of charges, the inclusion of the waiver of civil claims in the DPA, and the prosecution of Cady were all acts subject to absolute prosecutorial immunity.

The United States Sixth Circuit Court of Appeals affirmed. As for Plaintiff’s action against Broughton in his individual capacity, the Court likened the DPA to a plea bargain which has long been held to be intimately associated with the prosecutor’s role as an advocate of the State in the judicial process. Further, entering into a release-dismissal agreement is one way a prosecutor may choose to resolve a case in his role as advocate for the state. Accordingly, Broughton was entitled to absolute prosecutorial immunity. As for the claims against Broughton in his official capacity, absolute immunity was not available. Nevertheless, Broughton was entitled to Eleventh Amendment sovereign immunity since, Broughton was functioning as an agent of the state, and therefore could not be sued in his official capacity in federal court. Cady v. Broughton, et al, __ F.3d __ (6th Cir.2009).

U.S. Supreme Court Finds that Failure to Certify Test Results Constituted Race Discrimination in Violation of Title VII

In 2003, 118 New Haven, Connecticut firefighters took examinations to qualify for promotion to the rank of lieutenant or captain. The results would determine which firefighters would be considered for promotions during the next two years, and the order they would be considered. Candidates expended large amounts of time and money to prepare for the examination. When examination results showed that white candidates outperformed minority candidates, some firefighters argued the tests should be discarded while others said the exams were neutral and fair. Both sides threatened a discrimination suit. The City eventually took the side of those who protested the test results, and threw out the examinations. Certain white and Hispanic firefighters who likely would have been promoted based on their good test performance sued the City and some of its officials, alleging that the Plaintiffs were discriminated against on the basis of their race in violation of both Title VII of the Civil Rights Act and the Equal Protection Clause of the Fourteenth Amendment. The Defendants filed a motion for summary disposition on the basis that, if they had certified the results, they could have faced liability under Title VII for adopting a practice that had a disparate impact on the minority firefighters. The trial court granted the motion and the Court of Appeals affirmed.

The United States Supreme Court reversed. The Defendants chose not to certify the test results because of a statistical disparity based on race. Without some other justification, this violates Title VII’s provisions that employers cannot take adverse employment actions because of an individual’s race.The Court held that disparate treatment based on race like the City’s in this case is impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate impact statute. Furthermore, the Court held that the Defendants could not meet this standard. While the test results had a significant statistical disparity, that alone is not a sufficient basis for liability under Title VII. The City would only be liable if, in addition to the disparity, the examinations were not job related and consistent with business necessity, or if there existed an equally valid, less discriminatory alternative that served the City’s needs, that the City refused to adopt. The Court held that the City could not show either of these circumstances. Therefore, by failing to certify the test results, the City engaged in disparate treatment of the white and Hispanic firefighters based on race without justification in violation of Title VII.