Genesee County Drain Commissioner v. Genesee County, 309 Mich. App. 317

Background

Genesee County (defendants) allegedly administered a multi‑agency group health plan and received substantial premium refunds from Blue Cross, which the county deposited into its general fund instead of allocating to plan members.
Plaintiffs are governmental entities (including the Genesee County Drain Commissioner) that claim breach of an interagency contract and assert intentional torts (conversion, fraud) based on the county’s retention of refunds.
Plaintiffs sued in Genesee Circuit Court on October 24, 2011; defendants moved for summary disposition under MCR 2.116(C)(7) and (8), asserting governmental immunity and statute‑of‑limitations defense.
The trial court limited contract damages to accruals after October 24, 2005 (six‑year limitations) but denied summary disposition on the intentional tort claims, allowing them to proceed.
On appeal, plaintiffs sought equitable estoppel to avoid the limitations bar; defendants argued that the Governmental Tort Liability Act (GTLA) bars plaintiffs’ intentional tort claims because the conduct occurred while performing a governmental function.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether GTLA bars intentional tort claims against a governmental agency that committed the tort while performing a governmental function	Intentional torts cannot be a "governmental function," so GTLA immunity should not apply to intentional wrongdoing	Administration of interagency employee health insurance is a governmental function; intentional torts committed in that context remain within GTLA immunity	Court held GTLA bars plaintiffs’ intentional tort claims; defendant immune because the general activity (administering group health insurance) is a governmental function
Whether plaintiffs may use equitable estoppel to toll the 6‑year statute of limitations for contract damages before Oct 24, 2005	Plaintiffs argued defendants concealed the refunds and induced delay, so estoppel should apply	Defendants pointed to public record disclosures (allocation in public meetings); no concealment occurred	Court affirmed trial court: equitable estoppel not available because there was no concealment; damages limited to accruals after Oct 24, 2005
Standard for evaluating whether conduct falls outside a governmental function (for intentional tort exception)	Plaintiffs urged a categorical rule that intentional torts cannot be governmental functions	Defendants relied on precedent holding courts look to the general activity, not specific wrongful acts	Court rejected Plaintiffs’ categorical rule and reaffirmed the ‘‘general activity’’ test; intentional torts may be immune if committed within a governmental function
Remedy alternatives when GTLA bars tort claims	Plaintiffs argued tort suit was appropriate remedy for alleged wrongdoing	Defendants noted GTLA does not bar contractual or criminal remedies; plaintiffs can pursue non‑tort avenues	Court observed plaintiffs may pursue contractual or criminal remedies but cannot maintain intentional tort claims under GTLA

Key Cases Cited

Smith v. Public Health Dep’t, 428 Mich 540 (intentional torts can be immune if committed within a governmental function)
In re Bradley Estate, 494 Mich 367 (distinguishing tort liability from non‑tort liability of governmental agencies)
Kuznar v. Raksha Corp., 481 Mich 169 (procedural standards for MCR 2.116(C)(7) review)
Wade v. Dep’t of Corrections, 439 Mich 158 (plaintiff must plead facts justifying an exception to governmental immunity)
Ward v. Mich. State Univ. (On Remand), 287 Mich App 76 (look to general activity, not specific conduct, to determine governmental function)
Harrison v. Corrections Dep’t Director, 194 Mich App 446 (GTLA contains no intentional‑tort exception)
Cincinnati Ins. Co. v. Citizens Ins. Co., 454 Mich 263 (elements and narrow application of equitable estoppel to toll statutes of limitation)
Maiden v. Rozwood, 461 Mich 109 (legal sufficiency standard for MCR 2.116(C)(8) motions)