287 Mich. App. 406 | Mich. Ct. App. | 2010
This case arises from the operation of a landfill by defendants, Wexford County, Wexford County Landfill, and the Wexford County Department of Public Works. Plaintiffs are property owners who allege that contaminants from the landfill entered their groundwater, causing property damage and other economic injuries. Defendants asserted a defense of governmental immunity. The trial court found that, although defendants’ unlicensed operation of the landfill was not ultra vires, there were questions of material fact concerning whether the operation fell within the proprietary function exception to governmental immunity.
I. BASIC FACTS AND PROCEDURAL HISTORY
In late 1973, Wexford County and its Department of Public Works commenced operation of the Wexford County Landfill. A special use permit that the state of Michigan issued allowed Wexford County and the Department of Public Works to establish the landfill on an 80-acre site of state-owned land in Cedar Creek Township. Throughout the 1970s and 1980s, the landfill
During the 1980s, concerns emerged regarding possible contamination of the groundwater flowing beneath the landfill. In 1984, analysis of water collected from monitoring wells revealed the presence of chemical contaminants attributable to the landfill, and in 1986, the Michigan Department of Natural Resources recommended capping portions of the landfill to prevent further contamination. Defendants and the Department of Natural Resources engaged in a lengthy and contentious dispute over the measures necessary to prevent further groundwater contamination. In 1989, the Department of Public Works and the Department of Natural Resources entered into a consent order, which observed, in relevant part, “The Department alleges, but the County DPW does not admit, that past landfill operations and other disposal activities at the disposal site has [sic] resulted in, and continues to cause, unpermitted discharges to, and resultant contamination of, the groundwaters of the State . . . .” Pursuant to the consent order, the Department of Public Works agreed to implement a remedial action plan calling for the complete closure of unlined landfill areas, additional investigation of the extent of landfill-connected groundwater contamination, and maintenance of monitoring wells. Later, Wexford County also agreed to install a “groundwater pump and treatment] system, consisting of five . . . extraction wells and an aeration pond.”
Notwithstanding significant Wexford County expenditures related to environmental remediation, the landfill generated a profit from 1984 through 2002. Historical audit information that Wexford County submitted revealed that the landfill achieved its greatest profit in 2000, when its assets minus liabilities totaled slightly more than $12 million. Between 2000 and 2006, Wexford County spent approximately $27.6 million of landfill revenues on activities directly related to the landfill, including contamination investigation, contamination cleanup, and preventative measures mandated by the consent orders. Within the same period, Wexford County spent 10 percent of landfill profits, about $2.7 million, on activities unrelated to the landfill, including insurance expenses, courthouse bond payments, contributions to the general fund, and a 911 radio project.
Certain plaintiffs filed a brief in opposition to defendants’ motion, arguing that defendants were not entitled to immunity because their operation of the landfill was in violation of the law and, therefore, ultra vires. Further, certain plaintiffs argued that defendants were not entitled to immunity because the landfill operation was proprietary, conducted for the purpose of making a profit, and not of the size or scope normally supported by fees or taxes in a community the size of Wexford County. Certain plaintiffs added that even if the landfill was covered by governmental immunity in the 1970s and 1980s, defendants could not show that the contamination originated at that time. Certain plaintiffs submitted the affidavit of Christopher Grobbel, who opined that contamination was still flowing from the landfill at the present time. Certain plaintiffs asked that summary disposition be entered in their favor.
At a hearing on the cross-motions for summary disposition, defendants briefly argued, for the first time, that Grobbel’s affidavit was inadmissible because it did not list his expert qualifications or explain his methods, and, therefore, should not be considered by the trial court. The trial court took the parties’ cross-motions under advisement.
The trial court later issued a written opinion and order denying both motions for summary disposition. After reciting some of the landfill revenue and expenditure evidence, the trial court deemed summary disposition inappropriate on the first prong of the proprietary function test, because “[t]he County’s purpose in operating the landfill for pecuniary profit has not been conclusively proved or refuted by the numerous exhibits filed by the parties. Trial testimony of the people who made these decisions is necessary to accurately adjudicate this issue.” The trial court opined that questions of fact also existed regarding whether “units of government like Wexford County” commonly “engage in business activities of this magnitude primarily to meet the garbage disposal needs of their residents, or are landfills of this size and type usually maintained for profit by public or private entities[.]” Accordingly, the trial court stated that “ [t] his question is unanswered by the documentary evidence and presents a genuine issue
Therefore, the trial court found that the parties’ competing expert testimony “discloses the time of contamination to be a disputed issue of fact.” The trial court also rejected plaintiffs’ suggestion that defendants had engaged in ultra vires conduct, finding that “[a] landfill operating in violation of state licensing requirements is not a [sic] ultra vires activity and must be afforded governmental immunity, unless another specific exception applies.”
II. MOTIONS FOR SUMMARY DISPOSITION UNDER MCR 2.116(0(10)
A. STANDARD OF REVIEW
We first consider the motions for summary disposition under MCR 2.116(C)(10). Under that court rule, a party may move for dismissal of a claim on the ground that there is no genuine issue with respect to any material fact and the moving party is entitled to judgment as a matter of law. The moving party must specifically identify the undisputed factual issues and support its position with documentary evidence.
This Court reviews de novo a trial court’s decision on a motion for summary disposition,
B. ULTRA VIRES ACTIVITY
A governmental agency is generally immune from tort liability “if the governmental agency is engaged in the exercise or discharge of a governmental function.”
Here, there can be no dispute that operation of a landfill is ordinarily a governmental function. In Coleman v Kootsillas,
However, certain plaintiffs’ contend that defendants’ operation of the landfill without a license and in disregard of applicable environmental regulations constituted an ultra vires activity not subject to the protection of governmental immunity.
In Richardson v Jackson Co,
In resolving the issue, the Supreme Court explained that activities authorized by one statute, yet regulated by another, generally remain subject to and protected by governmental immunity:
Enabling acts, which grant authority in broad terms, must be distinguished from regulatory statutes. Improper performance of an activity authorized by law is, despite its impropriety, still “authorized” within the meaning of the . . . governmental function test. An agency’s violation of a regulatory statute that requires the agency to perform an activity in a certain way cannot render the activity ultra vires, as such a conclusion would swallow the [governmental immunity] rule by merging the concepts of negligence and ultra vires.
In applying the “governmental function” test of the immunity statute, this Court must consider that statute’s breadth. The statute extends immunity “to all governmental agencies for all tort liability whenever they are engaged in the exercise or discharge of a governmental function. ”[22 ] Nothing in the governmental immunity act suggests [that] the Legislature intended to treat the failure to meet a “condition precedent,” such as obtaining a license or permit, any differently for immunity purposes than the failure to meet other sorts of regulatory duties. None of the act’s four narrowly drawn exceptions single out activity conditioned on permits or licenses for special treatment.. .. [Activities conducted in violation of regulations other than approval requirements are as “unauthorized” as activities*419 conducted without proper approval. Licensing is nothing more than an intense form of regulation.
The Legislature did not intend that the term “governmental function” be interpreted so that immunity for activity authorized generally by statute should evaporate upon the failure to perform a regulatory condition contained in another statute. In sum, ultra vires activity is not activity that a governmental agency performs in an unauthorized manner. Instead, it is activity that the governmental agency lacks legal authority to perform in any manner.[23 ]
The Supreme Court held that the Legislature’s imposition of a “regulatory duty” on operators of public beaches did not signal its intent “to condition all authority to engage in that activity upon compliance with that duty.”
Here, the statute authorizing defendants’ landfill operation reads:
A county establishing a department of public works shall have the following powers to be administered by the board of public works subject to any limitations thereon:
(c) To acquire a refuse system[25 ] within 1 or more areas in the county and to improve, enlarge, extend, operate, and maintain the system.[26 ]
Certain plaintiffs nevertheless contend that defendants’ violations of MCL 324.11509 and MCL 324.11512(2), which are parts of the Natural Resources and Environmental Protection Act (NREPA),
C. THE PROPRIETARY FUNCTION EXCEPTION TO GOVERNMENTAL IMMUNITY
As explained above, defendants’ operation of a landfill constitutes a governmental function, for which a governmental agency is generally immune.
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[29 ]
1. PECUNIARY PROFIT PURPOSE
Defendants argue that the landfill was operated primarily to meet its citizens’ waste disposal needs, not primarily to make a profit.
In determining whether the agency’s primary purpose is to produce a pecuniary profit, a court must first consider “whether a profit is actually generated,” and second must consider “ ‘where the profit generated by the activity is deposited and how it is spent.’ ”
In Hyde, the Supreme Court noted that the proprietary function exception turns on the agency’s motive; it does not require that the activity “actually generate a profit. . . .”
“Another relevant consideration is where the profit generated by the activity is deposited and how it is spent.”
The evidence in this case showed that until 1989, all garbage that the landfill processed came from Wexford County. Since 1990, approximately six percent of the
The landfill has been making a profit since 1984. The landfill’s profits and interest on those profits were deposited into a landfill fund. Between 1989 and 2000, the fund’s unrestricted assets increased from $948,894 to $13,710,372. Through 1999, these funds were not used for any purpose unrelated to the landfill. But between 2000 and 2005, the landfill transferred approximately $2.7 million out of the landfill fund for uses unrelated to the landfill. As the following chart shows, for the first three years, the amounts of these unrelated transfers were approximately half of the landfill’s annual net earnings plus interest, until the landfill started losing money. The unrelated transfers continued for three years after the landfill began losing money, but stopped in 2006.
Year
Net Earnings (operating earnings)
Interest (non-operating earnings)
Net Earnings plus Interest
Unrelated Transfers
Percentage (of net Earnings plus Interest)
2000 379,440 725,157 1,155,869 752,175 65.0%
2001 428,376 368,329 1,153,533 566,559 49.1%
2002 262,554 256,077 630,883 395,091 62.6%
2003 (630,521) 264,692 (374,444) 339,713 N/A
2004 (1,777,797) 288,982 (1,513,105) 334,015 N/A
2005 (3,193,570) 205,130 (2,904,588) 330,000 N/A
Thus, in considering the motions for summary disposition under MCR 2.116(C)(10), we conclude that the trial court did not err by concluding that there was a question of material fact concerning whether the landfill was being operated for the primary purpose of making a pecuniary profit, including whether that motive changed over time.
2. ACTIVITY NORMALLY SUPPORTED BY TAXES OR FEES
The Supreme Court has stated that even if an activity is conducted for the primary purpose of making a profit, the proprietary function exception does not apply if the activity is normally supported by taxes or fees.
In Coleman, the city of Riverview accepted garbage, not just from its residents, but from numerous other sources, including Wayne County and the province of Ontario, Canada.
The fact that the city charges fees to garbage haulers unloading refuse into its landfill does not alter this conclusion. Any governmental activity must exact a fee if it is to produce a pecuniary profit. If imposition of a use fee like Riverview’s would suffice to defeat the proprietary function exception to governmental immunity, almost no city activity would subject a city to liability. That could not have been the intention of the Legislature.[48 ]
The Court concluded that the proprietary function test had been met and that the city of Riverview was not immune from tort liability.
Here, it is undisputed that fees exclusively support the landfill. However, as Coleman states, that fact alone is not sufficient to avoid the proprietary function exception. Defendants argue that the trial court erred when, in examining the issue whether an activity is “normally supported by taxes or fees,” it sought evidence of how other communities support their landfills. In applying this part of the proprietary function test, however, the
Thus, in considering the motions for summary disposition under MCR 2.116(C)(10), we conclude that the trial court did not err by finding that there was a question of fact whether defendants’ operation of the landfill was subject to the proprietary function exception to governmental immunity.
D. CONTAMINATION
Defendants argue that the trial court erred by considering the affidavit of certain plaintiffs’ expert Christopher Grobbel in finding that a question of material fact existed with regard to when the alleged contamination occurred. Defendants contend that Grobbel’s affidavit should not have been considered because the reliability standards required by MRE 702 were not satisfied.
The evidentiary rule that governs expert testimony, MRE 702, provides:
If the court determines that scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise if (1) the testimony is based on*427 sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the ease.[51 ]
Further, MCR 2.116(G)(6) provides that “[affidavits . . . offered in support of or in opposition to a motion based on subrule (C)(1)-(7) or (10) shall only be considered to the extent that the content or substance would be admissible as evidence to establish or deny the grounds stated in the motion.” However, in addressing this requirement, the Michigan Supreme Court in Maiden v Rozwood,
“The evidence need not be in admissible form; affidavits are ordinarily not admissible evidence at a trial. But it must be admissible in content.... Occasional statements in cases that the party opposing summary judgment must present admissible evidence .. . should be understood in this light, as referring to the content or substance, rather than the form, of the submission.”
Moreover, MCR 2.119(B)(1) provides:
If an affidavit is filed in support of or in opposition to a motion, it must:
(a) be made on personal knowledge;
(b) state with particularity facts admissible as evidence establishing or denying the grounds stated in the motion; and
(c) show affirmatively that the affiant, if sworn as a witness, can testify competently to the facts stated in the affidavit.
III. MOTION FOR SUMMARY DISPOSITION UNDER MCR 2.116(C)(7)
A. STANDARD OF REVIEW
Of crucial importance here is that defendants also brought their motion for summary disposition under MCR 2.116(C)(7). MCR 2.116(C)(7) provides that a motion for summary disposition may be raised on the ground that a claim is barred because of immunity granted by law. When reviewing a motion under MCR 2.116(C)(7), this Court must accept all well-pleaded factual allegations as true and construe them in favor of the plaintiff, unless other evidence contradicts them.
B. THE TRIAL COURT’S OPINION
In resolving the motions for summary disposition, the trial court found that summary disposition must be denied because there existed questions of fact that would best be resolved at a trial. Specifically, with respect to the pecuniary-profit-purpose test of the proprietary function exception, the trial court concluded that “[t]rial testimony of the people who made these decisions [regarding the landfill’s purpose] is necessary to accurately adjudicate this issue.”
C. GOVERNMENTAL IMMUNITY AS A QUESTION OF LAW
As we have stated above, when reviewing a motion for summary disposition brought under MCR 2.116(C)(10), the court must examine the documentary evidence presented and, drawing all reasonable inferences in favor of the nonmoving party, determine whether a genuine issue of material fact exists.
However, to the extent that the trial court envisioned that such further inquiry and clarification would be arrived at during a trial, with either the court sitting as a finder of fact or a jury serving the same function, we disagree. A trial is not the proper remedial avenue to take in resolving the factual questions under MCR 2.116(C)(7) dealing with governmental immunity. Indeed, the crux of the case is the determination of the threshold issue whether governmental immunity protects defendants’ conduct or whether that conduct fell outside the immunity protection through application of the proprietary function exception.
As we stated above, under MCR 2.116(0(10), if the court does determine that a genuine issue of material fact exists, then it must deny the motion and leave the issues of fact to a fact-finder to resolve at a trial. But we must reconcile this procedure with the fact that application of the proprietary function exception to governmental immunity remains a question of law for the court.
Accordingly, we instruct the trial court to hold an evidentiary hearing for the purpose of obtaining such factual development as is necessary to determine whether defendants’ operation of the landfill was subject to the proprietary function exception to governmental immunity. On the basis of the further factual development presented at that hearing, if the trial court determines that defendants’ operation of the landfill is subject to the proprietary function exception to governmental immunity as a matter of law, then it should deny
We affirm, but remand for proceedings consistent with this opinion. We do not retain jurisdiction.
MCL 691.1413.
Plaintiffs have divided themselves into two groups represented hy different counsel. We refer to the group that filed a summary disposition motion in the trial court, and now cross-appeal, as “certain plaintiffs.”
The Department of Natural Resources is now known as the Department of Natural Resources and Environment.
The complaint also contains an inverse condemnation count, which is not involved in this appeal. In January 2007, an amended complaint was filed that added more plaintiffs, hut reiterated the same counts in the original complaint.
MCR 2.116(G)(3)(b) and (4); Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999).
MCR 2.116(G)(5); Maiden, 461 Mich at 120; Quinto v Cross & Peters Co, 451 Mich 358, 361-362; 547 NW2d 314 (1996); see also Smith v Globe Life Ins Co, 460 Mich 446, 454-455 & n 2; 597 NW2d 28 (1999).
Glittenberg v Doughboy Recreational Indus (On Rehearing), 441 Mich 379, 398-399; 491 NW2d 208 (1992), reh den sub nom Spaulding v Lesco Int’l Corp, 441 Mich 1202 (1992).
Maiden, 461 Mich at 118; Spiek v Dep’t of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998); Tillman v Great Lakes Truck Ctr, Inc, 277 Mich App 47, 48; 742 NW2d 622 (2007); Guerra v Garratt, 222 Mich App 285, 288; 564 NW2d 121 (1997).
Heinz v Chicago Rd Investment Co, 216 Mich App 289, 295; 549 NW2d 47 (1996).
Wickings v Arctic Enterprises, Inc, 244 Mich App 125, 133; 624 NW2d 197 (2000).
MCL 691.1407(1).
MCL 691.1401(f).
Coleman v Kootsillas, 456 Mich 615, 619; 575 NW2d 527 (1998).
Id. at 619-620, citing MCL 123.261 and MCL 324.4301.
Id. at 620.
Id.
Richardson v Jackson Co, 432 Mich 377, 381; 443 NW2d 105 (1989) (emphasis in original).
Then codified as MCL 281.1001 et seq.
Richardson, 432 Mich at 380.
Id. at 385; see MCL 123.51.
Richardson, 432 Mich at 381.
Emphasis in original.
Richardson, 432 Mich at 385-387 (emphasis added; citations omitted).
Id. at 383.
The term “refuse system” means “disposal, including all equipment and facilities for storing, handling, processing, and disposing of refuse, including plants, works, instrumentalities, and properties, used or useful in connection with the salvage or disposal of refuse and used or useful in the creation, sale, or disposal of by-products, including rock, sand, clay, gravel, or timber, or any portion or any combination thereof.” MCL 123.731(e).
MCL 123.737.
MCL 324.101 et seq.
MCL 691.1407(1); Coleman, 456 Mich at 619.
MCL 691.1413 (emphasis added).
Hyde v Univ of Mich Bd of Regents, 426 Mich 223, 257; 393 NW2d 847 (1986).
Id. at 258 (emphasis in original).
Coleman, 456 Mich at 621.
Hyde, 426 Mich at 258.
Id.
Id.
Id.
Id.
Id.
Id. at 258-259 (emphasis in original).
Id. at 259.
Id.
Id.
Id.
Coleman, 456 Mich at 622 n 8; Hyde, 426 Mich at 259-260.
Coleman, 456 Mich at 622.
Id. at 616-617, 622-623.
Id. at 623.
Id. (emphasis added).
Id. at 623-624.
Id. at 623.
See also Craig v Oakwood Hosp, 471 Mich 67; 684 NW2d 296 (2004); Gilbert v DaimlerChrysler Corp, 470 Mich 749; 685 NW2d 391 (2004).
Maiden, 461 Mich at 124 n 6.
Winskunas v Birnbaum, 23 F3d 1264, 1267-1268 (CA 7, 1994) (citations omitted; original emphasis in Winskunas omitted).
MCR 2.116(G)(6); Maiden, 461 Mich at 124 n 6.
Maiden, 461 Mich at 119; Guerra, 222 Mich App at 289.
MCR 2.116(G)(5); Maiden, 461 Mich at 119; Guerra, 222 Mich App at 289.
Guerra, 222 Mich App at 289.
Id.
Emphasis added.
Emphasis added.
MCR 2.116(G)(5); Maiden, 461 Mich at 120; Quinto, 451 Mich at 361-362; see also Smith, 460 Mich at 454-455 & n 2.
MCR 2.116(G)(5); Maiden, 461 Mich at 119; Coleman, 456 Mich at 618; Herman v Detroit, 261 Mich App 141, 143-144; 680 NW2d 71 (2004); Guerra, 222 Mich App at 289.
Walsh v Taylor, 263 Mich App 618, 624; 689 NW2d 506 (2004).
Guerra, 222 Mich App at 289.
Id.
Briggs v Oakland Co, 276 Mich App 369, 371; 742 NW2d 136 (2007); Laurence G Wolf Capital Mgt Trust v City of Ferndale, 269 Mich App 265, 270; 713 NW2d 274 (2005).
In Delaney v Mich State Univ, unpublished opinion per curiam of the Court of Appeals, issued March 16, 1999 (Docket No. 202391), in considering a motion brought under MCR 2.116(C)(7) and (C)(10), a panel of this Court concluded that the “plaintiff ha[d] submitted allegations and proofs sufficient to withstand [the] defendant’s motion for summary disposition on the basis of governmental immunity.” Accordingly, the panel reversed and remanded “for proceedings consistent with this opinion.” However, the panel did not specifically indicate what such proceedings should actually entail, that is, a trial or merely an evidentiary hearing.
Laurence G Wolf, 269 Mich App at 268; see also Huron Tool & Engineering Co v Precision Consulting Servs, 209 Mich App 365, 377; 532 NW2d 541 (1995) (“However, if a material factual dispute exists such that factual development could provide a basis for recovery, summary disposition is inappropriate.”).
Hyde, 426 Mich at 255.