Lead Opinion
Plaintiffs and defendants appeal the trial court’s partial grant and partial denial of defendants’ motion for summary disposition under MCR 2.116(C)(7) and (8). For the reasons stated below, we affirm in part and reverse in part, and remand for proceedings consistent with this opinion.
I. NATURE OF THE CASE
Cases brought under the governmental tort liability act (GTLA)
Specifically, plaintiffs maintain that defendants breached their contractual obligations in their administration of a group health insurance contract for employees of both plaintiffs and defendants.
While plaintiffs’ assertion has surface appeal, it must be rejected. Were we to accept such a theory, we
II. FACTS AND PROCEDURAL HISTORY
Plaintiff Genesee County Drain Commissioner (Drain Commissioner) alleges that he had an agreement with defendant Genesee County to purchase group health insurance from Blue Cross Blue Shield of Michigan (Blue Cross) for their respective employees. Blue Cross determined the premium rate to be paid by each entity, and they were separately invoiced for the payments. According to plaintiffs, Genesee County was to administer the group plan for the parties under the agreement.
In 2007, the Drain Commissioner began making contingency plans for alternative health insurance coverage in the event Genesee County decided to end the agreement for group health insuranсe coverage. After obtaining financial records and information from Blue Cross, the Drain Commissioner says that he learned that Genesee County, in its capacity as the group-plan administrator, had received substantial refunds from Blue Cross (supposedly totaling millions of
Among other things, plaintiffs asserted that defendants: (1) breached the alleged agreement to purchase health insurance by placing the refunded premiums in its general fund; and, in so doing, (2) committed a number of intentional torts, including fraud and conversion. Defendants moved for summary disрosition under MCR 2.116(C)(7) and (8), and asserted that: (1) any damages plaintiffs sought for breach of contract that accrued on the basis of conduct occurring before October 24, 2005 were barred by the statute of limitations; and (2) defendants were immune from plaintiffs’ intentional tort claims under the GTLA.
At an August 2012 hearing, the trial court held that: (1) plaintiffs’ breach of contract claim could only recover damages for actions that accrued after October 24,2005, pursuant to the six-year period of limitations specified
On appeal, plaintiffs say that the trial court should have applied the doctrine of equitable estoppel to prevent defendants from relying on the period of limitations in MCL 600.5807(8), which would have allowed them to seek damages for breach of contract that accrued before October 24, 2005. Defendants argue that the trial court erred when it allowed plaintiffs’ intentional tort claims to proceed.
III. STANDARD OF REVIEW
MCR 2.116(C)(7) provides that a party may file a motion to dismiss a case when “[e]ntry of judgment, dismissal of the action, or other relief is appropriate because of... immunity granted by law [or] statute of limitations ....” When it reviews a motion under MCR 2.116(C)(7), the court must “consider all documentary evidence and accept the complaint as factually accurate unless affidavits or other appropriate documents specifically contradict it.” Kuznar v Raksha Corp,
“A motion under MCR 2.116(C)(8) tests the legal sufficiency of the complaint. All well-pleaded factual allegations are accepted as true and construed in a light most favorable” to the nonmoving party. Maiden v
Statutory interpretation is a matter of law that is reviewed de novo. Pittsfield Charter Twp v Washtenaw Co,
IV. ANALYSIS
A. GOVERNMENTAL IMMUNITY
1. THE GTLA
Though the origins of governmental immunity lie in
The Legislature enacted the GTLA in 1964 after a series of court decisions began to erode thе common-law rule of governmental immunity from tort liability.
The GTLA defines “governmental function” as “an activity that is expressly or impliedly mandated or authorized by constitution, statute, local charter or ordinance, or other law.” MCL 691.1401(b). “[T]his definition is to be broadly applied and requires only that there be some constitutional, statutory or other legal basis for the activity in which the governmental agency was engaged.” Harris v Univ of Mich Bd of Regents,
To overcome governmental immunity for tort liability, then, plaintiffs — whether рrivate parties, or, as here, public entities — who bring tort claims against a governmental defendant
2. APPLICATION
It is uncontested that defendants are “governmental agencies” within the scope of the GTLA. And plaintiffs’ assertion that the administration of an interagency agreement tо provide health insurance to public employees is not a “governmental function” is simply incorrect.
Plaintiffs’ reasoning is seductively simple, but ultimately circular and self-defeating. Plaintiffs assert that if a governmental agency commits an intentional tort, it cannot, by definition, be engaged in the exercise or discharge of a governmental function, as intentional torts ought not be regarded as a governmental function. Because the governmental agency committed the alleged tort outside the exercise or discharge of a governmental function, the GTLA’s immunity no longer applies, and the victim of the tort may assert intentional tort claims against the governmental agency. Here, plaintiffs say (1) defendants committed intentional torts when they deposited refunded health insurance premiums in the Genesee County general fund; (2) these intentional torts are not a governmental function; and (3) the GTLA is thus not controlling and plaintiffs may assert these intentional tort claims against defendants.
Plaintiffs’ analysis both ignores Michigan caselaw and misreads the GTLA. To repeat: the provision and administration of health insurance benefits to public employees via an interagency agreement is plainly a governmental function.
More importantly, were we to adopt plaintiffs’ misreading of the GTLA, we would fatally undermine the statute and, ironically, cause it to suffer the same fate as the hollowed-out common-law rule it was enacted to replaсe. Again, plaintiffs say that intentional torts, by definition, cannot be governmental functions. Because the GTLA states that any act committed outside the exercise or discharge of a governmental function is not subject to immunity from tort liability, future plaintiffs would only need to assert a governmental defendant committed an intentional tort to abrogate the GTLA’s grant of immunity and continue their suit.
Under plaintiffs’ theory, then, intentional torts become a judicially created exception to the GTLA, and eviscerate the GTLA’s genеral rule of governmental immunity from tort liability. History would thus repeat itself — just as common-law governmental immunity was substantially eroded by judge-made exceptions, so too would its statutory heir. We will not interpret the GTLA in a way that undermines the clear public policy choices of the Legislature. Again, the purpose of the GTLA is to limit governmental tort liability to specific, narrow, and enumerated categories.
Accordingly, plaintiffs’ intentional tort claims against defendant must be dismissed, and we reverse the trial court’s unsupported holding that allowed those claims to proceed to trial.
B. STATUTE OF LIMITATIONS
Again, we do not address the substantive merits of plaintiffs’ claim for breach of contract, but only address the procedural question of whether equitable estoppel may be applied to negate the statute of limitations for plaintiffs’ breach of contract claim. MCL 600.5807 states:
No person may bring or maintain any action to recover damages or sums due for breach of contract, or to enforce the specific performance of any contract unless, after the claim first accrued to himself or to someone through whom he claims, he commences the action within the periods of time prescribed by this section.
(8) The period of limitations is 6 years for all other actions to recover damages or sums due for breach of contract.
A “statute of limitations is a procedural, not substantive, rule, which will be upheld unless a party demonstrates that it is so harsh and unreasonable in its consequences that it effectively divests plaintiffs of
generally must establish that there has been (1) a false representation or concealment of a material fact, (2) an expectation that the other party will rely on the misconduct, and (3) knowledge of the actual facts on the part of the representing or concealing party. [The Michigan Supreme] Court has been reluctant to recognize an estoppel absent intentional or negligent conduct designed to induce a plaintiff to refrain from bringing a timely action. [Id.]
Here, plaintiffs have not come close to making a case for equitable estoppel to negate application of the statute of limitations under MCL 600.5807. As the trial court found, dispositively, at no time did defendants engage in a “false representation or concealment of a material fact. . . .” Id. In fact, the action of which plaintiffs complain — Genesee County’s placement of the premium refund in the county’s general fund — was a matter of public record. This transparency is the exact opposite of “concealment” and reveals that plaintiffs’ request for equitable estoppel is simply a transparent and unavailing attempt to circumvent straightforward law.
The trial court correctly held that plaintiffs may not seek damages that accrued before October 24,2005. On
V. CONCLUSION
Accordingly, we hold that the trial court erred when it denied defendants’ request for summary disposition as to plaintiffs’ intentional tort claims. Defendants are immune from tort liability under the GTLA, and plaintiffs’ tort claims must be dismissed as a matter of law. We remand these claims to the trial court for entry of an order of dismissal.
We affirm the trial court’s ruling that plaintiffs’ breach of contract claim may not seek compensation for damages that accrued before October 24, 2005.
Affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion. We do not retain jurisdiction.
Notes
MCL 691.1401 et seq.
Plaintiffs have also appealed a procedural issue: whether equitable estoppel may be applied to negate the statute of limitations and allow plaintiffs to seek contract damages for injuries accrued before October 24, 2005. The substantive merits of plaintiffs’ breach of contract claim are not before us, and we make no findings on those matters.
Tb repeat, this aрpeal involves only plaintiffs’ intentional tort claims, which is why the GTLA, which governs governmental liability for torts, is implicated. Our analysis does not address plaintiffs’ claim for breach of contract, which is a separate claim not governed by the GTLA, insofar as it involves contractual liability and not tort liability. See In re Bradley Estate,
See Ross v Consumers Power Co (On Rehearing),
Over time, our judiciary has applied an extension of sovereign immunity — “governmental immunity” — to “the ‘inferior’ divisions of government, i.e., townships, school districts, villages, cities, and counties . . . .” Pohutski,
“The purpose of sovereign immunity is to protect the State from interference with the performance of governmental functions and to preserve and to protect State funds.” Ass’n of Mid-Continent Univ v Bd of Trustees of Northeastern Ill Univ, 308 Ill App 3d 950, 953; 242 Ill Dec 526;
Moraccini v Sterling Hts,
Martin v Michigan,
See Ross,
Martin,
11 As used in the GTLA, the term “governmental agency” means “this state or a politiсal subdivision.” MCL 691.1401(a). In turn, “political subdivision” includes “countjiesj,” a “district or authority authorized by law or formed by 1 or more political subdivisions,” and a “hoard ... of a political subdivision.” MCL 691.1401(e). Here, defendants, which are, respectively, a county and a board of a county, are “political subdivisions” under MCL 691.1401(e) and thus “governmental agencies” under MCL 691.1401(a).
The GTLA also grants immunity from tort liability to certain individuals acting in their capacity as employees of the government. See MCL 691.1407(2) and (5).
Among the GTLA’s stated exceptions to governmental immunity fоr tort liability are tort suits that involve the following: (1) highways (MCL 691.1402); (2) government-owned vehicles (MCL 691.1405); (3) public buildings (MCL 691.1406); and (4) sewage-disposal-system events (MCL 691.1417).
Stated another way, tort liability may be imposed on a government agency “only if the agency was engaged in ultra vires activity.” Herman v Detroit,
In other words, governmental immunity “applies not only to negligence, but also to intentional torts if they are committed within the scope of a governmental function.” Jones v Williams,
Lest this immunity from intentional tort liability seem unduly restrictive, it should be noted that the GTLA only provides governmental defendants immunity frоm tort liability — not contractual or criminal liability. See In re Bradley Estate,
This represents an acknowledgment of the reality that state and local governments are not magical entities that have unlimited amounts of money at their disposal — their money comes from taxes levied on people and businesses, and any cost to the public fisc will ultimately be borne by the private citizen. As Milton Friedman memorably put it, “there’s no such thing as a free lunch.” Friedman, There’s No Such Thing as a Free Lunch (Chicago: Open Court, 1975).
County boards of commissioners have long held statutory authority to provide health insurance to cоunty employees under MCL 46.12a, and MCL 280.33(3) states that a county, as here, may bear the cost of “fringe benefits,” i.e., health insurance, for drainage-district employees. Furthermore, the provision of health insurance to government employees is a longstanding governmental function of governmental agencies. See, for example, Houghton Lake Ed Ass’n v Houghton Lake Community Sch, Bd of Ed,
There is also a specific provision, MCL 124.75(l)(c), that explicitly permits the exact sort of group-insurance arrangement at issue. MCL 124.75 was enacted in 2007, presumably after the parties made their group-insurance agreement. (The parties do not specify when they entered into the alleged agreement.) Nevertheless, the existence of MCL 124.75, when viewed in light of the longstanding statutory authority of governmental entities to purchase health insurance for their employees,
See note 18 of this opinion.
See Ward,
This would be incredibly easy to do, because almost any action can be refrained as an intentional tort. For example, physical violence against an individual can be framed as a tort (assault) or a crime (criminal assault). In the same fashion, plaintiffs’ own suit transforms an otherwise valid contractual claim against governmental defendants into an invalid intentional tort claim against governmental defendants.
In re Bradley Estate,
Harrison,
See In re Bradley Estate,
Concurrence Opinion
(concurring). I concur in the result only.
