Genesee Cnty. Drain Comm'r v. Genesee Cnty.

309 Mich.App. 317

869 N.W.2d 635

GENESEE COUNTY DRAIN COMMISSIONER

v.GENESEE COUNTY.

No. 312450.

Court of Appeals of Michigan.

Submitted April 1, 2014, at Detroit.

Decided March 3, 2015, at 9:00 a.m.

Henneke, Fraim & Dawes, PC, Flint (by Scott R. Fraim and Brandon S. Fraim), for plaintiffs.

Plunkett Cooney (by Hilary A. Ballentine, Bloomfield Hills H. William Reising, and Rhonda R. Stowers, Flint) for defendants.

Before: STEPHENS, P.J., and SAAD and BOONSTRA, JJ.

Opinion

SAAD, J.

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)¹ usually involve personal-injury or property-damage tort claims made by individuals against governmental agencies or employees. This case, however, is unusual, because it involves tort claims made by a group of governmental agencies against another group of governmental agencies. And it is even more unusual because plaintiffs' tort claims arise out of a contractual agreement. Despite the peculiar aspects of this action, our research and understanding of Michigan caselaw leads us to a conventional ruling: plaintiffs' intentional tort claims are barred by the GTLA, because the GTLA contains no exceptions from governmental immunity for intentional torts, and because defendants were engaged in a basic governmental function as they committed the alleged tortious conduct.

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.² In so doing, plaintiffs argue, defendants also committed the intentional torts of conversion and fraud by wrongfully keeping premium refunds for themselves, instead of sharing the refunds with plaintiffs, as allegedly required by the contract. Though plaintiffs acknowledge that there are no statutory exceptions for intentional torts under the GTLA, they note that the GTLA's immunity from tort liability only applies to governmental agencies engaged in the discharge of a governmental function. Defendants, plaintiffs claim, could not have been engaged in a governmental function when they committed intentional torts, because tortious conduct cannot be a “governmental function.” From this, plaintiffs say defendants are not immune from tort liability for their intentional wrongdoing under the GTLA.

While plaintiffs' assertion has surface appeal, it must be rejected. Were we to accept such a theory, we would in essence rewrite the GTLA and make public policy choices that are rightly the Legislature's to make. We would create a new (and wholly unsupported) exception to the GTLA's general rule of governmental immunity from tort liability—an exception that would swallow up this general rule. To avoid dismissal of their case pursuant to the GTLA, future plaintiffs would only need to allege intentional wrongdoing by a governmental agency. Such a result contravenes the stated purpose of the GTLA, which is to limit governmental tort liability to specific, statutorily enumerated situations. Accordingly, we hold that plaintiffs' tort claims are barred by the GTLA, and explain our reasoning in greater detail below.

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 insurance 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 dollars) for premium overpayments made by each member of the group plan. The county—which, plaintiffs say, could or should have used the refunds to reduce premium costs for county employees and employees of the Drain Commissioner, or could or should have returned a portion of the money to each member of the group plan—instead deposited the money in its general fund. These allocations, in accordance with MCL 15.263(1), took place at public meetings and were (and remain) matters of public record. Yet the Drain Commissioner claims he was unaware of Genesee County's conduct, and ultimately demanded that the county pay his office a portion of the refunded money the county received from Blue Cross. When defendant Genesee County Board of Commissioners (Board of Commissioners) did not authorize the county to do so, the Drain Commissioner and other affected parties brought this action against defendants in Genesee Circuit Court on October 24, 2011.

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 disposition 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 in MCL 600.5807(8) ; and (2) defendants' status as governmental entities did not give them immunity from intentional tort claims.

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., 481 Mich. 169, 175–176, 750 N.W.2d 121 (2008). All well-pleaded allegations are accepted as true and construed in favor of the nonmoving party. Johnson v. Pastoriza, 491 Mich. 417, 435, 818 N.W.2d 279 (2012). In the context of a suit in which the defendant alleges governmental immunity, “to survive a motion for summary disposition, the plaintiff must ... allege facts justifying application of an exception to governmental immunity.” Wade v. Dep't of Corrections, 439 Mich. 158, 163, 483 N.W.2d 26 (1992).

“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. Rozwood,

461 Mich. 109, 119, 597 N.W.2d 817 (1999). Motions under MCR 2.116(C)(8) are granted only when the claims are so unenforceable “as a matter of law that no factual development could possibly justify recovery.” Id. (quotation marks and citation omitted).

Statutory interpretation is a matter of law that is reviewed de novo. Pittsfield Charter Twp. v. Washtenaw Co., 468 Mich. 702, 707, 664 N.W.2d 193 (2003). “When ascertaining the Legislature's intent, a reviewing court should focus first on the plain language of the statute in question, and when the language of the statute is unambiguous, it must be enforced as written.” Fellows v. Mich. Comm. for the Blind, 305 Mich.App. 289, 297, 854 N.W.2d 482 (2014) (quotation marks and citation omitted). “A court does not construe the meaning of statutory terms in a vacuum. Rather, we interpret the words in their context and with a view to their place in the overall statutory scheme.” Manuel v. Gill, 481 Mich. 637, 650, 753 N.W.2d 48 (2008) (quotation marks and citations omitted).

IV. ANALYSIS

A. GOVERNMENTAL IMMUNITY

1. THE GTLA³

Though the origins of governmental immunity lie in the antiquated notion that the sovereign can do no wrong,⁴ the modern rationale is rooted in the more realistic assessment that the sovereign—meaning government at all levels⁵ —often does wrong. But the taxpaying citizen, who already pays dearly for government employees to perform governmental functions, would pay an unacceptably high price if every wrong or alleged wrong committed by the government or its agents were regarded as compensable.⁶ With this reality in mind, the Michigan Legislature adopted a public policy, codified in the GTLA, that provides governmental entities with strong and comprehensive immunity from tort liability, subject only to extremely limited and strictly construed exceptions.⁷ Thus, the law of governmental immunity from tort liability is statutory, a clear public policy choice made by the people's representatives, and one that abrogates all common-law...