BEATRICE BOLER, EDWIN ANDERSON, ALLINE ANDERSON, and EPCO SALES, LLC, Plaintiffs-Appellees,
GOVERNOR, STATE OF MICHIGAN, DEPARTMENT OF ENVIRONMENTAL QUALITY, and DEPARTMENT OF HEALTH AND HUMAN SERVICES, Defendants-Appellees, and DANIEL WYANT, LIANE SHEKTER-SMITH, ADAM ROSENTHAL, STEPHEN BUSCH, PATRICK COOK, MICHAEL PRYSBY, BRADLEY WURFEL, ED KURTZ, DARNELL EARLEY, GERARD AMBROSE, LOCKWOOD, ANDREWS & NEWMAN, P.C., and LOCKWOOD, ANDREWS & NEWMAN, INC., Defendants, and DAYNE WALLING, HOWARD CROFT, MICHAEL GLASGLOW, DAUGHERTY JOHNSON III, and CITY OF FLINT, Defendants-Appellants.
of Claims LC No. 16-000126-MK
Before: Servitto, P.J., and Markey and O'Connell, JJ.
Dayne Walling, Howard Croft, Michael Glasglow, Daugherty
Johnson III and the City of Flint (hereafter
"defendants") appeal as of right the trial
court's sua sponte order dismissing plaintiffs'
claims against them for lack of subject matter jurisdiction.
residents and a company located in the City of Flint, filed
this lawsuit in June 2016 (purportedly as a class action)
against the City, various of its officers and employees,
former emergency managers of the City, the governor, the
State of Michigan, the Michigan Department of Environmental
Quality ("MDEQ") and various employees of the MDEQ,
with respect to the contaminated water supply in Flint,
Michigan. Plaintiffs alleged that defendants conspired to
keep the seriousness of the pollution and contamination from
plaintiffs and allowed the water supply to keep being
delivered, risking plaintiffs' health and causing them
damages. The specific causes of action were breach of
contract, unjust enrichment, and declaratory relief.
Earley, Gerard Ambrose, and defendants moved for summary
disposition in lieu of answering the complaint. Relevant to
the instant matter, before a decision was rendered on that
motion, the court, on its own motion, dismissed
plaintiffs' claims against defendants "in accordance
with the August 25, 2016 opinion and order issued in
Collins v City of Flint, et al., Court of Court of
Claims Docket No. 16-115-MZ and Vale v City of
Flint, Court of Claims Docket No. 16-116-MK." In
those cases, the plaintiffs commenced intended class action
lawsuits in Genesee Circuit Court against the Governor, the
State of Michigan, the City of Flint, the City's former
emergency managers, and several City employees regarding the
water crisis in Flint. Plaintiffs asserted that defendants
breached a contract with residents to provide potable water,
breached an implied warranty of fitness for a particular
purpose, violated the Michigan Consumer Protection Act, and
unjustly enriched the City. The City transferred the claims
against the City, the former emergency manager, and city
employees from Genesee Circuit to the Court of Claims.
Plaintiffs challenged the validity of the notice of transfer
contending that the City was an "arm of the state"
as set forth in MCL 600.6419(1)(a). Plaintiff in the
Vale case sought summary disposition for lack of the
Court of Claims subject matter jurisdiction. The Court of
Claims found that the City was not an arm of the state and
that the claims against the City and its employees were
within the exclusive subject matter jurisdiction of the
appeal, defendants assert that municipalities act as arms of
the state whenever they act in the name of public health and
municipalities operate waterworks in the name of public
health. Defendants additionally assert that the state's
emergency management of a municipality under the Local
Financial Stability and Choice Act transforms the
municipality into an arm of the state and that the Court of
Claims has exclusive jurisdiction over claims brought against
arms of the state. We disagree and conclude that (1)
municipalities are not arms of the state when they operate a
waterworks plant, and (2) that municipalities and their
employees operating under the state's emergency manager
laws are not arms of the state for purposes of jurisdiction
in the Court of Claims.
concerning the jurisdiction of the Court of Claims present
statutory questions that are reviewed de novo as questions of
law. AFSCME Council 25 v State Employees' Ret
Sys, 294 Mich.App. 1, 6; 818 N.W.2d 337 (2011).
Challenges to subject-matter jurisdiction cannot be waived,
and a court must entertain such challenges regardless of when
they are raised, or even raise such challenges sua sponte, as
was the case here. O'Connell v Dir of Elections,
316 Mich.App. 91, 100; 891 N.W.2d 240 (2016).
Court of Claims is created by statute and the scope of its
subject-matter jurisdiction is explicit."
O'Connell v Dir of Elections, 316 Mich.App. 91,
101; 891 N.W.2d 240 (2016), quoting Dunbar v Dep't of
Mental Health, 197 Mich.App. 1, 5; 495 N.W.2d 152
(1992). The Court of Claims has exclusive jurisdiction to
hear and determine "any claim or demand, statutory or
constitutional, liquidated or unliquidated, ex contractu or
ex delicto, or any demand for monetary, equitable, or
declaratory relief or any demand for an extraordinary writ
against the state or any of its departments or officers . . .
." MCL 600.6419(1)(a). Included in the definition of
"the state or any of its departments or officers"
are the State of Michigan and:
any state governing, legislative, or judicial body,
department, commission, board, institution, arm, or agency of
the state, or an officer, employee, or volunteer of this
state or any governing, legislative, or judicial body,
department, commission, board, institution, arm, or agency of
this state, acting, or who reasonably believes that he or she
is acting, within the scope of his or her authority while
engaged in or discharging a government function in the course
of his or her duties. [MCL 600.6419(7)]
determination of whether the Court of Claims possesses
jurisdiction is governed by the actual nature of the claim,
not how the parties characterize the nature of the claim or
the request for relief. AFSCME Council 25, 294
Mich.App. at 6.
issue in this case is the phrase "arm of the state"
in MCL 600.6419(7). More specifically, we must determine when
one would be considered to be an arm of the state such that
one would therefore be considered "the state or any of
its departments or officers" and thus that an action
against it would fall under the exclusive jurisdiction of the
Court of Claims.
difficulty in determining when a city or municipality acts as
an arm of the state has a long history. In Tzatzken v
City of Detroit, 226 Mich. 603, 604; 198 N.W. 214
(1924), our Supreme Court suggested that a municipality
exercises dual powers, acting sometimes as an arm of the
state, in which all the members of the public are concerned,
and acting at other times independently by exercising powers
of a proprietary character. This Court explained the dual
roles undertaken by a city or municipality:
It developed historically that cities operated under one of
two personalities. The municipality when acting as an arm of
the state possessed a "public" character, but when
acting for the concerns of the citizenry of the city it was
functioning within its "private" personality. This
public versus private analysis was utilized in evaluating
questions of municipal tort immunity. If wearing the public
hat, the municipal corporation was said to be performing
governmentally and was immune from tort liability as was the
state. On the other hand, if the activity was for the benefit
of the peculiar locality, then the ...