STATE OF MICHIGAN IN THE 17th CIRCUIT COURT FOR KENT COUNTY

THE VILLAGE OF SAND LAKE,

Plaintiff,

vs.

PARADISE COVE RESORT CONDOMINIUM ASSOCIATION,

vs.

Defendant and Third-Party Plaintiff,

ROGER TOWSLEY,

Third-Party Defendant.

Case No. 19-09196-CBB

HON. CHRISTOPHER P. YATES

OPINION AND ORDER GRANTING SUMMARY DISPOSITION TO THIRD-PARTY DEFENDANT TOWSLEY UNDER MCR 2.116(C)(7)

Alexis de Tocqueville noted that "[t]he village or township is the only association which is

so perfectly natural that, wherever a number of men are collected, it seems to constitute itself." And

within villages, committees "elected for a single year, and unpaid, ... took immediate charge of such

administrative work as there was to do." See WILLIAM BENNETT MUNRO, THE GOVERNMENT OF THE

UNITED STATES 563 (The MacMillan Co 1927). The Village of Sand Lake ("Sand Lake") operates

on that structure, and Roger Towsley served as president of Sand Lake. During his tenure, Towsley

tried to negotiate an agreement to have Defendant Paradise Cove Resort Condominium Association

("Paradise Cove") connect to Sand Lake's water system. Towsley signed a letter on April 12, 2016,

memorializing that agreement, which afforded favorable pricing to Paradise Cove and its members.

But when the Sand Lake Village Council refused to ratify the agreement that Towsley signed, a fight

broke out and resulted in this litigation. Sand Lake filed this action demanding rescission of any type

of contract to provide water at reduced rates to Paradise Cove and its members because Towsley had

no unilateral authority to bind Sand Lake to such an agreement. That prompted Paradise Cove to file

a third-party complaint against Towsley in an effort to hold him personally responsible for all losses

flowing from his negotiation of what purported to be a binding agreement with Paradise Cove. That,

in turn, caused Towsley to move for summary disposition under MCR 2. 116(C)(7) and (C)(8) based

upon the immunity conferred by the Governmental T01tLiability Act ("GTLA"), MCL 691.1407(2).

Because the Court concludes that Towsley has satisfied all three conditions for such immunity, see

MCL 691.1407(2)(a)-(c), the Court shall award him summary disposition under MCR2.116(C)(7).

I. Fachtal Background

Third-Party Defendant Towsley has moved for summaiy disposition under M CR 2 .116( C)(7)

and (8). In addressing a motion for summary disposition under MCR 2.116(C)(7), the "contents of

the complaint are accepted as true unless contradicted by documentation submitted by the movant."

See Maiden v Rozwood, 461Mich109, 119 (1999). In resolving a motion under MCR 2.116(C)(8),

" the pleadings alone" may be considered. See El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152,

160 (2019). Accordingly, the Court shall begin with the allegations in the third-party complaint and

then make adjustments as the record requires in describing the background of this dispute.

On February 23, 2015, Third-Party Defendant Towsley- in his capacity as village president

of Sand Lake- wrote to the "[r]esidents of Paradise Cove" that the "Village of Sand Lake would like

the residents of Paradise Cove to hook up to the Village water system." See Third-Party Complaint,

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Exhibit B. In that letter, Towsley proposed a detailed fee structure and stated that "[t]he Villlage of

Sand Lake also agrees to a ten year agreement[.]" Id. That proposal resulted because the Sand Lake

Village Council had "authorized Mr. Towsley to propose a possible plan and fee schedule to Paradise

Cove concerning the delivery of water by the Village." See Third-Patty Complaint,~ 11 . Then, on

April 12, 2016, Towsley signed a contract drafted by the attorney for Paradise Cove that established

terms "for the owners at Paradise Cove to c01mect to the Village of Sand Lake water system[,]" see

id., Exhibit J, including a waiver of"the $3,000 initial hookup fee," a "yearly water fee" with built-in

caps on price increases, and a duration of 20 years. See id.

Third-Party Defendant Towsley signed that contract as the "President of the Village of Sand

Lake," see Third-Party Complaint, Exhibit J, but he ran into resistance when he reported the contract

to the Sand Lake Village Council. Specifically, the village council not only refused to approve the

contract, but also subsequently characterized Towsley's acceptance of the contract on behalf of Sand

Lake as an ultra vires act. See First Amended Complaint for Rescission of Contract,~ 9. Towsley

became enmeshed in this suit when Paradise Cove responded to Sand Lake' s complaint by filing a

third-party complaint seeking to hold Towsley personally liable to Paradise Cove on legal claims for

misrepresentation of authority, breach of implied warranty of authority, and indenmity.

In lieu of an answer to the third-party complaint, Towsley asked for summary disposition on

the basis of governmental immunity with respect to all three claims. Towsley further insists that the

third-party complaint fails to state a valid claim against him, so he is entitled to summary disposition

under MCR 2.116(C)(8). But the central focus of the competing parties' briefs and oral arguments

has been Towsley' s ability to rely upon the immunity conferred by the GTLA in MCL 691.1407(2),

so the Court will follow the parties' lead and devote its attention to that issue.

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II. Legal Analysis

Summary disposition under MCR 2.116(C)(7) is appropriate whenever a ·claim is barred by

govermnental immunity. In re Bradley Estate, 494 Mich 367, 376-377 (2013). Because Third-Party

Defendant Towsley has requested summary disposition on that basis, the Court should consider the

evidence in the record "in a light most favorable to the nomnoving party." RDM Holdings, Ltd v

Continental Plastics Co, 281 Mich App 678, 687 (2008). If there exists no factual dispute, whether

the third-party claims are barred by goverm11ental immunity presents "a question oflaw for the court

to decide." Id. "If a factual dispute exists, however, summaiy disposition is not appropriate" under

MCR 2. l 16(C)(7). Id. To the extent that Towsley has moved for summaiy disposition under MCR

2.116(C)(8), the Court must limit its analysis to the allegations in the third-party complaint, see El-

Khalil, 504 Mich at 159, and deny relief unless the third-party claims are "so clearly unenforceable

that no factual development could possibly justify recovery." Id. at 160.

"Under the GTLA, govermnental agencies and their employees are generally immune from

tort liability when they are engaged in the exercise or discharge of a govermnental function." Ray

v Swager, 501 Mich 52, 62(2017). That basic principle applies to state and local officials alike, see

Hannay v Dep't of Transportation, 497 Mich 45, 59 (2014), so Third-Party Defendant Towsley can

avail himself of that protection in his capacity as the president of Sand Lake. A specific provision

of the GTLA, MCL 691.1407(2), states that "each officer and employee of a governmental agency"

"is immune from tort liability for an injmy to a person or damage to property caused by the officer

[or] employee ... while in the course of employment or service" if three conditions are met: 1 (1)

1 Our Supreme Court has expansively defined "tort liability" for GTLA purposes as "all legal responsibility arising from a noncontractual civil wrong for which a remedy may be obtained in the form of compensatory damages." See In re Bradley Estate, 494 Mich at 385.

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the officer or employee "is acting or reasonably believes he or she is acting within the scope of his

or her authority[,]" MCL 691.1407(2)( a); (2) "[t]he governmental agency is engaged in the exercise

or discharge of a govermnental function[,]" MCL 691.1407(2)(b ); and (3) the officer's or employee's

"conduct does not amount to gross negligence that is the proximate cause of the injury or damage."

MCL 691 .1407(2)( c ). The Court shall address these three requirements seriatim.

A. Acting Within the Scope of Authority.

The Co mt must first decide whether Third-Paity Defendant Towsley was acting or reasonably

believed he was acting within the scope of his authority when he negotiated the agreement to have

Defendant Paradise Cove connect to Plaintiff Sand Lake's water system. See MCL 691.1407(2)(a).

Towsley undoubtedly was the president of the Village of Sand Lake when he negotiated the water

agreement with Paradise Cove. See Third-Party Complaint, Exhibit A (Affidavit of Roger Towsley).

Indeed, he communicated with Paradise Cove in his official capacity, see id., Exhibit B, and minutes

of regular council meetings of the Village of Sand Lake make clear that Sand Lake was well aware

of Towsley's efforts and encouraged him to proceed. See id., Exhibit D (minutes at SAND000041 ),

Exhibit E (minutes at SAND000058-SAND000059) & Exhibit F (minutes at pages 1-2). Therefore,

Towsley manifestly was acting or reasonably believed he was acting within the scope of his authority

when he negotiated the water agreement with Paradise Cove. See MCL 691.1407(2)(a).

B. Engaged in the Exercise of a Governn1ental Function.

The Court next must determine whether the Village of Sand Lake (acting tlu·ough Third-Party

Defendant Towsley) was "engaged in the exercise or discharge of a governn1ental function" in the

process of negotiating the water agreement with Paradise Cove. See MCL 691.1407(2)(b ). "Under

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the GTLA, governmental agencies and their employees are generally immune from tort liability when

they are engaged in the exercise or discharge of a governmental function[,]" see Ray, 501 Mich at

62, which "means an activity that is expressly or impliedly mandated or authorized by constitution,

statute, local charter or ordinance, or other law." See 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." Genesee County Drain Commissioner

v Genesee County, 309 Mich App 317, 327 (2015) (emphasis in original).

The water service provided by the Village of Sand Lake is an activity normally supported by

taxes or fees, so it fits comfortably within the definition of a governmental function under Michigan

law. 2 See MCL 691.1401 (b ). Moreover, villages are empowered by Michigan law to purchase and

construct "waterworks" and to "make extensions of water mains to provide water" for domestic uses.

See MCL 41.41 l(l)(a). Finally, our Court of Appeals has not only ruled that construction of sewers

and "collection of garbage by a city" are governmental functions, Beauchamp v Saginaw Township,

74 Mich App 44, 51 (1977), citing Sommers v City of Detroit, 284 Mich 67 (1938), but also stated

repeatedly that'" [t]he operation of a municipal water supply system is a governmental function[.]"'

See NL Ventures VI Farmington, LLC v City of Livonia, 314 Mich App 222, 244 (2016), quoting

Citizens Ins Co v Bloomfield Twp, 209 Mich App 484, 487 (1995). Therefore, the Comt concludes

that Third-Party Defendant Towsley was "engaged in the exercise or discharge of a governmental

function" while negotiating to connect Defendant Paradise Cove to the Sand Lake water system. See

MCL 691.1407(2)(b ) .

2 A "governn1ental function" differs from a "proprietaiy function," which refers to an activity "conducted primarily for the purpose of producing a pecuniaiy profit for the government agency, excluding, however, any activity normally supported by taxes or fees." See MCL 691.1413.

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C. Absence of Gross Negligence.

The Court finally must consider whether Third-Party Defendant Towsely engaged in gross

negligence that was "the proximate cause of the injury or damage" to Defendant Paradise Cove. See

MCL 691.1407(2)(c). For purposes of analysis under MCL 691.1407, "'[g]ross negligence' means

conduct so reckless as to demonstrate a substantial lack of concern for whether irtiury results." See

MCL 691 .1407(8)( a). "The determination whether a governmental employee's conduct constituted

gross negligence that proximately caused the complained-ofinjury under MCL 691.1407 is generally

a question of fact, but, if reasonable minds could not differ, a court may grant summary disposition."

Briggs v Oakland County, 276 Mich App 369, 374 (2007). No action by Towsley in negotiating an

agreement to connect Paradise Cove to Sand Lake's water system even approaches gross negligence.

To be clear, " [ e ]vidence of ordinary negligence is not enough to establish a material question of fact

regarding whether a government employee was grossly negligent. "3 Chelsea Investment Group LLC

v City of Chelsea, 288 Mich App 239, 265 (2010). " [T]here must be evidence that the employee's

conduct was reckless." Id. In a case where a city manager worked on solutions to a dispute between

the city and a real-estate developer, our Court of Appeals decided that the city manager's efforts did

not amount to gross negligence even though his proposed solutions did not resolve the problem. Id.

at 265-266. Similarly, Towsley's efforts cannot be characterized as gross negligence.

3 Defendant Paradise Cove insists that two of its claims allege conduct that falls outside the dividing line between negligence and gross negligence because Count One asserts misrepresentation of authority, which is an intentional tort, and Count Three seeks indemnity, which is a contract claim. The record leaves no doubt, however, that the claim for misrepresentation of authority is much more akin to negligent misrepresentation than fraudulent misrepresentation, see Barclae v Zarb, 3 00 Mich App 455, 476-477 (2013), so the claim is not an intentional tort. Similarly, the request for indemnity is predicated upon a common-law doctrine, see Third Amended Complaint,~ 45, citing Pontious v EW Bliss Co, 102 Mich App 718, 720-721 (1981), rather than an actual contract, so the claim cannot be characterized as a contract claim.

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III. Conclusion

Because Third-Party Defendant Towsley has met all three requirements for immunity under

MCL 691.1407(2), the Court shall award summary disposition to Towsley under MCR 2.116(C)(7)

on all of the claims in Paradise Cove's third-party complaint. Simply stated, each of the third-party

claims is foreclosed by the immunity conferred upon Towsley by the GTLA, MCL 691.1407(2).

IT IS SO ORDERED.

Dated: September 17, 2020 HON. CHRJSTOPHERP. YATES (P41017) Kent County Circuit Court Judge

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