Detroit Edison Co. v. City of Detroit
| Decision Date | 26 October 1989 |
| Docket Number | Docket No. 107727 |
| Citation | 180 Mich.App. 145,446 N.W.2d 615 |
| Parties | The DETROIT EDISON COMPANY, Plaintiff-Appellant, v. CITY OF DETROIT, Defendant-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Solomon Bienenfeld, Thomas P. Beagen and Laura Reyes Kopack, Detroit for plaintiff-appellant.
Lewis, White & Clay, P.C. by Ulysses W. Boykin, Detroit, for defendant-appellee.
Before GRIBBS, P.J., and MURPHY and NEFF, JJ.
This suit was brought by The Detroit Edison Company against the City of Detroit to recover Edison's cost of relocating certain equipment and steam conduits as a result of the city's expansion of Cobo Hall, a convention center owned and operated by the city.
The trial court, in a thoroughly researched and well-written opinion, granted the city's motion for summary disposition on the basis that the expansion of Cobo Hall represented the exercise by the city of a governmental function, and not the exercise of a proprietary function. Edison now appeals as of right from the circuit court order granting the city's motion for summary disposition and denying Edison's motion for summary disposition pursuant to MCR 2.116(C)(10). We affirm the trial court's grant of summary disposition in favor of the City of Detroit.
The uses of Cobo Hall include privately and publicly sponsored trade shows, conventions, dinners, bridge tournaments, receptions, dances, ballot counting, classes, religious meetings, and the like. Cobo Hall has a cocktail lounge, a restaurant, ticket booths, and commercial displays. To use any of the various halls, rooms, or other facilities at Cobo Hall, customers must pay a rental fee according to a schedule. Both private and public organizations, including the City of Detroit, pay these rental charges when they use Cobo Hall's facilities.
The operation of Cobo Hall is within the city's Civic Center Department, whose head is appointed by the mayor. A general manager of Cobo Hall is responsible for day-to-day operations of the facility, and he reports to the head of the department. The furnishing of food, janitorial, and electrical services is contracted out, with a percentage of revenue paid to Cobo Hall. Cobo Hall has its own sales and marketing division, which actively seeks bookings of events through advertising, public relations, and direct sales. The 1987-88 budget for marketing was $500,000, not including in-house salaries.
Cobo Hall's budget is part of the city's annual budget. The appropriation for the operations of Cobo Hall during fiscal year 1987-88 was $9,786,034. The revenue from the actual operations of Cobo Hall was $2,414,034. The State of Michigan provided economic development reimbursement funds for Cobo Hall of $5,350,000 during that period, leaving the city to make up a deficit of $2,022,000 from other sources. One source of revenue for the city is from "building rentals" in the amount of $1,339,500.
In 1983, Cobo Hall customers expressed dissatisfaction with the limited size of that facility. After feasibility studies were completed, the city council made the decision to expand Cobo Hall. Under the Cobo Hall expansion project, the exhibit area was doubled, the number of meeting rooms increased, and the square footage of Cobo Hall was expanded from one million to 2.4 million square feet.
The expansion of Cobo Hall necessitated vacating certain adjoining public streets. By resolution dated March 5, 1986, the city council approved a vacation of those public streets. This resolution stated in pertinent part:
Resolved, That because the vacations are the result of a necessary Public Improvement, all private utility companies are hereby directed to relocate their facilities from the vacated streets and alleys at no expense to the City and be it further
Resolved, That the City Engineering Department, upon proper application and cash deposit, shall issue permits to the private utility companies for relocation of their facilities from the vacated streets and alleys to public streets and alleys consistent with the public health, safety, convenience and general welfare.
In a relocation agreement executed by the city and Edison, it was agreed that Edison's relocation of its equipment would be "without prejudice to or waiver of Utility's rights or claims." Thereafter, as necessitated by the expansion of Cobo Hall, Edison relocated its equipment at a cost of approximately $800,000.
In Pontiac v. Consumers Power Co., 101 Mich.App. 450, 453, 300 N.W.2d 594 (1980), lv. den. 410 Mich. 908 (1981), this Court stated the general principle in utility relocation cases as follows:
Relocation costs must be borne by the utility if necessitated by the city's discharge of a governmental function, whereas the expenses must be borne by the city if necessitated by its discharge of a proprietary function. Whether the utility has located its transmission facilities by virtue of an easement, franchise, plat, or other grant is irrelevant; all are treated identically. [See also The Detroit Edison Co. v. Southeastern Michigan Transportation Authority, 161 Mich.App. 28, 30, 410 N.W.2d 295 (1987), lv. den. 430 Mich. 868 (1988).]
In Pontiac, the City of Pontiac requested that Consumers Power Company remove and relocate two electric power lines to facilitate the construction and renovation of Pontiac General Hospital. This Court in Pontiac, supra, 101 Mich.App. p. 454, 300 N.W.2d 594, held that it was the City of Pontiac's construction activities, pursuant to its proprietary function of operating the Pontiac General Hospital, that made the relocation of the utility lines necessary. The Court found that it was equitable that the governmental entity that was engaged in a proprietary function should be required to bear the cost of utility service relocation which was made necessary because of its activities. Pontiac, supra, p.p. 454-455, 300 N.W.2d 594.
This Court affirmed the trial court's finding in Detroit Edison that the construction of a public transit system by SEMTA was not a proprietary activity, but was, rather, in the nature of a discharge of a governmental function. Accordingly, this Court also affirmed the trial court's conclusion that SEMTA was not liable to pay Detroit Edison's relocation expenses which were necessitated by the construction of the Downtown Detroit People Mover. Detroit Edison, supra, p.p. 36-37, 410 N.W.2d 295.
Likewise, in Michigan Bell Telephone Co. v. Detroit, 106 Mich.App. 690, 696, 308 N.W.2d 608 (1981), this Court stated that the construction of a sewer facility is clearly a governmental function, that the common-law rule requiring a utility to remove its facilities at its own expense where necessary to protect the public health or general welfare was applicable, and that, accordingly, the trial court erred in holding that the City of Detroit was required to reimburse the utility for the relocation expenses necessitated by the construction of a sewage treatment facility.
We now turn to the dispositive question: Was the expansion of Cobo Hall an exercise of a governmental or proprietary function of the City of Detroit? To help answer this question we look to the governmental tort liability act, M.C.L. Sec. 691.1401 et seq.; M.S.A. Sec. 3.996(101) et seq., and cases that construe the act.
Strictly speaking, the act and the cases which construe it do not apply in the context of this case. However, the concepts of governmental function and proprietary function in a tort context are, at least to some extent, comparable to those concepts in a nontort context such as the present case. We are confident that we can look to that body of law for guidance.
In Ross v. Consumers Power Co (On Rehearing), 420 Mich. 567, 620, 363 N.W.2d 641 (1984), our Supreme Court defined the term ...
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