Dextrom v. Wexford County

• Decision Date: 09 March 2010
• Docket Number: Docket No. 281020.
• Parties: DEXTROM v. WEXFORD COUNTY.
• Court: Court of Appeal of Michigan — District of US

789 N.W.2d 211

DEXTROM
v.
WEXFORD COUNTY.

Docket No. 281020.

Court of Appeals of Michigan.

Submitted May 14, 2009, at Petoskey.
Decided March 9, 2010, at 9:00 a.m.

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Olson, Bzdok & Howard, P.C., Traverse City (by Christopher M. Bzdok and Jeffrey L. Jocks), for Ron Dextrom and others.

Law Offices of James P. O'Neill & Associates, Rochester (by James P. O'Neill) and Davis Listman PLLC, Mount Clemens (by Robert C. Davis) for Tony and Donota Cassone and others.

Miller, Canfield, Paddock and Stone, P.L.C., Ann Arbor (by Dean M. Altobelli), for defendants.

Before: WHITBECK, P.J., and DAVIS and GLEICHER, JJ.

PER CURIAM.

This case arises from defendants', Wexford County, Wexford County Landfill, and the Wexford County Department of Public Works, operation of a landfill. Plaintiffs are property owners who allege that contaminants from the landfill entered their groundwater, causing property damage and other economic injuries. Defendants asserted a defense of governmental immunity. The trial court found that, although defendants' unlicensed operation of the landfill was not ultra vires, there were questions of material fact concerning whether the operation fell within the proprietary function exception to governmental immunity. ¹ Defendants now appeal as of right the trial court's order denying their motion for summary disposition. And certain plaintiffs ² cross-appeal, challenging the trial court's denial of their cross-motion for summary disposition. We affirm, but remand for further proceedings.

I. BASIC FACTS AND PROCEDURAL HISTORY

In late 1973, Wexford County and its Department of Public Works commenced operation of the Wexford County Landfill. A special use permit that the state of Michigan issued allowed Wexford County and the Department of Public Works to establish the landfill on an 80-acre site of state-owned land in Cedar Creek Township. Throughout the 1970s and 1980s, the landfill

accepted waste only from Wexford County residents. In 1990, the landfill began accepting waste from Missaukee

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County, which borders Wexford County. The Missaukee County waste that the landfill accepted has never accounted for more than 13.2 percent of the landfill's total refuse intake.

During the 1980s, concerns emerged regarding possible contamination of the groundwater flowing beneath the landfill. In 1984, analysis of water collected from monitoring wells revealed the presence of chemical contaminants attributable to the landfill, and in 1986, the Michigan Department of Natural Resources recommended capping portions of the landfill to prevent further contamination. Defendants and the Department of Natural Resources engaged in a lengthy and contentious dispute over the measures necessary to prevent further groundwater contamination. In 1989, the Department of Public Works and the Department of Natural Resources entered into a consent order, which observed, in relevant part, “The Department alleges, but the County DPW does not admit, that past landfill operations and other disposal activities at the disposal site has [sic] resulted in, and continues to cause, unpermitted discharges to, and resultant contamination of, the groundwaters of the State....” Pursuant to the consent order, the Department of Public Works agreed to implement a remedial action plan calling for the complete closure of unlined landfill areas, additional investigation of the extent of landfill-connected groundwater contamination, and maintenance of monitoring wells. Later, Wexford County also agreed to install a “groundwater pump and treat[ment] system, consisting of five ... extraction wells and an aeration pond.”

Defendants did not promptly close all unlined landfill locations, and for several years after the consent agreement's execution, the Department of Natural Resources refused to license the facility. Defendants eventually implemented remediation efforts satisfactory to the Department of Natural Resources, and the landfill regained its license. Cleanup and monitoring activities continued through the 1990s, and in 2002, defendants entered into a second consent order with the Department of Natural Resources and Environment. ³ Subsequent detection of more contamination obligated Wexford County to expend substantial sums for wells, pumps, and other equipment. In 2004, Wexford County agreed to provide an alternate water system for residents with contaminated wells.

Notwithstanding significant Wexford County expenditures related to environmental remediation, the landfill generated a profit from 1984 through 2002. Historical audit information that Wexford County submitted revealed that the landfill achieved its greatest profit in 2000, when its assets minus liabilities totaled slightly more than $12 million. Between 2000 and 2006, Wexford County spent approximately $27.6 million of landfill revenues on activities directly related to the landfill, including contamination investigation, contamination cleanup, and preventative measures mandated by the consent orders. Within the same period, Wexford County spent 10 percent of landfill profits, about $2.7 million, on activities unrelated to the landfill, including insurance expenses, courthouse bond payments, contributions to the general fund, and a 911 radio project.

Plaintiffs commenced this action in September 2006, asserting claims for nuisance, nuisance per se, trespass, negligence,

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gross negligence, and negligence per se. ⁴ In May 2007, defendants moved for summary disposition of plaintiffs' tort claims on the basis of governmental immunity, citing MCR 2.116(C)(7) and (10). Defendants argued that (1) the landfill operation qualified as a governmental function, (2) defendants had not operated the landfill for the primary purpose of making a profit, and (3) user fees had always “almost exclusively” supported the landfill. Defendants further argued that the contamination had taken place in the 1970s and 1980s, when the landfill was still using unlined cells, well before there were any transfers out of the landfill's fund to pay for unrelated projects.

Certain plaintiffs filed a brief in opposition to defendants' motion, arguing that defendants were not entitled to immunity because their operation of the landfill was in violation of the law and, therefore, ultra vires. Further, certain plaintiffs argued that defendants were not entitled to immunity because the landfill operation was proprietary, conducted for the purpose of making a profit, and not of the size or scope normally supported by fees or taxes in a community the size of Wexford County. Certain plaintiffs added that even if the landfill was covered by governmental immunity in the 1970s and 1980s, defendants could not show that the contamination originated at that time. Certain plaintiffs submitted the affidavit of Christopher Grobbel, who opined that contamination was still flowing from the landfill at the present time. Certain plaintiffs asked that summary disposition be entered in their favor.

The remaining plaintiffs filed a brief in opposition to defendants' motion, also requesting that summary disposition be entered in their favor under MCR 2.116(I)(2). Like certain plaintiffs, these plaintiffs argued that defendants were not entitled to immunity because the landfill operation was proprietary, and was not of the size or scope normally supported by fees or taxes in a community the size of Wexford County.

At a hearing on the cross-motions for summary disposition, defendants briefly argued, for the first time, that Grobbel's affidavit was inadmissible because it did not list his expert qualifications or explain his methods, and, therefore, should not be considered by the trial court. The trial court took the parties' cross-motions under advisement.

The trial court later issued a written opinion and order denying both motions for summary disposition. After reciting some of the landfill revenue and expenditure evidence, the trial court deemed summary disposition inappropriate on the first prong of the proprietary function test, because “[t]he County's purpose in operating the landfill for pecuniary profit has not been conclusively proved or refuted by the numerous exhibits filed by the parties. Trial testimony of the people who made these decisions is necessary to accurately adjudicate this issue.” The trial court opined that questions of fact also existed regarding whether “units of government like Wexford County” commonly “engage in business activities of this magnitude primarily to meet the garbage disposal needs of their residents, or are landfills of this size and type usually maintained for profit by public or private entities [.]” Accordingly, the trial court stated that “[t]his question is unanswered by the documentary evidence and presents a genuine issue

of material fact that must be addressed at

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trial.” The trial court also noted the possibility that the landfill's primary purpose might have changed over time, and that “[i]f facts at trial show this to be true, the time when the contamination occurred becomes material to the issue of governmental immunity.”

Therefore, the trial court found that the parties' competing expert testimony “discloses the time of contamination to be a disputed issue of fact.” The trial court also rejected plaintiffs' suggestion that defendants had engaged in ultra vires conduct, finding that “[a] landfill operating in violation of state licensing requirements is not a [sic] ultra vires activity and must be afforded governmental immunity, unless another specific exception applies.”

II. MOTIONS FOR SUMMARY DISPOSITION UNDER MCR 2.116(C)(10) A. STANDARD OF REVIEW

We first consider the motions for summary disposition under MCR 2.116(C)(10). Under that court rule, a party may move for dismissal of a claim on the ground that there is no genuine issue with respect to any material fact and...