Koenig v. City of South Haven, Docket No. 109555, Calendar No. 10.

• Decision Date: 20 July 1999
• Docket Number: Docket No. 109555, Calendar No. 10.
• Citation: 460 Mich. 667,597 N.W.2d 99
• Parties: Carol J. KOENIG, Individually and as Guardian of Jennifer Lynn Koenig, and Frederick G. Koenig, Plaintiffs-Appellees-Cross-Appellants, and Attorney General of the State of Michigan and the Michigan Department of Social Services, Intervenors, v. The CITY OF SOUTH HAVEN, Defendant-Appellant-Cross-Appellee, and Scott Ratter and Tom Allred, Defendants Cross-Appellees.
• Court: Michigan Supreme Court

597 N.W.2d 99

460 Mich. 667

Carol J. KOENIG, Individually and as Guardian of Jennifer Lynn Koenig, and Frederick G. Koenig, Plaintiffs-Appellees-Cross-Appellants, and Attorney General of the State of Michigan and the Michigan Department of Social Services, Intervenors, v. The CITY OF SOUTH HAVEN, Defendant-Appellant-Cross-Appellee, and Scott Ratter and Tom Allred, Defendants Cross-Appellees.

Docket No. 109555, Calendar No. 10.

Supreme Court of Michigan.

Argued January 21, 1999.

Decided July 20, 1999.

Granzotto & Nicita, P.C. (by Angela J. Nicita), and Chambers, Steiner, P.C. (by Franklin J. Chambers), for plaintiffs-appellees.

Cummings, McClorey, Davis & Acho, P.C. (by Gail P. Massad), Livonia, for defendant-appellant.

Opinion

TAYLOR, J.

This matter arises out of the near-drowning of plaintiffs' daughter when a large wave swept her off a pier in the city of South Haven. Plaintiffs pursued a breach of contract claim against the city under a third-party beneficiary theory. They contended that South Haven breached its obligations under a memorandum of understanding with the Army Corps of Engineers to restrict access to the piers in inclement weather. We conclude that plaintiffs' daughter was not an intended third-party beneficiary of the memorandum of understanding. Accordingly, we would reverse the Court of Appeals decision that reversed the trial court's grant of summary disposition for South Haven.

Facts and Proceedings

On May 10, 1990, "senior skip day," plaintiffs' daughter, Jennifer Koenig, and five other high school seniors went to the North Pier in South Haven on Lake Michigan. The weather was drizzling, cold, and windy. A large wave swept Koenig and two others (Jeanine Bauman and Dan Caswell) off the pier and into the water. Bauman was rescued by two men. Caswell drowned. Two police officers attempted to rescue plaintiffs' daughter, but were unsuccessful; a United States Coast Guard tug boat eventually rescued her. She suffered anoxic (deprivation of oxygen) brain damage from the incident and became totally dependent, requiring twenty-four hour a day care thereafter. She died while the present case was pending before the Court of Appeals.

It is undisputed that the piers are owned and were erected by the Army Corps of Engineers. In January 1972, South Haven and the Detroit District Corps of Engineers entered into a memorandum of understanding. It stated in pertinent part:

I. Purpose:

This Memorandum of Understanding establishes general guidelines concerning the furnishing of assistance by the City of South Haven in regulating the use of Federal Navigation structures within the City of South Haven, Michigan, during periods of inclement weather or when danger to persons or property exists, as authorized herein.

II. Authority:

The government hereby gives the City of South Haven the right to enter upon Federal Navigational Structures for the purpose of regulation [of] public use of same.

III. Responsibilities:

A. The Corps of Engineers will furnish and install fence type barricades, with gates at the shore end of Federal pier structures, where required.

B. The City of South Haven, Michigan has been granted responsibility for coordinating and controlling entrance to existing Federal navigational structures at the South Haven Harbor, during period[s] of inclement weather.

C. The responsibility for determining when gates erected on Federal structures are to be opened and closed, rest[s] with the City of South Haven, Michigan.

* * *

V. Federal Pier Regulations:

The public shall be restricted from the North and South Federal piers in the City of South Haven during periods of inclement weather and when great danger to persons or property exists, said times to be determined by the City Manager, or a person designated by him. Gates will be locked during each emergency and reopened immediately thereafter.

In an October 6, 1972, letter, the corps provided keys to the fence and gate structures it had recently completed and stated:

We appreciate the cooperation you have expressed in the operation of these safety features on an annual basis, including their placement, removal, and storage.

As the reason the structures are removed is to avoid damage by the winter ice, they need to be removed only for that period. However, we ask that they be removed no earlier than Labor Day and placed no later than Memorial Day.

On the day of the incident, South Haven had not yet placed the fence and gate structures for the summer season.

Plaintiffs filed a two-count complaint. They sued South Haven for breach of contract, alleging that the memorandum of understanding (MOU) was a contract that required South Haven to preclude access to the piers under dangerous conditions. They contended that their daughter was an intended third-party beneficiary of the MOU and that she had suffered damages from South Haven's breach of its duties under this contract. Plaintiffs also sued individual defendants under the gross negligence exception to governmental immunity established in MCL § 691.1407; MSA § 3.996(107).

Defendants moved for summary disposition under MCR 2.116(C)(7), (8), and (10). The trial court granted South Haven's motion, finding that plaintiffs' daughter was not an intended third-party beneficiary of the MOU. It stated that it need not decide whether the MOU was a contract. It concluded that South Haven merely undertook responsibility for managing the operation of the fence under the MOU; thus, the corps and South Haven made promises to each other in the MOU, not promises to every person who visits the piers. The trial court denied the motion for summary disposition with respect to the individual defendants, concluding that whether they engaged in gross negligence was an issue for the jury.¹ Pursuant to the jury's verdict, the trial court issued a judgment of no cause of action in favor of the individual defendants.

Both parties appealed in the Court of Appeals, which reversed the grant of summary disposition for South Haven on the breach of contract claim and affirmed the jury verdict on the gross negligence claim. 221 Mich.App. 711, 562 N.W.2d 509 (1997). In its opinion, the Court noted that the third-party beneficiary statute does not restrict potential third-party beneficiaries to limited groups and concluded that the law does not prohibit a class consisting of "virtually any member of the public who used the government pier during times of inclement weather" from being intended third-party beneficiaries of the MOU. Id. at 719, 562 N.W.2d 509. It also found that the clear intention of the MOU was to "protect the safety of individuals who would attempt to use the pier during times of dangerous weather." Id. at 719, 562 N.W.2d 509. This led it to conclude that plaintiffs' daughter was an intended third-party beneficiary of the MOU and that the trial court accordingly erred in granting summary disposition for South Haven on this count. Finally, it found that genuine factual issues remained regarding whether South Haven received consideration under the MOU to the extent that the MOU could constitute a contract. Id. at 722, 562 N.W.2d 509. Thus, it remanded this matter for trial of the breach of contract count. Regarding the gross negligence count against the individual defendants, the Court affirmed the jury's verdict and further agreed with South Haven's contention that the gross negligence count was barred by the "public duty doctrine."²Id. at 729, 562 N.W.2d 509. This Court granted leave to determine whether South Haven was entitled to summary disposition of plaintiffs' breach of contract claim. 458 Mich. 864, 582 N.W.2d 836 (1998).

Standard of Review

This issue arose in the context of a summary disposition motion made pursuant to MCR 2.116(C)(8) and (10). This Court reviews rulings on summary disposition motions de novo. Spiek v. Dep't of Transportation, 456 Mich. 331, 337, 572 N.W.2d 201 (1998).

MCR 2.116(C)(8) tests the legal sufficiency of the claim on the pleadings alone to determine whether the plaintiff has stated a claim on which relief may be granted. The motion must be granted if no factual development could justify the plaintiff's claim for relief. [Id.]

In reviewing a motion for summary disposition brought under MCR 2.116(C)(10), a trial court considers affidavits, pleadings, depositions, admissions, and documentary evidence filed in the action or submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion. A trial court may grant a motion for summary disposition under MCR 2.116(C)(10) if the affidavits or other documentary evidence show that there is no genuine issue in respect to any material fact, and the moving party is entitled to judgment as a matter of law. MCR 2.116(C)(10), (G)(4).

In presenting a motion for summary disposition, the moving party has the initial burden of supporting its position by affidavits, depositions, admissions, or other documentary evidence. The burden then shifts to the opposing party to establish that a genuine issue of disputed fact exists. Where the burden of proof at trial on a dispositive issue rests on a nonmoving party, the nonmoving party may not rely on mere allegations or denials in pleadings, but must go beyond the pleadings to set forth specific facts showing that a genuine issue of material fact exists. If the opposing party fails to present documentary evidence establishing the existence of a material factual dispute, the motion is properly granted. [Quinto v. Cross & Peters Co., 451 Mich. 358, 362-363, 547 N.W.2d 314 (1996) (citations omitted).]

Discussion

We begin with two preliminary observations. First, governmental entities such as South Haven are generally immune from tort liability. MCL § 691.1407; MSA § 3.996(107). However, governmental immunity does not extend to contract actions, even when the contract action arises out of the same facts that would support a tort action. Ross v. Consumers...