LIABILITY POOL v. MUSK RD. COM'RS

• Decision Date: 09 April 1999
• Docket Number: Docket No. 204896.
• Citation: 235 Mich. App. 183,597 N.W.2d 187
• Parties: MICHIGAN MUNICIPAL LIABILITY AND PROPERTY POOL, Plaintiff-Appellant, v. MUSKEGON COUNTY BOARD OF COUNTY ROAD COMMISSIONERS, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

597 N.W.2d 187

235 Mich. App. 183

MICHIGAN MUNICIPAL LIABILITY AND PROPERTY POOL, Plaintiff-Appellant, v. MUSKEGON COUNTY BOARD OF COUNTY ROAD COMMISSIONERS, Defendant-Appellee.

Docket No. 204896.

Court of Appeals of Michigan.

Submitted March 2, 1999, at Grand Rapids.

Decided April 9, 1999, at 9:20 a.m.

Released for Publication July 14, 1999.

Plunkett & Cooney, P.C. (by Mary Massaron Ross and David K. Otis), Detroit, for the plaintiff.

Smith, Haughey, Rice & Roegge (by Jon D. Vander Ploeg), Grand Rapids, for the defendant. Before: HOLBROOK, JR., P.J., and MURPHY and TALBOT, JJ.

MURPHY, J.

Plaintiff Michigan Municipal Liability and Property Pool, appeals as of right from a circuit court order granting defendant Muskegon County Board of County Road Commissioners' motion for summary disposition in this indemnification action. We affirm.

Plaintiff is an unincorporated entity made up of municipal corporations, including the city of Norton Shores, forming a self-insurance pool. This case arises from plaintiff's attempt to recover from defendant (the county road commission) for breach of a release and hold harmless agreement (the indemnification agreement) between the county road commission and the city of Norton Shores, following a judgment entered against the city of Norton Shores in an underlying lawsuit.

The underlying lawsuit involved the Harvey Street improvement project. After plans for the project were prepared by the city of Norton Shores and Fruitport Township, the city of Norton Shores approached the county road commission to apply for the necessary funding, and the county road commission took jurisdiction over the project to secure funding. The county road commission, however, needed an engineer of record because its own engineer had recently retired; therefore, the county road commission voted unanimously to designate the city of Norton Shores' engineer, Rudolph J. Chmelar, to serve as the engineer for the project.

On that same day, the manager of the county road commission, Norman H. Erickson, signed a document formally designating city engineer Chmelar as the project engineer and sole representative for the project, and setting forth his responsibilities in that regard. In exchange for the loan of city engineer Chmelar's services, Erickson also signed an indemnification agreement on behalf of the county road commission.¹

Following the completion of the Harvey Street improvement project, the county road commission transferred jurisdiction over the project back to the city of Norton Shores. Thereafter, Paul Brothers Blueberries, Inc., brought suit in the Muskegon Circuit Court against both the county road commission and the city of Norton Shores, as well as the Muskegon County Drain Commissioner, alleging that the design of the Harvey Street improvement project resulted in subterranean waters being drained away from Paul Brothers' farm with damage to its blueberry crop. The case was submitted to mediation, and the mediators returned a mediation evaluation in favor of the Paul Brothers and against the county road commission in the amount of $40,000, and against the city of Norton Shores in the amount of $20,000, as well as a judgment of no cause of action against the Muskegon County Drain Commissioner. The city of Norton Shores, pursuant to the indemnification agreement, tendered for payment the $20,000 mediation evaluation to the county road commission. The county road commission, however, rejected the tender, but accepted the mediation evaluation entered against it and agreed to pay Paul Brothers $40,000. The city of Norton Shores, thereafter, also accepted the mediation evaluation entered against it and agreed to pay Paul Brothers $20,000. Subsequently, a judgment was entered in favor of Paul Brothers against the county road commission and the city of Norton Shores, whereupon a satisfaction of judgment was entered showing the city of Norton Shores' payment of $20,000.

The city of Norton Shores then assigned its rights under the indemnification agreement to plaintiff, which subsequently brought the instant lawsuit against the county road commission. In its complaint, plaintiff alleged that the county road commission was liable for breach of the indemnification agreement, and it sought indemnification for the $20,000 mediation award that the city of Norton Shores paid in the underlying lawsuit, as well as other related damages and costs.

Both parties filed motions for summary disposition pursuant to MCR 2.116(C)(8) and (10). Plaintiff relied on the indemnification agreement between the city of Norton Shores and the county road commission, arguing that the agreement clearly required the county road commission to indemnify the city of Norton Shores and its engineer for any and all damages arising out of the Harvey Street project, including the $20,000 judgment that was satisfied in the underlying Paul Brothers litigation. The county road commission argued, among other things, that the indemnification agreement is unenforceable because it is ultra vires.²

Following oral arguments, the trial court issued an opinion and order granting the county road commission's motion for summary disposition on the basis of its argument that the indemnification agreement is ultra vires and thus unenforceable.³ It is from this opinion and order that plaintiff appeals as of right.

We are presented with the narrow issue whether county road commissions have authority to enter into agreements to indemnify engineers or consultants before any liability-triggering event has occurred.⁴ We conclude that under existing constitutional and statutory provisions, county road commissions do not have the authority to enter into such agreements.

This Court reviews de novo questions of law involving statutory interpretation. Watson v. Bureau of State Lottery, 224 Mich.App. 639, 644, 569 N.W.2d 878 (1997). The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent and purpose of the Legislature. Id. The first criterion in determining intent is the specific language of the statute. House Speaker v. State Administrative Bd., 441 Mich. 547, 567, 495 N.W.2d 539 (1993); Watson, supra. Unless defined in the statute, every word or phrase of a statute should be understood according to the common and approved usage of the language, taking into account the context in which the words are used. M.C.L. § 8.3a; M.S.A. § 2.212(1); Yaldo v. North Pointe Ins. Co., 217 Mich.App. 617, 621, 552 N.W.2d 657 (1996), aff'd. 457 Mich. 341, 578 N.W.2d 274 (1998). If statutory language is clear, judicial construction is normally neither necessary nor permitted, and the statute must be enforced as it is written. Lorencz v. Ford Motor Co., 439 Mich. 370, 376, 483 N.W.2d 844 (1992). Watson, supra.

The Legislature is granted the authority to create the county road law and the road commission pursuant to Const. 1963, art. 7, § 16.⁵ However, a county's authority, like the authority of townships, cities, and villages, is derived from and limited by the constitution and valid state statutes. Arrowhead Development Co. v. Livingston Co. Rd. Comm., 413 Mich. 505, 511-512, 322 N.W.2d 702 (1982); Gray v. Wayne Co., 148 Mich.App. 247, 384 N.W.2d 141 (1986). Our Supreme Court "has repeatedly stated, local governments have no inherent powers and possess only those limited powers which are expressly conferred upon them by the state constitution or state statutes or which are necessarily implied therefrom." Hanselman v. Wayne Co. Concealed Weapon Licensing Bd., 419 Mich. 168, 187, 351 N.W.2d 544 (1984), citing Alan v. Wayne Co., 388 Mich. 210, 200 N.W.2d 628 (1972); Mason Co. Civic Research Council v. Mason Co., 343 Mich. 313, 72 N.W.2d 292 (1955). A power is "necessarily implied" if it is essential to the exercise of authority that is expressly granted. See, generally, Dries v. Chrysler Corp., 402 Mich. 78, 79, 259 N.W.2d 561 (1977) (power of Worker's Compensation Appeal Board to dismiss appeals for noncompliance with its rule requiring that appealing party file transcript within thirty days of filing of claim for review is necessarily implied from statute granting board authority to make rules on appellate procedure, in that power to dismiss is essential to enforcement of such procedural rules); Stebbins v. Judge of Superior Court of Grand Rapids, 108 Mich. 693, 698, 66 N.W. 594 (1896) ("Municipal corporations possess only those powers which are expressly conferred or necessarily implied, in consequence of their being essential to the exercise of their proper functions."); Vance v. Ananich, 145 Mich.App. 833, 836, 378 N.W.2d 616 (1985) ("Subpoena power not expressly conferred will not be implied unless essential to fulfillment of the objectives of a statute.")

Relevant to this case, M.C.L. § 224.10; M.S.A. § 9.110 empowers a board of county road commissioners to employ a competent highway engineer and to engage in other professional and consultant services as it considers necessary. This statute provides, in pertinent part, as follows:

(2) The board of county road commissioners shall employ a competent county highway engineer who shall make surveys ordered by the board, prepare plans and specifications for roads, bridges, and culverts, and exercise general supervision over construction to insure that the plans and specifications are strictly followed....

(3) The board may also engage other professional and consultant services as it considers necessary to implement this act and promote efficiency and economy in the operation of the county road system.

There is nothing in M.C.L. § 224.10; M.S.A. § 9.110 that expressly authorizes county road commissions to indemnify an engineer for any monetary judgments rendered against the engineer arising from the performance of professional services for county road commissions.

Plaintiff, however, argues that the authority to enter into an indemnification is implicit in the county...