Brand v. Hartman , 122 Mich. App. 326 ( 1983 )

122 Mich. App. 326 (1983) 332 N.W.2d 479

BRAND
v.
HARTMAN

Docket No. 52219.

Michigan Court of Appeals.

Decided January 10, 1983.

Sylvester Delaney, Deputy Corporation Counsel, and Joseph N. Baltimore and Thomas B. Serowik, Assistants Corporation Counsel, for defendant.

Before: MacKENZIE, P.J., and BRONSON and T.R. THOMAS,^[*] JJ.

T.R. THOMAS, J.

This Court granted an application for leave to appeal to defendant-appellant, City of Detroit, from an order of the trial court denying appellant's motion for summary judgment under GCR 1963, 117.2(1). Appellant's motion for summary judgment claimed plaintiff-appellee had failed to state a claim upon which relief could be granted and was based upon appellant's claim of governmental immunity from suit. Plaintiff-appellee had sued for damages on the allegation that the appellant negligently performed a housing inspection that was required by appellant's ordinance prior to sale.

Essentially, on December 7, 1977, plaintiff-appellee, Ronald Brand, contracted to purchase a house in the City of Detroit from defendant-appellees Fred and Ruth Hartman. On June 2, 1977, the house was inspected by an employee of the City of Detroit pursuant to Ordinance 124-H, §§ 12-7-1 et seq., as amended, of the Municipal Code of the City of Detroit for a fee of $92.50. Thereafter, plaintiff-appellee brought suit against defendant-appellees, the Hartmans and Real Estate One, Inc., seeking damages because screens and storm windows were missing, contrary to the purchase agreement, and because the house suffered from water leaks which cause structural damage. By first amended complaint, appellant was added as a defendant and damages were sought against it on the theory that it negligently examined the house and issued a certificate of approval which failed to list the building's defects. The plaintiff-appellee alleged no intentional act on the part of the appellant.

Further, after denying the appellant's motion for summary judgment, the trial court allowed plaintiff-appellee to file a second amended complaint. The second amended complaint added that the ordinance, by imposing an inspection upon the seller of a house, requiring him to repair any disclosed defects and charging a fee of $92.50 before a sale is allowed, is an invasion of the private housing market and not a governmental function. Again, no intentional act on the part of the appellant was alleged.

The ordinance in question, Ordinance 124-H, §§ 12-7-1 et seq., as amended, of the Municipal Code of the City of Detroit makes it unlawful to sell or transfer, or act as a broker for a sale or transfer, a dwelling unless a valid certificate of approval is tendered to the purchaser or transferee at the time of sale or transfer. There are exceptions to this general rule which allow for a waiver of the tender of the certificate of approval and delay the obtaining of the certificate of approval until the occupancy of the dwelling. A dwelling is defined as a one- or two-family residential structure.

Exempt from the provisions of the ordinance are sales or transfers between governmental agencies; sales or transfers where the purchaser or transferee have occupied the dwelling for the 12 months immediately prior to the sale or transfer, except in the instance where the sale or transfer is by exercise of an option to purchase; sales or transfers prior to the effective date of the ordinance; and, sales and transfers for which a signed purchase agreement was entered into prior to the effective date of the ordinance.

The ordinance further directs the Buildings and Safety Engineering Department of the City of Detroit to issue such a certificate of approval only after an inspection. The inspections are to be performed consistently with an inspection guideline to be prepared by the department and approved by the city council. The department is also charged with setting reasonable fees for inspections made pursuant to the ordinance.

The record in this case does not disclose the list of inspection guidelines to be used in inspections relating to the enforcement of the ordinance but by the terms of the ordinance they are to constitute the complete scope of repairs required for the issuance of the certificate or to be noted in an inspection report. From a reading of the transcript of the motion for summary judgment they include an inspection of the electrical units, the plumbing, the heating, and the general condition of the house.

The appellant raises three issues, the central of which is whether the specific act complained of, namely the negligent performance of a housing inspection for which a fee is charged, is an act in the exercise or discharge of a governmental function, rendering appellant immune to tort liability. The others are whether the trial court erred in denying appellant's motion for summary judgment on the ground that the plaintiff failed to plead facts in avoidance of governmental immunity and whether the trial court erred in allowing plaintiff-appellee to file a second amended complaint after appellant filed for leave to appeal.

As to the central issue, MCL 691.1407; MSA 3.996(107) provides:

"Except as in this act otherwise provided, all governmental agencies shall be immune from tort liability in all cases wherein the government agency is engaged in the exercise or discharge of a governmental function. Except as otherwise provided herein, this act shall not be construed as modifying or restricting the immunity of the state from tort liability as it existed heretofore, which immunity is affirmed."

The meaning of the term "governmental function" as used in the foregoing statute was considered by the Michigan Supreme Court in the cases of Parker v Highland Park, 404 Mich. 183; 273 NW2d 413 (1978), and Perry v Kalamazoo State Hospital, 404 Mich. 205; 273 NW2d 421 (1978).

As this Court stated in the case of Willis v Nienow, 113 Mich. App. 30, 33-34; 317 NW2d 273 (1982):

"No clear majority position emerged in Parker and Perry, but this Court has consistently applied the test formulated by Justice MOODY who emerged as the `swing vote' in those cases. See, for example, Cronin v Hazel Park, 88 Mich. App. 488; 276 NW2d 922 (1979); Ross v Consumers Power Co, 93 Mich. App. 687; 287 NW2d 319 (1979); Rubino v Sterling Heights, 94 Mich. App. 494; 290 NW2d 43 (1979), and Davis v Detroit, 98 Mich. App. 705; 296 NW2d 341 (1980). Justice MOODY agreed with Justices FITZGERALD, KAVANAGH, and LEVIN that the statutory term `governmental function' is subject to judicial refinement and that the term is limited to those activities which are of essence to governing. However, Justice MOODY'S view of that test differs from that of his colleagues. See Parker, supra, p 200.

"`To delineate a complete and balanced definition of governmental function within a simplistic format would be presumptuous. However, as a basic guideline, the crux of the governmental essence test should be founded upon the inquiry whether the purpose, planning and carrying out of the activity, due to its unique character or governmental mandate, can be effectively accomplished only by the government. Unless liability would be an unacceptable interference with government's ability to govern, activities that fall outside this perimeter, although performed by a government agency, are not governmental functions and therefore not immune.'"

The ordinance subject to scrutiny in this case is not a construction, housing, or health code. Not all of the dwellings in the City of Detroit are subject to its provisions; it is not pervasive as to the quality or condition of Detroit housing; it concerns only one- and two-family residential structures at the time of sale or transfer. It is a pre-sale inspection ordinance which requires that an inspection report and certificate of approval be issued, for a reasonable fee, at sale or transfer except a sale or transfer by lease, mortgage, gift, devise, bequest or lien foreclosure. Although the list of inspection guidelines referred to in the ordinance is not a matter of record, it can only be assumed that such guidelines concern themselves with the objectives of a housing or health ordinance which would be enforceable at all times and not just at the time of sale or transfer.

This inspection ordinance is not of the essence of governing in any sense of the expression. Private persons or organizations could and regularly do inspect one- and two-family residential structures offered for sale or transfer to achieve a variety of objectives not the least of which is to determine the presence of termites. Further, such pre-purchase housing inspections have historically been totally within the prerogative of the residential home buyer.

We would, therefore, hold that the inspections done pursuant to this ordinance and the certificates of approval issued pursuant thereto are not of essence to governing. Such activity is nongovernmental even under Justice MOODY'S broader statement of the governmental essence test.

In the case of Ross v Consumers Power Co, 93 Mich. App. 687, 698-699; 287 NW2d 319 (1979), this Court said:

"In reaching our decision, we are mindful of the strong policy considerations which call for the limitation of governmental immunity. Certainly today's social climate has resulted in a relationship between government and the individual where it can no longer be said with conviction that `it is better that an individual should sustain an injury than the public should suffer an inconvenience'. Russell v Men of Devon, 2 Durnford & East's Term Rep 667, 673; 100 Eng Rep 359, 362 (1788). Rather, we would agree with Professor Borchard, who already long ago said, `justice and a respect for the rights of the individual demand that Government, national, state and municipal * * * adopt necessary legislation to admit the legal responsibility of the State or city for the torts of its officers'. Borchard, Governmental Liability in Tort, 34 Yale L J 1, 3 (1924). Professor Cooperrider's understanding of the manner in which the doctrine of governmental immunity first found its way into the law of this state should lead us to recognize that its legitimate application calls for careful analysis, and that such analysis should result in the doctrine being the exception rather than the rule: that we should speak in terms of governmental liability rather than governmental immunity." (Footnote omitted.)

The trial judge did not err in determining that the specific act complained of, namely the negligent performance of a housing inspection pursuant to the ordinance in controversy in this case for which a fee is charged, is not an act in the exercise or discharge of a governmental function, rendering appellant immune to tort liability.

The second and third issues presented in this case for decision can be disposed of in singularity. It is true that a plaintiff must allege facts in avoidance of governmental immunity. Galli v Kirkeby, 398 Mich. 527; 248 NW2d 149 (1976). However, in the present case, no governmental immunity existed as a matter of law or as a matter of fact.

Further, in Rubino v Sterling Heights, 94 Mich. App. 494, 499; 290 NW2d 43 (1979), we said:

"GCR 1963, 118.1 permits a party to amend its pleading by leave of court, which `shall be freely given when justice so requires'. Although the decision whether to allow amendment is within the trial court's discretion, Leahy v Henry Ford Hospital, 84 Mich. App. 719, 722; 271 NW2d 34 (1978), as a general rule, leave should be granted absent unfair prejudice to the opposing party. Spartan Asphalt Paving Co v Grand Ledge Mobile Home Park, 71 Mich. App. 177; 247 NW2d 589 (1976), rev'd on other grounds 400 Mich. 184; 253 NW2d 646 (1977)."

No such unfair prejudice to the opposite party exists as a result of the filing of the second amended complaint.

Affirmed and remanded.

BRONSON, J., concurred.

MacKENZIE, P.J. (dissenting).

I respectfully dissent. The motion for summary judgment pursuant to GCR 1963, 117.2(1) at issue in this interlocutory appeal by defendant City of Detroit should only have been granted if, accepting as true all well-pled facts in plaintiff's complaint, plaintiff's claim was so clearly unenforceable as a matter of law that no factual development could possibly justify a right to recovery; however, plaintiff had the burden of pleading facts in avoidance of governmental immunity. Furness v Public Service Comm, 100 Mich. App. 365, 368; 299 NW2d 35 (1980). The majority here holds that it was unnecessary for plaintiff to plead such facts because governmental immunity was inapplicable as a matter of law. In so holding, the majority has gone beyond reviewing the circuit court's resolution of the city's motion for summary judgment and has, in effect, granted partial summary judgment for plaintiff pursuant to GCR 1963, 117.2(2) on the issue of governmental immunity on the theory that no factual development could possibly establish governmental immunity as a defense.

The majority's decision is premised on such unpled "facts" as the following:

"Private persons or organizations could and regularly do inspect one- and two-family residential structures offered for sale or transfer to achieve a variety of objectives not the least of which is to determine the presence of termites. Further, such pre-purchase housing inspections have historically been totally within the prerogative of the residential home buyer."

It would seem that evidence could be produced to contradict the foregoing. MRE 201(b) provides:

"A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned."

The "facts" relied upon by the majority fall within neither of these categories.

Had the majority opinion merely affirmed the decision of the trial court, I would still disagree. The generally recognized test of governmental immunity is that stated in Parker v Highland Park, 404 Mich. 183, 200; 273 NW2d 413 (1978) (MOODY, J., concurring):

"[T]he crux of the governmental essence test should be founded upon the inquiry whether the purpose, planning and carrying out of the activity, due to its unique character or governmental mandate, can be effectively accomplished only by the government. Unless liability would be an unacceptable interference with government's ability to govern, activities that fall outside this perimeter, although performed by a government agency, are not governmental functions and therefore not immune."

In Central Advertising Co v Novi, 91 Mich. App. 303, 317; 283 NW2d 730 (1979), the Court held that adoption and enforcement of a regulatory sign ordinance was within the scope of governmental immunity under the foregoing test. In Hoeppner v Dep't of Labor, 104 Mich. App. 334, 338; 304 NW2d 841 (1981), the Court held that performance of a safety inspection under the Michigan Occupational Safety and Health Act was a governmental function under the foregoing test. The Court reasoned that, while safety inspections are sometimes performed in the private sector, only government inspections could meet the statutory goal of ensuring a safe workplace for all employees in the state.

See also Antkiewicz v Motorists Mutual Ins Co, 91 Mich. App. 389, 395; 283 NW2d 749 (1979), in which the Court held that a police and fire department investigation of arson aimed at a subsequent criminal prosecution was a governmental function. I would conclude that enforcement of regulatory ordinances is a governmental function. Due to its unique character and governmental mandate, such enforcement can be effectively accomplished only by government. The Central Advertising Co, Hoeppner and Antikiewicz decisions support such a conclusion.

The inspection performed here by the city appears on its face to have been performed in the course of enforcing a regulatory ordinance. Plaintiff has pled no facts in avoidance of such a conclusion. While such inspections may have analogues in the private sector, they are within the scope of immunity here because they were performed in the exercise or discharge of a governmental function. See MCL 691.1407; MSA 3.996(107); Duncan v Detroit, 78 Mich. App. 632, 634; 261 NW2d 26 (1977); Cronin v Hazel Park, 88 Mich. App. 488, 491; 276 NW2d 922 (1979) and Antkiewicz, supra, p 395.

That the city charges a fee for performing an inspection makes no difference. See, for example, MCL 691.1413; MSA 3.996(113). Plaintiff has not pled any facts which suggest that the city is in the business of performing safety inspections for profit to meet the needs of individual buyers.

I would reverse and remand for further proceedings, including the entry of an appropriate order of summary judgment.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.