Proprietary Function Exception To Governmental Immunity

 Metro Detroit Personal Injury Lawyer


Generally, the government is immune from tort liability when engaged in a governmental function (see When Can The Government Be Sued?). However, an exception to this general rule exists for actions to recover for “bodily injury or property damage arising out of the performance of a proprietary function.” MCL 691.1413. A "propriety function" is defined as "any activity which is conducted primarily for the purpose of producing a pecuniary profit for the governmental agency, excluding, however, any activity normally supported by taxes or fees." Id

Cases finding that a government agency engaged in a proprietary function are exceedingly rare, but do exist. For example, In Laurence G Wolf Capital Mgmt Trust v City of Ferndale, 269 Mich App 265, 713 NW2d 274 (2005), plaintiff agreed to allow AT&T to lease and construct a cellular antenna on plaintiff's building. However, the city of Ferndale denied plaintiff's request for a variance to allow installation. The city subsequently entered into a lease agreement with AT&T to build a cell tower on city owned property near plaintiff's building. Plaintiff sued the city for tortious interference with their business relationship with AT&T. The city attempted to dismiss the case on grounds of governmental immunity. On appeal, the Michigan Court of Appeals held that the city was not entitled to immunity because the city was involved in a propriety function and plaintiff's claims of property damage fit within the exception.   

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