Governmental immunity; Proprietary function exception; MCL 691.1413; Primary purpose; Distinguishing Dextrom v Wexford Cnty

Concluding that “there was no question of fact that the proprietary function exception to governmental immunity did not apply[,]" the court reversed and remanded for the trial court to enter an order granting summary disposition to defendant-City. Plaintiff alleged, “in relevant part, premises-liability and negligence claims against the City.” Plaintiff pled “in avoidance of governmental immunity under the proprietary function exemption, arguing the City operated its beaches for a profit and was therefore not entitled to immunity in this case. Plaintiff highlighted the fact that the City comingled the money it earned from the beach (the ‘beach funds’) in a general account and presented an expert witness who testified that several unidentified transfers in the general account had no basis and were evidence of the City’s intent to profit from its beaches.” The court held that the evidence was “sufficient to establish that the beaches were not operated for the primary purpose of generating a profit.” It noted that in denying the City’s summary disposition motion, “the trial court found that the affidavit and testimony of plaintiff’s expert forensic accountant sufficed to create a question of fact regarding the primary purpose of operating the City’s beaches. Plaintiff’s expert questioned several transfers and fees detailed in the City’s financial records, claiming that they were subjective in nature or that it was unclear what the funds were used for. On the basis of these transfers, as well as other fees, advertising expenditures, and the lack of expenses associated with beach safety, plaintiff’s expert concluded that the City’s primary purpose for operating its beaches was for profit.” The expert, when asked about his conclusions, “admitted he did not have enough information to definitively determine that the beach funds were used for nonbeach purposes. [He] was simply unsure whether the fees and transfers were related to the beach operations because he was unable to review any documentation explaining their purpose. Furthermore, the City’s finance director and tax assessor explained the purpose of many of the questioned transfers, all of which were related to the operation of the beaches. But plaintiff’s expert disregarded the finance director’s testimony because he could not ‘verify’ her claims. Most importantly, plaintiff presented no evidence—aside from the expert’s speculative opinion—demonstrating that beach funds were actually included in the questioned transfers or that the funds were actually used for nonbeach purposes. This” was unlike Dextrom, “where there was concrete evidence that a landfill’s profits were used to fund nonlandfill-related projects. Because ‘mere conjecture or speculation is insufficient[]’ to create a genuine issue of material fact, . . . and there was no evidence showing that beach funds were actually used to fund unrelated activities, expenses, or projects, the trial court erred by denying the” City summary disposition.