Case Name: KOOTSILLAS v. CITY OF RIVERVIEW
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1995-12-15
Citations: 214 Mich. App. 570
Docket Number: Docket No. 157069
Parties: KOOTSILLAS v CITY OF RIVERVIEW
Judges: Before: Michael J. Kelly, P.J., and Sawyer and D. R. Freeman, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 214
Pages: 570–576

Head Matter:
KOOTSILLAS v CITY OF RIVERVIEW
Docket No. 157069.
Submitted July 19, 1995, at Detroit.
Decided December 15, 1995, at 9:20 a.m.
Leave to appeal sought.
Jimmie and Tammie Coleman brought an action in the Wayne Circuit Court against Albright Construction Company, Inc., Francis Kootsillas, and the City of Riverview, seeking damages related to Jimmie’s injury at the city’s landfill. Jimmie was injured when the garbage truck he was driving for Waste Management Company was crushed by a garbage truck owned by Albright and driven by Kootsillas. Kootsillas settled with the plaintiffs and brought a third-party action against the city for contribution. The court, John R. Kirwan, J., refused to permit the city to amend its pleadings to claim indemnification against Waste Management, but granted summary disposition for the city in the third-party action on the ground of governmental immunity. Kootsillas appealed and the city cross appealed.
The Court of Appeals held:
1. A governmental entity can, as in this case, forfeit governmental immunity from liability related to trash collection and landfill operation by charging fees that are in excess of amounts needed to offset related expenses, thus changing what is a governmental function into a pecuniary function or a profit-making enterprise.
2. On remand, the trial court should allow the city to amend its pleadings to claim indemnification.
Reversed and remanded.
Sawyer, J., dissenting, stated that the city is entitled to governmental immunity because the operation of a landfill by a municipality is a governmental function expressly authorized by statute, that an activity cannot be deemed a proprietary function unless the activity cannot normally be supported by taxes or fees, and that, because a municipality is authorized by statute to levy a tax for collection and disposal of garbage, the proprietary function exception does not apply to this case.
References
Am Jur 2d, Municipal, School, and State Tort Liability § 252.
See ALR Index under Municipal Corporations.
Governmental Immunity — Proprietary Function Exception — Trash Collection and Landfill Operation.
A municipality can forfeit governmental immunity from tort liability related to trash collection and landfill operation by charging fees in excess of amounts needed to offset related expenses, thus changing what is a governmental function into a pecuniary function or profit-making enterprise (MCL 691.1413; MSA 3.996[113]).
Garan, Lucow, Miller, Seward, Cooper & Becker, P.C. (by Thomas L. Misuraca and David M. Shafer), for Francis Kootsillas.
Cummings, McClorey, Davis & Acho, P.C. (by Marcia L. Howe), for City of Riverview.
Before: Michael J. Kelly, P.J., and Sawyer and D. R. Freeman, JJ.
Circuit judge, sitting on the Court of Appeals by assignment.

Opinion:
Michael J. Kelly, P.J.
Defendant and third-party plaintiff, Francis Kootsillas, appeals as of right and third-party defendant, City of Riverview, cross appeals from a Wayne Circuit Court order of September 22, 1992, granting the city's motion for summary disposition pursuant to MCR 2.116(C)(7). We reverse.
The circuit court found that the city was a governmental agency engaged in the exercise of a governmental function embracing the activities of the garbage dump landfill in question. The trial court did, however, find that the city operated its garbage dump for profit. This conclusion was fully supported by the record; in fact, the trial court's opinion underscored that the city admitted the activity was "conducted primarily for the purpose of producing a pecuniary profit." The court then went on to find that garbage-collecting activity and garbage disposal activity "can normally be sup ported by taxes or fees." Because the underlying tort claim and plaintiffs' claims against the city, Kootsillas, and Albright Construction Company, Inc., have been dismissed with prejudice by stipulation of the parties, we need decide only the propriety of the grant of the city's motion under MCR 2.116(C)(7) for summary disposition based on governmental immunity. The third-party plaintiff's well-pleaded allegations are to be accepted as true unless specifically contradicted by affidavits or appropriate documentation submitted by the city.
The pivotal case is Hyde v Univ of Michigan Bd of Regents, 426 Mich 223; 393 NW2d 847 (1986). There, the Court explained that an activity can be deemed a proprietary function only if it satisfies two tests:
(1) The activity must be conducted primarily for the purpose, of producing a pecuniary profit, and
(2) the activity cannot normally be supported by taxes or fees. [Hyde, supra at 257-258. Emphasis in original.]
In addition, the Hyde Court explained that MCL 691.1413; MSA 3.996(113) does not require that the activity actually be supported by taxes or fees to be subject to immunity, rather the activity need only be one which is "normally supported by taxes or fees." Hyde, supra at 260, n 32. (Emphasis in original.)
Here, we are convinced that the city's vast commercial landfill activity has dwarfed any governmental function and converted the activity into a proprietary function. The city's intent is fully conceded by its admissions and confirmed by documentary evidence, newspaper articles, depositions, accounting information, and millage and budget comparisons. The city invites customers to truck in garbage from all over Michigan and Canada, to deposit refuse in. its landfill collected from more than seventeen different governmental entities outside the city's geographic limits. The fees collected permit the city to use millions of dollars in profits to fund a host of services wholly unrelated to its landfill operations, and even to pay off municipal debts and to keep the city's millage artificially low. The landfill is the city's biggest business.
We hold that a governmental entity can forfeit its immunity for garbage and trash collection and landfill activity by charging fees that change the governmental function into a private one by the sheer scope of its profit-making enterprise, and we find that to be the case here. See 63 CJS, Municipal Corporations, § 777(b), pp 85-86; 57 Am Jur 2d, Municipal, County, School, and State Tort Liability, § 252, pp 256-257. Other states limit the immunity for activities that involve collection and fees for services in the community and abutting communities and the income is used to offset related expenses. That is, where the revenue would not "take the garbage collection service outside a governmental function and convert it into a ministerial one." City of Valdosta v Bellew, 178 Ga App 423; 343 SE2d 111 (1986). See also Tadjer v Montgomery Co, 300 Md 539; 479 A2d 1321 (1984), Koontz v City of Winston-Salem, 280 NC 513; 186 SE2d 897 (1972), and Kaczor v City of Minot, 138 NW2d 784 (ND, 1965). The intent to produce a pecuniary profit, especially one as sizeable as in the case at bar, converts the governmental activity into a commercial enterprise and requires the governmental entity either to forfeit its immunity or to insure itself against liability for damages precisely as any other commercial entrepreneur. The scope of the city's activity is disproportionate to its size and hence is not one that can "normally" be supported by its citizens and taxpayers in the sense of being proportionate to and in reasonable dimension with the size and scope of its geography and population.
Reversed. On remand, the trial court should grant leave to amend the city's cross-complaint and third-party complaint in order to litigate the city's indemnification claims, express and implied.
D. R. Freeman, J., concurred.