Opinion ID: 839195
Heading Depth: 2
Heading Rank: 2

Heading: juridical entity

Text: TCM asserts that the suit against it should be dismissed because it is not a juridical entity  that is, it is not an entity that can be rendered subject to suit. TCM was formed pursuant to the Urban Cooperation Act (UCA), MCL 124.501 et seq. Both the trial court and the Court of Appeals concluded that, under the UCA, TCM was subject to suit, relying on MCL 124.507(2), which states: A separate legal or administrative entity created by an interlocal agreement shall possess the common power specified in the agreement and may exercise it in the manner or according to the method provided in the agreement. The entity may be, in addition to its other powers, authorized in its own name to make and enter into contracts, to employ agencies or employees, to acquire, construct, manage, maintain, or operate buildings, works, or improvements, to acquire, hold, or dispose of property, to incur debts, liabilities, or obligations that, except as expressly authorized by the parties, do not constitute the debts, liabilities, or obligations of any of the parties to the agreement, to cooperate with a public agency, an agency or instrumentality of that public agency, or another legal or administrative entity created by that public agency under this act, to make loans from the proceeds of gifts, grants, assistance funds, or bequests pursuant to the terms of the interlocal agreement creating the entity, and to form other entities necessary to further the purpose of the interlocal agreement. The entity may sue and be sued in its own name. [Emphasis added.] TCM is a separate legal or administrative entity created by an interlocal agreement. The second sentence of MCL 124.507(2) enumerates a range of activities that such an entity may be . . . authorized to undertake, such as entering contracts and acquiring buildings. The phrase may be authorized indicates that the entity is not necessarily entitled to undertake such actions; rather, the entity may be authorized to do so, but absent an authorization the entity would not be able to act. In contrast to the second sentence of MCL 124.507(2), the third sentence simply states: The entity may sue and be sued in its own name. This language indicates that an entity created pursuant to the UCA, such as TCM, may be sued. The third sentence does not contain the qualifying language of the second sentence, which lists certain activities in which an entity may be authorized  to engage. This difference in language strongly suggests that the Legislature intended to distinguish between activities that must be authorized and activities that do not require authorization. Because the third sentence of MCL 124.507(2) states categorically that an entity may sue and be sued, we conclude that TCM is a juridical entity subject to suit. TCM raises two arguments against this conclusion. TCM first focuses on the term may in the third sentence: The entity may sue and be sued in its own name. It argues that may indicates that an entity may be sued only if the agreement creating the entity so specifies. However, the term may is relevantly defined as being used to express opportunity or permission. . . . Random House Webster's College Dictionary (1997). In general, our courts have said that the term may is permissive, Murphy v. Michigan Bell Tel. Co., 447 Mich. 93, 120, 523 N.W.2d 310 (1994), as opposed to the term shall, which is considered mandatory, People v. Couzens, 480 Mich. 240, 250, 747 N.W.2d 849 (2008). In MCL 124.507(2), the term may indicates that an entity created by an interlocal agreement is susceptible to being held to account in a court of law. That is, MCL 124.507(2) first states, in the active voice, that an entity may sue. This indicates that an entity is granted the discretionary ability to decide whether to bring suit. MCL 124.507(2) then uses the passive voice, stating that an entity may be sued. This statement similarly indicates that persons suffering an injury from an entity are granted the discretionary ability to sue the entity. In other words, may here is permissive: it grants permission to persons injured to sue the entity. Because MCL 124.507(2) states that [a]n entity may sue and be sued in its own name, the Legislature has signaled that such an entity may potentially be sued and is susceptible to suit. [5] TCM also argues that the interlocal agreement must specifically authorize suit under MCL 124.505(c), which states: A joint exercise of power pursuant to this act shall be made by contract or contracts in the form of an interlocal agreement which may provide for:    (c) The precise organization, composition, and nature of any separate legal or administrative entity created in the interlocal agreement with the powers designated to that entity. TCM contends that because the contract creating the entity may provide for . . . [t]he precise organization, composition, and nature of the entity, the formative contract must specify every aspect of such an entity; in particular, before an entity may be brought to court, the interlocal agreement must specify that the entity is subject to suit, for otherwise the nature of the entity would not permit a legal action against it. However, TCM's reliance on MCL 124.505(c) is, in our judgment, misplaced, because that statute states generally that aspects of an entity's nature may be specified in the interlocal agreement; on the other hand, MCL 124.507(2) states specifically that at least one aspect must be understood as characterizing an entity  namely, that it may sue and be sued. Thus, even if we assume that the amenability to suit can be described as an aspect of an entity's nature, because the more specific provision prevails over the more general, Fluor Enterprises, Inc. v. Dep't of Treasury, 477 Mich. 170, 181, 730 N.W.2d 722 (2007), MCL 124.505(c) does not suggest that specific authorization is required before suit may be brought against TCM.