MCL § 691.1413 – Proprietary function exception (for-profit governmental activities)
Table of Contents
Code Details
Chapter 691
Act 170 of 1964
Exact Statute Text
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691.1413 Damage arising out of performance of proprietary function.
Sec. 13.
The immunity of the governmental agency shall not apply to actions to recover for bodily injury or property damage arising out of the performance of a proprietary function as defined in this section. Proprietary function shall mean 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. No action shall be brought against the governmental agency for injury or property damage arising out of the operation of proprietary function, except for injury or loss suffered on or after July 1, 1965.
MCL § 691.1413 Summary
This Michigan statute outlines a significant exception to governmental immunity, specifically for activities performed by governmental agencies that are primarily aimed at generating a financial profit. It clarifies that if a governmental agency engages in a “proprietary function”—meaning an activity conducted chiefly for pecuniary gain, and not an activity typically funded by taxes or fees—then the usual protections of governmental immunity do not apply if someone suffers bodily injury or property damage as a result. This means that if a government entity is acting like a private business for profit, it can be sued like a private business. The statute also specifies that this exception applies only to injuries or losses occurring on or after July 1, 1965.
Purpose of MCL § 691.1413
The legislative purpose behind this particular statute is to ensure fairness and prevent governmental agencies from having an unfair advantage or avoiding liability when they choose to operate in a manner akin to private, for-profit enterprises. When a government entity steps out of its traditional role of providing public services (which are typically supported by taxes or fees) and instead engages in activities primarily to make money, this law levels the playing field. It aims to prevent a situation where a governmental agency could compete with private businesses, generate profit, but then escape responsibility for injuries or damages caused by those profit-generating activities due to sovereign immunity. The statute addresses the problem of governmental entities benefiting from commercial ventures without bearing the associated risks and liabilities that a private company would face.
Real-World Example of MCL § 691.1413
Imagine the City of Grand Rapids decides to open a public golf course. While many public parks and recreational facilities are supported by taxes and modest fees, the city council specifically markets this golf course as a premium destination, charging significantly higher greens fees, operating a pro shop with branded merchandise, and hosting paid tournaments, all with the explicit goal of generating substantial revenue beyond covering operational costs, aiming for a significant “pecuniary profit” for the city’s general fund. This activity is not “normally supported by taxes or fees” in the traditional sense of a basic public service.
If, during a paid tournament, a poorly maintained golf cart, owned and operated by the city through the golf course, malfunctions and causes a golfer to suffer a serious injury, the injured golfer might be able to sue the City of Grand Rapids. The city would likely argue governmental immunity. However, MCL § 691.1413 could apply here because the operation of this particular golf course, with its emphasis on generating significant profit through non-tax-supported, high-fee activities, could be classified as a “proprietary function.” Therefore, the city’s immunity would not apply, allowing the injured golfer to pursue a personal injury claim against the governmental agency.
Related Statutes
- MCL § 691.1407 – Governmental immunity from tort liability: This is the foundational statute for governmental immunity in Michigan, establishing the general rule that governmental agencies are immune from tort liability unless an exception applies. MCL § 691.1413 carves out one such exception to this broader immunity.
- MCL § 691.1401 – Definitions (e.g., “governmental agency”): This section provides definitions relevant to Chapter 691, including what constitutes a “governmental agency,” which is crucial for determining who is subject to or protected by these immunity statutes.
Case Law Interpreting MCL § 691.1413
Michigan courts have frequently interpreted the specific provisions of MCL § 691.1413 to determine when an activity constitutes a proprietary function. A landmark case in this area is *Jackson v City of Detroit*, 449 Mich 420 (1995), where the Michigan Supreme Court provided extensive guidance on applying this exception, emphasizing the “primarily for the purpose of producing a pecuniary profit” test and distinguishing activities normally supported by taxes or fees.
Another relevant case is *Styke v Michigan Dept of Natural Resources*, 297 Mich App 612 (2014), which further refined the interpretation of “proprietary function” in the context of state-operated facilities and clarified what types of revenue generation might or might not trigger the exception. These cases underscore the fact-intensive nature of determining whether governmental immunity is waived under this statute.
You can find more interpretations by searching for `MCL 691.1413 proprietary function exception` on Google Scholar.
Why MCL § 691.1413 Matters in Personal Injury Litigation
For individuals who have suffered bodily injury or property damage due to the actions of a governmental entity, understanding MCL § 691.1413 is absolutely critical. Michigan’s governmental immunity laws are very broad, often making it difficult to sue a governmental agency. However, this proprietary function exception provides a vital pathway for justice when a government body acts outside its traditional public service role and operates like a private business.
For plaintiffs and their personal injury attorneys, identifying a potential proprietary function is a key strategic consideration. It shifts the burden from trying to prove a different, often narrower, immunity exception (like the highway exception or public building exception) to demonstrating that the government’s activity was primarily profit-driven and not tax-supported. This often involves a detailed investigation into the governmental agency’s financial records, operational objectives, and the specific nature of the activity causing the injury. Success in such a case means the governmental agency loses its immunity defense, allowing the plaintiff to pursue damages as they would against any other negligent party. For defense attorneys representing governmental agencies, understanding the nuances of “pecuniary profit” and “normally supported by taxes or fees” is essential to mount an effective defense and argue that their client’s activity does not meet the criteria for a proprietary function, thus preserving immunity.