STATE OF MICHIGAN COURT OF APPEALS

STATE OF MICHIGAN COURT OF APPEALS ALBERT GARRETT, GREGORY DOCKERY and DAN SHEARD, UNPUBLISHED August 19, 2008 Plaintiffs-Appellees, V Nos. 269809; 273463 Wayne Circuit Court CITY OF DETROIT, DETROIT CITY COUNCIL LC No. 05-521567-CL and DETROIT BUILDING AUTHORITY, Defendants-Appellants. Before: White, P.J., and Zahra and Fort Hood, JJ. PER CURIAM. In Docket No. 269809, defendants appeal as of right the trial court s order denying their motion for summary disposition based on governmental immunity and granting plaintiffs request for a preliminary injunction. In Docket No. 273463, defendants appeal on delayed leave granted 1 the trial court s denial of their motion for summary disposition based on plaintiffs lack of standing and the preemption of plaintiffs claims by state law and plaintiffs collective bargaining agreements (CBAs). We reverse the order denying summary disposition to defendants based on governmental immunity and we remand for entry of a judgment in defendants favor, consistent with this opinion. I. Facts and Procedural History Plaintiffs filed suit based on defendants alleged violation of the city of Detroit s Privatization Ordinance. The ordinance is designed to allow the privatization of public services while preserving the jobs of city employees and maintaining the rights of city residents. Detroit Ordinances, 18-5-100 et seq. Prior to soliciting private bids for service contracts, the requesting city department or official must prepare a report detailing the need for such services and submit the report for the city council s consideration and approval. Detroit Ordinances, 18-5-103, 18-5-104(a). 1 Garrett v Detroit, unpublished order of the Court of Appeals, entered November 7, 2006 (Docket No. 273463). -1-

The Privatization Ordinance allows city employees whose jobs will be terminated by the privatization of a service to compete to provide the service in a last-chance bid provision. Upon approval of the City Council of a request to solicit bids for a proposed service contract, the regular City employees who will be affected by the proposed service contract, and their collective bargaining representative, shall be afforded a reasonable opportunity to organize, prepare and submit a bid, whether a quote or other response, to provide the subject services after having been provided all of the direct and indirect costs for the provision of such services by the City. Any bid prepared by such affected employees shall be the last bid submitted after the affected employees or the collective bargaining representative have had an opportunity to view a list of all companies submitting bids. [Detroit Ordinances, 18-5-104(b).] Ultimately, the city council must approve of any contract that results in the privatization of a city service by a two-third-majority vote. The city council must certify that it has determined that the availability and quality of the subject services would likely equal or exceed the quality of the subject services that could be provided by regular City employees, including cost and efficiency considerations. Detroit Ordinances, 18-5-105. In enacting the Privatization Ordinance, the city granted affected employees or their collective bargaining representatives the right to pursue a private right of action in the circuit court but only after the City Council has approved a contract. In such a lawsuit, the court must determine whether the city substantially complied with the Privatization Ordinance. Detroit Ordinances, 18-5-109. Monetary relief is limited to reimbursement to affected employees for lost wages due to displacement or termination as a direct result of letting the contract. Id. Plaintiffs filed a class action lawsuit and contended that the city had privatized various public services without complying with the last-chance bid procedure and without voting to waive the ordinance s requirements. Defendants filed a motion for summary disposition asserting that (1) plaintiffs claims were barred by governmental immunity, (2) plaintiffs lacked standing to file a private cause of action under the Privatization Ordinance, and (3) plaintiffs claims were preempted by the Public Employee Relations Act (PERA), MCL 423.201 et seq., and the employees CBAs with the city. The trial court denied defendants motion on all grounds and defendants appealed to this Court. II. Governmental Immunity A. Standard of Review We review a trial court s determination regarding a motion for summary disposition de novo. MacDonald v PKT, Inc, 464 Mich 322, 332; 628 NW2d 33 (2001). Defendants based their motion for summary disposition on MCR 2.116(C)(8) and MCR 2.116(C)(10); however, summary disposition based on governmental immunity is properly raised under MCR 2.116(C)(7). A motion under MCR 2.116(C)(7) tests whether a claim is barred because of immunity granted by law, and requires consideration of all documentary evidence filed or submitted by the parties. Maskery v Univ of Michigan Bd of Regents, 468 Mich 609, 613; 664 NW2d 165 (2003), quoting Glancy v Roseville, 457 Mich 580, 583; 577 NW2d 897 (1998). In -2-

making this determination, well-pleaded allegations are accepted as true and construed in favor of the nonmoving party. Dampier v Wayne Co, 233 Mich App 714, 720; 592 NW2d 809 (1999). B. Analysis 1. Plaintiffs Claim Sounds in Tort The trial court denied defendants motion for summary disposition after determining that plaintiffs claims sound in contract. Thus, the trial court concluded defendants were not entitled to governmental immunity. We disagree. First, plaintiffs claim is not based in contract. The Privatization Ordinance does not create a contract between the city and its employees. There is a strong presumption that statutes do not create contractual rights. Studier v Michigan Pub School Employees Retirement Bd, 472 Mich 642, 661; 698 NW2d 350 (2005). By enacting a statute, the legislative body merely declares a policy to be pursued until the legislature shall ordain otherwise. Id. (citations omitted). This premise is supported by the fact that the Legislature s main function is to enact laws to manage government affairs, not to enter into contracts. Studier, supra at 661. To overcome the strong presumption that a statute does not create a contractual right, this Court must first look to the language of the statute. The statutory language must clearly reveal the Legislature s intent to be contractually bound by a statute by plain language that is susceptible of no other reasonable construction. Certain phrases provide strong evidence that the Legislature intended to create a contractual right, such as expressly stating that a statute amounts to a written contract on behalf of the state, or using words such as contract, covenant, or vested rights. Studier, supra at 662-663. Absent express language creating a contractual right, a court may also look for language allowing amendment of the rights conferred by the statute, which suggests that the Legislature did not intend to create a contractual right. Id. The court may also look to the circumstances of a statute s passage to determine the Legislature s intent. Id. at 663. The plain language of Detroit Ordinances, 18-5-104(b) does not create a contract between the city and its employees. The Privatization Ordinance reflects the city s policy to preserve the jobs of municipal employees, while making city government more cost efficient. The ordinance purports to create a procedure to meet that goal. Subsection 104(b) confers on city employees and their collective bargaining representatives the right to submit a last-chance bid in the competitive bidding process affecting a Detroit service contract. While the language of that subsection imposes a mandatory duty on the city to comply, the language does not create a contract between the city and its employees. Plaintiffs further assert that their claims are contractual in nature because they are based on the employment relationship and amount to claims for wrongful separation. Plaintiffs generally titled their claims as one for lost wages and one for equitable relief. The trial court reasoned that plaintiffs claims could either be for breach of an employment contract or tortious interference with a contractual relationship. However, plaintiffs contract claim is based on defendants violation of a duty purportedly found in the Privatization Ordinance. Thus, plaintiffs claim is not a contract claim at all but rather it is a claim sounding in tort that arises from an alleged ordinance violation. -3-

Claims against a governmental entity that sound in tort must be pled in avoidance of governmental immunity. McDowell v Detroit, 264 Mich App 337, 355-356; 690 NW2d 513 (2004), rev d in part on other grounds 477 Mich 1079; 729 NW2d 227 (2007). In McDowell, supra at 341-342, the plaintiff, a resident in public housing whose family was killed by faulty electrical wiring, raised several allegations based on violations of the lease agreement. This Court found that the plaintiff s contract claims were merely recapitulations of her tort claims based on the negligence of the public entity in maintaining the premises. Id. at 355. The same is true in this case. Plaintiffs allege that defendants violated the Privatization Ordinance, a tort claim, and allege that the violation amounted to a breach of an employment contract. 2. The Privatization Ordinance Does Not Defeat the Governmental Tort Liability Act A governmental entity may not create a cause of action against itself in violation of the Governmental Tort Liability Act (GTLA), MCL 691.1401 et seq. In Mack v Detroit, 467 Mich 186, 196; 649 NW2d 47 (2002), superseded in part on other grounds Costa v Community Emergency Med Services, Inc, 475 Mich 403; 716 NW22d 236 (2006), the Supreme Court affirmatively found that a city cannot create a tort cause of action against itself in contravention of governmental immunity unless the Legislature has expressly authorized such a cause of action. In Mack, the plaintiff retired from the Detroit Police Department due to continued sexual orientation discrimination. Id. The plaintiff subsequently filed suit for intentional infliction of emotional distress and alleged that the city violated 2 of the Detroit City Charter, which prohibits discrimination based on sexual orientation. Id. The Supreme Court determined that the plaintiff failed to raise a claim within a statutory exception to governmental immunity. Id. The Court found that a plaintiff may raise a claim under the state Civil Rights Act (CRA) without pleading a claim within a statutory exception. However, the CRA does not provide protection from discrimination based on sexual orientation. Id. at 195-196. Here, the City of Detroit cannot create a cause of action under the Privatization ordinance unless the state legislature has expressly authorized such a claim. Since no such legislative authority exists, plaintiffs claim must fail as a matter of law. Our dissenting colleague disagrees with our conclusion, reasoning that the legislature through the Bidders on Public Works Act (BPWA), MCL 123.501, has indeed authorized the private right of action found in the Privatization Ordinance. We reject this reasoning for several reasons. Initially, we note that neither the trial court nor the learned trial counsel for plaintiffs raised this argument. Generally, an issue is not properly preserved if it is not raised before and addressed and decided by the trial court. Polkton Twp v Pellegrom, 265 Mich App 88, 95; 693 NW2d 170 (2005). Thus, this issue is unpreserved and need not be addressed by the appellate court. Id. Further, we do not read the BPWA as a statute that creates a cause of action in tort. Rather, the act simply gives parties who believe themselves to be aggrieved by the public bidding process an appeal by right, whether to the State Supreme Court or otherwise, which would permit judicial review of the bidding process to insure compliance with the state statute. Last, even if the BPWA is deemed to create a tort cause of action, that fact that the Detroit Privatization Ordinance far exceeds the scope of the BPWA is fatal to plaintiffs claim. In Mack, supra, the state legislature expressly authorized tort actions for discrimination under our Civil Rights Act. Yet, this express authorization was not sufficient to permit the City of Detroit to create a civil rights ordinance that deviated from the state act. Detroit was not permitted in Mack to define types of discrimination not expressly proscribed by our state Civil Rights Act. Pursuant -4-

to Mack, the City of Detroit lacks authority to create a cause of action that exceeds the scope of the appeal by right process defined under the Bidders on Public Works Act. C. Defendants Remaining Arguments on Appeal Having concluded that defendants are entitled to judgment as a matter of law pursuant to the Governmental Tort Liability Act, we decline to address defendants remaining arguments on appeal. III. Conclusion We reverse the order of the trial court denying summary disposition to defendants based on governmental immunity and we remand for entry of a judgment in defendants favor, consistent with this opinion. We do not retain jurisdiction. /s/ Brian K. Zahra -5-

STATE OF MICHIGAN COURT OF APPEALS ALBERT GARRETT, GREGORY DOCKERY and DAN SHEARD, Plaintiffs-Appellees, UNPUBLISHED August 19, 2008 v Nos. 269809; 273463 Wayne Circuit Court CITY OF DETROIT, DETROIT CITY COUNCIL LC No. 05-521567-CL and DETROIT BUILDING AUTHORITY, Defendants-Appellants. Before: White, P.J., and Zahra and Fort Hood, JJ. WHITE, P.J. (concurring.) I agree that the action is not for breach of contract, that Mack v City of Detroit, 467 Mich 186; 649 NW2d 47 (2002), holds that defendant cannot create a cause of action against itself in contravention of governmental immunity unless authorized by the Legislature, and that plaintiffs do not seek recovery under MCL 123.501. I do not understand the instant case as presenting the questions whether defendant has authority under the Constitution and the Home Rule Act to establish procedures for privatization, or whether contracts entered into without following that procedure are subject to challenge. The only issue we decide today is whether plaintiffs private right of action for damages under the ordinance is barred by governmental immunity. /s/ Helene N. White -1-

STATE OF MICHIGAN COURT OF APPEALS ALBERT GARRETT, GREGORY DOCKERY and DAN SHEARD, UNPUBLISHED August 19, 2008 Plaintiffs-Appellees, v Nos. 269809; 273463 Wayne Circuit Court CITY OF DETROIT, DETROIT CITY COUNCIL LC No. 05-521567-CL and DETROIT BUILDING AUTHORITY, Defendants-Appellants. Before: White, P.J., and Zahra and Fort Hood, JJ. FORT HOOD, J. (dissenting.). I respectfully dissent. I would affirm the trial court s order denying defendant s motion for summary disposition based on governmental immunity and granting plaintiffs request for a preliminary injunction. Review of a trial court s determination regarding a motion for summary disposition is de novo. Feyz v Mercy Memorial Hosp, 475 Mich 663, 672; 719 NW2d 1 (2006). Although defendants moved for summary disposition based on MCR 2.116(C)(8) and MCR 2.116(C)(10), summary disposition based on governmental immunity is properly raised under MCR 2.116(C)(7). A motion under MCR 2.116(C)(7) tests whether a claim is barred because of immunity granted by law and requires consideration of all documentary evidence filed or submitted by the parties. Burton v Reed City Hosp Corp, 471 Mich 745, 757; 691 NW2d 424 (2005); MCR 2.116(G)(5). When reviewing a motion based on MCR 2.116(C)(7), well-pleaded allegations are accepted as true and construed in favor of the nonmoving party. Dampier v Wayne Co, 233 Mich App 714, 720; 592 NW2d 809 (1999). The defense motion for summary disposition was denied when the trial court determined that plaintiffs claims sound in contract and, therefore, avoided the application of governmental immunity. I would affirm, albeit on other grounds. In Mack v Detroit, 467 Mich 186, 190-192; 649 NW2d 47 (2002), superseded in part on other grounds Costa v Community Emergency Med Services, Inc, 475 Mich 403; 716 NW2d 236 (2006), the female plaintiff, a police officer, attained the status of lieutenant and held various positions in the department. While employed as the acting inspector of the sex crimes unit, the plaintiff alleged that she was repeatedly propositioned by her male supervisors for sex. The -1-

plaintiff rebuffed the sexual advances, partly because of her sexual orientation as a lesbian, and complained to her superiors about the unwelcome conduct. She asserted that her superiors refused to take any action, and consequently, she endured additional discrimination and harassment. The plaintiff alleged that she was assigned a desk job answering telephones and was prohibited from participating in investigations. The plaintiff then filed suit, alleging intentional infliction of emotional distress and violations of the city of Detroit s charter that precluded discrimination on the basis of sex and sexual orientation. Ultimately, the Supreme Court concluded that a governmental entity may not create a cause of action against itself in violation of the Governmental Tort Liability Act (GTLA), MCL 691.1401 et seq: Plaintiff contends that the charter expressly creates a private cause of action for sexual orientation discrimination. However, whether the charter attempted to create a private cause of action for sexual orientation discrimination is an irrelevant inquiry because we hold that the charter could not create a cause of action against the city without contravening state governmental immunity law. Const 1963, art 7, 22 governs the authority of a city to enact a charter: Under general laws the electors of each city and village shall have the power and authority to frame, adopt and amend its charter, and to amend an existing charter of the city or village heretofore granted or enacted by the legislature for the government of the city or village. Each such city and village shall have power to adopt resolutions and ordinances relating to its municipal concerns, property and government, subject to the constitution and law. No enumeration of powers granted to cities and villages in this constitution shall limit or restrict the general grant of authority conferred by this section. [Emphasis added.] Thus, although art 7, 22 grants broad authority to municipalities, it clearly subjects their authority to constitutional and statutory limitations. One such statutory limitation involves governmental immunity. In the governmental tort liability act (GTLA), the Legislature expressly stated that [e]xcept as otherwise provided in this act, a governmental agency is immune from tort liability if [it] is engaged in the exercise or discharge of governmental function. MCL 691.1407(1). Accordingly, a governmental agency is immune unless the Legislature has pulled back the veil of immunity and allowed suit by citizens against the government. The GTLA allows suit against a governmental agency in only five areas. However, there are other areas outside the GTLA where the Legislature has allowed specific actions against the government to stand, such as the Civil Rights Act. Further, municipalities may be liable pursuant to 42 USC 1983. Monell v New York City DSS, 436 US 658; 98 S Ct 2018; 56 L Ed 2d 611 (1978). However, none of the exceptions where a suit is allowed against the government can be read to allow suit for sexual orientation discrimination. Likewise, no statute grants governmental agencies the authority to create an immunity exception for sexual orientation discrimination or waive immunity in -2-

the area of civil rights. Notably, the CRA, which makes a municipality liable for specific civil rights violations, neither provides a cause of action for sexual orientation discrimination nor grants municipalities the authority to create one. MCL 37.2101 et seq. Moreover, the CRA limits complaints to causes of action for violations of the act itself: A person alleging a violation of this act may bring a civil action for appropriate injunctive relief or damages, or both. [MCL 37.2801(1) (emphasis added).] In sum, without some express legislative authorization, the city cannot create a cause of action against itself in contravention of the broad scope of governmental immunity established by the GTLA. No such legislative act has recognized sexual orientation discrimination claims. Accordingly, this Court declines to circumvent the limitations placed on a municipality by the Legislature and recognize a cause of action against the city for sexual orientation discrimination. [Mack, supra at 193-197 (footnotes omitted).] Relying on Mack, supra, defendant asserts that this case falls within the parameters of governmental immunity. However, review of Michigan law reveals that the Legislature has allowed specific actions against the government to stand in the context of bids. In the Bidders on Public Works Act (BPWA), MCL 123.501 et seq, 1 the Legislature has expressly authorized a cause of action against a municipality for the failure to follow the procedures of a competitive bidding process. The Legislature has granted municipalities the power to enter into competitive bidding with private entities to provide certain public services. MCL 123.501. The governmental entity accepting the bids may rate the bidders according to their experience, equipment and resources and be furnished with proposals, plans and specifications for only such type and quantity of work as their qualifications as outlined in section one of this act would warrant. MCL 123.503. The Legislature created a cause of action against the governmental entity as follows: Any person feeling himself aggrieved at the determination of any such officer, board, commission, committee or department shall have the right of appeal by mandamus, certiorari or other proper remedy to the supreme court of the state of Michigan, or in any proper case to any circuit court having jurisdiction. [MCL 123.506 (emphasis added).] Defendant s contention, that this factual scenario is governed by the Mack decision, is not supported by the Legislature s authorization of a cause of action that arises out of the bidding process. Therefore, in my view, plaintiffs may maintain an action for a violation of Detroit 1 Although this statute was not raised below, issues of statutory construction present questions of law that are reviewed de novo. Cruz v State Farm Mut Auto Ins Co, 466 Mich 588, 594; 648 NW2d 591 (2002). Issues of law for which all necessary facts have been presented may be addressed on appeal. Miller v Inglis, 223 Mich App 159, 168; 567 NW2d 253 (1997). -3-

Ordinances, 18-5-104(b). The trial court reached the correct result in denying defendants motion for summary disposition based on governmental immunity, but for the wrong reason. Under such circumstances, the trial court s ruling may be affirmed. Hess v Cannon Twp, 265 Mich App 582, 596; 696 NW2d 742 (2005). With regard to Docket No. 273463, I would also affirm the trial court in part and remand. Defendants failed to make and support the motion for summary disposition with regard to the claim of preemption by the collective bargaining agreements and the Public Employee Relations Act (PERA), MCL 423.210 et seq. See Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314 (1996). With regard to the issue of standing, plaintiff Garrett s involvement in the litigation as a taxpayer was insufficient because it failed to assert a substantial interest detrimentally affected in a manner different from the citizenry at large. Moses, Inc v SEMCOG, 270 Mich App 401, 414; 716 NW2d 278 (2006). However, plaintiffs Dockery and Sheard alleged standing based not only as taxpayers, but also as city employees who were laid off due to the privatization of their jobs without following the proper procedures. Although defendants disputed the job status of these individuals, defendants failed to provide documentary evidence in support as required by Quinto, supra. See also MCR 2.116(G)(4-6). In Docket No. 269809, I would affirm. In Docket No. 273463, I would affirm in part. /s/ Karen M. Fort Hood -4-