Claim under the “sewage disposal system event” exception to the Governmental Tort Liability Act (GTLA) (MCL 691.1401 et seq.); MCL 691.1416 - MCL 691.1419; Linton v. Arenac Cnty. Rd. Comm’n; Whether the plaintiff-township was the “real party in interest”; Barclae v. Zarb; Kearns v. Michigan Iron & Coke Co.; Burkhardt v. Bailey; Whether the township was a “claimant”; MCL 691.1416(c); Governmental immunity; Willett v. Charter Twp. of Waterford; MCL 691.1417(2); Whether the water filtration system is a “sewage disposal system”; MCL 691.1416(j); “Sewer” or “sewage”; Whether the system had a “defect”; MCL 691.1416(3); Whether the defendant-Rockford Public Schools (RPS) “knew, or in the exercise of reasonable diligence should have known, about the defect”; The Michigan Municipal League Liability & Property Pool (MMLLPP)

The court held that the plaintiff-township was bringing this lawsuit “on behalf of” two claimants and thus, was a claimant in its own right. It also held that because the township could show that the water filtration system is a “sewage disposal system” for purposes of the “sewage disposal system event” exception to the GTLA, defendant-RPS was not entitled to summary disposition on this basis. Further, plaintiff presented sufficient evidence of a “defect” of some kind, whether in design, construction, or operation, in the system sufficient to avoid governmental immunity. Finally, there was a genuine issue of material fact as to the extent to which RPS was aware of the defect in its water filtration system before 8/20/11. RPS argued that the trial court erred in concluding that the township was the real party in interest. There was no dispute that the township did not suffer damages and did not itself pay any money to the homeowners (the Ms). However, both the Ms and the MMLLPP (the township’s insurer), “who each had a right of action against RPS, assigned their respective rights to the township.” By “virtue of the assignments, the township became the real party in interest.” The court recognized that the MMLLPP did not assign its rights to the township until after the lawsuit was filed. “Thus, at the time the township initiated the lawsuit, it was not the real party in interest as it pertained to the first $50,000 of damages sought in the complaint.” However, the trial court granted the township leave to amend its complaint to properly reflect that it was litigating as the assignee of both the Ms and the MMLLPP. RPS did not assert, and the court did not find, “any error in the trial court’s grant of leave to amend.” Further, while the township agreed to “remit any damages awarded by the trial court above $50,000” to the Ms, “to be a real party in interest, a plaintiff need only be vested with the right of action on the claim; the beneficial interest may be with another.” RPS also argued that the township could not be considered a “claimant” as defined by the “sewage disposal system event” exception. There was no dispute that the Ms “are property owners who suffered damages from what was alleged to have been a sewage disposal system event.” There was also no dispute that they were “reimbursed $50,000 from the MMLLPP to cover some, but not all, of those alleged damages. Thus, under the plain terms of the statute,” both the Ms, as the property owners, and the MMLLPP, “as a subrogee, would have been entitled to bring a claim” under the exception.