Indiana Court of Appeals Revisits Governmental Discretionary Function Immunity in Another Pothole Personal Injury Case

We previously blogged on a personal injury pothole case, Johnson v. City of Michigan City, in which a woman in Michigan City suffered a tibial plateau fracture when she hit a large pothole while riding her bicycle. In a divided opinion, the Indiana Court of Appeals affirmed the trial court’s decision finding Michigan City immune from liability under the Indiana Tort Claims Act, Indiana Code § 34-13-3-3, which provides immunity to governmental entities or their employees for liability resulting from certain losses, including losses resulting from the “performance of a discretionary function.” Judge Brown dissented in Johnson and would have found Michigan City was not entitled to discretionary function immunity because it “failed to designate evidence that a decision to fill a pothole which poses a dangerous condition is a deliberative, policy-driven process, or that this process was entirely a planning function rather than an operational function.”

In a recent decision, Murphy v. City of S. Bend, the Indiana Court of Appeals agreed with Judge Brown’s dissent, finding the City of South Bend (City) was not entitled to immunity for injuries John Murphy (Murphy) suffered when he stepped into a pothole, fell, and injured his leg during a St. Patrick’s Day Parade on a street owned by the City. In the trial court, the City raised immunity, arguing its street maintenance was a discretionary function. The City designated statements from its Department of Public Works Streets Manager and Executive Director, who testified the City had a 10-year improvement plan called “Rebuilding Our Streets Plan” for paving or resurfacing streets, under which the street in question was not due for resurfacing, and “a separate process for responding to complaints about individual potholes,” including patching potholes as part of routine inspections and “pothole repairs sweeps.” Based upon the evidence presented, the trial court found the City was entitled to discretionary function immunity. 

Indiana law uses a “planning/operational test” in analyzing discretionary function immunity. Planning functions include the formulation of basic policy decisions characterized by official judgment or discretion in weighing alternatives and choosing public policy, and government decisions about public policy involving the assessment of competing priorities and weighing budgetary considerations or the allocation of scarce resources. Courts analyze (1) the nature of the governmental actions and the decision-making process involved, (2) whether the action is one intended to be immune, and (3) whether the purposes of immunity are furthered by extending immunity to the act in question. Non-determinative “Peavler Factors” include (a) the nature of the conduct (i.e., whether the conduct or decision has a regulatory objective, involved the balancing of factors without reliance on a readily ascertainable rule or standard, requires a judgment based on policy decisions, involved adopting general principles or only applying them, involved the establishment of plans, specifications, or schedules, and whether the conduct or decision involved assessing priorities, weighing of budgetary considerations, or the allocation of resources); (b) the effect on governmental operations (i.e., whether the decision affects the feasibility or practicability of a government program and whether liability will affect the effective administration of the function in question); and (c) the capacity of courts to evaluate the propriety of the government’s action (i.e., whether tort standards offer an insufficient evaluation of the claim).

On appeal, the Indiana Court of Appeals in Murphy surveyed past cases, including Indiana Supreme Court cases, noting that “determining whether a governmental entity is entitled to discretionary immunity and thus summary judgment has resulted in close—and sometimes disputed—calls,” and “[the Court of Appeals] has continued to split on what evidence is sufficient to establish discretionary function immunity.” In agreeing with Judge Brown’s dissent in Johnson, the Murphy Court noted that, even if the “Rebuilding Our Streets Plan” arose from the City’s policy-oriented decision-making process, the City’s individual pothole repair process was admittedly “a separate process” and there was no evidence that the City’s individual pothole repair process was part of the “Rebuilding Our Streets Plan.” As to the City’s individual pothole repair process, the Court noted there was insufficient evidence for it to determine what Peavler Factors, if any, existed, as the record only demonstrated that “if the [City] is notified of or one of its crews observes a pothole, the pothole is fixed.” In reversing the trial court’s grant of immunity, the Court concluded that it could not determine whether the failure to repair the pothole arose from the City’s judgment based on policy considerations, as “the City presented no evidence from which [the Court could] evaluate the nature of its conduct in failing to repair potholes, the potential effect of liability on the City’s operations, or the capacity of the court to judge the City’s actions.”

The Indiana Court of Appeals found the trial court erred in granting summary judgment to the City of South Bend based upon discretionary function immunity. The Court reversed the trial court’s decision and remanded the case to the trial court for further proceedings.

You can read the full opinion here.