Report No. UM-HSRI-80-6-1 ROAD SAFETY RISK MAJAGEMENT IN
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Report No. UM-HSRI-80-6-1 ROAD SAFETY RISK MAJAGEMENT IN MICHIGAN. VOLUME I: ROAD LIABILITY AND RISK MANAGEMENT Hal 0. Carroll David G. Baldwin Kent B. Joscelyn The University of Michigan Highway Safety Research Institute Ann Arbor, Michigan 48109 July 1980 Prepared for Oakland County Road Commission Birmingham, Michigan 48010 Contract No. N-2 The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the data presented herein. The contents do not necessarily reflect the official views or policy of the sponsor or The University of Michigan. ACKNOWLEDGMENT This volume and its companion are the result of the efforts and contribu,tions of many persons. We thank all who assisted 'in the development, preparation, and production of these materials. The research that led to these volumes was sponsored by the Oakland County Road Commission. Many of the commissionls professional staff assisted us by raising questions and offering comments and suggestions as the work progressed through its various stages. We would like particularly to express our appreciation to John L. Grubba, Managing Director, and Brent 0. Bair, Contract Technical Manager. We have received much assistance from staff at the Highway Safety Research Institute. Our research assistants, who made valuable contributions, were Donald Garlit, Lawrence Rosenstock, Patricia Ramsey (who provided legal research support), and Kurt Richwerger (who researched procedures for the identification of road hazards and the selection of treatments). Acknowledgment is also due to William C. Wheeler, Jr,, J.D., and Dennis M. Powers, J.D., for legal research, and Murray Greyson, J.D., for legal research and administration of the project in its early stages. Other HSRI personnel also made important contributions. James E. Haney provided editorial assistance. Anne L. VanDerworp served as production editor. Draft versions of these volumes were produced by Douglas J. VanDenBerg, Judy Hunter, Kathy Szegedy, Shirley Barnes, and Kathy Nash under the supervision of Jacqueline B. Royal and Janet C. Peters. We thank all who contributed. Hal 0. Carroll David G. Baldwin PREFACE Risk management is a concept and a practice that is relatively new to the field of road safety. Although the systematic analysis of an organization's operations to identify risks and select treatments for them is common in the world of business, it has only recently begun to be undertaken by road authorities. However, as increasing insurance premiums make it more difficult for road authorities to transfer the risk of loss to an insurer, road safety risk management is likely to expand and develop. The purpose of these two volumes is to provide a background and a starting point for road safety risk management programs in Michigan. Volume I is intended to provide an introduction to risk management theory as it applies to road safety and an introduction to road liability law, as a background for the development of a risk management program. Volume I1 provides additional legal background in the form of summaries of cases involving road safety in Michigan. These volumes have been prepared on the premise that the law of road liability plays an essential role in a road safety risk management program. There are three ways in which this is true. First, as a practical matter, a concern about liability is often the impetus for safety decisions. At the same time, a concern about liability can also inhibit the making of safety decisions. Finally, however, legal considerations should be neither a driving nor a restraining force in a risk management program. Rather, they should be a source of information and a guide for decision-making. Lawsuits can inform the road authority of facts or conditions that involve risks of injury to users of the road. The reported court decisions and the statutes also provide guidelines as to what conduct or results are expected of the road authority in dealing with those risks. The purpose of these volumes, then, is to provide a general introduction to the law relating to road authorities and their operations. They are not intended to provide legal advice. That can only be done by counsel as specific legal questions arise. It is hoped that the materials in these volumes will acquaint the reader with general principles of road liability law, thereby providing a basis for sound road safety risk management decisions. viii CONTENTS CHAPTER ONE RISK MANAGEMENT AND THE ROAD AUTHORITY 1 DEFINITION OF RISK MANAGEMENT 1 The Meaning of "Risk" 1 Risk Management Defined 2 History of the Risk Management Concept Among Insurance Buyers 2 Development in the Theory of Risk Management 4 Insurance Risk Management in the 1970s 6 Who Manages Risk? 8 R is k Man agemen t 9 Risk of Litigation or Risk of Loss 10 Summary 12 RISK MANAGEMENT AND THE LAW 12 Law as a Source of Information 13 Law as a Constraint on Risk Management 14 SUMMARY 15 FOOTNOTES 16 CHAPTER TWO COURTS AND PROCEDURE 19 MICHIGAN' S COURT SYSTEM 19 District Courts 20 Circuit Courts 21 Court of Appeals 2 2 Supreme Court 22 Federal Court 2 3 COURT PROCEDURE 23 Tria1 Court Procedure 2 4 Starting the Case 2 4 Dismissing the Case Before Trial Preparation for Trial Tri a1 The Appeal Process Procedure Appell ate Court Decisions Re1 ief Granted SUMMARY CHAPTER THREE THE ROAD AUTHORITY'S LIABILITY--THE GENERAL RULE NEGLIGENCE Duty Breach Proximate Cause Damage STATUTORY LIABILITY Government a1 Immunity Road Authority Liability SUMMARY CHAPTER FOUR ROAD LIABILITY LAW--SPECIFIC SITUATIONS LIABILITY FOR SNOW AND ICE CONSTRUCTION ZONES AND CLOSED ROADS The Road Authority's Duty and Liability Summary SIGNING DECISIONS Introduction Effectiveness of Warning Signs Legal Effect of Signing Decisions Manual of Uniform Traffic Control Devices Specific Signing Statutes Signing Decisions and Liability SUMMARY FOOTNOTES CHAPTER FIVE ROAD LIABILITY LAW--DEFENSES 7 3 JURISDICTION 74 Statutory Basis of Jurisdiction 74 Geographical Limits on Jurisdiction 76 Sumary 78 STATUTE OF LIMITATIONS 79 Sumary 8 0 FAILURE TO NOTIFY ROAD AUTHORITY OF INJURY 81 Introduction 81 Background 81 Changes in the Rule 82 The Rule Today 82 Sumn ary 83 LACK OF NOTICE OF THE DEFECT 83 Notice as a Question of Fact 84 The Road Authority's Duty to Inspect 85 Persons Whose Knowledge is Attributable to the Road Authority 86 Factors Relevant to Establishing Notice 87 Summary 89 A RISK MANAGEMENT PROGRAM AS A DEFENSE 89 STATE OF THE ART 91 Summary 9 5 COMPARATIVE NEGLIGENCE IN MICHIGAN 9 5 Introduction 9 5 Negl igence 96 Contributory Negligence 96 Comparati ve Negl igence 9 7 Effect of Comparative Negligence on Other Rules of Law 9 8 Apportionment of Damages 9 9 Contribution Among Defendants 101 Practical Effects of Comparative Negligence 102 Conclusion 104 THE NO-FAULT AUTOMOBILE INSURANCE LAW 105 Introduction The No-Fault Law The Effect of the No-Fault Law on Road Authority Liability Conclusions and Recommendations SUMMARY FOOTNOTES CHAPTER SIX ROAD AUTHORITY LIABILITY FOR VEHICLES AND EQUIPMENT THE NO-FAULT LAW REG1STERED ROAD AUTHORITY VEHICLES UNR EG ISTER ED EQUI PMENT DAMAGE TO ROAD AUTHORITY PROPERTY SUMMARY FOOTNOTES CHAPTER SEVEN CIVIL AND CRIMINAL LIABILITY OF ROAD AUTHORITY EMPLOYEES CIVIL LIABILITY--NEGLIGENCE CRIMINAL LIABILITY INDEMNITY AND DEFENSE ALTERNATIVES AVAILABLE SUMMARY AND CONCLUSIONS FOOTNOTES CHAPTER EIGHT SELF-INSURANCE BAD FAITH SELF- INSURANCE AND BAD FAITH SUMMARY FOOTNOTES APPENDICES APPENDIX A - STATUTES RELATING TO ROAD AUTHORITY OPERATIONS APPENDIX B - BIBLIOGRAPHY OF SELECTED LITERATURE RELATING TO HIGHWAY SAFETY DEC ISION-MAK ING CHAPTER ONE RISK MANAGEMENT AND THE ROAD AUTHORITY A risk management program involves both an approach or attitude to problem solving and specific procedures and decisions. The attitude is a fundamental part of the program, in that it influences and often determines the specific procedures and the decisions adopted in a risk management program. Therefore, it is necessary to begin with a discussion of some basic risk management concepts before proceeding to specific areas of concern. This chapter discusses two main topics-how risk management concepts apply to road authorities, and how the law of road liability relates to a road authority's risk management program. DEFINITION OF RISK MANAGEMENT The concept of risk management originated in the business world and developed there. As a result, most of the theories and practices of risk management relate to the problems of profit-making organizations; many of these do not apply to public agency operations. Specifically, the risk management concerns of public agencies (and road authorities in particular) differ from traditional risk management in two ways--the types of risk to be managed, and the techniques used to manage them. The Meaning of "Riskn The definition of risk varies from field to field, and from author to author. For example, insurance managers at one time distinguished "pure1' or "truerf risk--pot en tial losses incurred simply as the result of ownership or possession-f rom speculative^ risk-potential losses incurred in the hope of gain (1). Decision theorists and some accident researchers, on the other hand, have distinguished tfhazardlffrom "riskff--hazard meaning the objective probability of a dangerous event's occurring and flrisktfmeaning one's subjective perception of that probability (2). Depending on the context, different features of the risk concept come into focus. The most basic features of risk to be distilled from the literature appear to be as follows. Future events are uncertain to relative degrees. Some of these pot en t i al, but uncertain, events involve losses (or relative losses). The type and extent of possible losses are also uncertain. People are forced to make decisions, and ultimately to act, with respect to the uncertain and potentially harmful future, basing their decisions on uncertain and incomplete data.