Troy Gibson v. City of Dearborn ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
ADRIENNE RENEE YOCHES, Individually and FOR PUBLICATION
as Next Friend to SAMUEL JAMES YOCHES, July 13, 2017
9:05 a.m.
Plaintiff-Appellee,
and
TROY GIBSON, JODI JERGOVICH, and STEVE
JERGOVICH,
Plaintiffs,
v No. 330998
Oakland Circuit Court
CITY OF DEARBORN, LC No. 2014-140398-NO
Defendant-Appellant,
and
ADAM FOREHAND,
Defendant.
LAURA JO LUBECK and RONALD LUBECK,
Plaintiffs-Appellees,
v No. 331137
Oakland Circuit Court
CITY OF DEARBORN, LC No. 2014-140410-NO
Defendant-Appellant.
TROY GIBSON, JODI JERGOVICH, and STEVE
JERGOVICH,
Plaintiffs-Appellees,
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v No. 331139
Oakland Circuit Court
CITY OF DEARBORN and CAMP DEARBORN, LC No. 2014-141218-NO
Defendants-Appellants,
and
ADAM O’BRIEN FOREHAND,
Defendant.
LAUREN MARIE CALVIN and TROY RAY
GIBSON,
Plaintiffs-Appellees,
v No. 331144
Oakland Circuit Court
CITY OF DEARBORN, doing business as CAMP LC No. 2014-141760-NO
DEARBORN,
Defendant-Appellant,
and
ADAM O’BRIEN FOREHAND,
Defendant.
CHARLOTTE BADER,
Plaintiff-Appellee,
v No. 331147
Oakland Circuit Court
CITY OF DEARBORN, LC No. 2014-142520-NO
Defendant-Appellant,
and
ADAM FOREHAND,
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Defendant.
CYNTHIA CIALONE Individually and as Next
Friend to EMMANUELE SOUFANE,
Plaintiff-Appellee,
v No. 331149
Oakland Circuit Court
CITY OF DEARBORN, LC No. 2015-145847-NO
Defendant-Appellant,
and
ADAM FOREHAND,
Defendant.
ADRIENNE RENEE YOCHES, Individually and
as Next Friend to SAMUEL JAMES YOCHES,
Plaintiff-Appellee,
and
TROY GIBSON, JODI JERGOVICH, and STEVE
JERGOVICH,
Plaintiffs,
and
CYNTHIA CIALONE, Individually and as Next
Friend to EMMANUELLE SOUFANE,
Plaintiff/Counter-
Defendant/Appellee,
v No. 331630
Oakland Circuit Court
CITY OF DEARBORN, LC No. 2014-140398-NO
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Defendant/Counter-Plaintiff/Third-
Party Plaintiff-Appellant,
and
ADAM FOREHAND,
Defendant,
and
HENRY FORD COMMUNITY COLLEGE
SUPPORT STAFF ASSOCIATION,
Third-Party Defendant-Appellee.
Before: O’BRIEN, P.J., and JANSEN and STEPHENS, JJ.
PER CURIAM.
These consolidated cases arise from a hayride accident at “Camp Dearborn” in Milford
Township. In Docket Nos. 330998, 331137, 331139, 331144, 331147, and 331149, defendant,
the City of Dearborn (“the City”), appeals as of right the trial court’s opinion and order denying
its motion for summary disposition pursuant to MCR 2.116(C)(7). The City argues that the trial
court erred by concluding that the motor vehicle exception, MCL 691.1405, to governmental
immunity under the Governmental Tort Liability Act (“GTLA”), MCL 691.1401 et seq., applied.
In Docket No. 331630, the City appeals by leave granted the trial court’s opinion and order
dismissing the City’s third-party complaint against Henry Ford Community College Support
Staff Association (“the Association”) pursuant to MCR 2.116(C)(10). Yoches v City of
Dearborn, unpublished order of the Court of Appeals entered on July 27, 2016 (Docket No.
331630). The City argues that the trial court erred by concluding that a “hold harmless
agreement” was unenforceable as a matter of law due to a lack of consideration. For the reasons
set forth below, we affirm.
The City owns and operates Camp Dearborn, a recreational facility located in Milford
Township. The Association is a labor organization representing employees of Henry Ford
Community College. Plaintiffs are members of the Association. Plaintiff Cynthia Cialone is a
volunteer member of the Association’s social committee. Cialone acted as liaison in
coordinating the “Fall Festival,” an event to be held for the Association’s members and their
families at Camp Dearborn on October 27th, 2013. As liaison, Cialone reserved a chalet at the
facility, contracted with vendors to provide goods and services during the festival, and reserved
two wagons for hayrides. Immediately before the hayrides were to begin on October 27, Scott
Schier, the City’s employee who drove one of the tractors pulling the hay wagons, approached
the group and asked who was “in charge.” Cialone identified herself as that person. At Schier’s
request, Cialone signed what was referred to as a hold harmless agreement apparently on behalf
of the Association. The agreement provided, in relevant part, as follows:
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In consideration for permission to participate in the Fall Hayrides at Camp
Dearborn, the below-listed organization agrees to RELEASE AND FOREVER
DISCHARGE the City of Dearborn, a municipal corporation, and its officers,
departments, employees, and agents from any and all claims, liabilities, or
lawsuits, including legal costs and attorney fees, resulting from the use of any
City property or in any connection with the hayrides at Camp Dearborn.
The below-listed organization hereby agrees to defend, indemnify, and
hold harmless the City of Dearborn, its officers, agents, departments and
employees from and against any and all claims and causes of action of any kind
arising out of or in connection with the organization’s or any of the organization’s
participants’ involvement in the hayrides at Camp Dearborn.
Knowing, understand, and fully appreciating all possible risks, the below-
listed organization does hereby expressly, voluntarily, and willingly assume all
risk of dangers associated with its participation or any of its participants’
involvement in the hayrides at Camp Dearborn. These risks could result in
damage to property, personal and/or bodily injury or death to the organization’s
individual participants.
The organization acknowledges that if it has minor participants, the
minors’ parents or guardians have granted specific permission for the minors to
participate in the hayrides at Camp Dearborn.
The authorized signor acknowledges that he/she has advised the
organization’s participants of this agreement, the risks involved in the activity,
and has the authority to enter into this agreement on behalf of the organization
and the organization’s participants.
Below these paragraphs, the agreement warned as follows: “THIS IS A RELEASE READ
BEFORE SIGNING.” In a section of the form designated for the organization’s name, Cialone
signed her name and then wrote the Association’s address and phone number. In a section for
the “[a]uthorized signor’s name, address, and telephone number,” Cialone signed her name and
printed her name and home address.
After Cialone completed the agreement, the hayrides began. During the rides, one of the
hay wagons tipped over, and several participants were injured as a result. According to
plaintiffs, defendant Adam Forehand, the City’s employee who drove the tractor that pulled the
hay wagon that tipped over, was intoxicated and driving recklessly at the time of the accident.
Consequently, plaintiffs brought a series of lawsuits against the City and Forehand. Plaintiffs’
lawsuits alleged claims for negligence, gross negligence, intentional infliction of emotional
distress, and negligent infliction of emotional distress. Plaintiffs also alleged that the City was
vicariously liable for Forehand’s negligence. In response to plaintiffs’ lawsuit, the City moved
for summary disposition on the ground that governmental immunity under the GTLA barred
plaintiffs’ claims. The City also filed a third-party complaint and counter-complaint against the
Association and Cialone, claiming that the Association was bound by the hold harmless
agreement discussed above. Alternatively, the City argued that, in the event the Association was
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not bound by the agreement, the agreement was nevertheless binding against Cialone in her
individual capacity. The City and the Association also filed cross-motions for summary
disposition regarding enforcement of the hold harmless agreement. With respect to the City’s
motion for summary disposition on plaintiffs’ claims, the trial court concluded that the tractor
that pulled the hay wagon constituted a motor vehicle for purposes of the motor vehicle
exception to governmental immunity. It therefore denied the City’s motion for summary
disposition on plaintiffs’ claims. With respect to the City’s and the Association’s cross-motions
for summary disposition regarding enforcement of the hold harmless agreement, the trial court
concluded that the agreement was unenforceable as a matter of law due to a lack of
consideration. It therefore denied the City’s motion for summary disposition and granted the
Association’s motion for summary disposition. As indicated above, the City challenges both
orders on appeal.
In Docket Nos. 330998, 331137, 331139, 331144, 331147, and 331149, the City argues
that the trial court erred by concluding that the tractor that pulled the hay wagon was a motor
vehicle for purposes of the motor vehicle exception to governmental immunity. We disagree.
The application of governmental immunity is a question of law subject to de novo
review. Seldon v Suburban Mobility Auth for Regional Transp, 297 Mich App 427, 433; 824
NW2d 318 (2012). A court may grant summary disposition pursuant MCR 2.116(C)(7) if the
moving party is entitled to “immunity granted by law.” Odom v Wayne Co, 482 Mich 459, 466;
760 NW2d 217 (2008). “When reviewing a motion under MCR 2.116(C)(7), this Court must
accept all well-pleaded allegations as true and construe them in favor of the plaintiff, unless other
evidence contradicts them.” Dextrom v Wexford Co, 287 Mich App 406, 428; 789 NW2d 211
(2010). “If any affidavits, depositions, admissions, or other documentary evidence are
submitted, the court must consider them to determine whether there is a genuine issue of material
fact.” Id. at 429. “If no facts are in dispute, and if reasonable minds could not differ regarding
the legal effect of those facts, the question of whether the claim is barred is an issue of law for
the court.” Id. “[I]f a question of fact exists to the extent that factual development could provide
a basis for recovery, dismissal is inappropriate.” Id. This issue also involves the interpretation
and application of a statute. “Issues concerning the proper interpretation of statutes are questions
of law that we review de novo.” Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151
(2003). “It is the cardinal principle of statutory construction that courts must give effect to
legislative intent. When reviewing a statute, courts must first examine the language of the
statute. If the intent of the Legislature is clearly expressed by the language, no further
construction is warranted.” Id. at 562.
Generally, “a governmental agency is immune from tort liability if the governmental
agency is engaged in the exercise or discharge of a governmental function.” MCL 691.1407(1).
There are, however, exceptions to this general rule. Specifically, the trial court held that the
motor vehicle exception set forth in MCL 691.1405 applied in this case. That statutory provision
provides as follows:
Governmental agencies shall be liable for bodily injury and property
damage resulting from the negligent operation by any officer, agent, or employee
of the governmental agency, of a motor vehicle of which the governmental
agency is the owner, as defined in Act No 300 of the Public Acts of 1949 [the
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Michigan Vehicle Code], as amended, being sections 257.1 to 257.923 of the
Compiled Laws of 1948.
The term “motor vehicle” is not statutorily defined for purposes of this provision. When a
statutory term is not statutorily defined, this Court turns to its dictionary definition to determine
the term’s plain and ordinary meaning. See Weaver v Giffels, 317 Mich App 671, ___; ___
NW2d ___ (2016) (Docket No. 327844); slip op at 4. With respect to the term “motor vehicle,”
this Court and our Supreme Court have done precisely that on several occasions.
For example, in Stanton v City of Battle Creek, 466 Mich 611, 613; 647 NW2d 508
(2002), the plaintiff truck driver delivered hardware to a location owned by the defendant city. A
city employee used a forklift owned by the city to unload the truck. Id. The plaintiff was injured
when the forklift’s brakes failed, causing the forklift to roll forward and strike the plaintiff. Id.The defendant argued that the motor vehicle exception to governmental immunity did not apply
because a forklift is not a motor vehicle within the meaning of the statute. Id. To begin its
analysis, the Supreme Court first clarified that the definitional phrase in MCL 691.1405 “sends
the reader to the Michigan Vehicle Code only for the definition of ‘owner,’ ” “not ‘motor
vehicle,’ and nothing in the statute demands a different interpretation.” Stanton, 466 Mich at
616. Consequently, because the term “motor vehicle” was not statutorily defined, the Supreme
Court turned to the term’s dictionary definition. Id. at 617. It explained as follows:
It is possible to find varying dictionary definitions of the term “motor
vehicle.” For example, the Random House Webster’s College Dictionary (2001)
defines a “motor vehicle” as “an automobile, truck, bus, or similar motor-driven
conveyance,” a definition that does not include a forklift. In our view, this
definition appropriately reflects the commonly understood meaning of the term.
The American Heritage Dictionary (2d College ed.), on the other hand, defines
“motor vehicle” as “self-propelled, wheeled conveyance that does not run on
rails,” a definition, which would arguably include a forklift. Given these
divergent definitions, we must choose one that most closely effectuates the
Legislature’s intent. Fortunately, our jurisprudence under the governmental tort
liability act provides an answer regarding which definition should be selected. As
previously noted, it is a basic principle of our state’s jurisprudence that the
immunity conferred upon governmental agencies and subdivisions is to be
construed broadly and that the statutory exceptions are to be narrowly construed.
Nawrocki v Macomb Co Rd Comm, 463 Mich 143, 158; 615 NW2d 702 (2000).
Thus, this Court must apply a narrow definition to the undefined term “motor
vehicle.”
The definition of a “motor vehicle” as “an automobile, truck, bus, or
similar motor-driven conveyance” is the narrower of the two common dictionary
definitions. Therefore, we apply it to the present case. A forklift—which is a
piece of industrial construction equipment—is not similar to an automobile, truck,
or bus. Thus, the motor vehicle exception should not be construed to remove the
broad veil of governmental immunity for the negligent operation of a forklift.
[Stanton, 466 Mich at 617-618 (emphasis in original).]
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Then, in Regan v Washtenaw County Rd Comm’rs (On Remand), 257 Mich App 39, 42-
43; 667 NW2d 57 (2003), this Court reconsidered its decision in Regan v Washtenaw County Bd
of Comm’rs, 249 Mich App 153, 155-156; 641 NW2d 285 (2002), on order from the Supreme
Court, Regan v Washtenaw County Rd Comm’rs, 468 Mich 851; 658 NW2d 490 (2003), in light
of the Supreme Court’s decision in Stanton as well as another somewhat related matter,
Chandler v Muskegon County, 467 Mich 315; 652 NW2d 224 (2002). Regan involved two
cases, “the Regan case” and “the Zelanko case.” In the Regan case, the plaintiff was driving a
van when she collided with a city-owned and city-employee-operated boom tractor. Regan (On
Remand), 257 Mich App at 42. In the Zelanko case, the plaintiff’s tractor-trailer rig was struck
in the windshield by a piece of tire tread propelled by a mower operated by a city employee. Id.
at 43. This Court, applying, in relevant part, the Supreme Court’s interpretation and application
of the term “motor vehicle” for purposes of the motor vehicle exception to governmental
immunity in Stanton, concluded that the broom tractor and the tractor mower were both motor
vehicles for purposes of MCL 691.1405:
With respect to whether the broom tractor and tractor mower are “motor
vehicles” for purposes of § 5, we find that both vehicles fit the definition
enunciated in Stanton. Both vehicles are clearly motor-driven conveyances, in
that they are motorized and carry or transport operators over the road, or
alongside the road, while the operators are performing governmental duties. We
respectfully disagree with the dissent’s test that the “principal function” of the
vehicle must be to transport or carry passengers or property in order to be
considered a “motor vehicle” under § 5. Similar language is not found anywhere
in the Stanton decision or the statute, and the dissent’s use of a “principal
function” test suggests that a vehicle must be used chiefly for the purpose of
transporting persons or property and cannot be used, in any significant manner,
for maintenance or other purposes to qualify under § 5. Limiting the definition in
this manner would exclude numerous governmental vehicles that traverse
Michigan roadways, including snowplows, utility and construction vehicles, and
emergency vehicles that are used in a maintenance, improvement, or service
capacity. This clearly was not the Legislature’s intent in enacting MCL 691.1405.
Surely, the Legislature did not intend to preclude liability for negligent actions
associated with the operation of a governmental vehicle designed to be drive on or
alongside roadways where the vehicle has maintenance and service capabilities.
[Id. at 48-49.]
Finally, in Wesche v Mecosta Co Rd Comm, 267 Mich App 274, 275-276; 705 NW2d 136
(2005), this Court addressed whether a Gradall hydraulic excavator driven by a city employee
constituted a motor vehicle for purposes of MCL 691.1405 when it struck a stopped vehicle at a
traffic light. This Court, relying, in relevant part, on the Stanton and Regan (On Remand)
decisions discussed above, held that the Gradall was a motor vehicle for purposes of the statute:
Applying these decisions to the case at hand, we conclude that the Gradall
is a motor vehicle for purposes of MCL 691.1405. The Gradall, a wheeled,
motorized vehicle operated by a driver, generally resembles a truck and moves
like a truck. The significant difference between it and a truck is that mounted on
the back of the vehicle is a unit that operates a hydraulic excavation tool.
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Although defendant argues that the Gradall is not used primarily for
transportation, none of the cases cited above requires the motor vehicle to be used
primarily for transportation for MCL 691.1405 to apply. Moreover, when the
Gradall is not being used for excavation, it can be driven along the roadways just
like a truck and transports both its attached excavation unit and the driver. At the
time of the accident in this case, the driver was returning the Gradall to
defendant’s garage from the project site. The Gradall was being drive on a public
roadway when it struck the rear of [the plaintiff]’s vehicle. Under these
circumstances, we conclude that the trial court did no err in ruling that the Gradall
is a motor vehicle for purposes of MCL 691.1405. [Wesche, 267 Mich App at
278.]
In light of this binding caselaw, MCR 7.215(J)(1), it is our conclusion that the trial court
correctly concluded that the tractor and hay wagon at issue in this case was a motor vehicle for
purposes of the motor vehicle exception to governmental immunity. We are of the view that the
tractor and hay wagon at issue in this case are more comparable to the broom tractor and the
tractor mower at issue in Regan than the forklift at issue in Stanton. In fact, the record reflects
that the tractor and hay wagon were being utilized to carry numerous passengers on a roadway
used by campers and patrolled by law enforcement, which, unlike equipment such as a forklift,
renders the tractor and hay wagon invariably connected to the roadway itself. See Wesche, 267
Mich App at 278, citing Regan, 257 Mich App at 48. While we agree with defendants that,
generally, tractors can be used for purposes such as farming, binding caselaw is quite clear in
that the “primary function” of a vehicle does not control the analysis at issue in this case. See id.
at 277. Accordingly, we conclude that the trial court correctly concluded that the tractor and hay
wagon at issue in this case was a motor vehicle for purposes of the motor vehicle exception to
governmental immunity. Consequently, its decision to deny defendants’ motion for summary
disposition on that ground was correct.
On appeal, the City raises two other arguments with respect to the application of
governmental immunity in this case. To the extent the City argues that the proprietary function
exception to governmental immunity, MCL 691.1413, does not apply, we decline to address the
merits of such an argument in light of our conclusion above. We do, however, choose to briefly
address the City’s arguments with respect to its vicarious liability for Forehand’s conduct under
the facts and circumstances of this case. Under the doctrine of vicarious liability, an employer is
generally liable for the torts its employees commit so long as those torts are within the scope of
their employment. Stephens v Worden Ins Agency, LLC, 307 Mich App 220, 239; 859 NW2d
723 (2014). The trial court concluded that the City was not entitled to summary disposition on
plaintiffs’ vicarious liability claims because the motor vehicle exception applied. The trial court
additionally stated, however, that gross negligence “defeats governmental immunity.” The City
does not challenge the trial court’s initial statement, i.e., that it can be held vicariously liable for
Forehand’s negligence if the motor vehicle exception to governmental immunity applies.
However, the City does take issue with the trial court’s suggestion that any gross negligence by
Forehand would, by itself, prohibit it from asserting governmental immunity. We agree with the
City in that regard.
The relevant statutory provision is MCL 691.1407, which provides, in relevant part, as
follows:
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(1) Except as otherwise provided in this act, a governmental agency is
immune from tort liability if the governmental agency is engaged in the exercise
or discharge of a governmental function. . . .
(2) Except as otherwise provided in this section, and without regard to the
discretionary or ministerial nature of the conduct in question, each officer and
employee of a governmental agency, . . . is immune from tort liability for an
injury to a person or damage to property caused by the officer, employee, or
member while in the course of employment or service or caused by the volunteer
while acting on behalf of a governmental agency if all of the following are met:
(a) The officer, employee, member, or volunteer is acting or reasonably
believes he or she is acting within the scope of his or her authority.
(b) The governmental agency is engaged in the exercise or discharge of a
governmental function.
(c) The officer’s, employee’s, member’s, or volunteer’s conduct does not
amount to gross negligence that is the proximate cause of the injury or damage.
This statutory language is unambiguous. MCL 691.1407(1) provides immunity to a
governmental agency without regard to an employee’s gross negligence. MCL 691.1407(2)
provides immunity for governmental employees, but MCL 691.1407(2)(c) provides an exception
to that immunity where the employee’s conduct constitutes gross negligence. Although
subsection (2)(c) establishes an exception to the grant of immunity to an officer or employee of a
governmental agency, it does not provide that a governmental agency otherwise entitled to
immunity can be vicariously liable for the officer’s or employee’s gross negligence.
Consequently, if governmental immunity does not apply “as otherwise provided in this act,” e.g.,
pursuant to the motor vehicle exception, the City would not be vicariously liable for Forehand’s
negligence, regardless of whether it rises to the level of gross negligence. See, e.g., Hobrla v
Glass, 143 Mich App 616, 624; 372 NW2d 630 (1985) (providing that, under MCL 691.1407(1),
“[t]he department’s immunity extends to allegations of vicarious liability, since the individual
defendants, even if they acted negligently, were also engaged at the time the tort was committed
[in] the exercise or discharge of a governmental function”).
Contrary to plaintiffs’ argument on appeal, MCL 691.1408 does not require imposition of
vicarious liability against a governmental agency for an employee’s gross negligence. MCL
691.1408 provides the following in that regard:
(1) Whenever a claim is made or a civil action is commenced against an
officer, employee, or volunteer of a governmental agency for injuries to persons
or property caused by negligence of the officer, employee, or volunteer while in
the course of employment with or actions on behalf of the governmental agency
and while acting within the scope of his or her authority, the governmental agency
may pay for, engage, or furnish the services of an attorney to advise the officer,
employee, or volunteer as to the claim and to appear for and represent the officer,
employee, or volunteer in the action. The governmental agency may compromise,
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settle, and pay the claim before or after the commencement of a civil action.
Whenever a judgment for damages is awarded against an officer, employee, or
volunteer of a governmental agency as a result of a civil action for personal
injuries or property damage caused by the officer, employee, or volunteer while in
the course of employment and while acting within the scope of his or her
authority, the governmental agency may indemnify the officer, employee, or
volunteer or pay, settle, or compromise the judgment.
(2) When a criminal action is commenced against an officer or employee
of a governmental agency based upon the conduct of the officer or employee in
the course of employment, if the employee or officer had a reasonable basis for
believing that he or she was acting within the scope of his or her authority at the
time of the alleged conduct, the governmental agency may pay for, engage, or
furnish the services of an attorney to advise the officer or employee as to the
action, and to appear for and represent the officer or employee in the action. An
officer or employee who has incurred legal expenses after December 31, 1975 for
conduct prescribed in this subsection may obtain reimbursement for those
expenses under this subsection.
(3) This section does not impose liability on a governmental agency.
[Emphasis added.]
The use of the word “may” in subsections (1) and (2) indicates that a governmental employer’s
decision to indemnify an employee for liability or to cover the cost of the employee’s legal
defense is a discretionary, not mandatory, decision. See Detroit Edison Co v Stenman, 311 Mich
App 367, 384 n 8; 875 NW2d 767 (2015). Moreover, 691.1408(3) makes clear that this section
“does not impose liability on a governmental agency.” Therefore, 691.1408 does not provide a
basis for imposing vicarious liability on a governmental agency for its employee’s gross
negligence.
In Docket No. 331630, the City argues that the trial court erred by concluding that the
hold harmless agreement was unenforceable as a matter of law. We agree with the trial court’s
decision in this regard.
The parties filed cross-motions for summary disposition pursuant to MCR 2.116(C)(10)
with respect to this issue. The trial court granted the Association’s motion and denied the City’s
motion pursuant to that subrule, which provides for summary disposition when “there is no
genuine issue as to any material fact and the moving party is entitled to judgment . . . as a matter
of law.” In deciding a motion for summary disposition pursuant to MCR 2.116(C)(10) and
reviewing that decision on appeal, courts must consider any evidence submitted by the parties in
a light most favorable to the nonmoving party to determine whether a genuine issue of material
fact exists. Maiden v Rozwood, 461 Mich 109, 118-120; 597 NW2d 817 (1999). A genuine
issue of material fact exists when the record leaves open “an issue upon which reasonable minds
might differ.” Debano–Griffin v Lake Co, 493 Mich 167, 175; 828 NW2d 634 (2013). A trial
court’s decision to grant a party’s motion for summary disposition is reviewed de novo. Maiden,
461 Mich at 118. This Court also reviews a trial court’s interpretation and application of a
contract de novo. Rossow v Brentwood Farms Dev, Inc, 251 Mich App 652, 658; 651 NW2d
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458 (2002). “The goal of contract construction is to determine and enforce the parties’ intent on
the basis of the plain language of the contract itself.” St Clair Med, PC v Borgiel, 270 Mich App
260, 264; 715 NW2d 914 (2006).
At issue in this case is a hold harmless agreement. A hold harmless agreement is an
indemnity contract, which is, in essence, a release of liability. Hecht v National Heritage
Academies, Inc, 499 Mich 586, 627 n 88; 886 NW2d 135 (2016). “An indemnity contract
creates a direct, primary liability between the indemnitor and the indemnitee that is original and
independent of any other obligation.” Miller-Davis Co v Ahrens Constr, Inc, 495 Mich 161, 173;
848 NW2d 95 (2014). “Before a contract can be completed, there must be an offer and
acceptance.” Kloian v Domino’s Pizza LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006)
(citation omitted). “[A] contract requires mutual assent or a meeting of the minds on all the
essential terms.” Id. Legal consideration also is required for a binding contract. Yerkovich v
AAA, 461 Mich 732, 740-741; 610 NW2d 542, 546 (2000). Consideration is “[s]ome right,
interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or
responsibility, given, suffered or undertaken by the other.” Sands Appliance Servs, Inc v Wilson,
463 Mich 231, 615 NW2d 241 (2000), quoting Black’s Law Dictionary (6th ed), p 306.
Consideration exists when there is “a benefit on one side, or a detriment suffered, or service done
on the other.” Id. at 242. In this case, the trial court determined that there was no new
consideration for the hold harmless agreement because the City was already contractually
obligated to provide the hay rides at the time the hold harmless agreement was signed. That is,
the trial court determined that the City had a preexisting duty to provide the hayrides. “Under
the preexisting duty rule, it is well settled that doing what one is legally bound to do is not
consideration for a new promise.” Yerkovich, 461 Mich at 740-741.
In this case, the hold harmless agreement purported to “release and forever discharge” the
City from “any and all claims . . . resulting from the use of any City property or in any
connection with the hayrides at Camp Dearborn.” It additionally required the Association “to
defend, indemnify, and hold harmless” the City and its employees “from and against any and all
claims and causes of action of any kind arising out of or in connection with the organization’s or
any of the organization’s participants’ involvement in the hayrides at Camp Dearborn.” The City
relies, in part, on this Court’s decision in Rowady v K Mart Corp, 170 Mich App 54, 59; 428
NW2d 22 (1988), where a panel of this Court, relying on 1 Restatement Contracts, 2d, § 80,
stated as follows with respect to the interplay between releases and consideration in
circumstances such as this:
Where there is no specific recitation of separate consideration for the
release, but it is part of a larger contract involving multiple promises, the basic
rule of contract law is that whatever consideration is paid for all the promises is
consideration for each one:
(1) There is consideration for a set of promises if what is
bargained for and given in exchange would have been
consideration for each promise in the set if exchanged for that
promise alone.
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(2) The fact that part of what is bargained for would not
have been consideration if that part alone had been bargained for
does not prevent the whole from being consideration.
Comment:
a. One consideration for a number of promises. Since
consideration is not required to be adequate in value (see § 79),
two or more promises may be binding even though made for the
price of one. A single performance or return promise may thus
furnish consideration for any number of promises.
Stated simply, “all consideration paid by [a] defendant in exchange for [a] plaintiff’s multiple
promises must be viewed as consideration as to each promise . . . .” Id.
While we agree with the Rowady panel’s statement in this regard, we cannot agree that it
is dispositive in this matter. The record includes multiple “RENTAL SALES RECEIPT[s],” and
each of those receipts repeatedly refers to a flyer for the applicable rules and regulations.
Specifically, the receipts instruct readers to “SEE FLYER FOR DETAIL OF RULES &
REGULATION” or to “SEE FLYER FOR DETAILED RULES AND REGULATIONS.” They
do not, however, mention the necessity of a hold harmless agreement. Similarly, the necessity of
a hold harmless agreement is not mentioned in the flyer either. While the flyer, which is entitled
“Fall Hayrides at Camp Dearborn,” does set forth various specific rules regarding reservations,
the maximum capacity for hayrides, opening and closing hours, rental fees and damage deposits,
the facility’s hours of operation, rules providing “FOR YOUR SAFETY DURING
HAYRIDES,” and cancellations, it makes no mention that additional agreements, including, for
example, a hold harmless agreement, were contemplated as part of the parties’ agreement.
Between the receipts and the flyer, it is quite apparent that the parties’ contract, which included
an agreement to provide hayrides, extensively covered all the essential terms of the agreement.
Kloian, 273 Mich App at 452. Stated differently, nothing in the record supports a conclusion
that the hold harmless agreement was “part of a larger contract involving multiple promises[.]”
Rowady, 170 Mich App at 59. As the trial court explained,
Here, the only contract between the City and the Association was the contract for
the hayride and chalet. The contract was finalized as of October 22, 2013, the
date that the Association paid in full. At that point, there was an offer by Camp
Dearborn, acceptance by the Association, and consideration, i.e., money paid by
the Association in return for Camp Dearborn’s obligation to provide the hayride
and chalet. The Hold Harmless Agreement was not part of that contract. It was a
separate agreement for which new consideration was required. There was no
consideration. Camp Dearborn was already obligated to provide the hayride and
chalet. The City did not incur any additional detriment, loss, forbearance, or
responsibility under the Agreement. The Agreement fails for lack of
consideration.
We discern no error with the trial court’s conclusion in this regard.
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Affirmed. Plaintiffs, as the prevailing parties, may tax costs pursuant to MCR 7.219.
/s/ Colleen A. O'Brien
/s/ Kathleen Jansen
/s/ Cynthia Diane Stephens
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