Loweke v. Ann Arbor Ceiling & Partition Co, LLC , 489 Mich. 157 ( 2011 )

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Opinion Robert P. Young, Jr. Michael F. Cavanagh
Marilyn Kelly
Stephen J. Markman
Diane M. Hathaway
Mary Beth Kelly
Brian K. Zahra
JUNE 6, 2011
STATE OF MICHIGAN
SUPREME COURT
RICHARD LOWEKE and SHERRI
LOWEKE,
Plaintiffs-Appellants,
v No. 141168
ANN ARBOR CEILING & PARTITION
CO., L.L.C.,
Defendant-Appellee.
BEFORE THE ENTIRE BENCH (except ZAHRA, J.)
CAVANAGH, J.
Plaintiff, an employee of an electrical subcontractor, was injured at a construction
site when several cement boards fell on him. The boards had been leaned against a wall
by employees of defendant, a carpentry and drywall subcontractor, which, like plaintiff’s
employer, had been hired by a general contractor to work on the construction project.
Plaintiff sued defendant for negligence and defendant moved for summary disposition,
asserting that, under Fultz v Union-Commerce Assoc, 470 Mich 460, 469-470; 683 NW2d
587 (2004), and its progeny, it owed no duty to plaintiff that was “separate and distinct”
from defendant’s contractual duties to the general contractor. The trial court granted
defendant’s motion and the Court of Appeals affirmed. We granted plaintiff’s
application for leave to appeal. Loweke v Ann Arbor Ceiling & Partition Co, Inc, 488
Mich 876 (2010).
We take this opportunity to clarify Fultz’s “‘separate and distinct’ mode of
analysis,” 470 Mich at 467, and hold that a contracting party’s assumption of contractual
obligations does not extinguish or limit separately existing common-law or statutory tort
duties owed to noncontracting third parties in the performance of the contract. Davis v
Venture One Constr, Inc, 568 F3d 570, 575, 577 (CA 6, 2009).1 In this case, plaintiff
asserts that defendant had a common-law duty, separate and distinct from its contractual
obligations to the general contractor, to use ordinary care in order to avoid physical harm
to persons and property in the execution of its undertakings. See, e.g., Clark v Dalman,
379 Mich 251, 261; 150 NW2d 755 (1967); Rinaldo’s Constr v Mich Bell Tel Co, 454
Mich 65, 84; 559 NW2d 647 (1997). Because defendant raised its motion for summary
disposition on the basis of an improper understanding of Fultz, and the Court of Appeals
affirmed the trial court’s decision granting summary disposition on that basis, we reverse
the judgment of the Court of Appeals and remand this case to the trial court for further
proceedings consistent with this opinion.
1
Although the United States Court of Appeals for the Sixth Circuit has subsequently
opined that Michigan courts would have decided Davis differently, see Bennett v MIS
Corp, 607 F3d 1076, 1096 (CA 6, 2010), the Sixth Circuit’s interpretation of Michigan
law is not binding on this Court. Rasheed v Chrysler Corp, 445 Mich 109, 123 n 20; 517
NW2d 19 (1994). And, for the reasons stated later in this opinion, we reject Bennett’s
overly broad reading of Fultz.
2
I. FACTS AND PROCEDURAL HISTORY
Plaintiff, Richard Loweke,2 was an electrician employed by Shaw Electric, a
subcontractor on a construction project at Detroit Metro Airport. Walbridge Aldinger
Company, the general contractor for the project, also subcontracted with defendant to
provide carpentry and drywall services. Defendant’s employees leaned numerous 4- by
8-foot sheets of cement board against a wall in a hallway where plaintiff was working.
Plaintiff claimed that at the time of the accident, he was standing midway in front of the
cement boards when, for unknown reasons, sheets of the cement board began to fall.
Plaintiff attempted to stop the boards from falling on him, but to no avail: several sheets
of cement board fell onto plaintiff’s right leg, injuring him.
Plaintiff sued defendant, alleging that defendant was negligent in stacking the
cement boards in an unstable position, creating a new hazard that previously did not exist.
Relying primarily on Fultz, defendant moved for summary disposition, asserting that it
was not liable to plaintiff in tort because plaintiff’s allegations were based on an assertion
that defendant negligently performed its contractual obligations to the general contractor
and, thus, were not based on any separate and distinct duty that defendant owed to
plaintiff. To support its argument, defendant cited its contract with Walbridge, which
held defendant responsible for “unloading, moving, lifting, protection, securing and
dispensing of its materials and equipment at the Project Site.” Defendant asserted that it
had not violated any duty that was independent of the contract because, in its view, the
2
Because plaintiff Sherri Loweke’s claims are derivative of the injuries suffered by her
husband Richard, we will refer to Richard Loweke as the singular “plaintiff.”
3
management and storage of its materials was a subject of its contract with Walbridge.
The trial court agreed with defendant and granted its motion for summary disposition,
reasoning that what had happened was within defendant’s obligations under the contract.
Plaintiff appealed.
The Court of Appeals affirmed. The Court explained that, under Fultz, a “court
must look at the terms of the contract and determine whether the defendant’s action was
required under the contract.” Loweke v Ann Arbor Ceiling & Partition Co, Inc,
unpublished opinion per curiam of the Court of Appeals, issued April 22, 2010 (Docket
No. 289451), p 3. Because defendant was required under its contract with Walbridge to
secure the cement board at the project site, the Court reasoned that plaintiff’s claim was
based on defendant’s negligence in performing its obligations under the contract and that
the alleged hazard had not presented any unique risk that was not contemplated by the
contract. Finally, the Court claimed that its holding was supported by two peremptory
orders of this Court: Mierzejewski v Torre & Bruglio, Inc, 477 Mich 1087 (2007), and
Banaszak v Northwest Airlines, Inc, 477 Mich 895 (2006). We granted plaintiff’s
application for leave to appeal. Loweke, 488 Mich 876.
II. STANDARD OF REVIEW
This Court reviews de novo a trial court’s decision on a motion for summary
disposition. In re Egbert R Smith Trust, 480 Mich 19, 23; 745 NW2d 754 (2008). This
Court also reviews de novo questions of law. Byker v Mannes, 465 Mich 637, 643; 641
NW2d 210 (2002). Whether a defendant is under a legal obligation to act for a plaintiff’s
benefit—i.e., whether a defendant owes a particular plaintiff a duty—is a question of law.
4
Dyer v Trachtman, 470 Mich 45, 49; 679 NW2d 311 (2004); Valcaniant v Detroit Edison
Co, 470 Mich 82, 86; 679 NW2d 689 (2004).
III. ANALYSIS
To establish a prima facie case of negligence, a plaintiff must prove the following
elements: (1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the
legal duty, (3) the plaintiff suffered damages, and (4) the defendant’s breach was a
proximate cause of the plaintiff’s damages. Roulo v Auto Club of Mich, 386 Mich 324,
328; 192 NW2d 237 (1971). Accordingly, a defendant is not liable to a plaintiff unless
the defendant owed a legal duty to the plaintiff. Beaty v Hertzberg & Golden, PC, 456
Mich 247, 262; 571 NW2d 716 (1997). In this case, the issue is when a duty of care
arises between a party to a contract and a noncontracting third party. In other words,
when two parties enter into a contract and a noncontracting third party, i.e., one who is a
stranger to the contract, is injured, under what circumstances does a duty of care arise
between the contracting party and the third party?
In Fultz,3 this Court attempted to clarify the standards for determining when a
negligence action based on a defendant’s contractual obligations with another and
brought by a third party to that contract may lie. Since Fultz and its progeny were issued,
however, courts have erroneously interpreted this Court’s decisions as rejecting accepted
tort-law principles and creating a legal rule “unique to Michigan tort law,” which bars
3
Although the two concurring justices in Fultz remain committed to their positions in
that case, see 470 Mich at 470-476 (MARILYN KELLY, J., concurring), we recognize that
the principles announced by the Fultz majority are the law in Michigan and will apply
them here.
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negligence causes of action on the basis of a lack of duty if a third-party plaintiff alleges
a hazard that was the subject of the defendant’s contractual obligations with another.
Bennett v MIS Corp, 607 F3d 1076, 1091-1092, 1094-1095 (CA 6, 2010); see, also,
Hatcher v Senior Home Health Care Inc, unpublished opinion per curiam of the Court of
Appeals, issued August 19, 2010 (Docket No. 289208), p 5 (stating that a claim is barred
if an injury is “caused by a hazard that is even remotely connected to a contractual
relationship”). Because this broad interpretation is misguided, we write to clarify Fultz.
A. LEGAL BACKGROUND
Before Fultz, when a plaintiff pleaded a tort arising out of a defendant’s breach of
contractual obligations, Michigan courts historically drew a distinction between
“misfeasance” of a contractual obligation—i.e., “active misconduct”—and “nonfeasance”
of a contractual obligation—i.e., “passive inaction,” Williams v Cunningham Drug
Stores, Inc, 429 Mich 495, 498; 418 NW2d 381 (1988), or “failing to do what one has
promised to do in the absence of a duty to act apart from the promise made,” Ferrett v
Gen Motors Corp, 438 Mich 235, 245 n 11; 475 NW2d 243 (1991) (quotation marks and
citation omitted). Under this dichotomy, a contracting party generally was not liable in
tort for the complete nonperformance of a contractual obligation, or nonfeasance,
whereas defective performance of a contractual obligation, or misfeasance, could support
an action in tort or contract. Rinaldo’s Constr, 454 Mich at 83-84; Ferrett, 438 Mich at245 n 11; Chase v Clinton Co, 241 Mich 478, 486; 217 NW 565 (1928). As this Court
has stated, however, the fundamental principle distinguishing a cause of action in tort
from one in contract is the concept of duty. Rinaldo’s Constr, 454 Mich at 83.
Accordingly, in cases of nonfeasance, a defendant who fails to perform his contractual
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duties is ordinarily not liable in tort because, as a general tort rule, “there is no duty that
obligates one person to aid or protect another.” Williams, 429 Mich at 498-499.4 As a
result, when a defendant completely fails to perform his contractual obligations, “[w]hat
we are left with is defendant’s failure to complete his contracted-for performance,” which
“is not a duty imposed by the law upon all, the violation of which gives rise to a tort
action” but, instead, is “a duty arising out of the intentions of the [contracting] parties
themselves and owed only to those specific individuals to whom the promise runs.” Hart
v Ludwig, 347 Mich 559, 565-566; 79 NW2d 895 (1956).
In contrast, cases that recognized a cause of action in tort arising out of the
negligent performance of a contract by a defendant “generally involve[d] a separate and
distinct duty imposed by law for the benefit of the plaintiff that provide[d] a right to
maintain [the] action without regard to whether there was a contractual relationship
between the plaintiff and the defendant.” Ferrett, 438 Mich at 245. This separate and
distinct duty “imposed by law” could arise by operation of a statute or under the “basic
rule of the common law, which imposes on every person engaged in the prosecution of
any undertaking an obligation to use due care, or to so govern his actions as not to
unreasonably endanger the person or property of others.” Clark, 379 Mich at 261; see,
also, Rinaldo’s Constr, 454 Mich at 84; Parker v Port Huron Hosp, 361 Mich 1, 11; 105
NW2d 1 (1960) (“It should be noted that . . . at the common law . . . the general rule has
been that one is liable for his negligence or tortious acts.”). Thus, in cases alleging
4
See, also, 1 Torts: Michigan Law & Practice (2d ed), § 10.18, p 10-23. But see
Williams, 429 Mich at 499 (noting the existence of an exception to this general rule when
there is a special relationship between the parties).
7
misfeasance of contractual obligations, although there was a contract, it “merely create[d]
the state of things which furnishe[d] the occasion of the tort.” Clark, 379 Mich at 261.
This Court, however, has recognized that determining whether an action in tort can
arise out of a contractual promise is often largely semantic and difficult to discern.
Rinaldo’s Constr, 454 Mich at 83; Hart, 347 Mich at 564-565. In Fultz, a majority of
this Court recognized the often “slippery distinction” between misfeasance and
nonfeasance of contractual obligations and attempted to disentangle the
misfeasance/nonfeasance dichotomy by shifting the focus to whether the particular
defendant owed a duty to the plaintiff. Fultz, 470 Mich at 467 (quotation marks and
citation omitted). Noting that this Court had described a tort action arising from the
misfeasance of contractual obligations as a “‘violation of a legal duty separate and
distinct from the contractual obligation,’” the Fultz majority explained that this “‘separate
and distinct’ definition of misfeasance” offered better guidance in determining whether a
negligence action based on a contract and brought by a third party could lie. Id., quoting
Rinaldo’s Constr, 454 Mich at 84. Accordingly, after Fultz, courts were to forgo the
misfeasance/nonfeasance distinction and, instead, employ a “‘separate and distinct’ mode
of analysis” to determine the threshold question: “whether the defendant owed a duty to
the plaintiff that is separate and distinct from the defendant’s contractual obligations.”
Fultz, 470 Mich at 467; see, also, 1 Torts: Michigan Law and Practice (2d ed), § 10.18,
p 10-24. Under this analysis, an action would lie in contract if it was based solely on a
defendant’s failure or refusal to perform a contractual promise. In contrast, an action
could lie in either contract or in tort if a “defendant negligently performs a contractual
duty or breaches a duty arising by implication from the relation of the parties created by
8
the contract . . . .” Fultz, 470 Mich at 469. In the latter category of cases, however, no
tort liability would arise “for failing to fulfill a promise in the absence of a duty to act that
is separate and distinct from the promise made.” Id. at 470.
Applying these principles, Fultz concluded that the plaintiff, who had slipped on a
snow- and ice-covered parking lot, did not have a negligence cause of action against the
contractor hired by the premises owner to plow and salt the lot because, in essence, the
plaintiff merely claimed that the contractor had breached its contract by failing to
perform its contractual duties. Id. at 468. Thus, because the plaintiff did not claim that
she was a third-party beneficiary of the contract between the defendant and the premises
owner or claim that the law otherwise imposed a duty on the defendant to complete the
contracted-for performance, the plaintiff had failed to plead a duty owed to her that was
independent, or “separate and distinct,” from the defendant’s contractual duty to the
premises owner. Id. at 463, 468. After explaining that the Fultz plaintiff alleged no duty
owed to her that was independent of the contract, this Court distinguished the facts of
Fultz from Osman v Summer Green Lawn Care, Inc, 209 Mich App 703; 532 NW2d 186
(1995), overruled in part on other grounds by Smith v Globe Life Ins Co, 460 Mich 446;
597 NW2d 28 (1999). The majority explained that Osman was factually similar, insofar
as the Osman plaintiff was injured when she slipped on ice that the Osman defendant had
contracted to remove from the premises owner’s property. However, the facts of Fultz
were distinguishable from the facts of Osman in a few significant respects: in Osman, the
defendant breached a duty owed to the plaintiff that was separate and distinct from its
contractual obligations when it created a “new hazard” in carrying out its snow-removal
duties. Specifically, in acting under the contract, the defendant moved snow to a portion
9
of the premises that created a condition that it should have known would pose a danger to
individuals traversing the area. Fultz, 470 Mich at 468-469. In contrast to the plaintiff in
Osman, the Fultz plaintiff failed to establish the existence of a duty owed to her by the
defendant and, thus, could not meet the threshold requirement for bringing a negligence
action. The plaintiff simply asserted that the defendant had failed to perform its
contractual obligations to the premises owner, which was insufficient to establish that the
defendant owed her a duty in tort. Id. at 468-469. Accordingly, the plaintiff’s remedy in
Fultz rested solely against the premises owner.
B. CLARIFICATION OF FULTZ
Although Fultz clearly stated that a defendant’s legal duty to act must arise
separately and distinctly from a defendant’s contractual obligations, Fultz’s “separate and
distinct mode of analysis” has been misconstrued to, in essence, establish a form of tort
immunity that bars negligence claims raised by a noncontracting third party. This is due,
in part, to two orders from this Court, Mierzejewski, 477 Mich 1087, and Banaszak, 477
Mich 895. Courts have misconstrued Fultz’s test requiring a “separate and distinct duty”
by erroneously focusing on whether a defendant’s conduct was separate and distinct from
the obligations required by the contract or whether the hazard was a subject of or
contemplated by the contract. See, e.g., Carrington v Cadillac Asphalt, LLC,
unpublished opinion per curiam of the Court of Appeals, issued February 9, 2010
(Docket No 289075); Hatcher, unpub op at 5; see, also, 1 Torts: Michigan Law and
Practice, § 10.18, p 10-25. This interpretation is incorrect because, in analyzing tort
actions based on a contract and brought by a noncontracting third party, Fultz directed
courts to focus on “[w]hether a particular defendant owes any duty at all to a particular
10
plaintiff,” Fultz, 470 Mich at 467 (emphasis added), and, thus, generally required an
inquiry into whether, aside from the contract, “a defendant is under any legal obligation
to act for the benefit of the plaintiff,” Valcaniant, 470 Mich at 86 n 4.5 See also Davis,
568 F3d at 575-576.
Thus, in determining whether an action in tort will lie, Fultz recast the test to focus
on whether any legal duty independent of the contract existed. Fultz, 470 Mich at 466.
Notably, in requiring courts to focus on whether a defendant owed a legal duty to the
plaintiff, Fultz directed courts to utilize the “‘separate and distinct’ definition of
misfeasance.” Id. at 467. In shifting the focus to this Court’s “separate and distinct
definition of misfeasance,” however, Fultz did not modify the aforementioned historical
understandings of this Court’s “separate and distinct mode of analysis.” Instead, Fultz
favorably cited Rinaldo’s Constr, 454 Mich at 84, and Ferrett, 438 Mich at 245, which,
like Fultz, focused on whether a legal duty independent of a contract existed, rather than
5
While this Court’s orders in Banaszak and Mierzejewski may have understandably
caused confusion, as explained later in this opinion, Fultz did not purport to overrule
longstanding common law. Instead, Fultz intended to provide a simplified test to
disentangle the sometimes difficult distinction between misfeasance and nonfeasance by
directing courts to focus on the “‘separate and distinct’ definition of misfeasance,” as
previously recognized by this Court. Fultz, 470 Mich at 467. Notably, the Banaszak and
Mierzejewski orders only cited Fultz and did not claim to extend it. Moreover, Fultz did
not claim to overrule the common law, and, just as “legislative amendment of the
common law is not lightly presumed,” Dawe v Dr Reuven Bar-Levav & Assoc, PC, 485
Mich 20, 28; 780 NW2d 272 (2010) (quotation marks and citation omitted), this Court
does not heedlessly modify the common law. Accordingly, to the extent that Banaszak
and Mierzejewski have been misconstrued to support an overly expansive reading of
Fultz, we note that such an interpretation is incorrect and reject it as inconsistent with
Fultz.
11
whether defendant’s conduct was separate and distinct from the tasks required by the
contract or whether the hazard was contemplated by the contract. Davis, 568 F3d at 576.
Determining whether a duty arises separately and distinctly from the contractual
agreement, therefore, generally does not necessarily involve reading the contract, noting
the obligations required by it, and determining whether the plaintiff’s injury was
contemplated by the contract. Id. Instead, Fultz’s directive is to determine whether a
defendant owes a noncontracting, third-party plaintiff a legal duty apart from the
defendant’s contractual obligations to another. Fultz, 470 Mich at 461-462. As this
Court has historically recognized, a separate and distinct duty to support a cause of action
in tort can arise by statute, Clark, 379 Mich at 261, or by a number of preexisting tort
principles, including duties imposed because of a special relationship between the parties,
see, e.g., Williams, 429 Mich at 499, and Fultz, 470 Mich at 468 n 4, and the generally
recognized common-law duty to use due care in undertakings, see, e.g., Clark, 379 Mich
at 261; Hart, 347 Mich at 564. As this Court has explained:
Cases recognizing a right to maintain an action in tort arising out of
a breach of contract by the defendant, generally involve a separate and
distinct duty imposed by law for the benefit of the plaintiff that provides a
right to maintain an action without regard to whether there was a
contractual relationship . . . . In Clark [379 Mich at 261-262], the duty
“imposed by law” was “[t]he general duty of a contractor to act so as not to
unreasonably endanger the well-being of employees of either
subcontractors or inspectors, or anyone else lawfully on the site of the
project . . . .” [Ferrett, 438 Mich at 245-246 (second alteration in Ferrett).]
Stated another way, under the “separate and distinct mode of analysis,” “‘[e]ntering into a
contract with another pursuant to which one party promises to do something does not
alter the fact that there [exists] a preexisting obligation or duty to avoid harm when one
12
acts.’” Rinaldo’s Const, 454 Mich at 84, quoting Prosser & Keeton, Torts (5th ed), § 92,
pp 656-657; see, also, Davis, 568 F3d at 575, 577.
Thus, under Fultz, while the mere existence of a contractual promise does not
ordinarily provide a basis for a duty of care to a third party in tort, “the existence of a
contract [also] does not extinguish duties of care otherwise existing . . . .” 1 Torts:
Michigan Law and Practice, § 10.18, p 10-25; see, also, Fultz, 470 Mich at 468-469.
Fultz did not extinguish the “simple idea that is embedded deep within the American
common law of torts . . . : if one ‘having assumed to act, does so negligently,’ then
liability exists as to a third party for ‘failure of the defendant to exercise care and skill in
the performance itself.’” Davis, 568 F3d at 575, quoting Hart, 347 Mich at 564.
In summary, “[w]hether a particular defendant owes any duty at all to a particular
plaintiff [in tort],” Fultz, 470 Mich at 467 (emphasis added), is generally determined
without regard to the obligations contained within the contract, Davis, 568 F3d at 577.
See, also, Churchill v Howe, 186 Mich 107, 114; 152 NW 989 (1915) (explaining that
although a tort can grow out of a contract, in general, a tort is a “wrong independent of a
contract”). Accordingly, with the aforementioned principles in mind, we clarify that
when engaging in the “separate and distinct mode of analysis” in Fultz’s analytical
framework, see 470 Mich at 469-470, courts should not permit the contents of the
contract to obscure the threshold question of whether any independent legal duty to the
noncontracting third party exists, the breach of which could result in tort liability.
Instead, in determining whether the action arises in tort, and thus whether a separate and
distinct duty independent of the contract exists, the operative question under Fultz is
13
whether the defendant owed the plaintiff any legal duty that would support a cause of
action in tort, including those duties that are imposed by law.
C. APPLICATION
Unlike the plaintiff’s cause of action in Fultz, 470 Mich at 468-469, plaintiff’s
cause of action in this case was not brought solely on the basis of defendant’s failure to
perform its contractual obligations to the general contractor. Instead, plaintiff claims that
defendant breached the common-law duty to exercise reasonable care and avoid harm
when one acts. Clark, 379 Mich at 261; Rinaldo’s Constr, 454 Mich at 84. Defendant’s
motion for summary disposition, however, was raised and decided on the basis of a
misinterpretation of Fultz. Specifically, defendant’s motion was brought exclusively
under the erroneous belief that defendant owed no duty to plaintiff because defendant’s
performance and the hazards associated with that performance were the subject of
defendant’s contract with the general contractor. Because defendant’s motion was
brought solely under the mistaken belief that Fultz extinguished preexisting common-law
duties, we need not and do not preemptively decide whether this particular plaintiff was
owed a duty of care under the common law.
IV. CONCLUSION
Under Fultz, a contracting party’s assumption of contractual obligations does not
extinguish or limit separate, preexisting common-law or statutory tort duties owed to
noncontracting third parties in the performance of a contract. Accordingly, we clarify
that when engaging in Fultz’s “separate and distinct mode of analysis,” courts should not
permit the contents of the contract to obscure the proper initial inquiry: whether, aside
from the contract, the defendant owed any independent legal duty to the plaintiff. In this
14
case, defendant—by performing an act under the contract—was not relieved of its
preexisting common-law duty to use ordinary care in order to avoid physical harm to
foreseeable persons and property in the execution of its undertakings. That duty, which is
imposed by law, is separate and distinct from defendant’s contractual obligations with the
general contractor. Accordingly, we reverse the judgment of the Court of Appeals and
remand this case to the trial court for further proceedings that are consistent with this
opinion.
Michael F. Cavanagh
Robert P. Young, Jr.
Marilyn Kelly
Stephen J. Markman
Mary Beth Kelly
HATHAWAY, J. I concur in the result only.
Diane M. Hathaway
ZAHRA, J., did not participate because he was on the Court of Appeals panel in this
case.
15