Opinion
347439 347712
09-16-2021
BAY COUNTY ROAD COMMISSION, Plaintiff-Appellee, v. JOHN E. GREEN COMPANY, Defendant-Appellant.
UNPUBLISHED
Bay Circuit Court LC No. 18-003444-NZ
Before: Gadola, P.J., and Gleicher and Stephens, JJ.
Gleicher J. Concurring in part and dissenting in part.
Bay County invested $42 million in a construction project intended to upgrade the county's water treatment plant. The county alleges that a subcontractor's negligently performed mechanical work caused a cascade of problems including leaks, premature wear on pump tubes, and pumps that generate excessive noise and vibration.
The county assigns responsibility for these results to defendant John E. Green Company (JEG). JEG performed the mechanical work for the project, including the fabrication and installation of plumbing, HVAC, process piping, and fire protection systems. Bay County's first amended complaint avers that after JEG completed its work, the county discovered a number of "errors, omissions, and defects." It seeks damages in contract and tort for remediating the problems that JEG allegedly caused.
JEG sought summary disposition under MCR 2.116(C)(8), contending that it owed Bay County no duty apart from the contractual obligations it owed to the general contractor. The trial court denied summary disposition of Bay County's negligence claim and subsequently denied JEG's motion to compel arbitration.
JEG's lone challenge to Bay County's negligence claim-and the sole basis for the majority's rejection of that claim-is the concept of duty. JEG has offered no other ground supporting the dismissal of Bay County's negligence theory.
The majority reverses the trial court's summary disposition ruling and affirms the arbitration ruling. I concur with the majority's conclusion that because the county was not a party to the arbitration agreement, the county is not bound by it. I respectfully dissent from the majority's duty analysis, as it is incompatible with our Supreme Court's opinion in Loweke v Ann Arbor Ceiling & Partition Co, LLC, 489 Mich. 157; 809 N.W.2d 553 (2011).
I. THE PLEADINGS SUPPORT A DUTY
The procedural posture of this case is vital to my analysis. The issue presented is whether the trial court erred by denying a motion for summary disposition brought under MCR 2.116(C)(8), on the pleadings. Our Supreme Court has stressed that "a motion for summary disposition under MCR 2.116(C)(8) must be decided on the pleadings alone and . . . all factual allegations must be taken as true." El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 154-155; 934 N.W.2d 665 (2019). In evaluating a (C)(8) motion, a court may not contest, disbelieve, or ignore any factual allegations and must rely solely on the pleadings in resolving legal issues. Id. at 160. "A motion under MCR 2.116(C)(8) may only be granted when a claim is so clearly unenforceable that no factual development could possibly justify recovery." Id.
Bay County's first amended complaint avers in relevant part that the Bay Water Treatment Plant provides "the only source of potable water for the residents of Bay County and supplies water utilized in fire suppression systems for commercial buildings, as well as the water utilized by firefighters." The complaint highlights that the plant "is so critical that, in the event it becomes inoperable, there will be merely eight to twelve hours of water sufficient to meet the public health and safety needs of Bay County." These background allegations elucidate that the construction project was intended to benefit the public, and that various public interests would be placed at risk if the project went awry.
The general contractor for the water treatment plant upgrade, Spence Brothers, entered into a subcontract with JEG to perform the mechanical work for the project. The amended complaint asserts that "JEG purports to specialize in the fabrication and installation of plumbing, HVAC, process piping, and fire protection systems, including design build and emergency services." According to the first amended complaint, the county discovered a multitude of problems with JEG's mechanical work. Here is the relevant paragraph:
15. In or around August of 2015, the 14-Day Acceptance Test proceeded. Bay County, however, quickly began, and has since continued, to discover substantial errors, omissions, and defects with Mechanical Work. Among other things, Bay County discovered:
a. defective raw water pumps that produce a significant amount of noise;
b. defective clarified water pumps;
c. defective sludge pumps;
d. defective finished water pumps that fail to conform to contractual specifications, which have caused damaging cavitation and vibration far above the allowable industry standard;
e. defective finished water pumps that can only be operated at 80%-82% of maximum output, despite Bay County's purchase of pumps that should be capable of being operated at 100% (even causing MDEQ to order Bay County not to exceed the 80%-82% range);
f. defective finished water tanks that must be kept at elevated levels to mitigate damaging cavitation to the finished water pumps, which limits the availability of potable water to the Bay County transmissions mains, and consequently jeopardizes capacity to the distribution system;
g. defective drain valves on the finished water piping that leak and have never been repaired; h. defective drain lines on every skid that have broken because of faulty installation;
i. defective pressure gauges on the suction side of the finished water pumps that fail to conform to contractual specifications;
j. defective thermal protective devices that trip out the finished water pumps when activated, and were disconnected and never repaired, which left the finished water pump motors unprotected from overheating and damage;
k. defective flex couplings on the bulk chemical tanks that were improperly installed;
l. defective chemical feed lines that were never purged of plastic shavings causing premature wear on peristaltic pump tubes;
m. defective chemical feed lines that were kinked when installed, which forced Bay County to replace the lines, and caused a safety issue due to high pressure on chemical lines;
n. defective pipe supports and hangers that were improperly designed, manufactured, and installed, including (but not limited to) those immediately adjacent to the membrane skids, which are deflecting and causing such potentially imminent failure that MDEQ recently required Bay County to file an emergency action plan; and
o. the inability of the Plant to produce and deliver potable water at the design rate of 17.4 million gallons per day.
Voluntary efforts to remediate these issues failed, Bay County claims.
Count III of the first amended complaint sets forth a claim for "negligence," in relevant part stating as follows:
45. As an engineer, mechanical contractor, and/or design professional licensed by the State of Michigan, JEG had a preexisting, separate and distinct (from any contractual obligations) duty to perform the Mechanical Work in a manner that protected the safety, health, and welfare of the public, including Bay County.
46. JEG breached this duty by failing to properly perform the Mechanical Work, including but not limited to those items listed in ¶ 16 d.-o.above.
47. JEG's breach of this duty has endangered the safety, health, and welfare of the public (including Bay County) and caused damage to Bay County's property.
Likely the reference to ¶ 16 is a typographical error, as the paragraph listing the "items" including "d.-o." is number 15 in the first amended complaint.
These allegations, which must be taken as true, adequately set forth a negligence claim.
"Actionable negligence presupposes the existence of a legal relationship between parties by which the injured party is owed a duty by the other, and such duty must be imposed by law." Clark v Dalman, 379 Mich. 251, 260-261; 150 N.W.2d 755 (1967). That duty may be created by a statute, "or it may arise generally by operation of law under application of 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." Id. at 261. The Supreme Court highlighted, "This rule of the common law arises out of the concept that every person is under the general duty to so act, or to use that which he controls, as not to injure another." Id. (citation omitted).
Whether Bay County's first amended complaint sets forth an actionable claim for negligence against JEG should not be a difficult question, as the allegations describe that JEG violated a duty owed to the people of Bay County to perform its work in a manner that did not endanger the security and functionality of the county's water system. As the Supreme Court explained in Clark, a common-law duty "may be a general one owed by the defendant to the public, of which the plaintiff is a part." Id. The allegations in the first amended complaint meet this standard.
The majority misses the obvious-that JEG owed a common-law duty to perform its work in a way that did not endanger the county's water system-because it becomes entangled in the effect of the subcontract between Spence and JEG. In Clark, the Supreme Court addressed this very issue, explaining that although a contract is "a relevant factor" in a duty determination, it "merely creates the state of things which furnishes the occasion of the tort." Id. There, the Court found that the defendant owed the plaintiff a legal duty of care despite the coexistence of contractual duties on the defendant's part: "The general duty of a contractor to act so as not to unreasonably endanger the well-being of employees of either subcontractors of inspectors, or anyone else lawfully on the site of the project, is well settled." Id. at 262. Here, the contract between JEG and Spence is the reason that JEG was present and performing work at the water treatment plant, but bears no relevance to JEG's obligation to avoid injury to the plant, the water, or Bay County.
Unfortunately, the clarity of Clark's distinction between common law and contractual duties was blurred by our Supreme Court's decision in Fultz v Union-Commerce Assoc, 470 Mich. 460; 683 N.W.2d 587 (2004). The Supreme Court cleaned up the confusion wrought by Fultz in Loweke, 489 Mich. 157. Although the majority cites Loweke in support of its holding, I suggest that the majority opinion elides the meaning and import of that case. I fear that the majority's analysis of duty revives the confusion generated by Fultz. I turn to a discussion of Loweke, which in my view resolves the issue presented here.
II. LOWEKE, AND THE DISTINCTION BETWEEN CONTRACTUAL AND COMMON-LAW DUTIES
Citing Fultz, the majority opinion recites that when evaluating "tort actions based on a contract and brought by a plaintiff who is not a party to that contract," courts must employ a" 'separate and distinct' mode of analysis." Fultz, 470 Mich. at 467. Although the majority acknowledges that in Loweke the Supreme Court instructed courts to focus on "whether, aside from the contract, a defendant is under any legal obligation to act for the benefit of the plaintiff," the majority fails to follow this rule. Remarkably, several sentences later the majority holds that "the contract itself articulates the duty owed by the defendant to both Spence and the owner, plaintiff."
If the majority is suggesting that the duties JEG might owe to Bay County are subsumed in its subcontract with Spence, the majority has resurrected the confusion created in the wake of Fultz. Loweke clarified that apart from any contract governing the defendant's relationship with a third party, there is an inherent common law duty to perform contractual undertakings non-negligently. As Loweke stressed, ascertaining whether such a common-law duty exists "generally does not necessarily involve reading the contract." Loweke, 489 Mich. at 169. The majority either misapprehends Loweke or simply fails to apply it to these facts.
The Loweke Court reinforced Clark, highlighting that "a separate and distinct duty to support a cause of action in tort can arise by statute, or by a number of preexisting tort principles, including duties imposed because of a special relationship between the parties and the generally recognized common-law duty to use due care in undertakings." Id. at 169-170 (citations omitted, emphasis added). The salient question is "whether any legal duty independent of the contract" exists. Id. at 169. Alternatively stated, the test "is to determine whether a defendant owes a noncontracting, third-party plaintiff a legal duty apart from the defendant's contractual obligations to another." Id.
In no uncertain terms, Loweke dictates that the mere existence of a contract between Spence and JEG, or Bay County and Spence, does not preclude Bay County from maintaining a cause of action against JEG for negligence. Rather, the question is whether JEG owed Bay County a duty to use due care when it undertook to perform extensive mechanical work on Bay County's water treatment plant.
Let's assume that a pedestrian passed by the water treatment plant construction site and was struck in the head by a wrench dropped by a worker employed by JEG. Is there any doubt but that the pedestrian could sue JEG? The duty involved in that hypothetical case is the duty to perform one's work safely so as not to injure others. That the worker's employer had a contract with Spence would be irrelevant to the pedestrian's case; the contract simply provided a reason for the worker's presence on the premises.
Loweke involved a similar duty to provide a safe workplace. The plaintiff there was a workman employed by a subcontractor who was injured by falling boards that had been negligently positioned by a different subcontractor. Id. at 159. Explaining that this Court had misinterpreted Fultz by holding that the defendant owed no duty to the plaintiff who had been struck by the falling boards, the Supreme Court pointed out that Fultz had not "extinguished preexisitng common-law duties[.]" Id. at 172. The Court summarized:
[D]efendant-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. [Id.]
Here, Bay County's amended complaint asserts that JEG's negligence "endangered the safety, health, and welfare of the public . . . and caused damage to Bay County's property." The first amended complaint provides a long list of examples of such harms, including noise, leaks, and safety challenges. Regardless of its contract with Spence, JEG owed Bay County a duty to perform its work in a manner that protected the county's residents, their water, and the people's property from harm. Loweke's straightforward lesson is that this common-law responsibility of due care existed separate and apart from JEG's specific contractual obligations. I have no idea of whether JEG actually violated any common-law duties, but Bay County's first amended complaint adequately sets forth an actionable claim that it did. I would affirm the circuit court's denial of summary disposition under MCR 2.116(C)(8).
Elizabeth L. Gleicher, J.