Docket Nos. 71761, 75321.
Decided January 3, 1985. Leave to appeal applied for.
Cicinelli, Mossner, Majoros Alexander, P.C. (by Eugene D. Mossner), for plaintiffs Staffney, Fess, Storm and Horney.
Van Benschoten, Hurlburt Van Benschoten, P.C. (by Harvey E. Van Benschoten and Lawrence A. Hurlburt), for plaintiffs O'Dell and Spencer.
McGraw Borchard, P.C. (by John W. McGraw), and Purcell, Tunison Cline, P.C. (by George M. Tunison), and Otto Otto (by Howard S. Otto), of counsel, for Michigan Millers Mutual Insurance Company.
Harvey, Kruse, Westen Milan, P.C. (by John A. Kruse and Michael F. Schmidt), for Association of Mill Elevator Mutual Insurance Companies.
Plaintiffs appeal as of right from the trial court's grant of summary judgment in favor of the defendants.
These cases have a considerable procedural history. The incident which precipitated the cases was an explosion and fire which occurred at the grain storage facility of the Michigan Elevator Exchange, a division of Farm Bureau Services Inc., on January 22, 1976. The circuit court granted summary judgment in favor of all the defendants in both cases.
Appeals by plaintiffs were taken independently to this Court. In Staffney v Fireman's Fund Ins Co, 91 Mich. App. 745, 753; 284 N.W.2d 277 (1979), this Court ruled that the trial court erred in granting summary judgment as to the fire insurance carriers Michigan Millers Mutual Insurance Company and Association of Mill Elevator Mutual Insurance Companies. A memorandum opinion reaching the same conclusion was also issued in the case involving plaintiff O'Dell (No. 75321). (Docket No. 78-1527, decided September 13, 1979 [unreported]).
Defendants Michigan Millers and Mill Mutuals applied for leave to appeal to the Michigan Supreme Court. The leave applications were held in abeyance pending decision in Smith v Allendale Mutual Ins Co, 410 Mich. 685; 303 N.W.2d 702 (1981). After the decision in Smith v Allendale Mutual Ins Co, supra, was announced, the Supreme Court issued an order vacating the judgment of the Court of Appeals in these cases and remanding the cases to the circuit court for further proceedings consistent with Smith v Allendale Mutual Ins Co, supra. 411 Mich. 947; 308 N.W.2d 102 (1981).
Motions for summary judgment were again brought in the trial court by defendants pursuant to GCR 1963, 117.2(1) and (3). Relying on Smith v Allendale Mutual Ins Co, the trial court granted the motions for summary judgment based on GCR 1963, 117.2(1) and (3) in Staffney (No. 71761) and O'Dell (No. 75321) on May 16, 1983, and November 22, 1983, respectively. The plaintiffs again appealed to this Court as of right. The appeals were consolidated by this Court.
The dispositive issue is whether plaintiffs have stated a claim on which relief can be granted. In deciding this question we consider the plaintiffs' respective amended complaints in light of the Michigan Supreme Court's opinion in Smith v Allendale Mutual Ins Co, supra. Initially we note that summary judgment in both actions was granted after the plaintiffs had amended their complaints. In their amended complaints plaintiffs again attempted to assert a cause of action under 2 Restatment Torts, 2d, § 324A, p 142, which states:
"One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if
"(a) his failure to exercise reasonable care increases the risk of such harm, or
"(b) he has undertaken to perform a duty owed by the other to the third person, or
"(c) the harm is suffered because of reliance of the other or the third person upon the undertaking."
Pertinent amendments to the complaint alleged that defendants inspected the premises and offered suggestions on fire prevention and control of welding activities to the grain elevator operators. The only difference we can discern from the allegations here and the complaints discussed in Smith v Allendale Mutual Ins Co, supra, are the allegations that defendants suggested a welding work practice program.
In Smith, supra, p 705, the Court held that the threshold requirement in an action under § 324A is that the defendant must have undertaken to render services to another. The Court stated:
"We conclude, as did the dissenting judge in Sabraw, that the threshold requirement of an undertaking to render services to another is lacking in these cases. An insurer's inspection of an insured's premises for fire hazards does not in itself demonstrate an undertaking to render fire inspection and prevention services to the insured. Absent evidence that the insurer agreed or intended to provide services for the benefit of the insured, there is no basis for a conclusion that such inspections are conducted other than to serve the insurer's interests in underwriting, rating and loss prevention and hence there is no undertaking. An insurer who does not undertake to inspect for the insured's benefit owes no duty to the insured or the insured's employees to inspect with reasonable care; such an insurer is, however, subject to liability if it engages in affirmative conduct creating or enlarging a fire hazard." Smith, pp 705-706.
The allegations stated in the complaints in the cases now before us do not allege that the defendants' undertaking was a service intended for the benefit of the insured. The allegations in the complaints before us demonstrate merely that a benefit was conferred upon the insured. An allegation that a gratuitous benefit was conferred is not sufficient to support the legal imposition of a duty.
"Persons pursuing their own interests often benefit others in the process. Accordingly, where a plaintiff seeks to prove an undertaking by conduct which benefits another and that conduct is consistent with a primary purpose on the part of the actor to benefit himself, the plaintiff must offer additional evidence to create a jury question whether there was an undertaking to render services and hence a duty to one who might foreseeably be injured by the actor's failure to perform the undertaking with reasonable care." Smith, p 718.
Plaintiffs have not alleged anything more than that defendants thoroughly inspected the premises. That allegation is not sufficient to create a cause of action under § 324A. The allegations in the complaint are squarely within the factual context of Sabraw v Michigan Millers Mutual Ins Co, the companion case to Smith v Allendale Mutual Ins Co. In Sabraw the Court noted that furnishing "No Smoking" signs and safety posters and making a presentation on fire prevention to plant employees was an insufficient basis on which to conclude that a legal duty should be imposed on the defendants by their actions. Summary judgment was properly granted under GCR 117.2(1).
Plaintiffs also suggest that summary judgment was improper under GCR 1963, 117.2(3). Again the plaintiffs err. A motion under GCR 1963, 117.2(3) is considered on the basis of affidavits, pleadings, depositions and interrogatories. Durant v Stahlin, 375 Mich. 628, 640; 135 N.W.2d 392 (1965). Affidavits offered with the motion in this case established that the inspections by defendants were made solely for defendants' benefit and not for the benefit of the insured. Nothing in the record before us indicates that the affidavits were controverted in any way by plaintiffs. The affidavits assert that the inspections were made in defendants' own interests. Plaintiffs were offered an opportunity to amend their complaints but declined to do so. In a similar situation, where affidavits by an inspector made clear that the inspections were made only for the benefit of the insurance company this Court stated.
"Moreover, plaintiff can point to nothing to contradict Employer's claim that these inspections were in its own interests and not for the benefit of the insured Corridor. Plaintiff's assertion that there is a question of fact regarding the location of the inspections made by Employers misses the point. There is no dispute over the fact that any inspections were primarily for Employers' own purposes and benefit.
* * *
"The parties' discovery efforts have failed to produce any evidence that employers made safety recommendations to Corridor. Again, assuming arguendo that recommendations were made (to the benefit of Corridor), such a conferral of benefit does not establish an undertaking imposing a duty upon Employers, Smith v Allendale Mutual Ins Co, supra." Scott v Detroit (On Rehearing), 113 Mich. App. 241, 245; 318 N.W.2d 32 (1982), lv den 417 Mich. 864 (1983).
In another case recently before this Court, Cunningham v Continental Casualty Co and Kempainen v Continental Casualty Co (On Remand), 139 Mich. App. 238; 361 N.W.2d 780 (1984), the question was whether similar actions by the insurer were sufficient evidence of an agreement to provide inspection services for the insurer's benefit. This Court concluded that the evidence offered, which was very similar in nature to the factual allegations in the complaints and affidavits here, were insufficient to establish the necessary threshold of an undertaking to provide services to another.