Estate of Koch v. A. Z. Shmina, Inc. (In Re Estate of Koch)
322 Mich. App. 383
| Mich. Ct. App. | 2017Background
- Decedent Michael Koch died in an April 22, 2013 explosion at Dexter’s wastewater-treatment digesters during demolition work; plaintiff (the Estate) sued contractor A.Z. Shmina and engineer Orchard Hiltz & McCliment, Inc. (OHM).
- OHM had design/administration contracts with Dexter that disclaimed job-site safety responsibility; Dexter contracted with Shmina, who subcontracted to Platinum and then to Regal for demolition work.
- Evidence showed weekly progress meetings attended by OHM staff and contractors; Regal’s worker used an oxy‑fuel torch on the secondary digester shortly before the explosion despite warnings that only the primary digester should be worked on.
- OHM sued Shmina and Platinum for indemnity and for failing to purchase sufficient project insurance; OHM moved for summary disposition to enforce indemnity provisions in Shmina’s/Platinum’s contracts with Dexter.
- The trial court sua sponte applied MCL 691.991(2) (2013 indemnity-limiting amendment), denied OHM’s motion, then granted Shmina’s/Platinum’s subsequent motions, concluding the statute voided the indemnity clauses; parties then stipulated to dismiss.
- The Court of Appeals held MCL 691.991(2) applies prospectively only, vacated the grant of summary disposition for Shmina and Platinum, affirmed denial of relief to OHM on other grounds, and remanded to reinstate OHM’s indemnity claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 691.991(2) applies retroactively to contracts executed before its 3/1/2013 effective date | OHM: statute does not apply to private-party contracts and allows proportionate indemnity; alternatively, statute governs conduct after effective date | Shmina/Platinum: statute voids indemnity provisions and applies to claims arising after enactment | Court: statute is presumptively prospective; no clear legislative intent for retroactivity; trial court erred to apply it retroactively — vacated summary disposition for Shmina/Platinum |
| Whether indemnity clauses in incorporated contract documents are ambiguous | OHM: provisions are complementary, not conflicting | Shmina: supplemental conditions broaden indemnity beyond general conditions; ambiguous language should be construed against drafter | Court: provisions irreconcilably conflict (general conditions limit indemnity; supplemental insurance spec expands it) — ambiguity exists; denial of OHM summary disposition affirmed; ambiguity creates factual issue requiring remand |
| Whether contra proferentem should be applied now to resolve ambiguity | OHM: not applicable; extrinsic evidence resolves meaning | Shmina: ambiguous terms construed against OHM as drafter | Court: contra proferentem not applied at appellate stage; meaning of ambiguous contract is a question for factfinder after extrinsic evidence — leave for trial court/jury |
| Whether OHM preserved claim that Shmina/Platinum failed to obtain required insurance | OHM: trial court should have ruled on insurance claim | Shmina/Platinum: stipulated dismissal resolved outstanding claims | Court: OHM waived the issue by stipulating to dismiss; cannot appeal errors it created |
Key Cases Cited
- Miller-Davis Co v Ahrens Constr, 495 Mich. 161 (Michigan 2014) (nature and enforceability of indemnity obligations)
- Frank W Lynch & Co v Flex Technologies, 463 Mich. 578 (Michigan 2001) (presumption against retroactive application; signals of prospective intent)
- United States Fidelity & Guaranty Co v Michigan Catastrophic Claims Ass'n, 484 Mich. 1 (Michigan 2009) (statutory interpretation and legislative intent)
- Klapp v United Ins Group Agency, 468 Mich. 459 (Michigan 2003) (contract ambiguity is for factfinder; contra proferentem explained)
- Maiden v Rozwood, 461 Mich. 109 (Michigan 1999) (summary disposition standard)
- Quality Prods & Concepts Co v Nagel Precision, 469 Mich. 362 (Michigan 2003) (legal effect and interpretation of contract clauses)