Krist Oil Company v. Semco Energy Inc
367243
Mich. Ct. App.Mar 20, 2025Background
- In 2008, Portage Lake Water & Sewer Authority contracted MJO Contracting, Inc. (MJO) to install a sewer line between Houghton and Hancock.
- On March 13, 2022, an explosion occurred in Houghton, allegedly due to a gas line leak caused by MJO’s negligence during the 2008 sewer line installation.
- Plaintiffs (including Krist Oil Company and others) sued MJO and SEMCO Energy exactly one year later, asserting claims of negligence.
- MJO moved for summary disposition, invoking MCL 600.5839(1)—the construction industry statute of repose—arguing the claims were time-barred.
- The trial court denied MJO’s motion, holding the statute did not apply as plaintiffs’ injuries did not stem from the sewer line itself.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Statute of Repose (MCL 600.5839(1)) | Injury resulted from gas line, distinct from the sewer line (the improvement); statute of repose does not apply. | Injury arose from MJO's work (including construction conduct), making statute applicable; time-barred. | Statute of repose applies to both the improvement and the work; claim is time-barred. |
| Whether "Improvement" Includes Construction Conduct | Only the improvement itself covered; not harm from collateral work. | Includes both finished product and construction process. | Construction process is covered under "improvement." |
| Effect of Lack of Notice or Discovery on repose period | No notice of defect, so claim shouldn’t be barred as "stale." | Statute of repose runs regardless of discovery or notice. | No notice exception in the statute; repose period is absolute. |
| Fraudulent Concealment and Tolling | MJO concealed negligence, so statutory period should be tolled. | Tolling statute (MCL 600.5855) does not apply to statutes of repose. | Tolling for fraudulent concealment is inapplicable to statutes of repose. |
Key Cases Cited
- Abbott v. John E. Green Co., 233 Mich. App. 194 (statute of repose covers claims based on both completed improvements and construction practices)
- Citizens Ins. Co. v. Scholz, 268 Mich. App. 659 (excavation work integral to an improvement qualifies for the statute of repose)
- Pendzsu v. Beazer East, Inc., 219 Mich. App. 405 (defines "improvement" to real property for purposes of the statute)