Miller-Davis Co. v. Ahrens Construction, Inc.
495 Mich. 161
| Mich. | 2014Background
- Miller-Davis, the general contractor, sued Ahrens (subcontractor) and Merchants Bonding for breach of contract over a defective natatorium roof installation, with the subcontract incorporating plans, specifications, and an indemnity clause.
- Ahrens installed the roof and, after a moisture problem (NMP) arose, the project architects found deficiencies; corrective work was undertaken and final payment occurred in February 2000.
- In 2003, architects identified substantial nonconforming installation; Miller-Davis and YMCA entered into an Agreement for Corrective Work to address the issues, resolving claims without litigation.
- Trial court awarded Miller-Davis damages for the corrective work; the Court of Appeals reversed in part, holding that § 600.5839(1) barred Miller-Davis’s contract claims and that the indemnity issue remained unresolved.
- Supreme Court granted leave, held that indemnity clauses apply to the corrective-work breach, that Sherman Lake YMCA made a claim triggering indemnity, and that the indemnity claim accrues separately from the underlying breach; case remanded for judgment and potential attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do indemnity clauses apply here? | Miller-Davis argues indemnity covers all damages from Ahrens’s breach. | Ahrens contends indemnity should not apply absent a qualifying claim. | Indemnity clauses apply to Miller-Davis’s corrective-work damages. |
| Is causation required to prove indemnity damages? | Damages arise from Ahrens’s breach of the indemnity, not necessarily the NMP causation. | Damages must be tied to the NMP causation. | Damages are caused by Ahrens’s breach of indemnity; NMP causation is not required for indemnity damages. |
| Does the six-year statute of limitations bar the indemnity claim? | Indemnity breach occurred within six years of accrual. | The accrual date should align with the underlying breach. | Not barred; indemnity accrual is distinct and occurred after the underlying breach. |
| When does accrual for the indemnity claim occur? | Accrual could be tied to the initial breach. | Accrual should occur when the indemnified loss is sustained or when indemnity is triggered. | Accrual for indemnity occurs after Ahrens breaches the indemnity obligation, separate from the initial breach. |
| Should the case be remanded for judgment and attorney’s fees? | If indemnity is viable, Miller-Davis seeks fees under the indemnity clause. | Fees should be determined after resolving indemnity viability. | Remand for judgment in Miller-Davis’s favor and for determination of attorney’s fees. |
Key Cases Cited
- Miller-Davis Co v Ahrens Constr, Inc (On Remand), 296 Mich App 56 (2012) (indemnity accrual and damages analysis on remand)
- Miller-Davis Co v Ahrens Constr, Inc, 489 Mich 355 (2011) (forecloses a single accrual date for indemnity under MCL 600.5807(8) roofing dispute)
- Grand Trunk W R, Inc v Auto Warehousing Co, 262 Mich App 345 (2004) (contract-law principles; accrual and damages analysis)
- Ins Co of North America v Southeastern Electric Co Inc, 405 Mich 554 (1979) (indemnity and damages causation principles in Michigan)
- Employers Mut Cas Co v Petroleum Equip, Inc, 190 Mich App 57 (1991) (causation and indemnity contract principles)
- Smith Trust, 480 Mich 19 (2008) (contract interpretation and accrual concepts in Michigan)