Miller-Davis Co. v. Ahrens Construction, Inc.Miller-Davis Co. v. Ahrens Construction, Inc.
In this case, defendant
We review de novo as a question of law whether a claim is barred by a statute of limitations. Scherer v Hellstrom,
We are to apply
No person may bring or maintain any action to recover damages or sums due for breach of contract, or to enforce the specific performance of any contract unless, after the claim first accrued to himself or to someone through whom he claims, he commences the action within the periods of time prescribed by this section.
(8) The period of limitations is 6 years for all other actions to recover damages or sums due for breach of contract. [Emphasis added.]
Thus,
With respect to accrual of a claim,
A contract claim accrues when the wrong occurs, i.e., when the promise is breached, regardless of when damage results.
Plaintiff was the general contractor on a construction project that included building a natatorium for a YMCA recreational complex, and defendant was a subcontractor with the responsibility of installing a proprietary wooden roofing system over which other roofing materials would be installed by other subcontractors. MillerDauis,
By the end of February 1999, defendant completed all its tasks regarding constructing the roof system, including installing all the wood parts, the vapor barrier, the T’s and sub-T’s [superstructures], the insulation, all of which were covered by [oriented strand board] nailed on top of two-by-four inch “sleepers” running perpendicular over the T’s to the top ridge of the roof.... Defendant certified to plaintiff that it had completed its work on the roof on April 26,1999, and plaintiff paid defendant for this work the next day.
. .. [I]t is undisputed, and the trial court so found, that defendant completed its work on its part of the natatorium’s roof by the end of February 1999. Thereafter, the evidence clearly establishes that another contractor completed the final phase of the roofs construction by attaching the roofing felt and the standing seam steel skin. Plaintiffs exhibit 9, the minutes of a work-progress meeting on February 18, 1999, indicatesthat over the prior two weeks Ahrens completed its roof work at the recreational building, and that work for the next two weeks contemplated subcontractor Architectural Glass & Metals’ completing the metal roof at the recreation building. [Miller-Davis, 285 Mich App at 296-297, 309 .]
We have not been presented any reason to revisit this analysis of when defendant completed the work it contracted with plaintiff to perform. Because defendant completed its work on the roof by the end of February 1999, the breach that plaintiff alleged — that defendant had failed to comply with the terms and requirements of the plans and specifications — must have occurred by that date. Further, because plaintiff did not file its complaint until May 12, 2005, more than six years after February 1999 and more than six years after plaintiff accepted the work through its payment at the end of April 1999, the statute of limitations barred those claims.
Plaintiff asserts in its supplemental brief on remand that defendant waived application of the statute of limitations by not briefing and arguing the proper statute,
Plaintiff also argues that its claim accrued on June 11, 1999, the date the construction project was certified as being substantially complete by the YMCA, the architect, and plaintiff. Alternatively, plaintiff asserts that the date the certificate of occupancy was issued, August 2, 1999, is the pertinent accrual date. For the reasons already discussed, we reject these alternative accrual dates as applicable to when the purported breach of contract — the wrong — occurred. We note that the date of substantial completion, June 11, 1999, fixed the beginning of the one-year guarantee period that defendant provided regarding its work. Although the natatorium moisture problem was apparent almost immediately after occupancy, plaintiff made no claim against defendant during the guarantee period.
Plaintiff also asserts that defendant breached its contract in 2003 when defendant refused plaintiffs demand for corrective work that required deconstructing the natatorium’s roof and reconstructing it according to a modified design that included application of a waterproofing element not in the original plans and specifications. Plaintiff asserts that defendant’s refusal to perform the corrective work was a breach
The primary goal of interpretation of a contract is to honor the intent of the parties. Tenneco,
The charge-back clause of the parties’ eight-page purchase-order contract provides:
Should you, the Subcontractor, at any time refuse to start said work promptly, neglect to supply a sufficient number of properly skilled workmen or sufficient materials of the property quality, or fail in any respect to prosecute the work with promptness and diligence, or if you should fail in performance of any of the agreements herein contained, MILLER-DAVIS COMPANY without prejudice to any other available remedy may, after twenty-four (24) hours written notice to you, provide any such labor or materials and deduct the cost thereof from any money then due or thereafter to become due you under this Subcontract; but if such expense and damage shall exceed such unpaid balance, you shall pay the difference to MILLER-DAVIS COMPANY.
We conclude that a fair reading of the charge-back clause in context does not admit of an interpretation that plaintiff may at any time it chooses, after plaintiff has accepted defendant’s contract work and the project itself has been substantially completed, require defendant to correct work plaintiff believes is nonconforming. Rather, the paragraphs above and below the charge-back clause on the same page all relate to management and payment for defendant’s work while the construction project is ongoing. The three paragraphs above the clause provide that “[t]ime of completion is of the essence of this order,” that defendant must follow the direction of plaintiffs construction manager, and that defendant must complete its work in a manner that does not interfere with or delay the work of other subcontractors. Below the charge-back clause, a paragraph requires defendant to comply with applicable safety laws and regulations. The final paragraph on the same page provides for payment to defendant, which “will be made each month equal to 90% of the value of the work satisfactorily completed . . . .” Moreover, the internal wording of the charge-back clause makes sense only if applied to the period when construction is ongoing, the subcontracted work is not
Our reading of the charge-back clause is also consistent with defendant’s having provided a one-year guarantee of its work from the date of substantial completion of the project. In contrast, plaintiffs reading of the charge-back clause would render superfluous defendant’s one-year guarantee. Thus, we conclude, on the basis of reading the charge-back clause as a whole and its placement in the contract, that the clause does not give plaintiff the right to demand corrective work after the project has been substantially completed and defendant has been paid for its work. Consequently, defendant did not breach the charge-back clause in 2003 when it refused plaintiffs demand that it perform corrective work on the natatorium roof. Plaintiff could still have timely brought its breach of contract claim on the theory of nonconforming work, but its declaration of defendant’s default in 2003 for failing to perform corrective work did not reset the accrual date of that claim under
We farther note that our reading of the charge-back clause is consistent with our prior analysis of that provision. In discussing whether “acceptance” of defendant’s work occurred within the meaning of
Moreover, even if the owner of the improvement must trigger “acceptance,” plaintiff as the general contractor-construction manager for the project was the authorized representative of the owner for purposes of supervising construction, deeming whether subcontractor work was acceptable under the subcontract’s “charge-back” provision, and having the ability to withhold payment for unacceptable work. Here, the undisputed facts, and as found by the trial court, establish that defendant “completed the natatorium roof by February 18, 1999[,] ... submitted its final request for pay on April 26, 1999, and Miller-Davis paid Ahrens the very next day.” Although plaintiff asserts it never “accepted” defendant’s work on the roof, plaintiffs own actions in accepting defendant’s certification that the roof work had been completed, and then paying for that work, speaks louder than its litigation denials. In sum, we conclude that the facts establish that by the end of April 1999 plaintiffs actions constituted “acceptance of the improvement” defendant made to real property triggering the running of the six-year limitations period ofMCL 600.5839(1) . [Miller Davis Co,285 Mich App at 311-312 (alterations in original).]
As discussed already, these dates also fixed the accrual date for plaintiffs breach of contract claim regarding alleged nonconforming work under the applicable statute of limitations,
The last contract claim that plaintiff asserted in its May 12, 2005, complaint is that defendant breached an indemnity clause by not reimbursing plaintiff for the costs associated with the 2003 corrective work, lost business profits, and its attorney fees for this action. After a bench trial, the trial court ruled that plaintiff had no cause of action for contractual indemnity because “no claims, suits, actions, recoveries, or demands were ever made, brought or recovered against” plaintiff within the meaning of the indemnity clause in plaintiffs contract with defendant. This
Regarding the statute of limitations on a promise to indemnify, “the period of limitations runs from ‘when the indemnitee sustained the loss,’ or ‘when the promisor fails to perform under the contract.’ ” Tenneco,
The indemnity clause of the parties’ contract provides, in pertinent part:
You as a Subcontractor/Supplier agree to ... indemnify Miller-Davis Company... from and against all claims, damages, losses, demands, liens, payments, suits, actions, recoveries, judgments and expenses including attorney’s fees, interest, sanctions, and court costs which are made, brought, or recovered against Miller-Davis Company, by reasons of or resulting from, but not limited to, any injury, damage, loss, or occurrence arising out of or resulting from the performance or execution of this Purchase Order and caused, in whole or in part, by any act, omission, fault, negligence, or breach of the conditions of this Purchase Order by [defendant], its agents, employees, and subcontractors regardless of whether or not caused in whole or in part by any act, omission, fault, breach of contract, or negligence of Miller-Davis Company. The Subcontractor/Supplier shall not, however, be obligated to indemnify Miller-Davis Company for any damage or injuries caused by or resulting from the sole negligence of Miller-Davis Company.
You as Subcontractor/Supplier agree to defend, hold harmless and indemnify Miller-Davis Company, the Owner, the Architect and other parties for all liabilities, either in tort or contract, in the same manner and to the same extent that Miller-Davis Company is required to defend, hold harmless and indemnify the Owner, Architect or other parties pursuant to Miller-Davis Company’s Contract with the Owner, unless the liability arises solely as a result of the negligence of Miller-Davis Company or its employees and agents. [Emphasis added.]
Plaintiff argues that the use of the word “all” in the indemnification clause means the clause is intended to provide the broadest possible coverage. Further, plaintiff argues, the indemnification clause requires that defendant indemnify plaintiff for “all. . . damages, losses .. . and expenses including attorney’s fees” caused by defendant’s breach of contract, i.e., the failure to comply with the contract’s plans and specifications. Plaintiff also asserts that the trial court clearly erred by finding that plaintiff was not under “demand” when it performed the corrective work because the indemnification clause is not conditioned on the filing of a formal claim or suit against plaintiff.
We conclude that the trial court correctly ruled that no one had brought a claim or demand against plaintiff within the meaning of the indemnification clause. Thus, because no claims or demands were
We read the indemnification clause as those clauses have traditionally been applied: to apportion ultimate liability among the contracting parties for liability to third parties. See Baker Contractor, Inc v Chris Nelsen & Son, Inc,
Additionally, we note that even if the owner’s “demand” that plaintiff correct the natatorium moisture problem was within the meaning of the indemnification clause, we would still affirm the trial court on this issue on alternative grounds. To the extent the owners demanded that plaintiff correct the natatorium moisture problem, the demand arose out of the owner’s contract with plaintiff, not plaintiffs subcontract with defendant. “When a trial court reaches the right result for the wrong reason, the ruling will not be disturbed.” Burise v City of Pontiac,
Moreover, plaintiff failed to present sufficient proof at trial that the moisture problem was caused by defendant’s failure to follow plans and specifications or by faulty workmanship. There is no evidence in the record that supports a conclusion that defendant’s alleged defective workmanship caused the moisture problem other than an inference drawn from the fact that after the corrective work it was no longer present. The logical force of this inference, however, is totally lacking because the corrective work contained three important elements that were not present in the original plans: (1) a waterproofing agent was added, (2) expanding foam insulation sealed any gaps between the structural support and the Styrofoam block, and (3) butyl caulk sealant was applied to the top of all T superstructures.
A party claiming a breach of contract must establish by a preponderance of the evidence (1) that there was a contract, (2) that the other party breached the contract and, (3) that the party asserting breach of contract suffered damages as a result of the breach. Stevenson v Brotherhoods Mut Benefit,
The specific weakness in plaintiffs case is the lack of evidence to causally link defendant’s alleged nonconforming workmanship to the moisture problem,
This Court in Karbel,
“ ‘[A] conjecture is simply an explanation consistent with known facts or conditions, but not deducible from them as a reasonable inference. There may be 2 or more plausible explanations as to how an event happened or what produced it; yet, if the evidence is without selective application to any 1 of them, they remain conjectures only. On the other hand, if there is evidence which points to any 1 theoxy of causation, indicating a logical sequence of cause and effect, then there is a jxiridical basis for such a determination, notwithstanding the existence of other plausible theories with or without support in the evidence.’ ”
In Skinner,
“ ‘The plaintiff must introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a cause in fact of the result. A mere possibility of such causation is not enough; and when the matter remains one of pure speculation or conjecture, or the probabilities are at best evenly balanced, it becomes the duty of the court to direct a verdict for the defendant.’ ” [Id. at 165, quoting Mulholland v DEC Int’l Corp,432 Mich 395 , 416, n 18;443 NW2d 340 (1989), quoting Prosser & Keeton, Torts (5th ed), § 41, p 269 (emphasis added).]
Although these cases considered when a plaintiff had presented sufficient evidence to allow submission of the case to a jury, the same principles apply equally to cases tried before a judge without a jury. See Mich Aero Club v Shelley,
The only evidence in the record that supports finding that defendant’s allegedly defective workmanship caused the natatorium moisture problem is an inference drawn from the fact that after the corrective work the problem was not present. The logical force of this inference is totally lacking because the corrective work contained three important elements, as noted already, that were not present in the original plans and specifications. Without other evidence, it is equally likely that the elements added to the reconstructed roof, as opposed to correcting the alleged defects, prevented the condensation problem.
Finally, plaintiff asserts for the first time in its supplemental brief on remand that certain sections in form contract documents of the American Institute of Architects (AIA), “General Conditions of the Contract for Construction,” are pertinent to its contract claims against defendant. Although the documents were admitted at trial, the record is not clear whether they were part of the contract between plaintiff and defendant. Nor does it appear that any argument was presented to the trial court concerning their application to this case. Finally, plaintiffs complaint did not refer to the documents, nor did it have attached to it the pertinent parts on which plaintiff now wishes to rely. See MCR 2.113(F). Under these circumstances, plaintiff has waived any claims regarding the AIA documents.
We reverse in part, affirm in part, and remand for entry of judgment for defendant. We do not retain jurisdiction.
Notes
“Defendant,” as used in this opinion, refers only to Ahrens Construction, Inc. Merchants Bonding Company, defendant’s surety, settled with plaintiff and is not a party to this appeal.
Plaintiff does not cite this provision in its complaint, but it is the only one that corresponds to plaintiffs theory of the case and the allegation in its complaint that defendant failed “to install the Roof System correctly and in compliance with the plans and specifications . . ..”
Plaintiff sent letters to defendant dated January 28, 2000, and February 8, 2000, with notice of the moisture problem. The first letter noted that while others suspected defendant as a possible cause of the problem, plaintiffs vice president of construction management stated in the letter that plaintiff did “not agree with this assessment.”