MILLER-DAVIS COMPANY v AHRENS CONSTRUCTION, INC
Docket No. 139666
Supreme Court of Michigan
July 11, 2011
489 Mich 355
Argued March 8, 2011 (Calendar No. 3).
In a unanimous opinion by Justice MARILYN KELLY, the Supreme Court held:
MCL 600.5805 is the general tort statute of limitations.MCL 600.5805(14) states that the period of limitations for an action against a licensed architect, professional engineer, land surveyor, or contractor is that provided inMCL 600.5839 . In contrast,MCL 600.5807 , the statute that sets forth the limitations periods for suits seeking damages for breach of contract, does not refer toMCL 600.5839 . Moreover,MCL 600.5839(1) itself refers to actions for injuries to property or for wrongful injury or death, which is language describing tort actions. Thus,MCL 600.5805 andMCL 600.5839 apply to tort actions, andMCL 600.5807 applies to contract actions.- The nature and origin of a cause of action determine which limitations period applies.
MCL 600.5839(1) does not apply if the nature and origin of a cause of action against a licensed architect, professional engineer, or contractor is the breach of a contract. - Mich Millers Mut Ins Co v West Detroit Bldg Co, 196 Mich App 367 (1992), and Travelers Ins Co v Guardian Alarm Co of Mich, 231 Mich App 473 (1998), erroneously expanded the scope of
MCL 600.5839(1) to contract actions and must be overruled as inconsistent with the statute. - Miller-Davis‘s complaint alleged that Ahrens breached the contract by installing a roof that did not conform to agreed-upon specifications and also sought indemnity for the corrective work that Miller-Davis had to perform. Neither claim fits within the language of
MCL 600.5839(1) . Miller-Davis relied not on a duty implied in law, but solely on the terms of the contract, and the statute of limitations for contract actions,MCL 600.5807(8) , applied. The Court of Appeals erred by concluding that Miller-Davis‘s contract action was barred byMCL 600.5839(1) .
Reversed and remanded to the Court of Appeals for further proceedings.
LIMITATION OF ACTIONS — ARCHITECTS, PROFESSIONAL ENGINEERS, AND CONTRACTORS — BREACHES OF CONTRACT.
The statute of limitations and repose applicable in actions to recover damages for injuries to persons or property brought against licensed architects, professional engineers, and contractors does not apply to actions for breach of contract; an action for breach of contract against a licensed architect, professional engineer, or
Gemrich Law PLC (by Alfred J. Gemrich) and Scott Graham PLLC (by Scott Graham) for Miller-Davis Company.
Field & Field, P.C. (by Samuel T. Field), for Ahrens Construction, Inc.
Amici Curiae:
Clark Hill PLC (by Kevin S. Hendrick, Thomas M. Keranen, and Brian P. Lick) for the Associated General Contractors of Michigan.
Thrun Law Firm, P.C. (by Christopher J. Iamarino and Kirk C. Herald), for the Michigan Association of School Boards and Michigan School Business Officials.
MARILYN KELLY, J. This case involves a dispute over a construction contract. At issue is whether the limitations period in
Plaintiff alleges that the general statute of limitations for breach of contract actions,
We agree with plaintiff that
Accordingly, we reverse the judgment of the Court of Appeals. Because there is a question about the date plaintiff‘s action accrued, we remand the case to the Court of Appeals to resolve this issue, as well as other issues not yet considered.
THE FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Plaintiff, Miller-Davis Company, was the general contractor hired to improve and construct various buildings for the YMCA Camping and Retreat Services of Battle Creek and Kalamazoo. The project included construction of a natatorium. Plaintiff contracted with defendant Ahrens Construction, Inc., to install the natatorium‘s roof.
A temporary certificate of occupancy was issued for the entire project on June 11, 1999. The roof was
The temperature and air pressure in the pool were adjusted. Also, defendant performed corrective work on the roof. But the NMP continued into 2003, when plaintiff‘s architect recommended removing the roof as the only means to determine whether defendant‘s improper installation caused the NMP. The architect, who eventually testified as plaintiff‘s expert witness, opined that rips in and missing sections of the vapor barrier and improper installation of the insulation had caused the NMP.
Defendant insisted that the NMP was the result of design defects rather than poor workmanship. After all defendant‘s efforts to correct the problem were unsuccessful, plaintiff declared a default. Plaintiff eventually performed the corrective work itself in the fall of 2003.
In May 2005, plaintiff sued defendant, alleging that it had breached its contract by installing a roof that did not conform to the plan‘s specifications. Plaintiff sought indemnification for the necessary corrective work. Its complaint did not allege that defendant‘s work created a defective and unsafe condition, that defendant caused the NMP, or that plaintiff‘s damages arose from a defective and unsafe condition. Nor did it refer to defendant‘s express one-year guarantee or allege a breach of warranty.
Defendant sought summary disposition under MCR 2.116(C)(7), claiming that plaintiff had filed suit after expiration of the six-year period specified in the statute of repose contained in
The case proceeded to a bench trial. Plaintiff‘s theory was that defendant had constructed a defective roof and that the nature of the defect became apparent only when the roof was removed. It asserted that the NMP did not reappear after the roof was reconstructed. Defendant‘s defense was that design defects caused the NMP. For example, defendant claimed that the NMP arose because the roof‘s design allowed the vapor barrier to come into contact with cold outside air. Defendant‘s expert testified that once the defectively designed roof had been removed, the NMP was corrected because trapped moisture was allowed to escape. Alternatively, defendant argued that the alleged defects in the roof were caused when plaintiff removed it. In closing argument, defendant again raised the statute of repose.
The trial court ruled in favor of plaintiff. It determined that defendant was in material breach of its contract for having performed nonconforming and defective work on the roof, which required corrective measures. This resulted in damages of $348,851.50. On the indemnity claim, the court ruled in favor of defendant because no suits had been filed against plaintiff. Hence, no indemnification was required. The court did not address the statute of repose issue.
Defendant appealed as of right, raising the statute of repose, among other defenses. Plaintiff cross-appealed the denial of its indemnity claim. The Court of Appeals agreed with defendant on the statute-of-repose issue,
We granted plaintiff‘s application for leave to appeal.6
THE STATUTES INVOLVED
The issue in this case is whether the statute of repose contained in
(1) A person shall not bring or maintain an action to recover damages for injuries to persons or property unless, after the claim first accrued to the plaintiff or someone through whom the plaintiff claims, the action is commenced within the periods of time prescribed by this section.
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(10) The period of limitations is 3 years after the time of the death or injury for all other actions to recover damages for the death of a person, or for injury to a person or property.
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(14) The period of limitations for an action against a state licensed architect, professional engineer, land surveyor, or contractor based on an improvement to real property shall be as provided in [
MCL 600.5839 ].
(1) No person may maintain any action to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained as a result of such injury, against any state licensed architect or professional engineer performing or furnishing the design or supervision of construction of the improvement, or against any contractor making the improvement, more than 6 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement, or 1 year after the defect is discovered or should have been discovered, provided that the defect constitutes the proximate cause of the injury or damage for which the action is brought and is the result of gross negligence on the part of the contractor or licensed architect or professional engineer. However, no such action shall be maintained more than 10 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement.
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(4) As used in this section, “contractor” means an individual, corporation, partnership, or other business entity which makes an improvement to real property.
Plaintiff asserts that
In order to determine the scope of
Section 5805(1) requires that all actions for injury to persons or property be brought within the time periods set forth in the section. There follow 14 subsections, 12 of which clearly refer to various types of tort suits.11 Aside from subsection (15), which defines “dating relationship,” the only subsection that might be interpreted as not limited to torts is subsection (14), pertaining to architects, engineers, land surveyors, and contractors.
Subsection (14), through reference to
In contrast to
The Michigan Supreme Court‘s decision 34 years ago in Huhtala v Travelers Ins Co14 reinforces this conclusion. Huhtala addressed how to determine whether a claim is subject to
Under Huhtala, if an action is founded on a “consensual” duty or obligation or the breach of an “express promise,” the action is not for personal injury. It is an
In distinguishing between tort actions and contract actions in the context of §§ 5805 and 5807, Huhtala concluded that any “action to recover damages for injury to persons or property” is a tort action.17 However, it did not specifically address the language of
The United States Court of Appeals for the Sixth Circuit did apply the reasoning of Huhtala to
In that case, a hospital contracted with a builder and an architect for the construction of a building addition. The hospital discovered a defect in the work and sued the builder and architect for breach of contract. The federal district court granted the defendants’ motion for summary disposition. It found that
The Sixth Circuit reversed that decision. It surveyed Michigan caselaw and found that the distinction outlined in Huhtala supplied the proper analysis for deter-
In arriving at this conclusion, it noted that the nature and origin of the claim was “that the defendants failed to perform the express promise to construct the improvement in conformity with the governing contract documents.”23 The court also noted that the claim did not involve a duty implied by law, but was dependent on the existence of a contract and contract principles.24 We find the rationale in Garden City Osteopathic Hosp persuasive.
In this case, the Court of Appeals relied on Michigan Millers Mut Ins Co v West Detroit Bldg Co25 for the proposition that
Without supporting analysis, the Court of Appeals found it “clear” that the limitations period in
Rather, the Court concluded that
The Michigan Millers Court turned to the statute‘s legislative history in an attempt to substantiate its holding. However, the history on which it relied does not support expanding the scope of
By expanding the scope of
In the 1980 case of O‘Brien v Hazelet & Erdal,34 this Court explained the Legislature‘s intent in drafting
[This statute] was enacted in 1967 in response to then recent developments in the law of torts. The waning of the privity doctrine as a defense against suits by injured third parties and other changes in the law increased the likelihood that persons taking part in the design and construction of improvements to real property might be forced to defend against claims arising out of alleged defects in such improvements, perhaps many years after construction of
the improvement was completed. The Legislature chose to limit the liability of architects and engineers in order to relieve them of the potential burden of defending claims brought long after completion of the improvement and thereby limit the impact of recent changes in the law upon the availability or cost of the services provided.
In 1986, in City of Marysville v Pate, Hirn & Bogue, Inc,35 the Court of Appeals again commented on the Legislature‘s intent in enacting
[T]his statute was enacted primarily to limit the engineers’ and architects’ exposure to litigation by injured third persons as evidenced by the legislation‘s timing and relation to case law. However, the Legislature never intended this statute to fix the period of limitation in which an owner of an improvement to real property must bring an action against the architect or engineer for professional malpractice committed in the planning or building of the improvement which results in deficiencies to the improvement itself. Unlike the language of other states’ statutes, the words selected by Michigan‘s Legislature make it clear that the statute simply applies when there is an injury “... arising out of the defect and unsafe condition ....” If there is no causal connection between the defective condition and the injury, the provision does not apply. Similarly, where the suit is for deficiencies in the improvement itself, the injury is the defective condition, hence, the injury does not “arise out of” the defective condi-
tion, but, rather, it is the condition. Therefore, claims for deficiencies in the improvement itself do not come within the scope of this special statute of limitation.
We agree that the language of the provision strongly supports the conclusion that
In this case, the complaint alleged two counts against the construction company: (1) breach of contract for installing a roof that did not conform to plan specifications and (2) indemnity for the corrective work plaintiff had to perform. Neither claim fits within the language of
There was no allegation that the roof deck system caused any “injury to property” or “bodily injury or wrongful death.”37 Nor was there any allegation of a “defective and unsafe condition.”38 Rather, plaintiff claimed that, because defendant failed to build the roof to the agreed-upon specifications, plaintiff was forced to expend money repairing it. Thus, the damages involved in this case were not to plaintiff‘s person or property, but rather to its financial expectations.
A claim for damages for deficiencies in an improvement is not an “action to recover damages for any injury to property ... or for bodily injury or wrongful death ....”39 It is a suit for breach of con-
CONCLUSION
We hold that
YOUNG, C.J., and CAVANAGH, MARKMAN, HATHAWAY, MARY BETH KELLY, and ZAHRA, JJ., concurred with MARILYN KELLY, J.