Michigan Supreme Court
Lansing, Michigan
Opinion
Chief Justice Justices
Maura D. Corrigan Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
FILED JULY 14, 2004
SANDRA GAIL FULTZ and OTTO FULTZ,
Plaintiffs-Appellees,
v No. 121613
UNION-COMMERCE ASSOCIATES,
COMM-CO EQUITIES, NAMER JONNA,
ARKAN JONNA, LAITH JONNA, MOHSIN
KOUZA, and GLADYS KOUZA,
Defendants,
and
CREATIVE MAINTENANCE, LTD.,
Defendant-Appellant.
_______________________________
BEFORE THE ENTIRE BENCH
CORRIGAN, C.J.
This case arises from an injury that plaintiff
Sandra Fultz sustained when she slipped and fell on an
icy parking lot owned by defendant Comm-Co Equities
(Comm-Co). We reverse the Court of Appeals decision
holding a snow removal contractor, defendant Creative
Maintenance Limited (CML), responsible for plaintiff’s
injury on the basis of its alleged failure to plow or
salt the parking lot. The injured plaintiff has no
cause of action against CML because it breached no
duty owed to plaintiff. The injured plaintiff’s
husband filed a loss of consortium claim. Because
this claim is derivative of her cause of action, this
claim necessarily fails as well. Plaintiff's remedy
lies solely against the premises owner. The threshold
question for negligence claims brought against a
contractor on the basis of a maintenance contract
between a premises owner and that contractor is
whether the contractor breached a duty separate and
distinct from those assumed under the contract.
Because the contractor in this case, CML, owed no duty
to plaintiff, her claim fails. The Court of Appeals
thus erred in affirming the jury verdict for
plaintiff. Accordingly, we reverse the judgment of
the Court of Appeals.
I. FACTS AND PROCEDURAL HISTORY
Plaintiff fell and injured her ankle while
walking across defendant Comm-Co’s snow- and ice
covered parking lot. Defendant CML had previously
entered an oral contract with defendant Comm-Co to
provide snow and salt services for the lot. At the
time plaintiff fell, CML had not plowed the lot in
2
approximately fourteen hours and had not salted the
parking lot.
Plaintiff sued Comm-Co and CML for negligence.
The trial court entered a default judgment against
defendant Comm-Co, which is not a party to this
appeal. The jury found no breach of the oral contract
between defendants CML and Comm-Co, but awarded
plaintiff compensatory damages after finding that
defendant CML had been negligent by failing to perform
under the contract and that CML's negligence was the
proximate cause of plaintiff’s injuries.
The Court of Appeals affirmed the jury's verdict.
It held that Osman v Summer Green Lawn Care, Inc, 209
Mich App 703; 532 NW2d 186 (1995), compelled the
conclusion that defendant CML owed a common-law duty
to provide the contracted snow removal service in a
reasonable manner. The Court of Appeals further
concluded that CML breached this duty by failing to
perform its contractual obligation.
We granted defendant CML's application for leave
to appeal limited to two issues: (1) whether
plaintiff can establish a duty owed her arising from a
contract to which she was not a party and (2) whether
3
a landowner's defenses are available to a contractor
acting for the landowner. 468 Mich 882 (2003).
We need not reach the second question regarding
defenses because we hold, as a matter of law, that
defendant owed no contractual or common-law duty to
plaintiff to plow or salt the parking lot.
II. STANDARD OF REVIEW
Whether defendant CML owed a duty to plaintiff is
a question of law. We review de novo questions of
law. Byker v Mannes, 465 Mich 637, 643; 641 NW2d 210
(2002).
III. DISCUSSION AND ANALYSIS
It is well-established that a prima facie case of
negligence requires a plaintiff to prove four
elements: duty, breach of that duty, causation, and
damages. Case v Consumers Power Co, 463 Mich 1, 6; 615
NW2d 17 (2000); Riddle v McLouth Steel Products Corp,
440 Mich 85, 96 n 10; 485 NW2d 676 (1992). The
threshold question in a negligence action is whether
the defendant owed a duty to the plaintiff. "It is
axiomatic that there can be no tort liability unless
defendants owed a duty to plaintiff." Beaty v
Hertzberg & Golden, PC, 456 Mich 247, 262, 571 NW2d
716 (1997).
4
Plaintiff does not claim that any statute or
ordinance imposes a duty on CML to maintain the
parking lot where she was injured, nor does she claim
that she was a third-party beneficiary of the contract
between defendant CML and the premises owner. She
contends instead that defendant CML, by contracting to
plow and salt the parking lot, owed a common-law duty
to plaintiff to exercise reasonable care in performing
its contractual duties. Plaintiff further alleges
that defendant’s failure to plow or salt the parking
lot breached that duty under the common-law tort
principles expressed in Restatement Torts, 2d, § 324A:
One who undertakes, gratuitously or for
consideration, to render services to another
which he should recognize as necessary for
the protection of a third person or his
things, is subject to liability to the third
person for physical harm resulting from his
failure to exercise reasonable care to
protect [sic, perform][1] his undertaking, if
* * *
(b) he has undertaken to perform a
duty owed by the other to the third person.
. . .
Michigan courts have accepted the Restatement of
Torts, 2d, § 324A, as an accurate statement of
Michigan law and used the principles stated above in
1
This is evidently a typographical error.
5
analyzing plaintiffs’ claims in the past. See, e.g.,
Smith v Allendale, 410 Mich 685; 303 NW2d 702 (1981);,
Callesen v Grand Trunk W R Co, 175 Mich App 252; 437
NW2d 372 (1989), Cleveland Cunningham v Continental
Cas Co, 139 Mich App 238; 361 NW2d 780 (1984),
Staffney v Michigan Millers Mut Ins Co, 140 Mich App
85; 362 NW2d 897 (1985), Schanz v New Hampshire Ins
Co, 165 Mich App 395; 418 NW2d 478 (1988).
While these opinions have endorsed § 324A, they
must not be invoked uncritically or without regard to
limiting principles within our case law. As we stated
in Smith, supra at 713:
Unlike a statute which expresses a
legislative directive for the treatment of
future cases, the Restatement seeks
primarily to distill the teachings of
decided cases and is descriptive. . . . Even
where a particular Restatement section has
received specific judicial endorsement,
cases where that section is invoked must be
decided by reference to the policies and
precedents underlying the rule restated.
Thus, we must reconcile the principles expressed in §
324A with our case law that limits their breadth.
If one voluntarily undertakes to perform an act,
having no prior obligation to do so, a duty may arise
to perform the act in a nonnegligent manner. Home Ins
Co v Detroit Fire Extinguisher Co, Inc, 212 Mich App
522, 529; 538 NW2d 424 (1996); Osman, supra; Keeton,
6
Prosser & Keeton, Torts, § 56, pp 380-381 (5th ed,
1984).
We described this common-law duty in Clark v
Dalman, 379 Mich 251; 150 NW2d 755 (1967):
Actionable negligence presupposes the
existence of a legal relationship between
parties by which the injured party is owed a
duty by the other, and such duty must be
imposed by law. . . .
* * *
Such duty of care may be a specific
duty owing to the plaintiff by the
defendant, or it may be a general one owed
by the defendant to the public, of which the
plaintiff is a part. Moreover, while this
duty of care, as an essential element of
actionable negligence, arises by operation
of law, it may and frequently does arise out
of a contractual relationship, the theory
being that accompanying every contract is a
common-law duty to perform with ordinary
care the thing agreed to be done, and that a
negligent performance constitutes a tort as
well as a breach of contract. [Id. at 260
261.]
In defining the contours of this common-law duty,
our courts have drawn a distinction between
misfeasance (action) and nonfeasance (inaction) for
tort claims based on a defendant's contractual
obligations. We have held that a tort action will not
lie when based solely on the nonperformance of a
contractual duty. See Hart v Ludwig, 347 Mich 559; 79
NW2d 895 (1956); Chase v Clinton Co, 241 Mich 478; 217
7
NW 565 (1928); Churchill v Howe, 186 Mich 107; 152 NW
989 (1915).
This Court described the nonfeasance/misfeasance
dichotomy in Williams v Cunningham Drug Stores, Inc,
429 Mich 495, 498-499; 418 NW2d 381 (1988):
In determining standards of conduct in
the area of negligence, the courts have
made a distinction between misfeasance, or
active misconduct causing personal injury,
and nonfeasance, which is passive inaction
or the failure to actively protect others
from harm. The common law has been slow in
recognizing liability for nonfeasance
because the courts are reluctant to force
persons to help one another and because such
conduct does not create a new risk of harm
to a potential plaintiff. Thus, as a general
rule, there is no duty that obligates one
person to aid or protect another.
In Hart, supra at 564-565, this Court opined that
the misfeasance/nonfeasance distinction is often
largely semantic and somewhat artificial:
The division thus made, between
misfeasance, which may support an action
either in tort or on the contract, and the
nonfeasance of a contractual obligation,
giving rise only to an action on the
contract, is admittedly difficult to make in
borderland cases. There are, it is
recognized, cases in which an incident of
nonfeasance occurs in the course of an
undertaking assumed. Thus a surgeon fails
to sterilize his instruments, an engineer
fails to shut off steam, a builder fails to
fill in a ditch in a public way. These are
all, it is true, failures to act, each
disastrous detail, in itself, a "mere"
nonfeasance. But the significant similarity
relates not to the slippery distinction
8
between action and nonaction but to the
fundamental concept of "duty”; in each a
situation of peril has been created, with
respect to which a tort action would lie
without having recourse to the contract
itself. [Citations omitted.]
We believe the “slippery distinction” between
misfeasance and nonfeasance of a duty undertaken
obscures the proper initial inquiry: Whether a
particular defendant owes any duty at all to a
particular plaintiff.
This Court and the Court of Appeals have defined
a tort action stemming from misfeasance of a
contractual obligation as the “violation of a legal
duty separate and distinct from the contractual
obligation.” Rinaldo's Constr Corp v Michigan Bell Tel
Co, 454 Mich 65, 84; 559 NW2d 647 (1997); see, also,
e.g., Ferrett v Gen Motors Corp, 438 Mich 235, 245;
475 NW2d 243 (1991); Sherman v Sea Ray Boats, Inc, 251
Mich App 41, 48; 649 NW2d 783 (2002).
We believe that the “separate and distinct”
definition of misfeasance offers better guidance in
determining whether a negligence action based on a
contract and brought by a third party to that contract
may lie because it focuses on the threshold question
of duty in a negligence claim. As there can be no
breach of a nonexistent duty, the former
9
misfeasance/nonfeasance inquiry in a negligence case
is defective because it improperly focuses on whether
a duty was breached instead of whether a duty exists
at all.
Accordingly, the lower courts should analyze tort
actions based on a contract and brought by a plaintiff
who is not a party to that contract by using a
“separate and distinct” mode of analysis.
Specifically, the threshold question is whether the
defendant owed a duty to the plaintiff that is
separate and distinct from the defendant’s contractual
obligations. If no independent duty exists, no tort
action based on a contract will lie.2
Applying that analysis here, the Court of Appeals
erred in affirming the jury verdict and in holding
that "evidence suggested that [CML] engaged in
misfeasance distinct from any breach of contract."
2
This understanding is entirely consistent with
the hypothetical example set out in Justice KELLY’s
concurring opinion. The hypothetical plaintiff
described in the concurrence would have no need to
pursue a cause of action on a third-party beneficiary
theory because that plaintiff would have a direct
cause of action against the premises owner who owed a
duty to maintain a safe premises. The premises owner
could then seek indemnification from the contractor
for breach of a contractual duty. Thus, the
concurrence’s concern regarding this hypothetical
plaintiff is unwarranted.
10
Unpublished opinion per curiam, issued March 19, 2002
(Docket No. 224019), p 6. In truth, plaintiff claims
CML breached its contract with defendant Comm-Co by
failing to perform its contractual duty of plowing or
salting the parking lot.3 She alleges no duty owed to
her independent of the contract. Plaintiff thus fails
to satisfy the threshold requirement of establishing a
duty that CML owed to her under the "separate and
distinct" approach set forth in this opinion.4
As noted earlier, the Court of Appeals relied on
Osman to hold that CML owed a duty to plaintiff to
fulfill its contractual obligation with defendant
Comm-Co. The Court of Appeals reliance on this case
was misplaced.
3
The jury, however, found no breach of contract.
4
Plaintiff’s claim fails using a
misfeasance/nonfeasance analysis, as well because she
alleges that CML committed nonfeasance by failing to
perform its snow removal obligation at all. Because
no special relationship exists between the parties in
this case, and therefore defendant owed no duty to
make safe the parking lot where plaintiff was injured,
defendant CML’s nonfeasance of its contractual
obligation cannot satisfy the threshold requirement of
establishing a duty owed to plaintiff under either
the former misfeasance/nonfeasance dichotomy or the
“separate and distinct” approach set forth in this
opinion.
11
Like the plaintiff here, the plaintiff in Osman
was injured when she fell on a patch of ice. Also,
like the defendant here, the defendant in Osman had
contracted to provide snow removal services to the
premises owner. In that case, however, the defendant
had breached a duty separate and distinct from its
contractual duty when it created a new hazard by
placing snow
on a portion of the premises when it knew,
or should have known or anticipated, that
the snow would melt and freeze into ice on
the abutting sidewalk, steps, and walkway,
thus posing a dangerous and hazardous
condition to individuals who traverse those
areas. [Osman, supra at 704.]
Here, the Court of Appeals stated that given the
snowy conditions on the day that plaintiff was injured
[CML] had a duty to use reasonable care in
removing dangerous ice and snow, which was
distinct from its obligations under its contract
with Comm-Co. Moreover, the evidence suggested
that Creative Maintenance breached that duty when
it did not take reasonable steps to remove or
prevent the icy conditions that caused
plaintiff's fall. [Slip op, p 7, (citations
omitted; emphasis supplied.)]
In this case, the Court of Appeals analysis is
flawed because defendant CML’s failure to carry out
its snow-removal duties owed to defendant created no
new hazard to plaintiff. Thus, plaintiff alleges no
duty owed to her by defendant CML separate and
12
distinct from its contract with defendant Comm-Co.
CML could not logically breach a duty that it did not
owe. The Court of Appeals erred in holding that
defendant CML was responsible for plaintiff’s injuries
solely on the basis of the contract between defendants
CML and Comm-Co.
IV. CONCLUSION
To summarize, if defendant fails or refuses to
perform a promise, the action is in contract. If
defendant negligently performs a contractual duty or
breaches a duty arising by implication from the
relation of the parties created by the contract, the
action may be either in contract or in tort. In such
cases, however, no tort liability arises for failing
to fulfill a promise in the absence of a duty to act
that is separate and distinct from the promise made.
We conclude in this case that, as a matter of
law, CML owed plaintiff no duty. Accordingly, we
reverse the judgment of the Court of Appeals.
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
13
S T A T E O F M I C H I G A N
SUPREME COURT
SANDRA GAIL FULTZ and OTTO FULTZ,
Plaintiffs-Appellees,
v No. 121613
UNION-COMMERCE ASSOCIATES,
COMM-CO EQUITIES, NAMER JONNA,
ARKAN JONNA, LAITH JONNA, MOHSIN
KOUZA, and GLADYS KOUZA,
Defendants,
and
CREATIVE MAINTENANCE, LTD.,
Defendant-Appellant.
_______________________________
KELLY, J. (concurring).
I agree with the majority that the appellant, Creative
Maintenance, Ltd., did not owe a duty to plaintiff Sandra
Fultz. However, I cannot agree with some of the majority's
rationale used in reaching this result.
The issue is whether a duty exists. The majority
opinion attempts to resolve it by recognizing the continued
validity of Restatement Torts, 2d, § 324A.1 The opinion
1
Section 324A provides:
(continued…)
first appears to analyze this case under Restatement Torts,
2d, § 324A(b). Ultimately, however, it rejects this
provision. Instead, it limits the existence of tort
liability that runs to persons not parties to a contract to
situations where a duty arises “separate[ly] and
distinct[ly]” from the duty owed under the contract. I read
this as a conclusion that a nonparty to the contract can
recover in tort only for damages arising out of situations
covered by § 324A(a). The majority appears to ignore the
situations outlined in § 324A(b) and (c). Therefore, I
disagree with the limitations that the majority imposes on
the existence of a duty.
(…continued)
One who undertakes, gratuitously or for
consideration, to render services to another
which he should recognize as necessary for the
protection of a third person or his things, is
subject to liability to the third person for
physical harm resulting from his failure to
exercise reasonable care to protect [sic] his
undertaking, if
(a) his failure to exercise reasonable care
increases the risk of such harm, or
(b) he has undertaken to perform a duty owed
by the other to the third person, or
(c) the harm is suffered because of reliance
of the other or the third person upon the
undertaking.
2
THE MAJORITY’S INTERPRETATION IS OVERLY EXPANSIVE
The majority notes2 that this Court and the Court of
Appeals have developed tests for deciding whether an action
lies in breach of contract rather than in tort. The
majority also observes3 that this Court and the Court of
Appeals have defined a tort action stemming from
misfeasance in terms of whether the "plaintiff alleges
violation of a legal duty separate and distinct from the
contractual obligation." Rinaldo's Constr Corp v Michigan
Bell Tel Co, 454 Mich 65, 84; 559 NW2d 647 (1997).
However, after reviewing the cases cited by the majority, I
conclude that it is taking a more expansive view of that
definition than has been taken previously.
The existence of a "duty separate and distinct from
the contractual obligation,"4 has been identified
historically as a dividing line between tort and contract
obligations. Thus far, however, this rule has been applied
only to disputes involving the parties to a contract. In
those cases, the one harmed by a breach of the contract
could not recover both in contract and in tort.
2
Ante, pp 7-8.
3
Ante, pp 9-10.
4
Id.
3
All the cases that the majority cites5 involve a duty
allegedly separate from a contract. In Hart,6 the Court
determined whether the plaintiff could maintain an action
in tort against the defendant for failing to adequately
care for the plaintiff's orchard. The parties had an oral
contract. Sherman7 involved a plaintiff who filed a
complaint against a boat manufacturer arising from a
contract to sell a boat. See also Rinaldo’s, 454 Mich 79
80, Ferrett v Gen Motors Corp, 438 Mich 235; 475 NW2d 243
(1991), Chase v Clinton Co, 241 Mich 478, 479-480; 217 NW
565 (1928), and Churchill v Howe, 186 Mich 107; 152 NW 989
(1915).
In each of these cases, the plaintiff and the
defendant were parties to a contract. It was necessary for
each court to determine whether a breach of the contract
could give rise to a separate tort duty. It was necessary
to identify what theory of recovery applied as well as what
damages were recoverable.
However, this case is different. The contract
involved is not between Creative Maintenance and Fultz. As
5
Ante, pp 8-10.
6
Hart v Ludwig, 347 Mich 559, 560; 79 NW2d 895 (1956).
7
Sherman v Sea Ray Boats, Inc, 251 Mich App 41; 649
NW2d 783 (2002).
4
a consequence, I am not convinced that the law the majority
invokes should be extended to this situation.
The use of a "separate and distinct" test to determine
whether a duty in tort arises independently of the contract
may have appeal. However, it fails where the contract
itself outlines a specific duty to protect third persons.
A HELPFUL HYPOTHETICAL EXAMPLE
By way of example, assume that a building owner hires
a contractor to patch the building's crumbling façade to
avoid injury to those passing near it. The contract
explicitly states that the purpose of the contract is to
protect the public from harm and that the contractor
undertakes this duty. Nevertheless, the contractor
misjudges the extent of the building’s deterioration and
uses inadequate repair methods that, although not
increasing the risk of falling materials, do not make the
facade safe. Assume, moreover, that a member of the public
sues the contractor, claiming harm from a failure to
protect after being injured when a portion of the facade
falls on him. To satisfy the majority's test, the
contractor must owe a duty to the plaintiff that is
separate and distinct from his contractual obligations. In
this hypothetical case, application of the majority’s test
would result in a finding of no cause of action for the
5
member of the general public. This is incongruous because
it is the general public that the contract was designed to
protect.
It could be argued that a member of the public might
still sue as a third-party beneficiary of the contract.
However, this Court has recently stated that Michigan law
does not empower incidental beneficiaries to enforce a
contract. Koenig v South Haven, 460 Mich 667, 679-680; 597
NW2d 99 (1999) (opinion by Taylor, J.); Schmalfeldt v North
Pointe Ins Co, 469 Mich 422, 427-428; 670 NW2d 651 (2003);
MCL 600.1405. Rather, a person can be a third-party
beneficiary of a contract only when the promisor undertakes
an obligation "directly" to or for that person. Koenig,
supra; Schmalfeldt, supra.
In Koenig, the author of the lead opinion wrote:
"[T]his Court has adopted the persuasive rule that a third
party beneficiary 'may be one of a class of persons, if the
class is sufficiently described or designated.'" Koenig,
supra at 680 (citations and emphasis omitted). But the
benefit of such a contract cannot run to a member of the
general public. Id.; Schmalfeldt, supra at 428.
Therefore, in the hypothetical case, a third-party
member of the public could not recover from the actual
tortfeasor either under the contract or in tort. I do not
6
agree with this proposition. It is particularly
distressing because the majority's new analysis of these
claims could leave innocent persons without recourse to
redress their injuries. Such persons may be precluded from
recovering either from the tortfeasor or from the
tortfeasor’s employer.
In cases in which the jury assigns one hundred percent
of the fault to the contractor, plaintiffs will have no
recovery. MCL 600.2957(1) requires the jury to assess the
percentage of fault by "consider[ing] the fault of each
person, regardless of whether the person is, or could have
been, named as a party to the action." Thus, while the
contractor does not owe any duty to the plaintiff, the
premises owner's liability will be determined according to
the jury's allocation of fault.
So, an innocent plaintiff, whose injury results
entirely from the negligence of a contractor, will recover
nothing from the premises owner. She will also have no
cause of action against the contractor because the
contractor owes no duty to the plaintiff. Rather than
adopt the majority’s new test, I would recognize that in
certain circumstances a duty under tort can arise solely
from a contractual obligation.
7
The facts of this case, as noted by the majority, are
distinct from those in Osman v Summer Lawn Care, Inc, 209
Mich App 703; 532 NW2d 186 (1995). Ante, p 12. In Osman,
the defendant created a hazard by placing snow on a
sidewalk, walkway, and steps where it should have known
snow would melt and freeze into ice. However, the
defendant's actions there gave rise to a tort claim under
the theory embodied in Restatement Torts, 2d § 324A(a), not
under the theory in § 324A(b).
The latter subsection contemplates a situation in
which the defendant assumes the duty owed by the other
contracting party. The majority ignores this subsection in
its decision to require a duty "separate and distinct" from
the contract.
CONCLUSION
Plaintiff maintains that the Court of Appeals was
correct when it found that a duty separate from the
contract was at issue in the instant case. However,
plaintiff assumes that every agreement to undertake a task
for another equates to an agreement to undertake the duty
owed by the other to a third person. This is not accurate.
Such a comprehensive assumption of duty has been
described in at least one jurisdiction as a case "where the
contracting party has entirely displaced the other party's
8
duty to maintain the premises safely . . . ." Espinal v
Melville Snow Contractors, Inc 98 NY2d 136, 140; 773 NE2d
485 (2002).
At the least, to undertake a duty pursuant to §
324A(b), the contracting party must clearly have agreed to
fulfill the other party's obligation, together with the
inherent responsibilities and potential liabilities. Such
an agreement would meet the reasonable expectations of the
contracting parties. It would also allow the plaintiffs an
avenue of recovery where the duty to act is not necessarily
separate and distinct from the duties spelled out in the
contract itself.
Here, there is no evidence that the contract between
Creative Maintenance and the shopping center contemplated
that Creative would assume the duties that the center owed
to the center's business invitees. Thus, Fultz failed to
establish that Creative Maintenance owed her a duty under §
324A(b).
Accordingly, I concur with the result reached by the
majority.
Marilyn Kelly
Michael F. Cavanagh
9