Tort claims arising from construction defects often falter in the looming presence of a contract. The existence of a contract is particularly challenging for the plaintiff who is not in contractual privity with the defendant. Under Michigan law, the distinction between duties owed by a contractor arising from a contract and those arising in the common law plays a critical role in properly pleading a tort claim. The distinction is acutely unclear with respect to claims arising from defective construction.
The “plaintiff not in privity” situation was addressed by the Michigan Supreme Court in Fultz v. Union Commerce & Associates, 470 Mich. 460 (2004). In Fultz, the Court declared that the plaintiff must show the defendant owed a duty to the plaintiff that was “separate and distinct from the defendant’s contractual obligations” in order to recover in negligence. The Fultz court further explained that a separate and distinct duty could be breached through a defendant’s creation of a “new hazard.” Since Fultz, the concepts of “separate and distinct duties” and “new hazard” under Michigan case law have remained unclear, thus an element of uncertainty exists with respect to pleading those elements.
On September 7, 2010, the Michigan Court of Appeals further explained the contract-common law duty dichotomy and the “new hazard” theory of breach. See Boylan v. Fifty-Eight Ltd. Liab. Co., 2010 WL 3488995 (Mich. Ct. App. 2010). In Boylan, the defendant was hired to install a water line that traversed an easement on the plaintiff’s land. The defendant contractor did not restore the terrain to its preexisting condition, thus predisposing the land to flooding and eventually causing the plaintiff’s septic system to fail. The court determined that the defendant had a duty that was grounded in “common-law duties to avoid permanently damaging” the landowner’s real property which was separate and distinct from its contractual duties. The court held that the defendant breached its duty when it created a “new hazard” that interfered with the plaintiff’s drainage system and caused the home’s septic system to back up.
While Boylan is instructive in defining both “separate and distinct” duties and “new hazard” breaches, the court did not pass on the pleading requirements for either element. The recent personal injury case of Tucker v. Pipitone, unpublished opinion per curiam of the Court of Appeals, issued Feb. 15, 2011 (No. 294754), helps explain the pleading requirements for alleging a “separate and distinct” duty.
In Tucker, the defendant was hired by a general contractor to perform siding work on the group home in which the legally-blind plaintiff resided. The plaintiff was not a party to the subcontract and therefore unable to recover under a breach of contract theory. The court concluded that the plaintiff alleged a duty that was “separate and distinct” from those imposed under the defendant’s contract with the general contractor by alleging that the defendant placed building materials in a location where it was foreseeable that it could cause group home residents to fall. The court reasoned that the plaintiff’s allegations implicated the defendant’s “common law duty to act in a manner that does not place others in unreasonable danger.” The court explained “[H]arms caused by the failure to perform the duty imposed under the contract” arise “solely under the contract” and “the failure to refrain from taking actions that unreasonably place others in danger” arise under the common law and apply to every action that a person takes. The court noted that had the plaintiff alleged that the defendant acted negligently by failing to properly install the siding (which later fell and injured the plaintiff), such a claim would have implicated a contractual duty, and thus the negligence claim would have failed.
In light of Tucker’s guidance, a plaintiff seeking to recover damages arising from a construction defect must tread carefully when the plaintiff is not a party to the applicable construction contract. Based on Tucker’s hypothetical, the duty to perform a task or properly perform a task derived from a contract cannot be the basis of such a claim; however, the failure to perform such tasks in a safe manner may satisfy the pleading requirements. Accordingly, plaintiffs not in privity with a defendant must allege duties that arise from the common law. Careful pleading may be the key to recovery.