Court of Appeals anticipated Supreme Court's retreat on "contract immunity."
Two judges of the Court of Appeals formulated an opinion this month in Price v. City of Royal Oak that anticipated the Michigan Supreme Court's retreat from an activist interpretation of "contract immunity." Just last week six Justices of the Supreme Court agreed that simply signing a contract does not confer immunity on the contracting parties from a common law duty of reasonable care to third-parties. The Court of Appeals majority in Price apparently anticipated this development when they overturned summary disposition for a sidewalk construction contractor.
The contractor had removed a section of sidewalk and excavated to a depth greater than one foot, without barricading the hazard. Price was injured when he unknowingly rode his bicycle into the excavation in the dark. The contractor claimed that it owed no duty to the public to erect barricades or warnings, because it was engaged in a contract with the City of Royal Oak and therefore immune to third-parties. The majority disagreed and pointed out that when the contractor, Pamar Enterprises, Inc., created a new hazard by excavating, it assumed a reasonable duty of care to the public.