Court reverses another summary disposition wrongly based on "contract immunity."
Richard Burns lost his home in a fire caused by a defective wood stove. He and his insurer, USAA, sued JCS Fireplace and a contractor, arguing that the negligent installation of the wood stove made the contractor, JCS (and their insurers) liable for the resulting fire damage. The trial court dismissed the negligence case, citing the Republican Supreme Court's much-criticized "contract immunity" holding.The latter holdilng was an opinion rendered in the Fultz v. Commercial-Union case, where the Engler Majority had decided that executing a contract between two parties eliminated any duty by either to a third-party. After Fultz, a number of appellate decisions were handed down immunizing negligent actors for damages caused to third persons because there was a provision in a contract requiring the negligent person to act reasonably. As bizarre as it seems, the Court had instructed lower courts that creating a contractual duty to act safely eliminated any common law duty to act in a reasonable manner.
Several months ago, the Michigan Supreme Court called a halt to this nonsense and "reinterpreted" the Fultz case in another injury case, Loweke v. Ann Arbor Ceiling. In a more carefully worded opinion, the Loweke majority explained that merely including safety duties in a contract did not immunize either party from "separate and distinct" common law duties already owed to third-parties (in other words, the duty to act reasonably). While third-parties could not sue over the breach of a contractually-created duty of safety, they could still sue if there was a pre-existing duty owed to them. Applying this common sense reinterpretation of the law (and taking it back to its pre-Engler majority status), the Court of Appeals in Burns' case overturned summary dispositions granted to the Fireplace company and contractor and reinstated the claims brought by Burns and his insurer.