MARILYN J. KELLY, J.
After nearly a decade of litigation and alternative dispute resolution proceedings, the indemnification contract underlying the troubled natatorium roof in this case again wends its way to this Court. We previously held that the six-year period of limitations of MCL 600.5807(8) applies to the parties' indemnification contract. We now hold that the indemnity clauses in the parties' subcontract apply here, because the plain language of the indemnification clauses extends to Ahrens's failure to undertake corrective work as obligated by the subcontract. We further hold that Sherman Lake YMCA made a "claim" upon Miller-Davis which triggered Ahrens's liability under the indemnity clauses. Ahrens's failure to indemnify therefore caused the damages Miller-Davis sustained in undertaking the corrective work itself. Finally, we hold that Miller-Davis's claim was not barred by the six-year statute of limitations found in MCL 600.5807(8). Rather, Miller-Davis's breach of contract claim for Ahrens's failure to indemnify is distinct from its breach of contract claim based on Ahrens's failure to install the roof according to specifications, and Miller-Davis's indemnity action necessarily accrued at a later point. We therefore reverse that portion of the Court of Appeals' opinion discussing Miller-Davis's indemnity claim, and remand this case to the Kalamazoo
Miller-Davis Company was an "at risk" contractor
Ahrens substantially completed the work on June 11, 1999, at which point its Written Guarantee commenced. The Guarantee provides in relevant part:
A certificate of substantial completion issued on June 25, 1999. During the winter season of 1999-2000, Sherman Lake YMCA experienced excessive condensation in the natatorium, which it termed the "natatorium moisture problem" (NMP). As a result of the accumulated condensation, it sometimes appeared to be raining
In February 2003, the project architects opened the roof and discovered significant deficiencies with Ahrens's installation of the roof system, namely inch-wide gaps between the Styrofoam blocks and sub-T supports, and many gaps and tears in the vapor barrier. The architects determined that the installation was not in substantial compliance with the contract, and directed reinstallation of the roof system using salvageable materials to the extent possible. The corrective work contained three elements not contained in the original design: Procor, a waterproofing agent; expanding foam insulation; and butyl caulk sealant.
By letter dated April 2, 2003, Miller-Davis notified Ahrens that the roof system was not installed in accordance with the manufacturer's requirements and the subcontract guidelines. Miller-Davis's May 5, 2003 letter to Merchants Bonding Company, Ahrens's surety, explicitly declared Ahrens in default and requested a conference within fifteen days. The parties met on June 27, 2003, and Ahrens agreed to review the corrective work plans and provide a plan for performance within a week. Neither Ahrens nor its bonding company provided such a plan. On July 15, 2003, Miller-Davis gave Ahrens notice of default, terminated Ahrens's right to perform the contract, and demanded the bonding company perform under the bond. In that letter, plaintiff noted that Sherman Lake YMCA was "considering declaring a Contractor Default...." The bonding company notified Miller-Davis that Ahrens had waived the surety's right to perform under the bond.
Miller-Davis and Sherman Lake YMCA entered into an Agreement for Corrective Work on August 27, 2003. Pursuant to the agreement and at the direction of the architects, Miller-Davis installed Procor, expanding foam insulation, and butyl caulk. On December 8, 2003, an independent contractor certified that Miller-Davis had completed the corrective work. Sherman Lake YMCA has not since experienced the NMP.
Miller-Davis filed suit in the Kalamazoo Circuit Court against Ahrens and its bonding company in May 2005, alleging breach of contract and seeking indemnification and bond collection.
On appeal, Ahrens argued that the circuit court erred by not granting summary disposition in its favor based on the contractor's statute of repose, MCL 600.5839(1).
On remand, the Court of Appeals explained that MCL 600.5827 provided that Miller-Davis's claim accrued at the time of the wrong upon which it was based rather than the time when damage resulted.
The Court of Appeals also held that the indemnity clauses did not affect its conclusion, explaining that "no one had brought a claim or demand against plaintiff within the meaning of the indemnification clause."
We again granted Miller-Davis's application for leave to appeal, requesting that the parties brief:
Resolution of this case requires interpretation of MCL 600.5807(8). We review this question of law de novo.
To determine whether Miller-Davis has an actionable claim for indemnification, we will first consider the language of the indemnity clauses, ascertaining whether they apply to the facts of this case. If these clauses apply, we must then consider whether Miller-Davis has shown that Ahrens's failure to conduct corrective work caused Miller-Davis's damages. Finally, we determine whether Miller-Davis sustained any such damages within the six-year limitations period for breach of contract actions found in MCL 600.5807(8).
An indemnity contract creates a direct, primary liability between the indemnitor and the indemnitee that is original and independent of any other
As with any other contract, our primary task in construing a contract for indemnification is to give effect to the parties' intention at the time they entered into the contract.
Where parties have expressly contracted for indemnification, "the extent of the duty must be determined from the language of the contract."
The plain language of this clause is inclusive.
The language used by the parties in contracting for indemnity is unambiguous and clearly intended to apply as broadly as possible. Nevertheless, the Court of Appeals determined that the indemnity clauses were inapplicable because "no one had brought a claim or demand against plaintiff within the meaning of the indemnification clause."
To determine whether Sherman Lake YMCA made a written claim or demand against Miller-Davis, we look to the Agreement for Corrective Work they entered into. That agreement specified that Miller-Davis "acknowledges it has responsibility to correct work or replace materials that are not in compliance with the contract documents" and that "subcontractor Ahrens did not install one or more components of the Roof System in accordance with the Owner-Contractor contract documents." The purpose of the agreement was to "avoid differences or any dispute that may be time consuming, financially expensive and/or not in the best interest of any of [the parties] or the users of the Project," and it goes on to outline "the rights and obligations" of the parties. "Nothing herein," it continues, "shall ... release any rights of claim the Owner, and/or the Contractor may now have or hereafter acquire against any third person regarding responsibility for the NMP...." The agreement termed this course of action a "compromise, settlement and accord... to effect a settlement of contested claims."
A straightforward reading of the Agreement for Corrective Work confirms that Sherman Lake YMCA possessed a claim or demand against Miller-Davis that was resolved — at Miller-Davis's expense — by this settlement between them. That Sherman Lake YMCA and Miller-Davis succeeded in resolving their dispute without resort to legal action does not alter Ahrens's obligation to indemnify Miller-Davis for the corrective work it was required to undertake in light of Ahrens's default. The indemnity provisions do not require Sherman Lake YMCA to prove liability or initiate a lawsuit or arbitration proceeding against Miller-Davis for Miller-Davis to seek indemnification from Ahrens for the corrective work it performed under the Agreement, nor do we see any question regarding the reasonableness of that agreed-upon work or Miller-Davis's
We turn next to the Court of Appeals' conclusion that Miller-Davis is not entitled to indemnification because it has failed to sufficiently demonstrate that Ahrens's nonconforming work caused the NMP.
The Court of Appeals, however, misconstrued the relevant causation inquiry. There is no dispute that Miller-Davis incurred costs in undertaking the corrective work that Ahrens refused to perform, and that Miller-Davis has claimed those costs as damages. Therefore, to the extent that Ahrens was obligated to indemnify Miller-Davis for the costs of the corrective work, its breach of that obligation caused Miller-Davis's claimed damages. Whether Ahrens's nonconforming work caused the NMP is not relevant to this analysis.
Nor do the terms of the subcontract require Miller-Davis to show that Ahrens caused the NMP. Under the subcontract, Ahrens is obligated to indemnify Miller-Davis for, among other things, all claims and demands made or brought against Miller-Davis "by reasons of or resulting from, but not limited to, any injury, damage, loss, or occurrence arising out of or resulting from the performance of execution of [the subcontract] and caused, in whole or in part, by any act, omission, fault, negligence, or breach of the conditions of this [subcontract] by" Ahrens. At no point did Sherman Lake YMCA demand, or Miller-Davis guarantee, to correct the NMP. Indeed, the Agreement for Corrective Work made clear that Miller-Davis did not concede that Ahrens's work caused the NMP: "The Contractor does not acknowledge that its or any subcontractor's nonconforming work or materials were or are a contributing or the sole cause of the NMP." Rather, Miller-Davis acknowledged only that it "has the responsibility for construction of the Project in accordance with the Owner-Contractor contract documents" under the Agreement for Corrective work, never promising to resolve the NMP. Correspondingly, Miller-Davis
Ahrens, for its part, was obligated to install the roof system in accordance with the plans and specifications and to correct any nonconforming installation, regardless of whether its nonconforming work caused the NMP.
Miller-Davis has shown that Ahrens's failure to undertake corrective work caused those damages by way of Sherman Lake YMCA's demand that Miller-Davis itself correct the work.
Nevertheless, Ahrens also asserts that Miller-Davis brought its breach of contract action beyond the relevant limitations period. MCL 600.5807(8) provides that "[n]o person may bring or maintain an action to recover damages or sums due for breach of contract ... unless, after the claim first accrued ..., he commences the action within ... 6 years...."
The Court of Appeals examined the subcontract to determine the wrong on which Miller-Davis's claims were based, explaining that the "underlying basis" for its claims was Ahrens's breach of the contract provision that "`[a]ll materials and/or work furnished on this order shall comply
While these contract claims were both based on terms within the same agreement, nothing in MCL 600.5807 or our contract-law principles compels the conclusion that the claims must therefore share a common point of accrual. Rather, the date of accrual for the breach of an indemnified promise does not serve as the date of accrual for an indemnity action. These separate breaches have logically distinct points of accrual.
Ahrens first failed to perform under the contract when it installed a roof that did not conform to plan specifications. The cause of action for this breach accrued by April 1999, when Miller-Davis made its last payment to Ahrens under the subcontract. This ocurred more than six years before Miller-Davis brought suit in May 2005. As a result, Miller-Davis's cause of action for breach of Ahrens's promise to install a roof conforming to plan specifications is barred by MCL 600.5807(8).
However, Ahrens's breach of the indemnity provision provides an independent basis for Miller-Davis's current indemnification claim. This breach necessarily occurred after Ahrens's breach of the underlying promise to conform its work to the subcontract's specifications. This is because no demand or claim upon Miller-Davis could trigger Ahrens's obligation to indemnify until after Ahrens had breached its promise to install the roof system according to the specifications. Miller-Davis offers three potential points of first accrual for this claim: February 26, 2003 (when Miller-Davis conducted a partial tear-off of the roof and discovered the nonconforming work); August 27, 2003 (when Miller-Davis settled Sherman Lake YMCA's claims via the Agreement for Corrective Work); and December 8, 2003 (when an independent engineering firm certified that Miller-Davis had corrected Ahrens's defective work). We need not decide which of these dates marks the accrual of Miller-Davis's cause of action for indemnity because we agree the claim did not accrue before February 2003 and Miller-Davis's May 2005 complaint was therefore well within the six-year period of limitations. Accordingly, we hold that Miller-Davis's indemnification claim was not barred by MCL 600.5807(8).
The Court of Appeals erred by concluding that the indemnity clauses in the parties' subcontract were inapplicable because no third party made a claim or demand upon Miller-Davis. Rather, Miller-Davis entered into the Agreement for Corrective Work with Sherman Lake YMCA that clearly established Sherman Lake YMCA's claim against Miller-Davis that Ahrens's
Because Sherman Lake YMCA made a claim or demand upon Miller-Davis for corrective work which Ahrens was obligated to perform, and Ahrens refused to indemnify Miller-Davis for undertaking that work, Miller-Davis has established that Ahrens caused its damages. We therefore reverse that portion of the Court of Appeals' opinion discussing Miller-Davis's indemnity claim, and remand this case to the Kalamazoo Circuit Court for entry of judgment in Miller-Davis's favor and to determine whether Miller-Davis is entitled to attorney's fees under the relevant indemnification clauses.
YOUNG, C.J., and MICHAEL F. CAVANAGH, MARKMAN, ZAHRA, McCORMACK, and VIVIANO, JJ., concurred with MARILYN J. KELLY, J.