PER CURIAM.
In early 2007, flooding and sewage backup damaged a residence owned by Fifty Eight Limited Liability Company (Fifty Eight). An investigation revealed that surface water pooling in the home's front yard had incapacitated the septic system. Fifty Eight concluded that during the construction of a water main for Lyon Township, Pamar Enterprises, Inc., had eliminated a swale protecting the home from surface-water runoff. We must now decide whether Pamar owed Fifty Eight any duty separate and distinct from those under Pamar's contract with Lyon Township. We find that Pamar did owe Fifty Eight a duty separate and distinct from those under the Pamar-Lyon Township contract, and on that basis we reverse the circuit court's order granting Pamar summary disposition of Fifty Eight's negligence claim. We also reverse the circuit court's order granting Pamar summary disposition of Fifty Eight's common-law trespass count, but we affirm the circuit court's orders granting Pamar summary disposition of Fifty Eight's statutory trespass and surface-water-law claims and denying Fifty Eight's motion to file an amended thirdparty complaint.
Fifty Eight owned a home located on Ten Mile Road in Lyon Township, which it rented to plaintiff Cheryl Boylan. Between January 2007 and March 2007, various portions of the home flooded and sewage backed up into the bathroom and kitchen sinks. Boylan reported the flooding to Fifty Eight, which undertook an investigation into the cause. Fifty Eight's property manager, William Clark, concluded that during Pamar's participation in the installation of a new water main for Lyon
In May 2007, Boylan filed suit against Fifty Eight in the 52-1 District Court, alleging negligence, breach of contract, and several other claims. In October 2007, Fifty Eight filed a third-party complaint against Pamar and Giffels-Webster Engineering, Inc., asserting claims for negligence, trespass, and "violation of Michigan's law of surface waters."
Pamar moved for summary disposition under MCR 2.116(C)(8) and (10), contending that pursuant to Fultz v. Union-Commerce Assoc., 470 Mich. 460, 683 N.W.2d 587 (2004), it owed no duty to Fifty Eight as a matter of law. Pamar further argued that because it had entered Fifty Eight's land with authorization, Fifty Eight could not prove trespass, and that Michigan's law of surface waters lacked applicability under the circumstances of this case.
The district court granted Pamar's motion for summary disposition and denied Fifty Eight's request to file an amended complaint that would have added a third party beneficiary contract claim. Fifty Eight appealed in the Oakland Circuit Court, which affirmed the district court's decisions. Both the district and circuit courts opined that pursuant to the Supreme Court's decision in Fultz, Pamar owed Fifty Eight no duty in tort. The circuit court concluded that Pamar's grading of the worksite on Fifty Eight's land did not give rise to "a separate and distinct duty" or a "new hazard," but instead constituted "a foreseeable consequence of the terms of the contract that caused this undisputed screw up by Pamar and it's because it trickles from the very terms of the contract that the court finds it doesn't
Fifty Eight contests the circuit court's summary disposition ruling, which we review de novo.
Fifty Eight first contends that the circuit court's determination that Pamar owed no duty to Fifty Eight rests on a misinterpretation of Fultz. Fifty Eight maintains that Fultz does not stand for the proposition that the mere existence of a contract between Pamar and Lyon Township completely "immunizes" Pamar from any potential tort liability relating to its construction of the water main. Pamar responds that Fultz plainly dictates that it owed no duty to "a third party to its contract" with Lyon Township. Because the parties argue at length concerning the interpretation and application of Fultz, we now turn to a careful examination of that decision.
The plaintiff in Fultz slipped and fell in an icy parking lot owned by Comm-Co Equities. Fultz, 470 Mich. at 461, 683 N.W.2d 587. Comm-Co had contracted with Creative Maintenance Limited (CML) for snow removal services. Id. at 462, 683 N.W.2d 587. The plaintiff sued both Comm-Co and CML, claiming that CML's negligent failure to plow or salt the parking lot had caused her fall. Id. The plaintiff theorized that CML owed her "a common-law duty ... to exercise reasonable care in performing its contractual duties" and that CML breached this duty by failing to perform its contractual duty of plowing or salting the parking lot. Id. at 463-464, 683 N.W.2d 587. The Supreme Court observed that the plaintiff had "allege[d] no duty owed to her independent of the contract," but instead relied on "common-law tort principles expressed in Restatement Torts, 2d, § 324A...." Id. at 464, 468, 683 N.W.2d 587.
The Supreme Court held that as a matter of law, CML "owed no contractual or common-law duty to plaintiff to plow or salt the parking lot." Id. at 463, 683 N.W.2d 587. In reaching this conclusion, the Supreme Court rejected that a common-law duty to the plaintiff arose solely from CML's breach of its contract with Comm-Co. The Court instructed lower courts to instead analyze tort claims brought by third parties to a contract "by
The "separate and distinct duty" analysis described in Fultz refutes Pamar's sweeping assertion that a contractor owes no duties to any third party. Rather, Fultz specifically contemplated that despite the existence of a contract, under certain circumstances tort duties to third parties may lie:
Stated differently, tort liability may attach in the presence of a duty that arises separately and distinctly from the contractual agreement.
In Fultz, the Supreme Court posited that the creation of a "new hazard" may give rise to a breach of a duty separate and distinct from the contract. Id. at 469, 683 N.W.2d 587 (emphasis in original). Fultz's "new hazard" reference derived from this Court's decision in Osman v. Summer Green Lawn Care, Inc., 209 Mich.App. 703, 532 N.W.2d 186 (1995), overruled in part on other grounds by Smith v. Globe Life Ins. Co., 460 Mich. 446, 597 N.W.2d 28 (1999).
The defendant argued that its contract with the landowner "indicated that defendant assumed no duty or responsibilities of the premises owner," nor "any of the responsibility for damage or injury caused by slipping and falling on any pavement surface." Id. at 705, 532 N.W.2d 186.
This Court found that the contract at issue "allow[ed] only one interpretation," and specifically referred to the following contractual language: "`Nothing contained in this agreement shall relieve Provider
The common-law duty of care existed "separate and apart from the contract itself" as part of "a general duty owed by defendant to the public of which plaintiff is a part." Id. at 710, 532 N.W.2d 186.
In Fultz, the Supreme Court declined to overrule this portion of Osman. The Supreme Court reasoned that in Osman, the defendant had created a new hazard by placing snow near pedestrian walkways, in an area where melting and freezing snow foreseeably created a danger "`to individuals who traverse those areas.'" Fultz, 470 Mich. at 469, 683 N.W.2d 587, quoting Osman, 209 Mich.App. at 704, 532 N.W.2d 186. The Fultz Court emphasized that unlike the defendant in Osman, "CML's failure to carry out its snow-removal duties owed to [Comm-Co] created no new hazard to plaintiff." Fultz, 470 Mich. at 469, 683 N.W.2d 587.
The subject of Pamar's contract with Lyon Township was the installation of a new water main. By virtue of the contract, Pamar assumed a duty to construct the water main according to certain detailed specifications. Presumably, Pamar fulfilled its contractual obligations by successfully installing the water main. Notwithstanding that the new water main would potentially benefit neighboring property owners, Fultz teaches that no duty to perform the water main contract existed with respect to Pamar and third parties. Alternatively phrased, Fifty Eight would have no cause of action had the flooding occurred simply because Pamar neglected to install the water main. However, separate and distinct from Pamar's contract to install a new water main for Lyon Township, Pamar bore a duty to exercise reasonable care when it entered onto and altered private property. Pamar's contract with Lyon Township for "[i]nstallation of approximately 6,600 linear feet of [16-inch] water main along Ten Mile Road, intersecting Milford Road, in Lyon Township, Michigan," neither created this separate duty of care nor eliminated it.
In contrast with the facts described in Fultz, Fifty Eight's tort claim against Pamar did not arise solely from Pamar's performance under the contract with Lyon Township. Irrespective of the existence of a contract, Pamar's entry onto Fifty Eight's land triggered several separate and distinct common-law duties to avoid permanently damaging the property. The common law indisputably recognizes a landowner's right to the full enjoyment of his or her land. For example, the private nuisance doctrine penalizes
Furthermore, the parties agree that Pamar held an easement over a portion of Fifty Eight's property in the course of the water-main construction. "An easement does not displace the general possession of the land by its owner, but merely grants the holder of the easement qualified possession only to the extent necessary for enjoyment of the rights conferred by the easement." Schadewald v. Brulé, 225 Mich.App. 26, 35, 570 N.W.2d 788 (1997). "A principle which underlies the use of all easements is that the owner of an easement cannot materially increase the burden of it upon the servient estate or impose thereon a new and additional burden." Delaney v. Pond, 350 Mich. 685, 687, 86 N.W.2d 816 (1957). Viewed in the light most favorable to Fifty Eight, Pamar's elimination of the swale materially increased the easement's burden by predisposing the land to flooding.
The existence of these separate and distinct duties of care readily distinguish this case from Banaszak v. Northwest Airlines, Inc., 477 Mich. 895, 722 N.W.2d 433 (2006). In that case, the Supreme Court held that a contract required a defendant "to provide a cover over the `wellway,' an opening at the end of the moving walkway that contains the mechanical elements. The purpose of the cover was to protect persons using that area." Id. Because the hazard created by the defendant's failure to properly install the cover "was the subject of the ... contract," the Supreme Court held that the defendant "owed no duty to plaintiff that was `separate and distinct' from its duties under the contract." Id. Fifty Eight asserts that Pamar entered onto Fifty Eight's land, disrupted the drainage contours, failed to recognize this error, and neglected to correct it. And no evidence of record suggests that maintenance of surface drainage contours served as "the subject of the contract" between Pamar and Lyon Township.
Additionally, Pamar's water-main-construction work created a new hazard consisting of interference with the property's drainage system. Record evidence established that in the course of constructing the water main, Pamar entered onto Fifty Eight's property, graded the land, and eliminated a swale that had been present before the water main work commenced. Fultz explained that a party to a contract breaches a duty separate and distinct from the contract when it creates a new hazard that it should have anticipated would pose a dangerous condition to third persons. Fultz, 470 Mich. at 468-469, 683 N.W.2d 587. Viewed in the light most favorable to Fifty Eight, the facts reasonably support that Pamar's rearrangement of the soil on Fifty Eight's premises and Pamar's elimination of a preexisting swale created a new condition on the premises that it should have foreseen could predispose the property to flooding.
Notably, the Pamar-Lyon Township contract itself envisions that the parties intended Pamar to shoulder responsibility for remedying damage to residential property. The contract directed Pamar to:
Like the contract in Osman, this language reinforces the contract's contemplation that Pamar would conduct its operations in a reasonable manner and that the contract does not shield Pamar from liability. See Osman, 209 Mich.App. at 707, 709-710, 532 N.W.2d 186. Viewed in the light most favorable to Fifty Eight, Pamar violated a recognized tort duty, independent of its contract with Lyon Township, when it interfered with the drainage on Fifty Eight's property. Consequently, we conclude that the circuit court erred by affirming the district court's order granting Pamar summary disposition of Fifty Eight's negligence claim.
In reaching our conclusions, we specifically reject Pamar's assertion that the Supreme Court overruled Osman through its peremptory order in Mierzejewski v. Torre & Bruglio, Inc., 477 Mich. 1087, 729 N.W.2d 225 (2007). In that brief order, the Supreme Court specifically invoked Fultz in support of its holding that "[t]he defendant did not owe any duty to the plaintiffs separate and distinct from the contractual promise made under its snow removal contract with the premises owner." Id. As in Banaszak, the Supreme Court's statement in Mierzejewski signals that any purported "new hazard" created by the snow removal contractor in fact fell within the scope of the contract's performance requirements and therefore did not arise from the breach of a separate and distinct duty of care. In contrast, Pamar has failed to identify any portion of its contract with Lyon Township that obligated it to alter or influence the drainage characteristics of Fifty Eight's land.
Fifty Eight next challenges the circuit court's affirmance of summary disposition regarding Fifty Eight's trespass claim. Fifty Eight asserts that Pamar committed a "direct trespass" by changing the grade of the land in the absence of any authority, thereby "caus[ing] water to enter [Fifty Eight's] property." Pamar replies that because it had authorization to enter onto Fifty Eight's land, Fifty Eight cannot establish a trespass.
"Recovery for trespass to land in Michigan is available only upon proof of an unauthorized direct or immediate intrusion of a physical, tangible object onto land over which the plaintiff has a right of exclusive possession." Adams v. Cleveland-Cliffs Iron Co., 237 Mich.App. 51, 67, 602 N.W.2d 215 (1999). "[A] `direct or immediate' invasion for purposes of trespass is one that is accomplished by any means that the offender knew or reasonably should have known would result in the physical invasion of the plaintiff's land." Id. at 71, 602 N.W.2d 215. Damages may be recovered for "any appreciable intrusion." Id. at 72, 602 N.W.2d 215. Surface-water diversion may effect an intrusion onto land. See Kernen v. Homestead Dev. Co., 232 Mich.App. 503, 512, 591 N.W.2d 369 (1998).
See also Schadewald, 225 Mich.App. at 40, 570 N.W.2d 788 (observing that activities exceeding the "reasonable exercise of the use granted by the easement may constitute a trespass").
Clark's affidavit attested that the front yard of Fifty Eight's property never flooded before Pamar changed the grade of the land. Although Pamar entered the land with authority, Fifty Eight's allegations that (1) Pamar knew or reasonably should have known that its activities would result in a physical intrusion of water onto Fifty Eight's land and (2) Pamar's actions on the land exceeded the scope of its authorized use present questions of fact appropriate for jury determination. Therefore, we conclude that the circuit court erred by affirming the district court's order granting Pamar summary disposition of Fifty Eight's common-law trespass claim.
Fifty Eight's complaint also sets forth a trespass claim under MCL 600.2919(1), which provides in relevant part:
Imposition of treble damages for statutory trespass requires a showing "that the trespass was intentional and with knowledge that it was without right." Kelly v. Fine, 354 Mich. 384, 387, 92 N.W.2d 511 (1958) (construing 1948 CL 692.451, a predecessor statute with substantially similar language). If the trespass "was casual and involuntary," treble damages are inappropriate. MCL 600.2919(1)(c); see also Embrey, 74 Mich.App. at 141, 253 N.W.2d 687.
"[A] trespasser's good faith and honest belief that he possessed the legal authority to commit the complained-of act are sufficient to avoid treble damage liability." Governale v. City of Owosso, 59 Mich.App. 756, 759, 229 N.W.2d 918 (1975). "Treble damages under MCL 600.2919 ... may not ... be awarded where the trespass was merely negligent." Iacobelli Constr. Co., Inc. v. Western Cas. & Surety Co., 130 Mich.App. 255, 262, 343 N.W.2d 517 (1983). Under the statute, a plaintiff need not show that a defendant acted with malice or an intent to injure the land, but must substantiate that the trespass occurred as the result of more than mere negligence. Id. at 262-263, 343 N.W.2d 517. No evidence of record in this case tends to suggest that Pamar intentionally changed the drainage contours on Fifty Eight's property or that Pamar intended that its actions would have an impact on Fifty Eight's property drainage. We conclude that the circuit court correctly affirmed the district court's order granting Pamar summary disposition of Fifty Eight's statutory trespass claim.
Fifty Eight asserts that the circuit court incorrectly affirmed summary disposition of its claim invoking Michigan's surface-water laws. Fifty Eight believes that a question of fact exists concerning whether Pamar altered the surface-water runoff in a fashion that diverted water onto Fifty Eight's property. Pamar contends that surface-water-law principles do not apply, given that it does not own any adjacent or neighboring property.
Michigan's law of surface waters applies to adjoining landowners, but has never been extended to impose liability on a party who neither owns nor controls a dominant estate. Because no caselaw supports Fifty Eight's assertion that the law of surface waters affords a cause of action under the facts presented, we conclude that the circuit court correctly affirmed summary disposition of this claim.
Lastly, Fifty Eight challenges the circuit court's decision to deny its motion to amend the third-party complaint to add a third-party-beneficiary claim. We review for an abuse of discretion a circuit court's decision to grant or deny leave to amend a pleading; we will only reverse the court's ruling if it occasions an injustice. Casey v. Auto Owners Ins. Co., 273 Mich.App. 388, 400-401, 729 N.W.2d 277 (2006). A court does not abuse its discretion if it selects an outcome falling within the range
Fifty Eight sought to amend its third-party complaint in conformity with MCR 2.116(I)(5), which states, "If the grounds asserted are based on subrule (C)(8), (9), or (10), the court shall give the parties an opportunity to amend their pleadings as provided by MCR 2.118, unless the evidence then before the court shows that amendment would not be justified." Except in limited circumstances, a "party may amend a pleading only by leave of the court or by written consent of the adverse party. Leave shall be freely given when justice so requires." MCR 2.118(A)(2). A court should freely grant the nonprevailing party leave to amend the pleadings unless the amendment would be futile or otherwise unjustified. Ormsby v. Capital Welding, Inc., 471 Mich. 45, 52-53, 684 N.W.2d 320 (2004). Motions to amend a complaint should be denied only for particularized reasons, such as undue delay, bad faith, or dilatory motive on the part of the movant, a repeated failure to cure deficiencies in the pleadings, undue prejudice to the opposing party by virtue of allowing the amendment, or the futility of amendment. Casey, 273 Mich.App. at 401, 729 N.W.2d 277.
In MCL 600.1405, the Legislature has defined, in relevant part as follows, who may claim third-party-beneficiary status with respect to an agreement entered into by other parties:
The Michigan Supreme Court has summarized that
"By using the modifier `directly,' the Legislature intended `to assure that contracting parties are clearly aware that the scope of their contractual undertakings encompasses a third party, directly referred to in the contract, before the third party is able to enforce the contract.'" Schmalfeldt v. North Pointe Ins. Co., 469 Mich. 422, 428, 670 N.W.2d 651 (2003), quoting Koenig v. South Haven, 460 Mich. 667, 677, 597 N.W.2d 99 (1999). When determining whether MCL 600.1405 applies to a purported third-party beneficiary, "a court should look no further than the form and meaning of the contract itself" and should view the contract objectively. Schmalfeldt, 469 Mich. at 428, 670 N.W.2d 651 (quotation marks omitted).
In Kisiel v. Holz, 272 Mich.App. 168, 725 N.W.2d 67 (2006), this Court considered facts somewhat analogous to those presented here. The plaintiff in Kisiel contracted with the Holz Building Company, Inc, for the construction of a home. Id. at 169, 725 N.W.2d 67. Holz's owner subcontracted with GFA Development, Inc., for excavation and concrete work. Id. When numerous cracks appeared in the basement walls and floor, the plaintiff sued Holz and several other defendants, contending
After reviewing the language employed in the contract between Pamar and Lyon Township in light of these governing legal principles, we discern no support for Fifty Eight's contention that it qualifies as a third-party beneficiary of this agreement. The contract nowhere refers to Fifty Eight. At best, Fifty Eight qualifies as an incidental beneficiary of the portion of the contract requiring Pamar to "provide the necessary protection to prevent damage, injury or loss to ... other property at the site...." Because amendment of Fifty Eight's complaint to add a third-party-beneficiary claim would have proved futile, we conclude that the circuit court correctly affirmed the district court's denial of Fifty Eight's motion to amend its third-party complaint.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
