PER CURIAM.
This case returns to us on remand from our Supreme Court to reconsider whether the trial court properly dismissed plaintiff Devon Scott Bailey's claims against defendants T.J. Realty, Inc., which did business under the name Hi-Tech Protection, Inc. (Hi-Tech), Evergreen Regency Townhomes, Ltd. (Evergreen), and Radney Management & Investments (Radney). Bailey v. Schaaf, 494 Mich. 595, 618-619, 835 N.W.2d 413 (2013). For the reasons more fully explained in this opinion, we again conclude that the trial court erred when it dismissed Bailey's claim against Evergreen and Radney for breach of their duty to involve the police after learning of an ongoing criminal emergency, but did not err when it dismissed Bailey's remaining claims. Accordingly, we again affirm in part, reverse in part, and remand for further proceedings.
In November 2007, Bailey sued various parties to recover damages for injuries he sustained after defendant Steven Gerome Schaaf shot him at an outdoor gathering on the grounds of an apartment complex. See Bailey v. Schaaf, 293 Mich.App. 611, 616-617, 810 N.W.2d 641 (2011). In addition to his claim against Schaaf, Bailey eventually alleged claims against Evergreen, which owned the apartment complex, the complex's manager, Radney, the business that provided security for the complex, Hi-Tech, Hi-Tech's owner, Timothy Johnson, and the security guards that Hi-Tech assigned to the complex on the day of the shooting, William Baker and Christopher Campbell. Id. at 617, 810 N.W.2d 641. The trial court dismissed the claims against the individual defendants — Baker, Campbell and Johnson — after Bailey's lawyer declined to argue a basis for holding them individually liable. Id. at 618, 810 N.W.2d 641. The trial court later dismissed the claims against Evergreen, Radney, and Hi-Tech, but entered a default judgment against Schaaf. Bailey then appealed the trial court's decision to dismiss his claims against Evergreen, Radney, and Hi-Tech to this Court. Id. at 619-620, 810 N.W.2d 641.
In that first appeal, we addressed three issues: whether the trial court abused its discretion when it allowed Evergreen and Radney to amend their responses to Bailey's request for admissions, whether the trial court erred when it determined that Bailey was not a third-party beneficiary of the contract for security services between Evergreen and Hi-Tech, and whether the trial court erred when it dismissed Bailey's claims against Evergreen, Radney, and Hi-Tech under MCR 2.116(C)(8) after it determined that Bailey failed to identify a duty that any of these defendants owed to him. See Bailey, 293 Mich.App. at 614-615, 627, 810 N.W.2d 641. We concluded that the trial court did not abuse its discretion when it permitted Evergreen and Radney to amend their responses to Bailey's request to admit and did not err when it determined that Bailey was not a third-party beneficiary under the contract between Evergreen and Hi-Tech. Id. at 620-626, 810 N.W.2d 641.
Finally, we determined that Hi-Tech had no common-law duty to protect Evergreen and Radney's invitees from criminal acts by third-parties; we explained that any duty that Hi-Tech may have had arose from its contract to provide security services, which Bailey could not use as a basis for his claim because he was not a third-party beneficiary under the contract. Id. at 642-643, 810 N.W.2d 641, citing Fultz v. Union-Commerce Assoc., 470 Mich. 460, 461-462, 683 N.W.2d 587 (2004). For that reason, we concluded that the trial court did not err when it dismissed Bailey's claim against Hi-Tech. Id. at 643, 810 N.W.2d 641.
On further appeal, our Supreme Court affirmed this Court's extension of the duty stated in MacDonald to the landlord-tenant relationship. Bailey, 494 Mich. at 618-619, 835 N.W.2d 413. It did not, however, affirm this Court's judgment in its entirety; it vacated a portion of the opinion and remanded the case for consideration of two issues. Id. at 619, 835 N.W.2d 413.
First, it asked this Court to consider Evergreen and Radney's argument that the dismissal of the claims against the security guards relieved them of vicarious liability under the decision in Al-Shimmari v. Detroit Med. Ctr., 477 Mich. 280, 731 N.W.2d 29 (2007). See Bailey, 494 Mich. at 619, 835 N.W.2d 413. The Supreme Court indicated that this Court should additionally consider whether Evergreen and Radney properly preserved that issue for appeal. Id.
Second, the Supreme Court asked this Court to reconsider our decision concerning Hi-Tech's duty to Bailey — if any — in light of the decisions in Loweke v. Ann Arbor Ceiling & Partition Co., LLC, 489 Mich. 157, 809 N.W.2d 553 (2011), and Hill v. Sears, Roebuck & Co., 492 Mich. 651, 822 N.W.2d 190 (2012), which clarified and applied the holding in Fultz. See Bailey, 494 Mich. at 619, 835 N.W.2d 413.
We first reconsider whether the trial court properly dismissed Bailey's claim against Hi-Tech on the grounds that he failed to show that Hi-Tech owed him a duty that was distinct from those provided under Hi-Tech's agreement with Evergreen and Radney. This Court reviews de novo whether the trial court properly granted a motion for summary disposition. Barnard Mfg. Co., Inc. v. Gates Performance
In our prior opinion, we determined that Bailey "failed to identify a duty that was separate and distinct from Hi-Tech's duties under its contract with Evergreen." Bailey, 293 Mich.App. at 642, 810 N.W.2d 641. We noted that Hi-Tech had no common-law duty to protect Bailey from Schaaf or even to take some affirmative step to aid him after he was injured. Id. Instead, we stated, to the extent that Hi-Tech had any duty to act, its "duties were created by the terms of the contract" that it had with Evergreen. Id. Because Bailey had no right to enforce a "duty imposed solely under a contract to which he is not a party or an intended beneficiary," we concluded that Bailey failed to state a claim against Hi-Tech. Id. at 643, 810 N.W.2d 641. Although we applied our Supreme Court's decision in Fultz, the Supreme Court has now nevertheless asked us to reconsider our decision in light of the clarification of Fultz that it provided in Loweke and Hill. Bailey, 494 Mich. at 619, 835 N.W.2d 413. Accordingly, we briefly trace the evolution of the test stated in Fultz and clarified in Loweke and Hill.
In order to recover against Hi-Tech, Bailey had to establish as a threshold matter that Hi-Tech owed him a duty of care. See Hill, 492 Mich. at 660, 822 N.W.2d 190. Whether one person owes a duty of care to another depends — in significant part — on the relationship between those persons: "At common law, [t]he determination of whether a legal duty exists is a question of whether the relationship between the actor and the plaintiff gives rise to any legal obligation on the actor's part to act for the benefit of the subsequently injured person." Id. at 661, 822 N.W.2d 190 (quotation marks and citations omitted) (alteration in original). A duty to act for another person's benefit may arise by contractual agreement, by statute, or under the common law. Id. at 660-661, 822 N.W.2d 190.
A party to an agreement has an enforceable contractual duty to perform as agreed in the contract. See Bloomfield Estates Improvement Ass'n, Inc. v. City of Birmingham, 479 Mich. 206, 212-213, 737 N.W.2d 670 (2007) (characterizing the right to make and enforce contracts as a fundamental right and stating that, "when parties have freely established their mutual rights and obligations through the formation of unambiguous contracts," the courts must enforce the contract's terms). But not every person benefited by the contractual agreement may sue to enforce the duties arising under it. Rather, only the parties to the agreement and those third-parties that the contracting parties intended to benefit by the agreement may sue to enforce it. Brunsell v. City of Zeeland, 467 Mich. 293, 295-299, 651 N.W.2d 388 (2002). See also Schmalfeldt v. North Pointe Ins Co., 469 Mich. 422, 427-429, 670 N.W.2d 651 (2003).
Nevertheless, even though a party to a contract does not have a duty to perform for the benefit of third parties, Michigan courts have long recognized that persons acting pursuant to a contract may be liable to third parties at common law for negligently performing their contractual duties. Fultz, 470 Mich. at 464-465, 683 N.W.2d 587 (recognizing that once a party voluntarily
In Hart, our Supreme Court had to determine whether Hazen Hart and Lorene Hart properly stated a claim in tort against Frederick Ludwig. Id. at 560, 79 N.W.2d 895. The Harts had hired Ludwig to care for their orchard, but shortly after beginning work for the 1953 season, Ludwig refused to continue working. Id. The Harts alleged a tort claim premised on Ludwig's negligent failure to remove shoots, prune, fertilize, and protect the orchard from destructive animal life, which caused them damage. Id.
Turning to whether the Harts' claim sounded in tort, our Supreme Court recognized that the "question was not without difficulty." Id. The Court explained that there had arisen a distinction between claims arising from misfeasance and nonfeasance. This distinction was between claims arising from the negligent failure to perform or timely perform under the contract (nonfeasance), which were actionable only in contract, and claims arising from active negligence causing harm (misfeasance), which were actionable in tort. Id. at 561-565, 79 N.W.2d 895. The Court stated that it was often difficult to distinguish between nonfeasance and misfeasance in borderline cases. According to the Court, such cases may involve nonfeasance, as with a surgeon's failure to sterilize his instruments or a builder's failure to fill a ditch, which also constitute misfeasance. Id. at 564-565, 79 N.W.2d 895. In examining the facts from those decisions in which the courts had concluded that an action in tort would lie, our Supreme Court surmised that the common thread was whether the claim involved a breach of duty that was distinct from enforcing the contract promise:
Because the "only duty, other than that voluntarily assumed in the contract to which [Ludwig] was subject, was his duty to perform his promise in a careful and
Our Supreme Court reexamined the distinction between a claim arising from the failure to perform under a contract and the negligent performance of a contractual obligation in Fultz. In that case, Sandra Fultz fell and injured her ankle while walking across a parking lot owned by Comm-Co Equities. Fultz, 470 Mich. at 462, 683 N.W.2d 587. Fultz sued Comm-Co as the premises possessor, but also sued Creative Maintenance Limited, which was the company that Comm-Co had hired to provide snow removal services for its lot. Id. Fultz alleged that, once Creative Maintenance undertook to clear Comm-Co's lot, it had a common-law duty to exercise reasonable care in performing its contractual duties. Id. at 463-464, 683 N.W.2d 587. A jury eventually found that Creative Maintenance breached its duty to provide reasonable snow removal, and this Court affirmed. Id. at 462, 683 N.W.2d 587. Our Supreme Court, however, determined that Fultz's claim against Creative Maintenance did not implicate a duty recognized under the common law.
In analyzing the issue, our Supreme Court first acknowledged that persons who undertake to perform an act for another — as with a typical agent or independent contractor — have a duty to perform the act in a nonnegligent manner. Id. at 465, 683 N.W.2d 587. The Court explained that this duty must nevertheless be one that the person specifically owed to the plaintiff or must be one that the person owed to the general public. Id., quoting Clark v. Dalman, 379 Mich. 251, 260-261, 150 N.W.2d 755 (1967). The Court recognized that Michigan courts had traditionally examined the "contours of this common-law duty" by drawing a distinction between "misfeasance (action) and nonfeasance (inaction) for tort claims" arising from contractual obligations. Fultz, 470 Mich. at 465, 683 N.W.2d 587. Thus, "[w]e have held that a tort action will not lie when based solely on the nonperformance of a contractual duty." Id. at 466, 683 N.W.2d 587, citing Hart, 347 Mich. 559, 79 N.W.2d 895, Chase v. Clinton Co., 241 Mich. 478, 217 N.W. 565 (1928), and Churchill v. Howe, 186 Mich. 107, 152 N.W. 989 (1915).
But the Court felt that this distinction was largely "semantic" and "somewhat artificial." Id. As had been recognized in Hart, the Court stated, the real distinction was not one of misfeasance or nonfeasance, but of duty. Fultz, 470 Mich. at 466, 683 N.W.2d 587, quoting Hart, 347 Mich. at 564-565, 79 N.W.2d 895. It recognized that it had, since the decision in Hart, "defined a tort action stemming from misfeasance of a contractual obligation as the `violation of a legal duty separate and distinct from the contractual obligation.'" Fultz, 470 Mich. at 467, 683 N.W.2d 587, quoting Rinaldo's Constr. Corp. v. Mich. Bell Tel. Co., 454 Mich. 65, 84, 559 N.W.2d 647 (1997). It then concluded that the "separate and distinct" definition noted in Hart and explained in Rinaldo's offered "better guidance in determining whether a negligence action based on contract may lie because it focuses on the threshold question of duty in a negligence claim." Fultz, 470 Mich. at 467, 683 N.W.2d 587. Accordingly, it stated that Michigan courts should in the future analyze whether the claim was one that arose solely from a contract by examining whether the plaintiff pleaded that the agent or contractor
Turning to the facts of the case, the Court determined that Fultz's claims against Creative Maintenance failed because she did not establish that Creative Maintenance had a common-law duty to remove the snow and ice from Comm-Co's parking lot; instead, she essentially alleged that Creative Maintenance breached its contract with Comm-Co "by failing to perform its contractual duty of plowing or salting the parking lot." Id. at 468, 683 N.W.2d 587. Moreover, although the Court agreed that the performance of a contractual obligation may amount to a breach of duty that is separate and distinct when the performing party creates a new hazard, Fultz did not allege that Creative Maintenance created a new hazard; she only alleged that it failed to clear the lot. Id. at 469, 683 N.W.2d 587. Because Fultz could not rely on Creative Maintenance's breach of its contractual duty to Comm-Co to establish a claim against Creative Maintenance, the Supreme Court reversed the jury's verdict against Creative Maintenance. Id. at 470, 683 N.W.2d 587.
As can be seen from a careful reading of Fultz, the Court did not alter the substantive law applicable to claims arising from the negligent performance of a contractual duty; instead, it adopted the analytical framework stated in Hart and Rinaldo's. Nevertheless, after the decision in Fultz, some courts "misconstrued" the decision in Fultz to create a "form of tort immunity" for negligence claims raised by noncontracting third parties. Loweke, 489 Mich, at 168, 809 N.W.2d 553. Specifically, some courts began to apply Fultz not by examining whether the plaintiff alleged a claim premised on a duty that was separate and distinct from the underlying contractual obligation, but by examining whether the defendant's conduct "was separate and distinct from the obligations required by the contract or whether the hazard was a subject of or contemplated by the contract." Id. Because of the confusion arising from these decisions, in Loweke our Supreme Court again addressed the proper analysis for determining whether a tort action will lie for the negligent performance of a contract.
In Loweke, our Supreme Court rejected the notion that Fultz established a new test premised on the nature of the obligations under the contract. In Fultz, it explained, it had merely "recast the test to focus on whether any legal duty independent of the contract existed." Id. at 169, 809 N.W.2d 553.
Because the trial court and this Court had misapplied the test stated in Fultz to the facts in Loweke, the Supreme Court
Our Supreme Court applied the clarified Fultz decision in Hill, 492 Mich. 651, 822 N.W.2d 190. In that case, Marcy Hill, Patricia Hill, and Christopher Hill sued Sears, Roebuck and Co. for injuries that they sustained after Marcy Hill inadvertently released gas into her home through an uncapped gas line, which later ignited. Hill, 492 Mich. at 656-657, 822 N.W.2d 190. The Hills alleged that Sears negligently installed an electric dryer more than three years earlier and that its negligence proximately caused their injuries. Id. at 656-657, 822 N.W.2d 190.
On appeal, the Court determined that Sears had a limited relationship with the Hills that involved meeting its contractual obligation to deliver and install the dryer and to do so with due care. Id. at 662-664, 822 N.W.2d 190. The Court rejected the contention that, by agreeing to deliver and install the electric dryer, Sears assumed additional duties not associated with the delivery and installation. Id. at 665, 822 N.W.2d 190. Instead, it held that Sears had no duty with respect to the gas line. Id. Finally, the Court agreed that Sears could be liable for breaching a duty that was separate and distinct from its contract as stated in Fultz, but concluded that the Hills failed to establish that Sears breached such a duty by creating a "new dangerous condition" or making "an existing dangerous condition more hazardous": "The placement of the dryer did not affect the existence or nature of the hazard in any manner because the danger posed by the uncapped gas line was exactly the same before and after the electric dryer was installed." Id. at 671, 822 N.W.2d 190.
Turning to this case, under Fultz, as clarified in Loweke and applied in Hill, Bailey could not rely solely on Hi-Tech's promise to provide security services to Evergreen to establish a claim against Hi-Tech. Because Bailey was not a party to Hi-Tech's agreement with Evergreen and was not a third-party beneficiary under that agreement, Bailey had to plead and be able to prove that Hi-Tech breached a duty to him that was separate and distinct from Hi-Tech's promises to Evergreen.
Here, Evergreen negotiated and entered into an agreement with Hi-Tech that obligated Hi-Tech to provide certain security services for Evergreen's property. In accordance with the terms of its agreement with Evergreen, Hi-Tech assigned its security guards to the apartment complex where Schaaf shot Bailey. Although Hi-Tech had a contractual obligation to provide security guards who would presumably protect Evergreen's property, tenants, and guests, Hi-Tech had no legal duty to provide such protection because, under Michigan's common-law, a person generally does not have a duty to protect or intervene to help others who might be in danger. See Williams v. Cunningham Drug Stores, Inc., 429 Mich. 495, 498-499, 418 N.W.2d 381 (1988) (noting that courts are reluctant to establish duties that "force persons to help one another" and recognizing the general rule is "there is no duty that obligates one person to aid or protect another").
Bailey did not allege that Hi-Tech had possession and control over the premises at issue; accordingly, Hi-Tech had no duty to keep the common areas safe. See Duffy v. Irons Area Tourist Ass'n, 300 Mich.App. 542, 547, 834 N.W.2d 508 (2013) (explaining that premises liability usually applies to land owners, tenants, and lessees because those persons or entities are in possession and control of the land). For the same reason, Hi-Tech had no duty as a landlord or merchant to expedite the involvement of police officers once it became aware — through its employees — that Bailey and the other guests at the gathering were in imminent danger. See Bailey, 494 Mich. at 614-617, 835 N.W.2d 413.
Finally, Bailey did not allege that Hi-Tech's employees breached their common-law duty to act with ordinary care by creating a new hazard or increasing the danger posed by an existing hazard; given the allegations, the danger posed by Schaaf was the same without regard to Baker and Campbell's presence at the apartment complex. See Hill, 492 Mich. at 671-672, 822 N.W.2d 190 (stating that the installers did not create a new hazard or increase the danger posed by an existing hazard when they installed the dryer; therefore, there was no breach of the common-law duty of ordinary care); Hart, 347 Mich. at 565, 79 N.W.2d 895 (stating that the case at issue did not involve allegations that the defendant breached his duty to perform his promise "in a careful and skillful manner without risk of harm to others"); compare Ross v. Glaser, 220 Mich.App. 183, 186-187, 559 N.W.2d 331 (1996) (holding that the provision of a firearm to a person with known mental instability was actionable misfeasance as opposed to mere nonfeasance).
If Hi-Tech and its employees had any duty to protect Bailey or otherwise intervene on his behalf, that duty was solely a matter of the contractual agreements between Hi-Tech, its employees, and Evergreen. While Evergreen might be able to recover for a beach of the agreement to provide security services should it ultimately be held liable for the Hi-Tech employees' failure to properly respond to the events, Bailey cannot rely on Hi-Tech's purported breach of the agreement with Evergreen to establish his tort claim. See Hart, 347 Mich. at 565-566, 79 N.W.2d 895 ("This is not a duty imposed by the law upon all, ... but a duty arising out of the intentions of the parties themselves and owed only to those specific individuals to whom the promise runs."). Because Bailey failed to allege that Hi-Tech breached a duty that was separate and distinct from its obligations under its agreement with Evergreen, the trial court did not err when it dismissed Bailey's claim against Hi-Tech.
We next consider Evergreen and Radney's argument that this Court should affirm the trial court's decision to dismiss Bailey's claims under the rule stated in Al-Shimmari, 477 Mich. 280, 731 N.W.2d 29. On appeal, Evergreen and Radney contend that Bailey's claims against them are premised on the failure of their purported agents, Baker and Campbell, to involve police officers and, under our Supreme Court's decision in Al-Shimmari, the claims against them as principals must be dismissed because the claims against their agents were dismissed. This Court reviews de novo a trial court's decision on a motion for summary disposition. Barnard Mfg., 285 Mich.App. at 369, 775 N.W.2d 618. This Court also reviews de novo the proper scope and application of the common law, such as the common law of agency. Brecht, 297 Mich.App. at 736, 825 N.W.2d 110.
As a preliminary matter, we must address whether Evergreen and Radney properly preserved this issue for appeal.
In February 2009, Evergreen, Radney, Hi-Tech, Campbell, Baker, and Johnson moved for summary disposition under MCR 2.116(C)(8). In their motion and brief, they argued that the claims against them must be dismissed because Bailey failed to properly plead that any one of them breached a duty owed to Bailey. Specifically, they maintained that Michigan law does not impose a duty on premises possessors, such as Evergreen or Radney, to provide security or make their premises safe from criminal activity, and does not impose a duty to protect or aid others. They did not address Evergreen or Radney's vicarious liability for any tort committed by Baker or Campbell and did not raise or discuss our Supreme Court's decision in Al-Shimmari.
The trial court held a hearing on the motion in March 2009. At the hearing, defendants' lawyer began by arguing that the individual defendants — Johnson, Baker, and Campbell — plainly had no duty to protect or aid Bailey. After defendants' lawyer summarized his position as to the duty owed by the individual defendants, the trial court interrupted:
In response, Bailey's lawyer stated that he was "really not contending that" and noted that he had not "address[ed] that in our response." After this brief colloquy, the trial court granted the request for dismissal as to the claims against the individual defendants. The trial court went on to rule that Evergreen, Radney, and Hi-Tech also had no duty to provide security or to otherwise protect or aid Bailey. In May 2009, the trial court entered an order dismissing the claims against each defendant other than Schaaf that was consistent with that determination.
As can be seen, Evergreen and Radney did not argue before the trial court that Bailey's claims against them had to be dismissed once the trial court determined
In civil cases, Michigan courts generally follow the rule that a "a litigant must preserve an issue for appellate review by raising it in the trial court." Id. This "raise or waive"
When a litigant waives appellate review by failing to properly preserve a claim of error, although under no obligation to do so, this Court may exercise its discretion to consider the claim.
Whether Al-Shimmari applies to this case is solely a question of law that requires no further factual development and plainly implicates the proper determination of the case. See Smith, 269 Mich. App. at 427, 711 N.W.2d 421. Moreover, given the peculiar procedural history of this case, it is not clear that Evergreen or Radney's lawyer had a reasonable opportunity to raise this alternate basis for relief before the trial court; by declining to argue a basis for imposing liability, Bailey's lawyer essentially conceded that whether the individual defendants could be personally liable was not at issue, and the trial court soon after determined that it would be appropriate to dismiss the claims against Evergreen and Radney on the grounds that Bailey also failed to state a claim against them. Thus, it is not surprising that Evergreen and Radney did not offer an alternate basis for dismissal at the hearing. Finally, even if we declined to review this issue, we can see no reason that would preclude Evergreen and Radney from raising this ground for dismissal in a new motion on remand, which in turn could result in yet further appeals. Therefore, in the interests of justice and efficiency, we elect to exercise our discretion and consider this issue for the first time on appeal. See Walters, 481 Mich. at 387-388, 751 N.W.2d 431.
In order to properly understand the decision in Al-Shimmari and how it might apply to the facts of this case, it is useful to briefly summarize the law of agency as it applies to a principal's vicarious liability for the torts of the principal's agent, an agent's liability to third parties for the agent's own torts, and a principal's direct liability for the principal's own torts.
A principal may be vicariously liable to a third-party for harms inflicted by his or her agent even though the principal did not participate by act or omission in the agent's tort. See Al-Shimmari, 477 Mich. at 294, 731 N.W.2d 29. "Vicarious liability is indirect responsibility imposed by operation of law." Theophelis v. Lansing Gen. Hosp., 430 Mich. 473, 483, 424 N.W.2d 478 (1988). Courts impose indirect responsibility on the principal for his or her agent's torts as a matter of public policy, but the "principal, having committed no tortious act, is not a `tortfeasor' as that term is commonly defined." Id. Because liability is imputed by law, a plaintiff does not have to prove that the principal acted negligently. "Rather, to succeed on a vicarious liability claim, a plaintiff need only prove that an agent has acted negligently." Al-Shimmari, 477 Mich. at 294-295, 731 N.W.2d 29. Concomitantly, if the agent has not breached a duty owed to the third party, the principal cannot be held vicariously liable for the agent's actions or omissions. Lincoln v. Gupta, 142 Mich.App. 615, 622, 370 N.W.2d 312 (1985).
A principal, however, remains directly liable for his or her own tortious conduct. See Cox v. Flint Bd. of Hosp. Mgrs., 467 Mich. 1, 11, 651 N.W.2d 356 (2002) (recognizing that a principal may be directly liable for the principal's own torts or vicariously liable for torts committed by its agents); Malcolm v. City of East Detroit, 437 Mich. 132, 145-146, 468 N.W.2d 479 (1991) (explaining that "[w]hether liability is vicarious or direct depends upon whether the focus is upon the entity or the individual employee committing the tort"); Cascarella v. Nat'l Grocer Co., 151 Mich. 15, 18, 114 N.W. 857 (1908). Thus, a principal may be directly liable — as opposed to vicariously liable — for negligently hiring, training, or supervising an employee, if the employee's actions harm a third party.
As for an agent, he or she is personally liable for his or her own tortious conduct, even when acting on behalf of his or her principal. Dep't of Agriculture v. Appletree Marketing, LLC, 485 Mich. 1, 17 n. 39, 779 N.W.2d 237 (2010). The agent remains liable even though his or her principal may also be vicariously liable. Wines v. Crosby & Co., 169 Mich. 210, 215, 135 N.W. 96 (1912). An agent is not, however, liable to a third party merely because he or she neglects to perform a duty that his or her principal owes to a third party. In such a case, the third party's remedy is against the principal alone. See Ellis v. McNaughton, 76 Mich. 237, 240-242, 42 N.W. 1113 (1889) (acknowledging that an agent is not normally liable for his or her nonfeasance, but distinguishing the facts therein, and concluding that the agent's duty was "imposed upon him by law as a responsible individual in common with all other members of society"); 2 Restatement Agency, 3d, § 7.02 ("An agent's breach of a duty owed to the principal is not an independent basis for the agent's tort liability to a third party. An agent is subject to tort liability to a third party harmed by the agent's conduct only when the agent's conduct breaches a duty that the agent owes to the third party.") (emphasis omitted); 2 Restatement Agency, 2d, § 352, p. 122; 2A CJS, Agency, § 399, p. 695; but see 2 Restatement Agency, 2d, § 354, p. 125 (noting that an agent who specifically undertakes to protect another for his principal may be liable for failing to protect the third party under certain circumstances).
As our Supreme Court recognized more than 100 years ago, when an agent breaches a duty owed solely to his or her principal, a third party may not rely on that breach to establish a tort claim; but when the agent breaches a separate duty owed to the third party, the third party may hold the agent liable:
Although no longer framed as a matter of misfeasance versus nonfeasance, this rule is consistent with modern application of the rule:
Because the distinction between misfeasance and nonfeasance is analogous to that addressed by the Fultz line of cases discussed earlier in this opinion, the analytic framework applied in Fultz applies equally to determining whether an agent can be liable in tort to a third party. Accordingly, a plaintiff cannot sue an agent to recover for harm caused by the agent's breach of a duty owed solely to his or her principal. Rather, the plaintiff must allege and be able to prove that the agent breached a duty that was separate and distinct from his or her agency agreement with the principal. See Fultz, 470 Mich. at 467, 683 N.W.2d 587; Ellis, 76 Mich. at 240-242, 42 N.W. 1113.
With these basic principles of agency law in mind, we now examine our Supreme Court's decision in Al-Shimmari. In that case, Abdul Al-Shimmari sued his surgeon, Dr. Setti Rengachary, and several institutional defendants after he discovered that he had suffered a nerve injury during a surgery that Rengachary performed. Al-Shimmari, 477 Mich. at 284, 731 N.W.2d 29. Our Supreme Court determined that the trial court did not err when it dismissed the claim against Rengachary because Al-Shimmari failed to serve process on Rengachary within the period of limitations. Id. at 287-293, 731 N.W.2d 29. After concluding that the trial court did not err when it dismissed the claim against Rengachary, the Court analyzed whether the claims against the institutional defendants could nevertheless proceed. Id. at 294, 731 N.W.2d 29.
The Court first noted that Al-Shimmari's claims against the institutional defendants were premised solely on their vicarious liability for Rengachary's alleged negligence (there were no claims against the institutional defendants involving direct liability). Id. at 285, 294-295, 731 N.W.2d 29. The Court then examined MCR 2.504(B)(3) and determined that the dismissal of the claim against Rengachary constituted an adjudication on the merits under that rule. Id. at 295, 731 N.W.2d 29. Because the dismissal of the claim against Rengachary amounted to a dismissal on the merits, Al-Shimmari could no longer argue the merits of the claim against Rengachary and, therefore, could not impute Rengachary's negligence to the institutional defendants. Id. at 295-296, 731 N.W.2d 29. For that reason, the Supreme Court determined that Al-Shimmari's vicarious-liability claims against the institutional defendants had to be dismissed. Id. at 297, 731 N.W.2d 29.
As explained by our Supreme Court in Al-Shimmari, a principal cannot be held vicariously liable for his or her agent's alleged tort if the trial court dismisses the claim against the agent and that dismissal constitutes an adjudication on the merits. This is so because the plaintiff can no longer argue the merits of
If a plaintiff's claim against the principal does not involve an agent's breach of a duty that the agent separately owed to the third party, that claim does not involve true vicarious liability and the dismissal of the plaintiff's claims against the agent will not constitute an adjudication on the merits as to whether the agent's acts or omissions constitute the breach of duty independently owed by the principal. Similarly, in those situations in which a plaintiff has alleged separate claims of vicarious and direct liability against the principal on the basis of an agent's conduct, the dismissal of the claims — if any — against the agent will only constitute an adjudication on the merits as to those claims against the principal involving true vicarious liability. Accordingly, if Bailey's remaining claims against Evergreen and Radney are not solely based on vicarious liability — that is, do not solely depend on holding Evergreen and Radney liable for a tort committed by Baker and Campbell — the dismissal of the claims against Baker and Campbell will not constitute an adjudication on the merits under Al-Shimmari.
In his second amended complaint, Bailey did allege that Evergreen and Radney were vicariously liable for any torts committed by Hi-Tech, Baker, or Campbell. But he also alleged that his injuries were caused by Evergreen's failure to keep its premises safe and by both Evergreen and Radney's negligence in hiring, supervising, and retaining Hi-Tech. That is, he plainly alleged traditional claims of direct liability against both Evergreen and Radney. Although this Court eventually determined that Bailey failed to state claims against Evergreen and Radney to the extent that his complaint alleged that Evergreen and Radney had a duty to provide security or make its premises safe from criminal activity, this Court nevertheless determined that Bailey's allegations were sufficient to state a claim that Evergreen and Radney — as landlords or premises possessors — breached their duty to adequately respond to an ongoing criminal emergency. Bailey, 293 Mich.App. at 641-642, 810 N.W.2d 641. Accordingly, the claims at issue on appeal do not solely involve true vicarious liability. This is so because Bailey does not have to prove that Baker and Campbell breached a duty that they owed to him in order to establish that Evergreen and Radney breached their duty to respond to an ongoing criminal emergency.
Evergreen and Radney had a common-law duty to their invitees: they had to expedite the involvement of the police "when a situation presently occurring on the premises pose[d] a risk of imminent and foreseeable harm to identifiable invitees." Bailey, 293 Mich.App. at 636, 810 N.W.2d 641, citing MacDonald, 464 Mich, at 326, 335, 338, 628 N.W.2d 33. Their
Moreover, the fact that Evergreen or Radney contracted with Hi-Tech to meet their duty to involve the police did not relieve them of direct liability should Hi-Tech fail to perform its contractual duty. Fultz, 470 Mich. at 467-468 n. 2, 683 N.W.2d 587. See also Samuelson v. Cleveland Iron Mining Co., 49 Mich. 164, 172-173, 13 N.W. 499 (1882) (COOLEY, J.) (explaining that, when the "duty which has been neglected is personal to the master himself," it does not matter that an agent or employee neglected the duty; in such cases the principal remains liable in his or her own right). Because Bailey's remaining claims against Evergreen and Radney involve direct liability rather than true vicarious liability, the trial court's decision to dismiss the claims against Baker and Campbell does not implicate Al-Shimmari's holding that the principal cannot be held vicariously liable when the court dismisses on the merits the negligence claims against the agent.
We acknowledge that it might appear incongruous to hold that a principal can be liable for a breach of duty that was caused by its employee or agent's actions while nevertheless holding that the employee or agent's actions do not amount to a breach of duty by the employee or agent in his or her individual capacity. This is particularly true where, as here, the principal's duty would not have been triggered had its security personnel not been informed of the ongoing emergency.
But the same would be true even if Hi-Tech and its employees had not been in the business of providing security. If Evergreen and Radney had hired Hi-Tech to provide maintenance, and had Baker and Campbell been informed of the ongoing emergency while they were conducting maintenance, the outcome might be the same; Bailey could similarly have alleged that Baker and Campbell were Evergreen and Radney's agents, that Evergreen and Radney had notice of the ongoing emergency through their agents, and that their knowledge triggered a duty to involve the police, which Evergreen and Radney breached by failing to call the police. See New Props., Inc. v. George D. Newpower, Jr., Inc., 282 Mich.App. 120, 134, 762 N.W.2d 178 (2009) (discussing the doctrine of imputed knowledge). Here, Bailey alleged a direct cause of action against Evergreen and Radney. Should Evergreen or Radney be found liable for their purported agents' failure to properly perform their contract, Evergreen and Radney are not without a remedy: they may seek damages for their agents' breach of the agency agreement or security contract. See Fultz, 470 Mich. at 467-468 n. 2, 683 N.W.2d 587.
The trial court did not err when it determined that Bailey failed to allege that Hi-Tech breached a duty to him that was separate and distinct from its obligations under its agreement with Evergreen to provide security services. For that reason, we again conclude that the trial court properly dismissed Bailey's claim against Hi-Tech. Bailey's remaining claims
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. As the prevailing party, Bailey may tax his costs. MCR 7.219(A).
BECKERING, P.J., and WHITBECK and M.J. KELLY, JJ., concurred.
