Staffney v. Michigan Millers Mut. Ins. Co.

• Decision Date: 28 February 1985
• Docket Number: Docket Nos. 71761,75321
• Citation: 140 Mich.App. 85,362 N.W.2d 897
• Court: Court of Appeal of Michigan — District of US
• Parties: William T. STAFFNEY and Williatte Staffney; Larry A. Fess and Karen L. Fess; The Estate of Jack R. Storm, Deceased, by Rae Joyce Storm, executrix; The Estate of Glenn R. Horney, Deceased, by Margaret Joan Horney, Administratrix; The Estate of Clifford W. Schumann, Deceased, by Susanne M. Schumann, Administratrix; Terry D. Shaffer; James H. Nugent, Sr.; Joseph D. Harnandez; Russell I. Kime and Rachele M. Kime, Plaintiffs-Appellants, v. MICHIGAN MILLERS MUTUAL INSURANCE COMPANY; a Michigan corporation; Association of Mill & Elevator Mutual Insurance Companies, a/k/a "The Mill Mutuals", jointly and severally, Defendants-Appellees, and Stout Construction Company, Inc., an Ohio corporation, and New Hampshire Indemnity Company, Inc., a New Hampshire corporation, Defendants. Erma J. O'DELL, Special Administratrix of the Estate of Bruce D. O'Dell, Deceased; Harold E. Spencer, Jr., and June Spencer, Plaintiffs-Appellants, v. MICHIGAN MILLERS MUTUAL INSURANCE COMPANY, a Michigan corporation, Association of Mill & Elevator Mutual Insurance Companies, a/k/a "The Mill Mutuals", jointly and severally, Defendants-Appellees, and Stout Construction Company, Inc., an Ohio corporation, Defendant.

Page 897

362 N.W.2d 897

140 Mich.App. 85

William T. STAFFNEY and Williatte Staffney; Larry A. Fess

and Karen L. Fess; The Estate of Jack R. Storm, Deceased,

by Rae Joyce Storm, executrix; The Estate of Glenn R.

Horney, Deceased, by Margaret Joan Horney, Administratrix;

The Estate of Clifford W. Schumann, Deceased, by Susanne M.

Schumann, Administratrix; Terry D. Shaffer; James H.

Nugent, Sr.; Joseph D. Harnandez; Russell I. Kime and Rachele M. Kime, Plaintiffs-Appellants, v. MICHIGAN MILLERS MUTUAL INSURANCE COMPANY; a Michigan

corporation; Association of Mill & Elevator

Mutual Insurance Companies, a/k/a "The

Mill Mutuals", jointly and

severally,

Defendants-Appellees,

and

Stout Construction Company, Inc., an Ohio corporation, and

New Hampshire Indemnity Company, Inc., a New

Hampshire corporation, Defendants.

Erma J. O'DELL, Special Administratrix of the Estate of Bruce D. O'Dell, Deceased; Harold E. Spencer, Jr., and June Spencer, Plaintiffs-Appellants, v. MICHIGAN MILLERS MUTUAL INSURANCE COMPANY, a Michigan

corporation, Association of Mill & Elevator Mutual

Insurance Companies, a/k/a "The Mill

Mutuals", jointly and

severally,

Defendants-Appellees,

and

Stout Construction Company, Inc., an Ohio corporation, Defendant.

Docket Nos. 71761, 75321.

Court of Appeals of Michigan.

Submitted Oct. 4, 1984.

Decided Jan. 3, 1985.

Rehearing Denied Feb. 22, 1985.

Released for Publication Feb. 28, 1985.

Cicinelli, Mossner, Majoros & Alexander, P.C. by Eugene D. Mossner, Saginaw, for plaintiffs Staffney, Fess, Storm and Horney.

Van Benschoten, Hurlburt & Van Benschoten, P.C. by Harvey E. Van Benschoten and Lawrence A. Hurlburt, Saginaw, for plaintiffs O'Dell and Spencer.

McGraw & Borchard, P.C. by John W. McGraw, and Purcell, Tunison & Cline, P.C. by George M. Tunison, and Otto & Otto by Howard S. Otto, Saginaw, of counsel, for Michigan Millers Mut. Ins. Co.

Harvey, Kruse, Westen & Milan, P.C. by John A. Kruse and Michael F. Schmidt, Detroit, for Ass'n of Mill & Elevator Mut. Ins. Companies.

Before: CYNAR, P.J., and KELLY and R.L. EVANS, ^* JJ.

PER CURIAM.

Plaintiffs appeal as of right from the trial court's grant of summary judgment in favor of the defendants.

These cases have a considerable procedural history. The incident which precipitated the cases was an explosion and fire which occurred at the grain storage facility of the Michigan Elevator Exchange, a division of Farm Bureau Services Inc., on January 22, 1976. The circuit court granted summary judgment in favor of all the defendants in both cases.

Appeals by plaintiffs were taken independently to this Court. In Staffney v. Fireman's Fund Ins. Co., 91 Mich.App. 745, 753, 284 N.W.2d 277 (1979), this Court ruled that the trial court erred in granting summary judgment as to the fire insurance carriers Michigan Millers Mutual Insurance Company (Michigan Millers) and Association of Mill & Elevator Mutual Insurance Companies (Mill Mutuals). A memorandum opinion reaching the same conclusion was also issued in the case involving plaintiff O'Dell (No. 75321). (Docket No. 78-1526, decided September 13, 1979 [unreported] )

Defendants Michigan Millers and Mill Mutuals applied for leave to appeal to the Michigan Supreme Court. The leave applications were held in abeyance pending decision in Smith v. Allendale Mutual Ins. Co., 410 Mich. 685, 303 N.W.2d 702 (1981). After the decision in Smith v. Allendale Mutual Ins. Co., supra, was announced, the Supreme Court issued an order vacating the judgment of the Court of Appeals in these cases and remanding the cases to the circuit court for further proceedings consistent with Smith v. Allendale Mutual Ins. Co., supra. See, 411 Mich. 947, 308 N.W.2d 102 (1981).

Motions for summary judgment were again brought in the trial court by defendants pursuant to GCR 1963, 117.2(1) and (3). Relying on Smith v. Allendale Mutual Ins. Co., the trial court granted the motions for summary judgment based on GCR 1963, 117.2(1) and (3) in Staffney (No. 71761) and O'Dell (No. 75321) on May 16, 1983, and November 22, 1983, respectively. The plaintiffs again appealed to this Court as of right. The appeals were consolidated by this Court.

The dispositive issue is whether plaintiffs have stated a claim on which relief can be granted. In deciding this question we consider the plaintiffs' respective amended complaints in light of the Michigan Supreme Court's opinion in Smith v. Allendale Mutual Ins. Co., supra. Initially we note that summary judgment in both actions was granted after the plaintiffs had amended their complaints. In their amended complaints plaintiffs again attempted to assert a cause of action under 2 Restatement Torts, 2d, § 324A, p. 142, which states:

"One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if "(a) his failure to exercise reasonable care increases the risk of such harm, or

"(b) he has undertaken to perform a duty owed by the other to the third person, or

"(c) the harm is suffered because of reliance of the other or the third person upon the undertaking."

Pertinent amendments to the complaint alleged that defendants inspected the premises and offered suggestions on fire prevention and control of welding activities to the grain elevator operators. The only difference we can discern from the allegations here and the complaints discussed in Smith v. Allendale Mutual Ins. Co., supra, are the allegations that defendants suggested a welding work practice program.

In Smith, supra, 303 N.W.2d, p. 705, the Court held that the threshold requirement in an action under § 324A is that the defendant must have undertaken to render services to another. The Court stated:

"We conclude, as did the dissenting judge in Sabraw, that the threshold requirement of an undertaking to render services to another is lacking in these cases. An insurer's inspection of an insured's premises for fire hazards does not in itself demonstrate an undertaking to render fire inspection and prevention services to the insured. Absent evidence that the insurer agreed or intended to provide services for the benefit of the insured, there is no basis for a conclusion that such inspections are conducted other than to serve the insurer's interests in underwriting, rating and loss prevention and hence there is no undertaking. An insurer who does not undertake to inspect for the insured's benefit owes no duty to the insured or the insured's employees to inspect with reasonable care; such an insurer is, however, subject to liability if it engages in affirmative conduct creating or enlarging a fire hazard." Smith, 303 N.W.2d, pp. 705-706.

The allegations stated in the complaints in the cases now before us do not allege that the defendants' undertaking was a service intended for the benefit of the insured. The allegations in the complaints before us demonstrate merely that a benefit was conferred upon the insured. An allegation that a gratuituous benefit was conferred is not sufficient to support the legal imposition of a...