Borman's, Inc. v. Lake State Development Co.

• Decision Date: 07 April 1975
• Docket Number: No. 3,Docket No. 19287,3
• Citation: 60 Mich.App. 175,230 N.W.2d 363
• Parties: BORMAN'S, INC., Plaintiff-Appellant, v. LAKE STATE DEVELOPMENT CO. et al., Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 363

230 N.W.2d 363

60 Mich.App. 175

BORMAN'S, INC., Plaintiff-Appellant, v. LAKE STATE DEVELOPMENT CO. et al., Defendants-Appellees.

Docket No. 19287.

Court of Appeals of Michigan, Division No. 3.

April 7, 1975.

Rehearing Denied June 16, 1975.

Released for Publication June 26, 1975.

Parmenter, Forsythe & Rude by Steven G. Schember, Muskegon, for plaintiff-appellant.

White, Spaniola, Knudsen, Stariah & Potuznik, P.C. by Harry J. Knudsen, Muskegon, for Lake State.

Cholette, Perkins & Buchanan by Edward D. Wells, Grand Rapids, for Terrill, etc.

Warner, Norcross & Judd by Paul K. Gaston, Grand Rapids for Tri-Cities.

Before BRONSON, P.J., and CAVANAGH and WALSH, JJ.

WALSH, Judge.

This is an appeal from an order granting defendants' motions for summary judgment for failure to state a cause of action, GCR 1963, 117.2(1).

The plaintiff Borman's, Inc. entered into a lease agreement on May 9, 1966, with one of the defendants, Lake State Development Co., whereby Lake State agreed to construct a shopping center and warranted that storm and sanitary sewers would be 'available to the leased premises'.

Lake State Development Co. contracted with defendant Tri-Cities Construction and Supply Co. for the construction of the sewers; and Tri-Cities Construction and Supply Co. in turn retained the defendant architect firm Terrill, Kistler, and Anderson, Inc. to design the drain system. For convenience the defendants will be referred to in the opinion as 'Lake State', 'Tri-Cities' and 'Terrill'.

Borman's alleged in a complaint filed on October 23, 1970, that the drainage system did not function properly, 'with the result that plaintiff experienced flooding in its truck wells, garden center, and over substantial portions of the parking area serving plaintiff's premises'. Count I of this complaint alleges that Lake State breached an express warranty contained in the lease to provide an adequate drainage system. Count II alleges that the negligent and improper construction of the drainage system by Tri-Cities constituted a breach of express and implied warranties. Similar allegations were asserted against Terrill in Count III. The damages in the amount of $91,055.34 included expenditures for the repair and reconstruction of the drainage system, loss of profits and damage to its reputation.

Motions for summary judgment were filed by all three defendants, although it is unclear whether they were brought under GCR 1963, 117.2(1) or (3). The defendants also moved for accelerated judgment, GCR 1963, 116.1(5), on the ground that the applicable statute of limitations had run on plaintiff's claim.

A hearing was held on the defendants' various motions, during which Borman's moved to amend its complaint to add three additional counts. The first two counts alleged fraudulent concealment of the inadequacy of the drainage system by defendants Tri-Cities and Terrill. The third was an allegation that Tri-Cities had breached a contract to repair, reconstruct or maintain the system entered into subsequent to its completion.

The trial judge denied Borman's motion to amend and granted all three defendants' motions for summary judgment on the ground that the plaintiff had failed to state a claim upon which relief could be granted. The court accordingly declined to rule on the motions for accelerated judgment.

I. THE SUMMARY JUDGMENT ISSUE

As previously stated, it is unclear whether the parties' motions were based on GCR 1963, 117.2(1) or (3). Terrill's was certainly brought under both. But no affidavits were filed with any of these motions. Since this failure ordinarily means automatic reversal of a summary judgment granted under subsection 3, DeMare Bros. Construction, Inc. v. Teska, 49 Mich.App. 642, 646, 212 N.W.2d 602 (1973), we consider the present motions as if they were based solely on plaintiff's failure to state a claim under subsection 1.

A motion based solely on subsection 1, challenges the legal sufficiency of a plaintiff's claim and is to be considered by an examination of the pleadings alone. Todd v. Biglow, 51 Mich.App. 346, 349, 214 N.W.2d 733 (1974). Our job as a reviewing court is to accept as true the well-pleaded facts in plaintiff's complaint, againt each defendant, Weckler v. Berrein County Road Commission, 55 Mich.App. 7, 9, 222 N.W.2d 9 (1974), and to determine whether these claims are so 'clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery'. Crowther v. Ross Chemical & Manufacturing Co., 42 Mich.App. 426, 431, 202 N.W.2d 577, 580 (1972).

A. Borman's Claim Against Lake State

The relevant portions of plaintiff's claim against Lake State alleged the following:

1. Pursuant to the lease agreement 3(b) Lake State warranted that storm and sanitary sewers would be available to the plaintiff during the term of the lease.

2. Paragraph 6(b) of the lease ¹ contained a one-year service guarantee on all the improvements to be constructed by Lake State.

3. Since the opening of the shopping center the drainage system on a number of occasions failed to adequately drain the rain surface water from the parking area, truck wells, and garden center.

4. Despite plaintiff's giving timely notice to Lake State on each such occasion of the inadequacy of the drainage system, Lake State did nothing to remedy the situation. Plaintiff, therefore, was forced to expend approximately $41,000 to repair and ultimately reconstruct the entire system.

The existence of the contract or lease agreement is certainly not disputed. Furthermore, the plaintiff has alleged a breach of specific provisions of that agreement and substantial damages flowing therefrom. Plaintiff, at the very minimum, states a cause of action for the breach of the 6(b) service warranty and another for the breach of the wrranty that storm and sanitary sewers would be available to the leases premises (3(b)). The trial court, therefore, erred in granting Lake State's motion for summary judgment. If the facts were as Borman's has stated, it clearly has a cause of actin against Lake State. Davis v. Kramer Brothers Freight Lines, Inc., 361 Mich. 371, 376--377, 105 N.W.2d 29 (1960).

B. Borman's Claim Against Tri-Cities

Borman's count against Tri-Cities alleges that 'improper and negligent construction' of the drainage system constituted a breach of its warranties to Lake State which warranties were assigned by that defendant to Borman's under 6(b) of the lease. (See fn. 1.) The complaint further states that Tri-Cities breached a warranty made directly to the plaintiff 'that such drainage system would be fit for the particular purpose for which it was intended' and that it would be 'usable' by the plaintiff.

Tri-Cities' response to these allegations is that the plaintiff's claims against it, under the assignment of warranties clause in the lease agreement (6(b)) are limited by the 90-day notice provisions contained in 3(g). ² It is also urged that Tri-Cities' construction contract with Lake State contained no warranties which could have been assigned to Borman's. As the Michigan Supreme Court stated in Davis v. Kramer Brothers Freight Lines, Inc., Supra, at 377, 105 N.W.2d at 32:

'What defendant is really insisting is that it has ample defenses, not that no cause of action has been stated. Such matters are not triable upon affidavits upon a motion to dismiss.'

Nor are such issues to be litigated in appellate briefs submitted to this court. They involve the practical interpretation of portions of at least two written agreements and as to these issues the plaintiff is entitled to a trial on the merits.

C. Borman's Claim Against Terrill

In Count III of its complaint, plaintiff claims the assignment of any warranties which Terrill may have made to Lake State. But the pleading fails to allege the existence of an express warranty made by Terrill to Tri-Cities; nor does it allege an assignment by the latter firm to Lake State of any warranties between Tri-Cities and Terrill.

The essence of plaintiff's claim against this defendant architect firm seems to be that Terrill Impliedly warranted, when they agreed to design a drain system for Tri-Cities, that such system would be fit for its intended use and that Terrill's negligent design was a breach of that implied warranty. We find this position to be untenable and contrary to the law in this state.

As far back as 1898 it was held that an architect is not a warrantor of his plans and specifications. 'The law does not imply such a warranty, or the guaranty of the perfection of his plans. * * * The law requires only the exercise of ordinary skill and care, in the light of present knowledge.' Chapel v. Clark, 117 Mich. 638, 640, 76 N.W. 62 (1898).

Terrill's motion for summary judgment as to Count III of the complaint was therefore properly granted.

II. BORMAN'S MOTION TO AMEND ITS COMPLAINT

A. The Contract Cause of Action Against Tri-Cities

As previously pointed out, the plaintiff sought to amend its complaint during the hearing on the defendants' motions for summary judgment. One of the proposed counts was that Tri-Cities breached its contract with Borman's to repair the defective drainage system. Tri-Cities' contractual duty allegedly stemmed from notations written on a letter from Borman's to the general superintendent of Tri-Cities. The letter was dated August 2, 1967, but plaintiff's counsel indicated to the trial judge that the notations on the letter had been only recently discovered.

The court heard voir dire testimony from two witnesses, apparently the author and recipient of the letter, and then stated:

'And I can't say that I have heard anything this morning which would give rise to a motion to amend your pleadings, or that to even predict that you would have any success if you had amended them along the lines--it sounded to me like a tie ball game this morning between those witnesses.

'But, in any event, the plaintiff has been in possession of this...