Koenig v. City of South Haven, Docket No. 180870

• Decision Date: 21 February 1997
• Docket Number: Docket No. 180870
• Citation: 562 N.W.2d 509,221 Mich.App. 711
• Parties: Carol J. KOENIG, Individually and as Personal Representative of the Estate of Jennifer Lynn Koenig, Deceased; and Frederick G. Koenig, Plaintiffs-Appellants/Cross-Appellees, and Department of Social Services and Attorney General, Intervening Plaintiffs, v. CITY OF SOUTH HAVEN, Scott Ratter, and Tom Allred, Defendants-Appellees/Cross-Appellants, and Allen Vanderberg, Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 509

562 N.W.2d 509

221 Mich.App. 711

Carol J. KOENIG, Individually and as Personal Representative of the Estate of Jennifer Lynn Koenig, Deceased and Frederick G. Koenig Plaintiffs-Appellants/Cross-Appellees and Department of Social Services and Attorney General Intervening Plaintiffs, v. CITY OF SOUTH HAVEN, Scott Ratter, and Tom Allred, Defendants-Appellees/Cross-Appellants, and Allen Vanderberg, Defendant.

Docket No. 180870.

Court of Appeals of Michigan.

Submitted Jan. 14, 1997, at Detroit.

Decided Feb. 21, 1997, at 9:40 a.m.

Released for Publication April 30, 1997.

Chambers Steiner by Angela J. Nicita and Franklin J. Chambers, Detroit, for plaintiffs-appellants/cross-appellees.

Cummings, McClorey, Davis & Acho, P.C. by Gail P. Massad, Livonia, for the City of South Haven, Scott Ratter, and Thomas Allred.

Before DOCTOROFF, P.J., and HOOD and P.J. SULLIVAN ^*, JJ.

PER CURIAM.

Plaintiffs appeal as of right from the trial court's order granting defendant City of South Haven's motion for summary disposition. Plaintiffs also appeal from the judgment entered pursuant to a jury verdict finding no cause of action in favor of the individual defendants. Plaintiffs argue that the trial court erred in excluding certain testimony from lay and expert witnesses. Finally, plaintiffs contend that the trial court erred in failing to take judicial notice of certain Michigan statutes. On cross appeal, defendants allege that the trial court erred in denying their motions for a directed verdict and summary disposition. We find that the trial court erred in granting defendant City of South Haven's motion for summary disposition. We also find that the trial court erred in failing to grant defendants' motion for a directed verdict with regard to plaintiffs' claim of gross negligence against the individual defendants. We affirm with regard to all other issues.

In this case, on May 10, 1990, in South Haven, Michigan, a large wave swept Jennifer Lynn Koenig off a pier extending into Lake Michigan. Although she was alive when rescued, she suffered severe and permanent injuries due to prolonged exposure and anoxia. She died in July 1995. At the time of the accident, the weather was drizzly, cold, and windy, and Lake Michigan was "wavy." In their complaint, plaintiffs, the parents of the deceased, alleged that defendants had assumed a duty to erect barricades that, during periods of dangerous lake conditions, would prevent access to the pier off which the deceased was swept.

In support of their claim that defendants had a contractual duty to prevent access to the pier in times of inclement weather, plaintiffs presented a document entitled "Memorandum of Understanding" (MOU) between the Detroit District Corps of Engineers and defendant City of South Haven. Plaintiffs alleged that the MOU obligated defendants to lock the gates to the pier when danger to persons or property warranted the closing. Plaintiffs further alleged that Jennifer Koenig, as an individual using the pier during inclement weather, was a third-party beneficiary of that contract.

For an individual to sue on a contract to which the individual is not a party, it must be determined that the individual was an intended third-party beneficiary of the contract. Rhodes v. United Jewish Charities of Detroit, 184 Mich.App. 740, 744, 459 N.W.2d 44 (1990). Third-party beneficiary law in Michigan is controlled by statute. M.C.L. § 600.1405; M.S.A. § 27A.1405 provides in pertinent part:

Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee.

(1) A promise shall be construed to have been made for the benefit of a person whenever the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person.

The test for whether a person is a third-party beneficiary of a contract is objective; "the subjective intent of the parties to the contract is irrelevant." Alcona Community Schools v. Michigan, 216 Mich.App. 202, 205, 549 N.W.2d 356 (1996). Where the contract is primarily for the benefit of the parties thereto, the fact that a third party is incidentally benefitted does not confer rights on that person as a third-party beneficiary. Id. The law presumes that a contract has been executed for the benefit of the parties thereto, thus plaintiffs had the burden of proving that the decedent was an intended beneficiary of the contract. Malesev v. Garavaglia, 12 Mich.App. 282, 286, 162 N.W.2d 844 (1968); Moore Construction Co., Inc. v. Clarksville Dep't of Electricity, 707 S.W.2d 1, 9 (Tenn.App., 1985). The contract itself reveals the parties' intentions. Rhodes, supra.

In granting summary disposition for defendant City of South Haven on plaintiffs' third-party beneficiary claim, the trial court stated:

Applying the objective test, we see that the City merely undertook the responsibility to manage the operation of the fence. The Corps of Engineers and the City made a promise to each other, not to every citizen who visits the South Haven North Pier....

Thus, we hold that plaintiff does not have [third-party beneficiary] status. This issue is not a question of fact, and therefore, will not go before the jury at trial. On the [third-party beneficiary] theory the plaintiff has failed to state a claim upon whether [sic: which] relief can be granted so summary disposition is proper.

Upon review de novo, Borman v. State Farm Fire & Casualty Co., 198 Mich.App. 675, 678, 499 N.W.2d 419 (1993), aff'd 446 Mich. 482, 521 N.W.2d 266 (1994), we disagree with the trial court and reverse its order of summary disposition with regard to this issue.

In contending that the MOU was intended to benefit individuals such as the decedent, who used the pier during inclement weather, plaintiffs relied exclusively on the language of the MOU. Section I of the agreement stated:

Purpose: This Memorandum of Understanding establishes general guidelines concerning the furnishing of assistance by the City of South Haven in regulating the use of Federal Navigation structures within the City of South Haven, Michigan, during periods of inclement weather or when danger to persons or property exists, as authorized herein.

Pursuant to Section III of the MOU, the Corps of Engineers was to furnish and install fence-type barricades at the entrance to the piers, and the City of South Haven was "granted responsibility for coordinating and controlling entrance to the existing Federal navigational structures at the South Haven Harbor, during period [sic] of inclement weather." Section III(C) conferred upon the city the responsibility of determining when the gates were to be opened and closed.

Section V of the MOU stated as follows:

Federal Pier Regulations: The public shall be restricted from the North and South Federal Piers in the City of South Haven during periods of inclement weather and when great danger to persons or property exists, said times to be determined by the city manager, or a person designated by him. Gates will be locked during each emergency and reopened immediately thereafter.

The MOU became effective on January 27, 1972.

In our extensive research of third-party beneficiary law in Michigan and other jurisdictions, we were unable to find a case with a fact pattern similar to the instant situation. As noted by defendants, most cases involving third-party beneficiary rights confer those benefits on a particular class of individuals. However, we note that the statute does not limit potential third-party beneficiaries to narrowly defined groups, but allows such status to "[a]ny person for whose benefit a promise is made by way of contract...." M.C.L. § 600.1405; M.S.A. § 27A.1405 (emphasis added). Similarly, we were able to find no case law that would restrict intended third-party beneficiaries to a limited group. ¹ Thus, although the class plaintiff alleges to be third- party beneficiaries could be virtually any member of the public who used the government pier during times of inclement weather, we find that the law does not prohibit such a class from being intended beneficiaries of the contract between defendant city and the Corps of Engineers.

The question then becomes whether plaintiffs' decedent was an intended beneficiary of the alleged contract ² between defendant city and the Corps of Engineers. This determination must be made on the basis of an objective reading of the MOU. Rhodes, supra. As noted above, under the MOU, defendant city agreed to restrict public access to the piers in the City of South Haven "during periods of inclement weather and when great danger to persons or property exists." We find that the clear intention of the parties in entering into the MOU was to protect the safety of individuals who would attempt to use the pier during times of dangerous weather. Plaintiffs' complaint plainly alleged that their decedent was such an individual.

In finding that plaintiffs' decedent was an intended third-party beneficiary of the MOU, we find instructive the Alabama case of Holley v. St. Paul Fire & Marine Ins. Co., 396 So.2d 75 (Ala.1981). There, the plaintiff injured herself while visiting a hospital, allegedly because of inadequate lighting. She sued under a third-party beneficiary theory, alleging that the hospital had a contract with the defendant to maintain the hospital, which the defendant breached. The court, finding a third-party beneficiary relationship existed, stated:

Can there be any doubt that the hospital board does not make a maintenance contract for the direct benefit of the board members themselves? For whom does the board maintain the hospital? Obviously for those who will inhabit it for purposes of treatment, rehabilitation and cure. We may take judicial knowledge that visitors are not discouraged from using hospital facilities...