Miller–Davis Co. v. Ahrens Constr., Inc.

• Decision Date: 22 March 2012
• Docket Number: Docket No. 284037.
• Citation: 296 Mich.App. 56,817 N.W.2d 609
• Parties: MILLER–DAVIS COMPANY v. AHRENS CONSTRUCTION, INC. (ON REMAND).
• Court: Court of Appeal of Michigan — District of US

296 Mich.App. 56

817 N.W.2d 609

MILLER–DAVIS COMPANY

v.AHRENS CONSTRUCTION, INC. (ON REMAND).

Docket No. 284037.

Court of Appeals of Michigan.

Submitted Sept. 1, 2011, at Lansing.

Decided March 22, 2012, at 9:10 a.m.

Howard & Howard Attorneys, P.C. (by Scott Graham), and Gemrich Law PLC (by Alfred J. Gemrich) for Miller–Davis Company.

Field & Field, P.C., Kalamazoo (by Samuel T. Field), for Ahrens Construction, Inc.

Before: JANSEN, P.J., and HOEKSTRA and MARKEY, JJ.

PER CURIAM.

In this case, defendant ¹ appealed the judgment entered for plaintiff after a bench trial on plaintiff's breach of contract claims. Plaintiff filed a cross-appeal of a judgment of no cause of action on its claim for contractual indemnity. This Court held that MCL 600.5839(1) time-barred plaintiff's claims. Miller–Davis Co. v. Ahrens Constr., Inc., 285 Mich.App. 289, 292, 312–313, 777 N.W.2d 437 (2009). Our Supreme Court reversed, holding that “ MCL 600.5839 is limited to tort actions.” Miller–Davis Co. v. Ahrens Const., Inc., 489 Mich. 355, 371, 802 N.W.2d 33 (2011). The Court concluded that the general six-year period of limitations applicable to actions for breach of contract, MCL 600.5807(8), which “runs from the date the ‘claim first accrued,’ ” applied in this case. Miller–Davis, 489 Mich. at 358, 802 N.W.2d 33. “Because there [was] a question about the date plaintiff's action accrued,” the Court remanded the case to this Court “to resolve this issue, as well as other issues not yet considered.” Id. Later, the Court indicated that on remand this Court should apply MCL 600.5807(8) and, “if necessary, [consider] the remaining issues raised in the appeal and cross-appeal.” Id. at 372, 802 N.W.2d 33. We reverse in part, affirm in part, and remand for entry of judgment for defendant.

We review de novo as a question of law whether a claim is barred by a statute of limitations. Scherer v. Hellstrom, 270 Mich.App. 458, 461, 716 N.W.2d 307 (2006).

We are to apply MCL 600.5807, which provides:

No person may bring or maintain any action to recover damages or sums due for breach of contract, or to enforce the specific performance of any contract unless, after the claim first accrued to himself or to someone through whom he claims, he commences the action within the periods of time prescribed by this section.

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(8) The period of limitations is 6 years for all other actions to recover damages or sums due for breach of contract. [Emphasis added.]

Thus, MCL 600.5807(8) requires that an action to recover damages for breach of contract must be brought within six years after the claim first accrued. Miller–Davis, 489 Mich. at 358, 802 N.W.2d 33;Blazer Foods, Inc. v. Restaurant Properties, Inc., 259 Mich.App. 241, 245, 673 N.W.2d 805 (2003).

With respect to accrual of a claim, MCL 600.5827 provides that except for cases covered by MCL 600.5829 to MCL 600.5838, “[a] claim accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results.” Sections 5829 to 5838 cover claims relating to possession of land, a mutual and open account, warranty, common carriers, life insurance, installment contracts, alimony, and malpractice. None of these provisions applies in this case. Although plaintiff presents arguments in its supplemental brief regarding certain warranty provisions, plaintiff's complaint did not include a claim for breach of warranty. Miller–Davis, 489 Mich. at 359, 802 N.W.2d 33;Miller–Davis, 285 Mich.App. at 306, 777 N.W.2d 437.

A contract claim accrues when the wrong occurs, i.e., when the promise is breached, regardless of when damage results. MCL 600.5827; Seyburn, Kahn, Ginn, Bess, Deitch & Serlin, PC v. Bakshi, 483 Mich. 345, 355, 771 N.W.2d 411 (2009); Tenneco Inc. v. Amerisure Mut. Ins. Co., 281 Mich.App. 429, 458, 761 N.W.2d 846 (2008). The “wrong” on which the contract claim is based is determined by examining the parties' contract. Tenneco, 281 Mich.App. at 458, 761 N.W.2d 846, citing Scherer 270 Mich.App. at 463, 716 N.W.2d 307. Although plaintiff asserts the breach of a so-called charge-back clause and an indemnification clause, the underlying basis for its claim is that defendant breached a contract condition providing that “[a]ll materials and/or work furnished on this order shall comply with the terms and requirements of the plans and specifications—where applicable.” ²

Plaintiff was the general contractor on a construction project that included building a natatorium for a YMCA recreational complex, and defendant was a subcontractor with the responsibility of installing a proprietary wooden roofing system over which other roofing materials would be installed by other subcontractors. Miller–Davis, 285 Mich.App. at 292–293, 309, 777 N.W.2d 437. The wrong that plaintiff alleged with respect to defendant's having failed to “comply with the terms and requirements of the plans and specifications” of the contract must have occurred on or before defendant completed its portion of the overall construction project. This conclusion is consistent with this Court's prior decisions. “A cause of action for breach of a construction contract accrues at the time work on the contract is completed.” Employers Mut. Cas. Co. v. Petroleum Equip., Inc., 190 Mich.App. 57, 63, 475 N.W.2d 418 (1991), citing Buckley v. Small, 52 Mich.App. 454, 455–456, 217 N.W.2d 422 (1974). In our prior opinion, we addressed the date when defendant completed its work on the project. In particular, we noted that defendant completed its work on the project by the end of February 1999 and certified to plaintiff that the work was complete on April 26, 1999, for the purpose of being paid.

By the end of February 1999, defendant completed all its tasks regarding constructing the roof system, including installing all the wood parts, the vapor barrier, the T's and sub-T's [superstructures], the insulation, all of which were covered by [oriented strand board] nailed on top of two-by-four inch “sleepers” running perpendicular over the T's to the top ridge of the roof.... Defendant certified to plaintiff that it had completed its work on the roof on April 26, 1999, and plaintiff paid defendant for this work the next day.

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... [I]t is undisputed, and the trial court so found, that defendant completed its work on its part of the natatorium's roof by the end of February 1999. Thereafter, the evidence clearly establishes that another contractor completed the final phase of the roof's construction by attaching the roofing felt and the standing seam steel skin. Plaintiff's exhibit 9, the minutes of a work-progress meeting on February 18, 1999, indicates that over the prior two weeks Ahrens completed its roof work at the recreational building, and that work for the next two weeks contemplated subcontractor Architectural Glass & Metals' completing the metal roof at the recreation building. [Miller–Davis, 285 Mich.App. at 296–297, 309, 777 N.W.2d 437.]

We have not been presented any reason to revisit this analysis of when defendant completed the work it contracted with plaintiff to perform. Because defendant completed its work on the roof by the end of February 1999, the breach that plaintiff alleged—that defendant had failed to comply with the terms and requirements of the plans and specifications—must have occurred by that date. Further, because plaintiff did not file its complaint until May 12, 2005, more than six years after February 1999 and more than six years after plaintiff accepted the work through its payment at the end of April 1999, the statute of limitations barred those claims. MCL 600.5807(8); Buckley, 52 Mich.App. at 455–456, 217 N.W.2d 422.

Plaintiff asserts in its supplemental brief on remand that defendant waived application of the statute of limitations by not briefing and arguing the proper statute, MCL 600.5807(8). We find this argument disingenuous and reject it. At the outset of this case, defendant set forth several affirmative defenses to plaintiff's complaint. The affirmative defense defendant first asserted was the statute of repose. The second affirmative defense that defendant set forth was that plaintiff's claim was barred by the applicable statute of limitations. Throughout this litigation, in the trial court and on appeal, plaintiff has argued that MCL 600.5807(8) is the proper statute to determine whether its complaint was timely; defendant has argued that MCL 600.5839(1) was the proper statute for doing so. Our Supreme Court has now resolved the issue and remanded the case for this Court to apply MCL 600.5807(8) to determine whether plaintiff's breach of contract claims are time-barred. We find no reason not to comply with the remand instructions.

Plaintiff also argues that its claim accrued on June 11, 1999, the date the construction project was certified as being substantially complete by the YMCA, the architect, and plaintiff. Alternatively, plaintiff asserts that the date the certificate of occupancy was issued, August 2, 1999, is the pertinent accrual date. For the reasons already discussed, we reject these alternative accrual dates as applicable to when the purported breach of contract—the wrong—occurred. We note that the date of substantial completion, June 11, 1999, fixed the beginning of the one-year guarantee period that defendant provided regarding its work. Although the natatorium moisture problem was apparent almost immediately after occupancy, plaintiff made no claim against defendant during the guarantee period.³

Plaintiff also asserts that defendant breached its contract in 2003 when defendant refused plaintiff's demand for corrective work that required deconstructing the natatorium's roof and reconstructing it according to a modified design that included application of a waterproofing element not in the original plans and specifications. Plaintiff asserts that defendant's refusal to perform the corrective work was a breach of the contract's so-called charge-back clause....