Muzar v. Metro Town Houses, Inc., Docket Nos. 77-1434

Decision Date04 April 1978
Docket Number77-1435,Docket Nos. 77-1434
PartiesCharlotte MUZAR, Carrie Ledbetter, and Agatha Malinowski, Plaintiffs, v. METRO TOWN HOUSES, INC., a Michigan Corporation, Defendant. STATE FARM FIRE & CASUALTY CO., a Foreign Corporation, Third-Party Plaintiff, v. Francisco MOSCHELLI, Individually and d/b/a F.P.M. Cement Contracting Co., Third-Party Defendant. DEMBS BUILDING COMPANY, formerly known as Woods Building Company, a Michigan Corporation, Third-Party Defendant-Appellant and Third-Party Plaintiff, v. LEHNER ASSOCIATES, INC., a corporation, Third-Party Defendant-Appellee. 82 Mich.App. 368, 266 N.W.2d 850
CourtCourt of Appeal of Michigan — District of US

[82 MICHAPP 369] Eli Friedman, Detroit, for Dembs Bldg. Co.

William D. Booth and Michael T. Lynch, Southfield, for Lehner Associates.

Ralph H. Adams, Detroit, for Muzur, Malinowski and Ledbetter.

Rodman C. Moesta, Detroit, for State Farm.

A. David Laudani, E. Detroit, for Moschelli.

Before T. M. BURNS, P. J., and CAVANAGH and RILEY, JJ.

[82 MICHAPP 370] RILEY, Judge.

The present appeal involves a challenge to the constitutionality of M.C.L.A. § 600.5839(1); M.S.A. § 27A.5839(1), 1 the statute of limitations applicable to suits against licensed architects and engineers arising from work done in connection with improvements to real property. A short recitation of the factual and procedural history of the cases is necessary prior to our discussion of the issue.

In 1964, Metro Town Houses, Inc. contracted with Dembs Building Company for construction of a townhouse complex in Mount Clemens, Michigan. Dembs in turn contracted the design of the drainage system for the townhouse buildings to Lehner Associates, Inc., a professional engineering firm.

In 1965, three of the townhouses were sold by Metro to plaintiffs Charlotte Muzar, Carrie Ledbetter, and Agatha Malinowski. All three of the townhouses were contained within the same building. State Farm Fire and Casualty Co. insured plaintiffs against damage, including collapse, to the common building.

On January 3, 1973, the building housing the plaintiffs' townhouses collapsed, allegedly due to defects in the construction of the drainage system. [82 MICHAPP 371] In July, 1973, plaintiffs sued Metro and State Farm, jointly and severally, for breach of warranty. After Metro was discovered to be defunct, State Farm settled the plaintiffs' suit for $40,000.

In December, 1975, State Farm brought a third-party complaint against Dembs, claiming that it was subrogated to the original plaintiffs' right to seek recovery of the $40,000 from the construction company. In turn, Dembs filed a third-party action for indemnity against Lehner Associates, alleging that the collapse was caused by defective design of the drainage system.

Concurrent with these proceedings, the original plaintiffs instituted a separate lawsuit directly against Dembs, alleging a breach of warranty. Dembs again filed a third-party complaint for indemnity against Lehner.

On August 11, 1976, Lehner filed motions for accelerated judgment 2 against Dembs in both suits, arguing that the actions were barred by M.C.L.A. § 600.5839(1); M.S.A. § 27A.5389(1), since the building collapsed more than six years after completion of the work done by Lehner. In answer to the motion Dembs contended that the statute was unconstitutional as a violation of equal protection. On December 13, 1976, the trial court issued an opinion upholding the constitutionality of the statute and granting accelerated judgment to Lehner in both lawsuits. Dembs appealed the accelerated judgments to this Court, which has consolidated the matters due to the identity of the issues.

Appellant Dembs contends that the statute violates equal protection since it sets up a limited class (licensed architects and professional engineers) and exempts them from tort liability after a set time period without extending the same protections[82 MICHAPP 372] to other entities (contractors, materialmen, etc.) engaged in the construction industry and subject to related liabilities. Dembs argues that the statute arbitrarily discriminates between persons in the construction industry, claiming that none of the various justifications expressed in support of the legislation apply only to architects and engineers.

Lehner responds that the Legislature may validly limit the scope of the statute to a particular occupational class provided that there is a rational basis for the classification scheme. Lehner finds such a rational basis for this statute in the allegedly unique position of architects and engineers facing potential liability for work in connection with real property.

From the proceeding discussion it is evident that before the equal protection challenge can be reviewed and decided we must specify the standard by which we will judge the constitutionality of the statute. Under classic equal protection analysis the applicable standard depended on whether the legislation affected a "suspect" class or a fundamental right. If so, the reviewing court would apply a "strict scrutiny" test, which would require the state to show a compelling interest justifying the legislation. Manistee Bank & Trust Co. v. McGowan, 394 Mich. 655, 232 N.W.2d 636 (1975). If the legislation did not affect a suspect class or fundamental right, the burden would be on the person challenging the statute to show that there was no reasonable or rational basis for the classifications at issue. Manistee Bank, supra. In the majority of cases it appeared that the choice of the test predetermined the result, since few pieces of discriminatory[82 MICHAPP 373] legislation could withstand strict scrutiny, but some rational basis for a classification could be found. 3

In more recent cases many courts, apparently dissatisfied with the rigidity of the two-test approach, have adopted a third test as a middle-ground standard for equal protection challenges. In Manistee Bank, supra, the Michigan Supreme Court termed this test as the "fair-and-substantial-relation-to-the-object-of-the-legislation" standard. Manistee Bank, supra at 670, 232 N.W.2d at 642. 4 The Court stated:

"A commentator writes that the California Supreme Court 'applied a somewhat redefined standard of equal protection a standard requiring a "realistic", rather than merely a "legitimate", state purpose which is substantially, rather than merely rationally, supported by the classification system set up by the legislature. * * * The Court in Brown (Brown v. Merlo, 8 Cal.3d 855, 106 Cal.Rptr. 388, 506 P.2d 212 (1973)) refused to attribute to the legislature a " theoretically 'conceivable', but totally unrealistic, state purpose that might support this classification scheme" * * * '. (Emphasis in original.) In short, the California Supreme Court approached its reviewing function in a manner Professor Gunther identifies as 'means scrutiny' or 'equal protection bite without "strict scrutiny" '.

"Whatever label is attached to the analysis * * * 'the governing rule is one of reason: The Equal Protection Clause, like the Due Process Clause, is a guaranty that controls the reasonableness of governmental action'. The classification must be a reasonable one, and it must bear a reasonable relation to the object of the legislation." (Footnotes omitted.) Manistee Bank, supra at 670-671, 232 N.W.2d at 642.

[82 MICHAPP 374] The Manistee Bank Court went on to state that the "reasonable relation to the object of the legislation" test should be applied where the statute creates an exception to a general rule and that exception is no longer experimental. 394 Mich. at 671-672, 232 N.W.2d at 642. The Court then applied the test to hold Michigan's guest-passenger statute 5 unconstitutional.

We believe that the Manistee Bank test should be applied in the case at bar. No argument has been, or reasonably can be, made that the statute affects a suspect class or fundamental right, thereby eliminating the "strict scrutiny" alternative. We believe further that the statute does not fit into the category of experimental legislation that would justify application of the lower standard of review provided by the "rational basis" test. 6 Hence, we conclude that the proper test was set out in Manistee Bank, supra.

As we will discuss in the remainder of this opinion, numerous cases from other jurisdictions have dealt with equal protection challenges to statutes similar to Michigan's. In the course of those cases, the gamut of justifications expressed in support of the statutes has been analyzed and reanalyzed.

"Where a classification scheme creates a discrete exception to a general rule and has been enforced for a sufficiently long period of time that all the rationales likely to be advanced in its support have been developed,[82 MICHAPP 375] a court should fully examine those rationales and determine whether they are sound.

"It is understandable that a court reviewing what may be 'experimental' legislation would say, as did this Court in Naudzius, (Naudzius v. Lahr, 253 Mich. 216, 234 N.W. 581 (1931)) '(p)erhaps the legislature also had other reasons for the law'. Where, however, it can no longer be claimed that the legislation is experimental, where all possible rationales have been developed, a court should not dismiss a constitutional challenge on that hypothesis." Manistee Bank, supra at 672, 232 N.W.2d at 643.

Although we note that no previous cases have challenged Michigan's law, we find that the cases construing similar statutes have removed this area of legislation from the experimental class, and thus call for application of the "reasonable relation to the object" standard.

Applying this standard, we hold that M.C.L.A. § 600.5839(1); M.S.A. § 27A.5839(1) unconstitutionally violates equal protection in that it distinguishes between licensed architects and professional engineers on the one hand and other members of the construction industry on the other...

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