Ostroth v. Warren Regency, GP, LLC

• Decision Date: 29 September 2004
• Docket Number: Docket No. 245934.
• Citation: 263 Mich. App. 1,687 N.W.2d 309
• Parties: Ellen M. OSTROTH and Thane Ostroth, Plaintiffs, and Jennifer L. Hudock and Brian D. Hudock, Plaintiffs-Appellants, v. WARREN REGENCY, G.P., L.L.C., and Warren Regency Limited Partnership, Defendants, and Edward Schulak, Hobbs & Black, Inc., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

687 N.W.2d 309

263 Mich. App. 1

Ellen M. OSTROTH and Thane Ostroth, Plaintiffs, andJennifer L. Hudock and Brian D. Hudock, Plaintiffs-Appellants, v.WARREN REGENCY, G.P., L.L.C., and Warren Regency Limited Partnership, Defendants, andEdward Schulak, Hobbs & Black, Inc., Defendant-Appellee.

Docket No. 245934.

Court of Appeals of Michigan.

Submitted June 2, 2004, at Detroit.

Decided July 8, 2004, at 9:00 a.m.

Released for Publication September 29, 2004.

Donnelly W. Hadden, P.C.(by Donnelly W. Hadden), and Ball & Ball, L.L.P.(by Bettie K. Ball), Ann Arbor, Mt. Clemens, for the plaintiff.

Sullivan, Ward, Bone, Tyler & Asher, P.C.(by Ronald S. Lederman), Southfield, for Edward Schulak, Hobbs & Black, Inc.

Before: SMOLENSKI, P.J., and WHITE and KELLY, JJ.

SMOLENSKI, P.J.

PlaintiffsEllen M. Ostroth and Jennifer L. Hudock, along with their husbands, Thane Ostroth and Brian D. Hudock, filed this action in May 2000.Plaintiffs alleged that Ellen Ostroth and Jennifer Hudock sustained personal injuries as a result of environmental hazards arising from the renovation of their workplace.DefendantEdward Schulak, Hobbs & Black, Inc., the architectural firm for the renovation project, was added as a party in plaintiffs' first amended complaint.Defendant moved for summary disposition, alleging that the plaintiffs' claims were barred by the statute of limitations.The trial court, relying on the two-year statute of limitations applicable to professional malpractice claims, MCL 600.5805(4),¹ granted the motion.The Hudock plaintiffs now appeal as of right.²We affirm in part, reverse in part, and remand.

I.Background

PlaintiffJennifer Hudock alleged that she was an employee of Campbell-Ewald Advertising Company from April 24, 1998, through August 24, 1998, and worked at 12222 East Thirteen Mile Road, Warren, Michigan.That building was in the possession of Warren Regency G.P., L.L.C., and Warren Regency Limited Partnership.Warren Regency Limited Partnership was the property manager for the building and contracted with defendant for architectural services involving renovation of the building.

In her complaint, plaintiff alleged that work performed by contractors on the building during a renovation project created a hazardous environment; specifically, "[t]he building was designed and constructed with inadequate heating, cooling, ventilation and plumbing systems."Among the hazards plaintiff allegedly was exposed to were fungus, mold, bacteria, formaldehyde, and carbon dioxide.Plaintiff claimed that she suffered from "[s]evere lung and neurologic [sic] disease" as a result of the environmental hazards in the building.

Defendant was first identified as a possible nonparty wholly or partially at fault in this case on June 28, 2000, when an originally named defendant filed a notice of fault of nonparties under MCR 2.112(K).Plaintiffs moved to amend their complaint to add defendant as a party and their motion was granted on October 16, 2000.On November 14, 2000, plaintiffs filed an amended complaint that added defendant as a party and alleged a claim of negligence against defendant as the architect of the renovation project.

Defendant subsequently filed a motion for summary disposition challenging the merits of plaintiff's claim.However, in its supporting brief, defendant's main argument asserted that plaintiff's claim was barred by the statute of limitations.In response, plaintiff argued that defendant waived the statute of limitations defense because it did not include it as an affirmative defense in any of its responsive pleadings.Defendant then moved for leave to amend its affirmative defenses to add the statute of limitations defense.Defendant contended that it did not previously assert the defense because it did not have information earlier regarding when plaintiffs first had notice of the potential claims against defendant.Moreover, defendant argued that plaintiff would not be prejudiced because discovery was not scheduled to close until June 14, 2002, and an amendment would not affect other deadlines in the case, including the filing of witness lists.Without explanation, the court permitted defendant to amend its affirmative defenses.

In response to defendant's statute of limitations defense, plaintiff argued that the applicable period of limitation for this case was six years, as prescribed in MCL 600.5839(1).Plaintiff further argued that because a certificate of occupancy was never produced for the building, she did not know that defendant could be culpable until the notice of possible nonparty fault was filed.Plaintiff maintained that her claim was therefore timely under the circumstances.Defendant argued that § 5839 was only a statute of repose and because plaintiffs had filed their complaint within six years, the statute was inapplicable.Defendant argued that § 5805(4), pertaining to professional malpractice, provided the applicable period of limitations.The trial court agreed and granted defendant's motion for summary disposition pursuant to MCR 2.116(C)(7) on the basis that plaintiffs had not filed their complaint within the two-year limitations period.

II.Defendant's Motion to Amend Affirmative Defenses

Plaintiff first argues that the trial court erred in allowing the defendant to amend its affirmative defenses to include the statute of limitations as a defense.We review the trial court's decision for an abuse of discretion.Cole v. Ladbroke Racing Michigan, Inc.,241 Mich.App. 1, 9, 614 N.W.2d 169(2000).Leave to amend should be freely granted when justice so requires.MCR 2.118(A)(2).However, leave to amend should not be granted in the face of undue delay, bad faith, or dilatory motive on the part of the movant, or undue prejudice to the opposing party by virtue of allowance of the amendment.Cole, supra at 9-10, 614 N.W.2d 169.Although defendant failed to assert the statute of limitations in its previous answers to plaintiff's complaint, and did not move to amend its affirmative defenses until after it raised the statute of limitations defense in its motion for summary disposition, we do not find that defendant's lack of action was the result of bad faith or undue delay.And the amendment did not prejudice plaintiff's ability to respond to the issue.Id. at 10, 614 N.W.2d 169.The mere fact that an amendment might cause a party to lose on the merits is not sufficient to establish prejudice.SeeKnauff v. Oscoda Co. Drain Comm'r,240 Mich.App. 485, 493, 618 N.W.2d 1(2000).Therefore, we conclude that the trial court did not abuse its discretion in allowing the amendment.

III.Defendant's Motion for Summary Disposition

However, we do find that the trial court erred in granting defendant's motion for summary disposition.This Court reviews de novo a trial court's decision on a motion for summary disposition.Spiek v. Dep't of Transportation,456 Mich. 331, 337, 572 N.W.2d 201(1998).Summary disposition may be granted under MCR 2.116(C)(7) when an action is barred because of the statute of limitations.We review such a motion under the following standard:

A defendant who files a motion for summary disposition under MCR 2.116(C)(7) may (but is not required to) file supportive material such as affidavits, depositions, admissions, or other documentary evidence.MCR 2.116(G)(3);Patterson v. Kleiman,447 Mich. 429, 432, 526 N.W.2d 879(1994).If such documentation is submitted, the court must consider it.MCR 2.116(G)(5).If no such documentation is submitted, the court must review the plaintiff's complaint, accepting its well-pleaded allegations as true and construing them in a light most favorable to the plaintiff.[Turner v. Mercy Hosp. & Health Services of Detroit,210 Mich.App. 345, 348, 533 N.W.2d 365(1995).]

The central issue on appeal is whether the two-year statute of limitations for malpractice claims, MCL 600.5805(4), the three-year general statute of limitations for negligence actions, MCL 600.5805(8),³ or the specific six-year statute of limitations applicable to professional negligence claims against architects, engineers, and contractors, MCL 600.5839, applies in this case.We hold that MCL 600.5839 applies to plaintiff's negligence claim against defendant, and, therefore, her cause of action is not time-barred.

A. MCL 600.5839 and the O'Brien Decision

MCL 600.5839(1) currently states:

No person may maintain any action to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained as a result of such injury, against any state licensed architect or professional engineer performing or furnishing the design or supervision of construction of the improvement, or against any contractor making the improvement, more than 6 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement, or 1 year after the defect is discovered or should have been discovered, provided that the defect constitutes the proximate cause of the injury or damage for which the action is brought and is the result of gross negligence on the part of the contractor or licensed architect or professional engineer.However, no such action shall be maintained more than 10 years after the time of occupancy of the completed improvement, use, or acceptance of the improvement.[⁴]

There is no question that this statute operates as a statute of repose, preventing a cause of action from ever accruing when the injury is sustained or an accrued action is brought more than six years after the date of occupancy of the completed improvement, or use, or acceptance of the improvement.O'Brien v. Hazelet & Erdal,410 Mich. 1, 15, 299 N.W.2d 336(1980);Smith v. Quality Constr. Co.,200 Mich.App. 297, 301, 503 N.W.2d 753(1993).In such a case, "the injured party`literally has...