Universal Gym Equipment, Inc. v. Vic Tanny Intern., Inc.
| Decision Date | 07 November 1994 |
| Docket Number | Docket No. 157313 |
| Citation | 207 Mich.App. 364,526 N.W.2d 5 |
| Parties | UNIVERSAL GYM EQUIPMENT, INC., Plaintiff-Appellant, v. VIC TANNY INTERNATIONAL, INC., and Vic Tanny of Greater Michigan, Inc., Defendants-Appellees. |
| Court | Court of Appeal of Michigan — District of US |
Barbier & Barbier, P.C. by Ralph W. Barbier, Jr., Grosse Pointe Woods, for plaintiff.
Petersmarck, Callahan, Bauer & Maxwell, P.C. by Richard W. West, Detroit, for defendants.
Before MICHAEL J. KELLY, P.J., and CORRIGAN and CORWIN, * JJ.
Plaintiff appeals as of right a circuit court order granting defendants' motion for summary disposition under MCR 2.116(C)(7) and (8) and dismissing plaintiff's complaint for contribution and indemnification following settlement of an underlying suit against plaintiff by a third party. We affirm in part, reverse in part, and remand.
On March 13, 1990, Catherine Ostroski filed suit against plaintiff Universal Gym Equipment, Inc., after she was injured at a Vic Tanny health club while using an exercise machine manufactured by Universal. Ostroski alleged that Universal was at fault. Because of a release provision in her health club membership contract, Ostroski did not name Vic Tanny as a defendant. However, Vic Tanny was aware of the proceedings and was requested to participate in settlement negotiations. On November 4, 1991, Ostroski reached a settlement agreement with Universal for $225,000.
On July 1, 1991, Universal initiated separate proceedings in a complaint against Vic Tanny alleging that Vic Tanny was liable for failure to maintain safe premises and had an obligation to indemnify against or to contribute toward any settlement between Universal and Ostroski. Universal filed an amended complaint after settlement with Ostroski. On July 6, 1992, Vic Tanny filed a motion for summary disposition, which the circuit court granted on September 15, 1992, on the basis that Vic Tanny could not be liable for contribution or indemnification where it had a valid defense under the release provision.
Universal first argues that the circuit court erred in granting summary disposition of its contribution claim because the release provision in Ostroski's membership contract was unenforceable as against public policy. Alternatively, Universal contends that any defense provided by the release clause in an action between Vic Tanny and Ostroski was insufficient to bar recovery by Universal in a separate action for contribution against Vic Tanny.
With respect to the first argument, Universal now concedes that the release clause is enforceable in cases of ordinary negligence in light of this Court's recent decision in Skotak v. Vic Tanny Int'l, Inc. 203 Mich.App. 616, 513 N.W.2d 428 (1994). There, the Court upheld the validity of an identical clause, recognizing that "[i]t is not contrary to this state's public policy for a party to contract against liability for damages caused by its own ordinary negligence." Id. at 617-618, 513 N.W.2d 428. The Court also found that the release provision "clearly expresses [Vic Tanny's] intention to disclaim liability for all negligence, including its own." Id. at 619, 513 N.W.2d 428.
The Skotak Court did not address the enforceability of the release clause with respect to a claim of gross negligence. Universal argues that a preinjury release provision absolving a party from liability for grossly negligent conduct violates Michigan public policy. We agree. See Klann v. Hess Cartage Co., 50 Mich.App. 703, 706, 214 N.W.2d 63 (1973); Island Creek Coal Co. v. Lake Shore, Inc., 692 F.Supp. 629, 633 (W.D.Va.1988) (applying Michigan law). See also Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 554, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992). Universal claims that Vic Tanny was grossly negligent in failing to maintain the exercise equipment and to train its employees and members regarding proper use of the equipment. Although Universal's original complaint did not sound in gross negligence, it filed a motion for a second amended complaint that did include allegations of gross negligence. The trial court denied the motion, but Vic Tanny's response to the motion and the order denying the motion are missing from the record. Because motions to amend a complaint are accorded great liberality, see MCR 2.118, and because the grounds for the trial court's denial of the motion in this case remain a mystery, we reverse the order of denial and remand for a new hearing on the motion to file a second amended complaint. If the trial court grants the motion it shall allow further proceedings on the claim of gross negligence. If it denies the motion it shall specify the reasons and grounds for the denial.
The issue still remaining is whether Vic Tanny may invoke the release provision as a defense against Universal's contribution claim if its conduct amounted to ordinary negligence.
Because this is an issue of first impression in Michigan, plaintiff relies in part on the opinion of the New York Court of Appeals in Sommer, supra, which found a similar release clause wholly unenforceable against a third-party contribution claimant. We consider the analysis in Sommer inapposite because we are constrained by the Michigan contribution statute, M.C.L. § 600.2925a et seq.; M.S.A. § 27A.2925(1) et seq., to reach a different result.
The Sommer court addressed the enforceability of an exculpatory clause in a contract between a fire alarm monitoring service and its customer in a contribution action against the monitoring service by third parties. Although the Court found the release clause violative of public policy only in cases of gross negligence, it went on to hold that the provision did not provide a defense to the contribution claim even in cases of ordinary negligence:
In contribution cases, we have drawn a distinction between the absence of liability to an injured party, and the absence of a duty. Often, the absence of direct liability to plaintiff is merely the result of a special defense, such as the Statute of Limitations or the exclusivity of workers' compensation, and not because defendant was free of fault. In such cases, we have held that codefendants may seek contribution from the joint wrongdoer, despite the wrongdoer's own defense to plaintiff's claim. This principle is fully in accord with the rationale of Dole [v Dow, 30 NY2d 143; 331 NYS2d 382; 282 NE2d 288 (1972) ], which promotes equitable distribution of the loss in proportion to actual fault. [79 N.Y.2d at 558, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (Citations omitted; emphasis in original.]
See also Moyses v. Spartan Asphalt Paving Co., 383 Mich. 314, 174 N.W.2d 797 (1970); Caldwell v. Fox, 394 Mich. 401, 419-420, 231 N.W.2d 46 (1975) ().
The Sommer court further explained that the defendant's exculpatory provision in that case was "akin to a special defense that does not affect the codefendants' ability to obtain contribution." 79 N.Y.2d at 558, 583 N.Y.S.2d 957, 593 N.E.2d 1365.
... Although [the defendant's] direct liability to [the plaintiff in the underlying action] (by virtue of the exculpatory clause) is triggered only upon gross negligence, its duty is to avoid ordinary negligence. Upon breach of that duty, fairness requires that [the defendant] contribute to the judgment in proportion to its culpability. [Id. (Emphasis in original.) ]
Perhaps most persuasive was the court's observation that "it would be patently unfair to abrogate the [codefendants'] right to contribution based on an exculpatory clause to which they were not a party." Id. In this case, Universal was not a party to the membership agreement between Vic Tanny and Ostroski. By asserting the release provision as a defense to the contribution claim, Vic Tanny is able to shift all claims to Universal without its prior knowledge or consent. 1
Nonetheless, Vic Tanny contends that the language of the contribution statute, enacted after Moyses, supra, dictates a different result from that which we would reach under the rationale of Sommer. Reluctantly, we agree.
M.C.L. § 600.2925a; M.S.A. § 27A.2925(1) provides in pertinent part:
(3) A tort-feasor who enters into a settlement agreement with a claimant is not entitled to recover contribution from another tort-feasor if any...
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