Burrows v. bidigare/bublys, Inc

404 N.W.2d 650, 158 Mich. App. 175

• Court: Michigan Court of Appeals
• Decided: January 7, 1987
• Docket: Docket 84371
• Status: Published

Opinions

W. F. Hood, J.

Plaintiffs, John H. Burrows, M.D., and Eudoro Coello, M.D., are physicians. Defendants, Frederick J. Bidigare and Aligmantas V. Bublys, are professional architects. Defendant Bidigare/Bublys, Inc., is an architectural firm which was formed by the architects.¹

On August 3, 1976, the two doctors entered into an agreement with Bidigare/Bublys, Inc., in which the architectural firm agreed to perform architectural services relating to a medical clinic which the doctors wanted to have built in St. Clair Shores. The clinic was completed and occupied in October or November of 1977. Considerable glass was apparently used in constructing a "glass curtain wall” in the front of the building. After occupancy, water seeped in and around the windows. According to plaintiffs, water infiltration has interfered with the building’s use, produced rot and plywood delamination and decreased the building’s value. Plaintiffs indicate that after continued negotiations and failed attempts to cure by the architectural firm, the contractor and the glass subcontractor, a solution was effected by another architect and contractor at a cost of $44,725.

The doctors’ contract with Bidigare/Bublys contained an arbitration clause. Plaintiffs demanded arbitration against the architectural firm, Bidigare/Bublys, Inc., on January 13, 1983. On April 15, 1983, plaintiffs filed a complaint in circuit court against the architectural firm and also against the two individual architects who had worked on the project, defendants Frederick Bidigare and Aligmantas Bublys, alleging architectural malpractice on behalf of all three defendants.

On June 28, 1983, defendants moved for accelerated judgment on two grounds: (1) that the claim was barred by the two-year malpractice period of limitation, or alternatively, the three-year negligence period of limitation; and (2) that it was also barred by the ongoing arbitration proceedings. The circuit court was not persuaded by defendants’ statute of limitation argument, finding that the six-year period of limitation contained in MCL 600.5839(1); MSA 27A.5839(1) was directly applicable to claims against architects for damages arising out of the defective condition of an improvement to real property. However, the court was persuaded by defendants’ argument regarding arbitration. The. court held that any claims against both the architectural firm and the individual architects would be required to be submitted to arbitration. The court therefore granted accelerated judgment to defendants on that ground.

Plaintiffs then filed an amended demand for arbitration which included the individual architects as respondents. On August 30, 1984, the arbitrator awarded the plaintiff doctors $10,003 against Bidigare/Bublys, Inc. The doctors’s claims against the individual architects were denied. The claims of plaintiff Burrows & Coello Investment Company were denied as to all respondents.

On September 24, 1984, plaintiffs moved in the circuit court for modification of the arbitration award. On February 21, 1985, the circuit court held that the individual architects were fully and personally liable for their negligent acts. The court concluded that the arbitrator must have found that the individual architects and the architectural firm performed their duties negligently or breached their contract. The court concluded that, since the individual architects remained personally liable, the arbitrator made an error of law by denying plaintiffs’ claims against the architects. The court therefore modified the arbitration award in order to hold the individual architects personally liable. An order and judgment in accord with the court’s holding was entered on April 8, 1985.

Defendants Bidigare and Bublys appeal from the April 8, 1985, order and judgment. Plaintiffs cross-appeal from the circuit court order granting accelerated judgment for defendants and directing arbitration.

We will first address defendants’ argument that the trial court erred in denying their motion for accelerated judgment on the ground that plaintiffs’ claim was barred by the statute of limitations. Defendants contend that the proper statute of limitations to be applied is MCL 600.5805; MSA 27A.5805, which establishes a two-year limitation for actions charging malpractice and a three-year limitation for other actions to recover damages for injury to person or property, and that the trial court improperly applied MCL 600.5839; MSA 27A.5839, which provides a six-year limitation for actions to recover damages for injury to person or property arising out of unsafe or defective improvements to real property. Defendants submit that the latter statute is inapplicable to suits, such as the instant case, where the claim is for damages for deficiencies in the improvement itself.

After this case was submitted on appeal, another panel of this Court issued an opinion in the case of Marysville v Pate, Hirn & Bogue, Inc, 154 Mich App 655; 397 NW2d 859 (1986), which confirms defendants’ argument. We agree with defendants and the Marysville panel that claims for deficiencies in the improvement itself are not governed by MCL 600.5839; MSA 27A.5839, but disagree that MCL 600.5805; MSA 27A.5805 is applicable.

A claim for damages for deficiencies in the improvement itself is essentially a suit for breach of contract. Defendants’ obligation to the plaintiffs in this case arose out of the contract for architectural services. The written contract itself contained no express provisions requiring that architectural services be performed skillfully, carefully and in a professional manner, but as a general rule such an obligation is implied in every contract for work or services. See, 17 Am Jur 2d, Contracts, § 371, p 814. A suit for breach of an implied provision of a written contract is a suit on the written contract.

Several other states have had occasion to rule on the issue of whether suits for damages for deficiencies in the improvement itself are within the coverage of statutes similar to MCL 600.5839; MSA 27A.5839 and have held that they are not. These cases are collected in Anno: What statute of limitations governs action by contractee for defective or improper performance of work by private building contractors?, 1 ALR3d 914. The collective cases indicate a general consensus that the appropriate statute of limitation is the one applicable to breach of contract actions. In Michigan, the pertinent statute is MCL 600.5807(8); MSA 27A.5807(8), which provides for a six-year limitation. The instant suit was brought within six years of the time the building was completed and occupied. Therefore, plaintiffs’ action is not barred by the statute of limitation. We therefore find no basis to reverse on this ground.

Defendants next contend that the trial court erred in finding the individual defendants liable by applying the provisions of the Professional Service Corporation Act, MCL 450.221 et seq.; MSA 21.315(1) et seq. Section 6 of the act provides:

Nothing contained in this act shall be interpreted to abolish, repeal, modify, restrict or limit the law now in effect in this state applicable to the professional relationship and liabilities between the person furnishing the professional services and the person receiving such professional service and to the standards for professional conduct. Any officer, shareholder, agent or employee of a corporation organized under this act shall remain personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by him, or by any person under his direct supervision and control, while rendering professional service on behalf of the corporation to the person for whom such professional services were being rendered. The corporation shall be liable up to the full value of its property for any negligent or wrongful acts or misconduct committed by any of its officers, shareholders, agents or employees while they are engaged on behalf of the corporation in the rendering of professional services. [MCL 450.226; MSA 21.315(6).]

It is defendants’ claim that application of the statute was in error because, if allowed the opportunity, defendants would have shown that the defendant corporation was originally incorporated under the Business Corporation Act, MCL 450.1101 et seq.; MSA 21.200(101) et seq., and not the Professional Service Corporation Act. This claim is without merit. The contract could not be performed except by the personal services of professionally qualified individuals. It would be against public policy to permit such a professional to insulate himself from liability for his personal failure to conform to professional standards, merely because he performs the services as an agent of a corporation. Thus, the principles set forth in the Professional Service Corporation Act would apply regardless of whether the defendant corporation came to life under that statute.

The arbitration award in this case held the corporate defendant liable and the individual defendants not liable. The trial judge ordered modification of the award to impose liability on the individual defendants, reasoning that if the corporation was liable, the individual defendants had to be liable also. This was error.

The principle by which the above-quoted portion of the Professional Service Corporation Act imposed liability upon individuals provides for piercing the corporate shield in a very limited situation. It does not destroy the corporate shield to impose liability on all officers, agents or stockholders as if they were partners. Neither does it impose liability upon an individual just because he worked on the project, even if he was one of only two individuals who worked on the project. Liability is imposed upon an individual only when the claimant has sustained the burden of proving that that particular individual personally committed a negligent or wrongful act or misconduct which caused the damage, or directly supervised and controlled the person who commited such an act.

The decision of the arbitrator was consistent with a finding that the proofs presented at arbitration established that the contract was performed defectively, but did not establish which, if either, of the individual defendants was at fault or directly supervised and controlled the person at fault.²

Plaintiffs have cross-appealed from the trial court’s earlier order granting accelerated judgment to defendants on the ground that claims against the individual defendants were subject to the arbitration clause of the contract. Plaintiffs have failed to file a brief in support of their cross-appeal and the cross-appeal therefore may be considered abandoned.

We do point out, however, that the situation here differs from that of a claim against a tortfeasor for negligently inflicted damage or injury. By classic definition, a tort is a civil wrong other than a breach of contract. A classic tort action based upon a negligently inflicted injury arises when there is a breach of a duty imposed by law to use care for the safety of another or his property. The fact that the tortfeasor was an employee or agent of another person or corporation does not make him immune from suit for his breach of the duty imposed by law.

The individual defendants in the instant case owed plaintiffs no duty imposed by law. Regardless of the fact that the individual defendants did not sign the contract in their individual capacities, the defendants’ duties to the plaintiffs arose out of that contract and the claim against them is that they failed to perform that contract with professional skill and care. Because plaintiffs’ claims are based on the defendants’ failure to properly perform the contract, plaintiffs’ remedies should be limited, as the contract provides, to arbitration. If the rule were otherwise, the right of a professional corporation to provide in a contract for settlement of contractual disputes by arbitration would be effectively damaged or destroyed. The opposing party would have the option of ignoring the arbitration requirement and suing in court the individual professionals of the corporation.

The order of the trial court rendering accelerated judgment to the individual defendants on the ground that the plaintiffs’ claims in the suit against them were barred by the arbitration agreement and proceeding is therefore affirmed.

The order of the trial court modifying the arbitration award is reversed.

J. H. Gillis, P.J., concurred.

1 The status of Peterson Glass Company, a fourth defendant, is not relevant to this appeal.

2 Plaintiffs attached to their brief copies of the written final arguments of the parties to the arbitration. Such attachments are not properly part of the record in this case. They demonstrate, however, that plaintiffs’ entire argument to the arbitrator was devoted to showing that the problems with the building were due to improper design and to defects in construction that could have been detected if proper inspection had been made. There was no attempt on the part of plaintiffs to zero in as to what individual was responsible for either the defect in design or the negligent inspection.