Iron County v. Sundberg, Carolson & Associates, Inc

564 N.W.2d 78, 222 Mich. App. 120

• Court: Michigan Court of Appeals
• Decided: May 15, 1997
• Docket: Docket 185644
• Status: Published

Opinion

Griffin, J.

Defendant Sundberg, Carlson & Associates, Inc. (hereinafter defendant), appeals as of right a circuit court judgment confirming an arbitration award in plaintiffs favor. We affirm but remand for recalculation of the judgment interest.

Plaintiff brought this action against defendant for damages allegedly arising from defendant’s design and construction oversight of a roof for a county medical care facility. In general terms, plaintiff’s complaint alleges claims both of breach of contract and of negligence. For example, in paragraphs thirteen and fourteen the complaint states:

13) That Sundberg, Carlson and Associates, Inc., did breach the contract alleged in that tihey

a) did fail to properly inspect the building;

b) did fail to analyze the structure for roof selection;

c) did fail to select an adequate roof system;

d) did fail to properly inspect construction;

e) did fail to notify Plaintiff of improper installation.

14) That as a result the shingles on the installed roof are cracking and deteriorating and Plaintiff has not received the roof for which it bargained and has suffered losses on the contract in excess of $10,000. [Emphasis added.]

Further, although paragraph ten alleges that the shingles were damaged by distortion, the allegations of damages contained in paragraphs eighteen and twenty-two are broader:

18) That as a result of this breach of duty the Plaintiff now has a roof inadequate to its needs which must be repaired or replaced and has thereby suffered damage in excess of ten thousand dollars.

22) That as a result the Plaintiff must replace or repair the roof and has incurred damages in excess of ten thousand dollars.

During discovery, it was learned from an inspection of the roof by an expert that the roof did not comply with the applicable fire code. Shortly thereafter, plaintiff declared its intention to use this evidence in support of its claims of breach of contract and negligence. Further, plaintiff offered to adjourn an upcoming arbitration hearing and to pay defendant its expenses incurred because of the adjournment. Although the arbitration hearing was thereafter adjourned, defendant did not pursue any further dis covery. Instead, defendant objected to plaintiffs use of this newly discovered evidence on the ground that the statute of repose for architects, MCL 600.5839; MSA 27A.5839, barred all allegations not previously pleaded.

On appeal, defendant contends that the arbitrator erred in allowing plaintiff to support its claims of breach of contract and negligence with evidence that the roof failed to comply with the fire code. Defendant argues that plaintiffs previously pleaded claims were too narrow to encompass this evidence. We disagree.

Under Michigan’s rule of general fact-based pleading, see MCR 2.111(B)(1), the only facts and circumstances that must be pleaded “with particularity” are claims of “fraud or mistake.” MCR 2.112(B)(1). In other situations, MCR 2.111(B)(1) provides that the allegations in a complaint must state “the facts, without repetition, on which the pleader relies,” and “the specific allegations necessary reasonably to inform the adverse party” of the pleader’s claims. See Dacon v Transue, 441 Mich 315, 330; 490 NW2d 369 (1992). A complaint is sufficient under MCR 2.111(B)(1) as long as it “contain[s] allegations that are specific enough reasonably to inform the defendant of the nature of the claim against which he must defend.” Porter v Henry Ford Hosp, 181 Mich App 706, 708; 450 NW2d 37 (1989); see also Goins v Ford Motor Co, 131 Mich App 185, 195; 347 NW2d 184 (1983).

We conclude that plaintiff’s allegation of a fire code violation pertaining to the roof was not a new claim for relief. Rather, this evidence constitutes a new theory, learned through discovery, that supports plaintiff’s previously pleaded claims. See, generally, Derbeck v Ward, 178 Mich App 38; 443 NW2d 812 (1989); Martin, Dean & Webster, Michigan Court Rules Practice, Rule 2.604, p 417. This new theory falls within the scope of the general factual allegations pleaded in support of plaintiff’s claims of breach of contract and negligence. Indeed, a roof that does not comply with the fire code is clearly an “inadequate” roof that “must be replaced or repaired.” See Porter, supra at 709-710; Reinhardt v Bennett, 45 Mich App 18, 24-25; 205 NW2d 847 (1973). Thus, because plaintiff is not obligated under MCR 2.111(B)(1) to plead its factual allegations with particularity, plaintiff should not be precluded from supporting its claims with evidence of a fire code violation gleaned through the discovery process. See Goins, supra at 195; Simonson v Michigan Life Ins Co, 37 Mich App 79, 83; 194 NW2d 446 (1971). To the extent defendant found the pleaded factual allegations supporting plaintiff’s claims to be too general, it could have filed a motion for a more definite statement under MCR 2.115(A) or interrogatories requesting greater factual specificity regarding plaintiff’s claims. 1

Accordingly, we hold that the statute of repose, MCL 600.5839; MSA 27A.5839, did not bar plaintiffs proofs concerning the factual issue of a fire code violation because such'evidence was relevant and material to plaintiffs previously pleaded claims of breach of contract and negligence. Therefore, we affirm the decision of the lower court with regard to this issue.

Defendant also argues that the trial court should have used its equitable powers over an arbitration proceeding, see MCL 600.5035; MSA 27A.5035, to rule that plaintiffs claims were barred by the doctrine of laches. We disagree. “[T]he timeliness of the bringing of an arbitration proceeding is a procedural issue to be determined by the arbitrators rather than the courts.” Bennett v Shearson Lehman-American Express, Inc, 168 Mich App 80, 83; 423 NW2d 911 (1987). The question of timeliness includes consideration of the doctrine of laches. See Said v Rouge Steel Co, 209 Mich App 150, 155; 530 NW2d 765 (1995). Therefore, we conclude that the decision whether to apply the doctrine of laches was within the arbitrator’s discretion, and the trial court correctly declined to interfere with the exercise of the arbitrator’s discretion.

Next, defendant claims that the arbitrator exceeded its authority in awarding plaintiff $196,509.66, because the applicable arbitration agreement provides that, when a plaintiff pays only a $500 arbitration fee, the arbitrator may set damages no higher than $16,666.66. We disagree. Although plaintiff paid the $1,000 arbitration fee that removes the ceiling on damages, defendant Sundberg contends that the ceiling still applies because half of plaintiff’s $1,000 fee applied to plaintiff’s claim against a codefendant, Pellow Roof ing & Sales, Inc. However, the arbitration agreement does not establish that a $1,000 fee must be paid with respect to each claim or each defendant in order to avoid the limitation concerning damages. Accordingly, the lower court correctly presumed that the arbitrator acted within the scope of its authority in concluding that plaintiff’s payment of a single $1,000 fee removed the limitation regarding damages for all of plaintiff’s claims. See Gordon Sel-Way, Inc v Spence Bros, Inc, 438 Mich 488, 497; 475 NW2d 704 (1991).

Finally, defendant argues that, because there was an arbitration agreement, MCL 438.7; MSA 19.4 governs the award of judgment interest from the date of the entry of the arbitrator’s award to the date that the motion to confirm the award was filed with the court. Defendant argues that after that date, the fluctuating judgment interest rate applies. We agree. This issue was addressed in Gordon Sel-Way, supra at 510-511. Defendant was entitled to a five percent interest rate from December 21, 1994 (the date of the arbitration award) to February 13, 1995 (the date of the filing of the motion to confirm the arbitration award). Thereafter, the interest rate should have been determined by MCL 600.6013(5); MSA 27A.6013(5).

We affirm the circuit court’s judgment confirming the arbitration award but remand for recalculation of the judgment interest. We do not retain jurisdiction.

1 We disagree with defendant’s contention that plaintiff limited its claims by its answers to interrogatories regarding damages. Although in response to interrogatory number eight plaintiff notes the raising, buckling, and flexing of the shingles, plaintiffs answer also states that “cost is unknown at this time — depending upon what is involved to correct the problem.” Further, the question and answer to interrogatory number ten are as follows:

Q. State the amount in dollars and cents of the claimed damage or attach detailed estimates showing the amount estimated to repair the claimed damages.

A. Depends upon the work and materials required to remedy problem. Total cost is unknown at this time.