In a recent decision handed down by the Michigan Supreme Court, Miller-Davis Co. v. Ahrens Construction, Inc., the court ruled that Michigan’s six-year statute of limitations for breach of contract, MCL 600.5807(8), applied to breach of contract claims against contractors, architects, or engineers for improvements to property. In doing so, the Supreme Court rejected the argument that Michigan’s statute of repose, MCL 600.5839(1), applied.
In Miller-Davis, the plaintiff, a general contractor, filed a breach of contract claim against the defendant, a subcontractor who was hired to rebuild the roof of a YMCA swimming pool. The Plaintiff alleged that the defendant’s work failed to conform to the contract’s specifications. The plaintiff did not file a tort claims against the subcontractor. The problems with the roof were so severe that the roof had to be replaced, which is how the problem was identified.
Because the lawsuit was filed over six years after the work had been performed, there was an argument as to whether the statute of limitations for breach of contract, or the statute of repose applied. The subcontractor argued that Michigan’s statute of repose protected it from actions “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. …” Under the statute of repose, all claims must be filed within six years after occupancy. The plaintiff argued that the statute of repose did not apply because the claims were for breach of contract, not claims in tort.
Even though both statutes have six-year limitation periods, there is a significant difference between the two. Under the statute of repose, a claim accrues at the time of “occupancy of the completed improvement, use or acceptance of the improvement.” However, the statute of limitations for a breach of contract claim begins to run at the time the claim accrues.
The Michigan Supreme Court ruled that the statute of limitations for breach of contract applied because the claim was not a tort claim. The court noted that MCL 600.5839 “does not apply to a claim against an engineer or contractor for a defect in an improvement when the nature and origin of the claim is the breach of a contract.” The court ruled that the statute of repose applied only to tort actions.
The Supreme Court ruled that the claim did not fall under the statute of repose because:
There was no allegation that the roof deck system caused any “injury to property” or “bodily injury or wrongful death.” Nor was there any allegation of a “defective and unsafe condition.” Rather, plaintiff claimed that, because defendant failed to build the roof to the agreed-upon specifications, plaintiff was forced to expend money repairing it.
This case is significant because it narrows the scope of Michigan’s statute of repose exclusively to tort actions.
