Praxair Incorporated v. Detroit Bulk Storage Incorporated ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
PRAXAIR, INC., UNPUBLISHED
March 1, 2016
Plaintiff/Counter-Defendant,
and
U.S. STEEL CORPORATION,
Intervening Plaintiff/Counter-
Defendant-Appellee,
v No. 323354
Wayne Circuit Court
DETROIT BULK STORAGE, INC., LC No. 12-012916-NZ
Defendant/Cross-Defendant,
and
MORTON SALT, INC.,
Defendant/Counter-Plaintiff-
Appellant,
and
HDI-GERLING AMERICA INSURANCE
COMPANY
Counter-Plaintiff/Cross-Plaintiff.
Before: GLEICHER, P.J., and JANSEN and SHAPIRO, JJ.
PER CURIAM.
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This appeal arises from a circuit court order denying Morton Salt, Inc.’s motion for
summary disposition on U.S. Steel Corporation’s negligence claim pursuant to MCR 2.116(C)(8)
and (10). This Court granted Morton Salt’s application for leave to appeal.1 For the reasons
stated in this opinion, we reverse and remand.
This action began in October 2012, when Praxair, Inc. filed a complaint against Detroit
Bulk Storage, Inc. and Morton Salt. Praxair’s complaint alleged that on January 28, 2011, the
Detroit Bulk Storage facility and Morton Salt accumulated “an immense stockpile of road salt”
near Praxair’s underground pipelines, that Detroit Bulk Storage and Morton Salt neglected to
safely and securely store the road salt, and that the weight of the salt pile, which was over
100,000 tons, “caused a soil shift that severed the . . . cooling water supply lines and the electric”
lines Praxair used at its facility. The complaint alleged negligence and trespass counts against
Detroit Bulk Storage and Morton Salt.
In early 2013, U.S. Steel, the owner of the affected real property, intervened and filed
claims for breach of contract and negligence against its tenant, Detroit Bulk Storage. In January
2014, U.S. Steel filed a negligence claim against Morton Salt. U.S. Steel asserted that Morton
Salt owed it “a duty to conduct its operations in a manner that would not disturb or damage U.S.
Steel’s real property and . . . business operations.” According to U.S. Steel, Morton Salt
breached this duty as follows: (1) a Morton Salt employee regularly visited the Detroit Bulk
Storage facility “to oversee the manner and location in which” Detroit Bulk Storage “offloaded,
stockpiled, stored, and otherwise handled” the salt; (2) Morton Salt and Detroit Bulk Storage had
contracts instructing and directing it “how and where to offload the salt,” and “the manner and
location in which to stockpile, store, and otherwise handle the salt;” (3) on January 27, 2011,
Morton Salt delivered “large quantities of salt,” which Detroit Bulk Storage and Morton Salt
“offloaded, stockpiled and stored” “in an unsafe and otherwise improper manner and location;”
and (4) on January 28, 2011, the improper and unsafe “loading, storage, and stockpiling” of salt
caused “a global stability failure” at the Detroit Bulk Storage facility. U.S. Steel averred that
Morton Salt’s breach proximately caused more than $65,000,000 in business interruption losses
and damages to the real property.2
In March 2014, Morton Salt sought summary disposition of U.S. Steel’s negligence
claim. Morton Salt asserted that U.S. Steel had identified no statutory or contractual duty of care
owed by Morton Salt. Morton Salt also contended that as a matter of law, it owed U.S. Steel no
common-law duty because they shared no relationship, and Morton Salt could not have foreseen
that any of its alleged negligence would give rise to a reasonable risk of damages or harm to U.S.
Steel. Morton Salt added that it could face no liability for acts performed by its independent
contractor, Detroit Bulk Storage.
1
Praxair Inc v Detroit Bulk Storage Inc, unpublished order of the Court of Appeals, entered
November 25, 2014 (Docket No. 323354).
2
All other claims in this litigation have settled.
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In response, U.S. Steel argued that, as a matter of law, Morton Salt owed it a duty to
exercise due care in delivering large quantities of salt in a manner that would not damage the
dock owned by U.S. Steel. U.S. Steel argued that Morton Salt regularly delivered salt to the U.S.
Steel dock in River Rouge; “controlled the amount of salt discharged onto the property;”
instructed Detroit Bulk Storage how to handle, receive, and store its salt; and inspected the salt
stored by Detroit Bulk Storage. U.S. Steel further submitted that, as a matter of law, it was
foreseeable to Morton Salt that delivering and storing “over 100,000 tons of salt on U.S. Steel’s
property would damage” the property. Alternatively, U.S. Steel argued that material questions of
fact existed concerning whether Morton Salt owed U.S. Steel a duty of care “to not damage U.S.
Steel’s property.” The circuit court denied the motion on the basis that a Morton Salt stockpile
inspector had some “knowledge regarding the circumstances of the loading and storing” of salt
by Detroit Bulk Storage.
“We review de novo a circuit court’s summary disposition ruling.” Walsh v Taylor, 263
Mich App 618, 621; 689 NW2d 506 (2004).3 A motion brought under MCR 2.116(C)(10) tests
whether a claim has adequate factual support. Id. “[T]his Court considers the pleadings,
admissions, affidavits, and other relevant documentary evidence of record in the light most
favorable to the nonmoving party to determine whether any genuine issue of material fact exists
to warrant a trial.” Id.A party alleging negligence must prove that “(1) the defendant owed the plaintiff a legal
duty, (2) the defendant breached the legal duty, (3) the plaintiff suffered damages, and (4) the
defendant’s breach was a proximate cause of the plaintiff’s damages.” Hill v Sears, Roebuck &
Co, 492 Mich 651, 660; 822 NW2d 190 (2012) (internal quotation and citation omitted). On
appeal, the parties dispute whether Morton Salt owed U.S. Steel a duty of care. “Whether a
defendant owes a plaintiff a duty of care is a question of law decided by the circuit court,” which
this Court reviews de novo. Id. at 659.
A duty may arise from a contractual relationship,4 by virtue of a statute, or “under the
basic rule of the common law, which imposes on every person engaged in the prosecution of any
undertaking an obligation to use due care, or to so govern his actions as not to unreasonably
endanger the person or property of others.” Loweke v Ann Arbor Ceiling & Partition Co, LLC,
489 Mich 157, 164-166; 809 NW2d 553 (2011) (internal quotation and citation omitted). U.S.
Steel has not alleged that Morton Salt owed it a duty pursuant to contract or statute; it alleges that
Morton Salt owed it a duty to act reasonably in its delivery and maintenance of the stored salt.
Morton Salt responds that it had no such duty to U.S. Steel, who owned the land on which
Detroit Bulk Storage was located. Instead, the only party with such a duty was Detroit Bulk
3
Morton Salt sought summary disposition under MCR 2.116(C)(8) and (10). Because the parties
attached evidence beyond the pleadings, and the circuit court referenced this evidence in ruling
on the motion, the motion is properly considered pursuant to MCR 2.116(C)(10). See Walsh,
263 Mich App at 621.
4
The parties do not dispute that no contractual relationship existed between Morton Salt and
U.S. Steel.
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Storage because it was an independent contractor who was responsible for the relevant decision-
making and activities.
A premises owner who hires an independent contractor is generally not
vicariously liable for injuries that the contractor negligently causes. The rationale
for this rule is that an independent contractor is not subject to the control of the
employer, and therefore the employer should not be held vicariously liable for
actions outside its control.
The test for whether a worker is an independent contractor or an employee
is whether the worker has control over the method of his or her work: If the
employer of a person or business ostensibly labeled an independent contractor
retains control over the method of the work, there is in fact no contractee-
contractor relationship, and the employer may be vicariously liable under the
principles of master and servant. In other words: An independent contractor is
one who, carrying on an independent business, contracts to do a piece of work
according to his own methods, and without being subject to control of his
employer as to the means by which the result is to be accomplished, but only as to
the result of the work. [Campbell v Kovich, 273 Mich App 227, 233-234; 731
NW2d 112 (2006) (internal citations, quotation marks, and alternations omitted).]
The critical evidence in this case is (1) the language of the salt-storage agreement
between Detroit Bulk Storage and Morton Salt, (2) Morton Salt’s Stockpile Operator’s Manual
which it provided to Detroit Bulk Storage and to which Detroit Bulk Storage was to adhere, and
(3) the testimony of Morton Salt’s stockpile manager. We have reviewed the relevant exhibits
and contrary to U.S. Steel’s claim, find that none of them create a question of fact as to whether
Morton Salt was directing the relevant activities of Detroit Bulk Storage. Rather, they establish
that Morton Salt’s specific directives went to the preservation of the salt from the elements,
barge unloading, and general safety standards. Morton Salt did not control the manner in which
Detroit Bulk Storage would prepare the land or assure proper geological support for the salt
piles. Morton Salt instead relied on Detroit Bulk Storage to address such issues in its role as an
independent storage contractor.
U.S. Steel asserts that Morton Salt delivered excessive amounts of salt to Detroit Bulk
Storage and that the salt piles were double the height permitted in U.S. Steel’s lease with Detroit
Bulk Storage. However, it has not offered any evidence that Morton Salt was privy to that lease,
let alone bound by it, nor that Detroit Bulk Storage ever advised Morton Salt that its deliveries
exceeded its capacity. Similarly, U.S. Steel has not provided evidentiary support for its
argument that the capacity was limited to 100,000 tons. It relies on the Morton Salt—Detroit
Bulk Storage contract, but that document does not limit capacity to 100,000 tons. It instead
provided that the capacity must be at least 100,000 tons. Finally, U.S. Steel has not presented
any evidence that the occasional inspection of the salt piles by Morton Salt had any purpose
other than to assure that the salt was being properly preserved.
U.S. Steel relies on Loweke, 480 Mich 157, and on Boylan v Fifty Eight Limited Liability
Co, 289 Mich App 709; 808 NW2d 277 (2010). In Loweke, the Supreme Court held that a
contractor retains common law duties to third-parties in the execution of its tasks. Loweke, 480
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Mich at 159. In Boylan, we held that a contractor owed a duty to a plaintiff property owner that
was separate and distinct from its contract with a third-party. Boylan, 289 Mich App at 719. We
agree with plaintiff that these cases stand for the proposition that a contractor cannot assert that
the scope of his contractual duties immunize him from suit brought by a third party harmed by
the contractor’s negligence. However, those cases do not establish that the party hiring the
contractor is responsible for the contractor’s breach of its common law duties to third parties
unless there is evidence that the contractor’s harm-producing actions were taken on direction of
the hiring party. Here, the record does not contain any evidence that the negligence of Detroit
Bulk Storage resulted from the directions or control of Morton Salt. Moreover, Morton Salt did
not have a common law duty to assure that Detroit Bulk Storage complied with the terms of its
lease with U.S. Steel.
Lastly, U.S. Steel argues that the denial of summary disposition should be affirmed
because discovery remained ongoing when summary disposition was sought. However, in light
of the fact that U.S. Steel was unable, and is still unable, to identify in any but the vaguest terms,
what duty Morton Salt allegedly violated, we conclude that further discovery would be futile.
Liparoto Constr, Inc v Gen Shale Brick, Inc, 284 Mich App 25, 33-34; 772 NW2d 801 (2009).
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Elizabeth L. Gleicher
/s/ Kathleen Jansen
/s/ Douglas B. Shapiro
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