City of Riverview v. Prudential Security Inc ( 2021 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CITY OF RIVERVIEW, UNPUBLISHED
July 15, 2021
Plaintiff-Appellee,
v No. 353950
Wayne Circuit Court
PRUDENTIAL SECURITY INC, LC No. 19-002485-CK
Defendant-Appellant.
Before: RIORDAN, P.J., and M. J. KELLY and SHAPIRO, JJ.
PER CURIAM.
In this breach-of-contract action, defendant, Prudential Security Inc (Prudential), appeals
the trial court’s order granting summary disposition in favor of plaintiff, City of Riverview
(Riverview). We affirm.
I. BACKGROUND
Prudential had been providing security services for Riverview’s landfill since 2011. In
July 2014, Riverview and Prudential executed a three-year contract under which Prudential would
provide security services for the landfill until July 2017. Per the contract, Prudential promised to
provide uniformed security guards and an all-terrain vehicle, which the guards used to make hourly
security checks or “rounds” of the landfill’s perimeter. The landfill’s roads are dirt roads covered
with gravel and, as one Prudential employee described them, they are “rocky and bumpy.”
Riverview employees perform maintenance on the roads as needed, including leveling the roads
and laying down fresh dirt and gravel.
In June 2017, with the contract expiration date approaching, Riverview and Prudential
agreed to extend the contract until July 2020 and signed an addendum to that effect. Although
Prudential had previously expressed concern to Riverview about Prudential’s rising vehicle
maintenance costs, Prudential did not mention this concern when negotiating the contract
extension. Instead, Prudential’s only requested change to the contract was for hourly rate increases
if either the state or federal minimum wage was increased. Riverview agreed to this condition and
the contract otherwise remained the same.
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A few months after the parties executed the addendum, Prudential requested an increase to
the contract price because of rising vehicle costs. That request was denied as were subsequent
requests for pay increases to cover vehicle maintenance and repairs costs. Prudential continued to
provide the security services required by the contract throughout 2017 and 2018. On January 13,
2019, Prudential informed Riverview that it would be terminating service as of January 18, 2019.
Riverview sought bids for an emergency replacement for Prudential to cover the remainder of the
contract term. Riverview initially hired Slater Security Services, LLC (Slater) on a 180-day
emergency contract. As the 180-day emergency contract neared its end, Riverview solicited bids
for a new three-year contract and ultimately awarded the contract to Slater.
In February 2019, Riverview sued Prudential for breach of contract. Riverview claimed
damages of $48,423.48, which represents the amount that Riverview paid Slater above the contract
rate agreed to by Prudential. After discovery, Riverview moved for summary disposition under
MCR 2.116(C)(9) (failure to state a defense) and (C)(10) (no genuine issue of material fact).
Riverview argued that Prudential had materially breached the terms of the contract without a valid
defense.
In response, Prudential argued that its duty to perform under the contract was discharged
by impossibility or impracticability. Prudential reasoned that the condition of the landfill’s roads
made it impracticable to provide security services because the roads routinely damaged
Prudential’s vehicles. Alternatively, Prudential argued that its duty to provide security services
never arose because Riverview had breached an implied condition precedent in the contract to
maintain the landfill’s roads in suitable condition. Prudential further contended that, even if it had
unjustifiably breached the contract, there was a question of fact as to whether Riverview had
appropriately mitigated its damages when two security companies had submitted lower bids than
Slater.
After hearing oral argument, the trial court granted Riverview’s motion for summary
disposition. The court rejected Prudential’s defense of impossibility or impracticability, finding
that the uncontradicted evidence showed that Prudential was able to perform the hourly rounds
without undue hardship. The court also ruled that the contract did not contain an implied condition
precedent to maintain the roads or, if there was an implied condition, Riverview did not breach it
given the daily security logs showing that Prudential’s guards were able to make their rounds.
Lastly, the court found that there was no genuine issue of fact that Riverview made reasonable
efforts to mitigate its damages. This appeal followed.
II. ANALYSIS
A. EXCUSE FOR NONPERFORMANCE
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Prudential first argues that there is a genuine issue of material fact whether the defense of
impossibility or impracticability discharged or excused its contractual duty to provide security
services to Riverview. We disagree.1
A party’s contractual obligation to perform may be discharged when a circumstance arises
that renders performance impossible or impracticable. Roberts v Farmers Ins Exch, 275 Mich App
58, 73-74; 737 NW2d 332 (2007). An impossibility can either be original or supervening. Id.
at 74. A supervening impossibility develops after the contract in question is formed, while an
original impossibility refers to a circumstance already in existence when the contract was formed
but was unknown to the parties. Id. Generally, for impossibility or impracticability to discharge
a party’s contractual duties, the circumstance that arises must be one that the parties could not have
reasonably foreseen at the time they entered the contract. Id. at 74; Rogers Plaza, Inc v SS Kresge
Co, 32 Mich App 724, 743; 189 NW2d 346 (1971).
In this case, the evidence conclusively shows that the condition of the landfill’s roads is a
circumstance that Prudential either knew about or could have reasonably foreseen. Prudential had
been providing security service to Riverview since 2011, giving Prudential ample time to become
familiar with the landfill’s roads. It was therefore reasonably foreseeably to Prudential—both in
2014 when it signed the three-year contract and in 2017 when it signed the extension—that its
vehicles would be traversing unpaved, rugged roads and that there would be corresponding vehicle
maintenance and repair costs. Although Prudential’s business and compliance manager testified
that the roads became worse in 2017, there was no evidence supporting this assertion. Specifically,
there were no photographs of the alleged road conditions or documentation showing an increase
in vehicle costs over time. Moreover, the contract provided that Prudential would release all tort
claims against Riverview “arising out of injuries sustained by [Prudential] by reason of the
inherently dangerous conditions at the premises described herein.” From this provision and their
knowledge of the property, Prudential could have reasonably foreseen the incurrence of vehicle
maintenance and repair costs.
Even assuming that the vehicle-related costs were not foreseeable, Prudential’s defense of
impossibility would still fail. “Although absolute impossibility is not required, there must be a
showing of impracticability because of extreme and unreasonable difficulty, expense, injury or
loss involved.” Roberts, 275 Mich App at 74. “A mere change in the degree of difficulty or
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We review de novo a trial court’s decision to grant summary disposition. Pontiac Police & Fire
Retiree Prefunded Group Health & Ins Trust Bd of Trustees v City of Pontiac, 309 Mich App 611,
617; 873 NW2d 783 (2015). Although Riverview moved for summary disposition under MCR
2.116(C)(9) and (C)(10), because the parties relied on evidence beyond their pleadings, we apply
the standard of review applicable to summary disposition under MCR 2.116(C)(10). See
Nuculovic v Hill, 287 Mich App 58, 61; 783 NW2d 124 (2010). “Summary disposition is
appropriate under MCR 2.116(C)(10) if there is no genuine issue regarding any material fact and
the moving party is entitled to judgment as a matter of law.” West v Gen Motors Corp, 469 Mich
177, 183; 665 NW2d 468 (2003). “A genuine issue of material fact exists when the record, giving
the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” Id.-3-
expense due to such causes as increased wages, prices of raw materials, or costs of construction,
unless well beyond the normal range, does not amount to impracticability . . . .” Restatement
Contracts, 2d, § 261, comment d.
Even when viewed in a light most favorable to Prudential, the evidence shows that the
landfill’s roads presented neither an unreasonable physical barrier nor an unreasonable economic
barrier to Prudential’s performance. First, the daily security logs produced by the parties show
that, with a few exceptions, Prudential’s security guards were able to complete their rounds of the
property without incident. The deposition testimony was consistent with the logs. The landfill’s
lead operator recalled four or five occasions where Prudential security guards had “ran into
something,” damaging their vehicle to the point that they could not drive it to complete rounds.
Similarly, the landfill’s facility manager remembered seeing Prudential vehicles with flat tires and
recalled two occasions where the vehicle was so damaged from an accident that it could not be
driven. One time, a security guard had backed into the side of the facility manager’s work truck;
another time, a security guard’s SUV’s front end had been damaged. Even assuming these
accidents were caused by the road conditions, they do not establish impossibility or impracticality
when Prudential’s security guards were able to perform the required rounds nearly every day
without incident. Indeed, Prudential’s operations manager testified that the roads did not prevent
him or the guards he oversaw from completing their rounds.
Prudential’s real argument is not that performance was impossible, but that it became too
expensive. But Prudential has offered nothing to show that its vehicle-related costs presented an
unreasonable economic barrier to its performance. Nowhere in the record does Prudential provide
competent proof of its maintenance and repair costs. It offered no receipts, invoices, pictures, or
other evidence demonstrating an exorbitant expense. All it offered was a handwritten note created
by its business and compliance manager listing various expenses allegedly incurred from 2018 and
2019. The manager testified that she prepared the handwritten note the day before her deposition
and that the note was based on her review of Prudential’s expense records from 2018 and 2019.
However, the note merely provides that Prudential spent $4,500 on vehicle repairs in 2018, and
$800 in 2019. There is nothing in the record from which to conclude that these alleged costs were
anything more than a mere change in the degree of difficulty or expense, especially considering
the contract at issue was worth more than $200,000. These were not such extreme expenses that
it would have been impracticable for Prudential to continue performance.
In the alternative, Prudential argues that its obligation to perform never arose because the
contract contained an implied condition precedent requiring Riverview to keep the roads in suitable
condition and that Riverview breached that condition.
“A condition precedent is a condition that must be met by one party before the other party
is obligated to perform[.]” Archambo v Lawyers Title Ins Corp, 466 Mich 402, 411; 646 NW2d
170 (2002) (quotation marks and citation omitted). The failure to satisfy a condition precedent
precludes any cause of action for the failure of performance. Berkel & Co Contractors, 210 Mich
App 416, 420; 533 NW2d 838 (1995).
Prudential does not identify any caselaw addressing whether a condition precedent to
performance may be implied. However, even if this is a viable legal argument and the parties’
contract contained the claimed condition, Prudential has offered no evidence that Riverview failed
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to fulfill the condition. The facility manager testified that, whenever the road became too bumpy
or craggy, he or another Riverview employee would grade the road, level the surface, and lay down
fresh gravel. Though he did not keep records of how often he did this, he estimated that he did so
once a month. He also testified that he or another Riverview employee serviced the roads the few
times that Prudential’s security guards complained about them. Prudential offered nothing to rebut
this testimony. As noted, Prudential’s operations manager testified that the condition of the roads
never prevented him or his subordinates from completing their rounds. Although there is some
evidence that Prudential’s vehicles were damaged on occasion because of the road conditions,
Prudential was nonetheless able to perform its contractual obligations. Thus, the record does not
demonstrate a genuine issue of material fact as to whether Riverview made a reasonable effort to
maintain its roads.
In sum, the trial court did not err by finding no genuine issue of material fact as to whether
Prudential’s duty to perform was excused or never arose. Because Prudential does not otherwise
dispute that it breached the contract, the court correctly granted summary disposition to Riverview.
B. MITIGATION OF DAMAGES
Prudential also argues that, even if it breached the contract without justification, there is a
genuine issue of material fact as to whether Riverview made reasonable efforts to mitigate its
damages. We again disagree.
“Mitigation of damages is a legal doctrine that seeks to minimize the economic harm
arising from wrongdoing.” Morris v Clawson Tank Co, 459 Mich 256, 263; 587 NW2d 253
(1998). A party’s duty to reasonably mitigate may be summarized as follows:
Where one person has committed a tort, breach of contract, or other legal wrong
against another, it is incumbent upon the latter to use such means as are reasonable
under the circumstances to avoid or minimize the damages. The person wronged
cannot recover for any item of damage which could thus have been avoided. [Id. at
263-264 (quotation marks and citation omitted)].
“The defendant bears the burden of proving that the plaintiff failed to make reasonable efforts to
mitigate damages.” Id. at 266.
Generally, “[t]he question whether [a] plaintiff’s efforts to mitigate damages were
reasonable under the circumstances is one for the trier of fact.” Id. at 270. But like all questions
of fact, the trial court may decide the matter as a question of law at the summary-disposition stage
when reasonable minds cannot differ on the conclusion. See 1300 LaFayette East Coop, Inc v
Savoy, 284 Mich App 522, 525; 773 NW2d 57 (2009) (“A question of fact exists when reasonable
minds can differ on the conclusions to be drawn from the evidence.”).
In this case, Prudential fails to show that there is a genuine question of material fact
precluding summary disposition of its mitigation defense. As noted, after Prudential ceased
performance of its contractual obligations, Riverview hired Slater to provide security services on
a 180-day emergency contract. Of the firms that bid on that contract, Slater submitted the lowest
bid at an hourly rate of $17.65. As the 180-day emergency contract neared its end, Riverview
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solicited bids for a new three-year contract and selected Slater, who again offered an hourly rate
of $17.65.
Prudential argues that Riverview failed to mitigate its damages because two other
contractors submitted cheaper bids, referring to H & P Protective Services, Inc (H & P) and All
Inclusive Security & Investigation, LLC (All Inclusive). However, as Riverview explained before
the trial court, although All Inclusive charged an hourly service rate of $16.75—a rate lower than
Slater’s $17.65 per hour service rate—All Inclusive charged a $15 per day vehicle fee in addition
to its hourly service rate. In contrast, Slater’s vehicle fee was included in its hourly service rate.
Slater also charged a much higher holiday hourly rate. Accordingly, All Inclusive did not submit
a cheaper bid than Slater.
Offering $16.25 per hour, H & P submitted the lowest bid. However, Riverview explained
that it chose Slater over H & P because: (1) Riverview was pleased with the quality of service
provided by Slater during the emergency contract; and (2) Riverview viewed H & P as “geared
more towards ‘event-based-security services’ rather than daily on-site security services.”
Prudential fails to explain how Riverview’s decision to award the three-year contract to
Slater was unreasonable. Prudential does not identify any caselaw that the party must select the
cheapest replacement service in order to reasonably mitigate their damages. Nor does Prudential
dispute or even address Riverview’s explanation for choosing Slater, i.e., that it was satisfied with
their performance under the emergency contract and H & P was not aimed toward providing on-
site security services. Based on the record before us, reasonable minds could not differ on the
conclusion that Riverview made reasonable efforts to mitigate their damages. Accordingly, the
trial court correctly granted summary disposition of this affirmative defense.
Affirmed. Riverview may tax appellate costs as the prevailing party. MCR 7.219(A).
/s/ Michael J. Riordan
/s/ Michael J. Kelly
/s/ Douglas B. Shapiro
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