negligence case on the basis of duty is she was i believe a little too influenced by the faults decision the supreme court case from a few years ago the fact is folse was quote unquote clarified by the michigan supreme court a couple of years ago in the lower key case in lower key the supreme court reaffirmed longer stablished michigan common law with respect to when a duty exists particularly more particularly with respect to when a duty exists when a contract is in play and what the michigan supreme court did was to establish i should say reestablish the fact that where you have a contract and you are acting on that contract when you undertake based on that contract and you act negligently you owe a duty of due care but  can be liable in tort to that desperate but it's another isn't that another thing altogether to say that a party performing under a contract can be liable to the other party in that that's that's the that's really what these fights are about and what i hardly ever says ludwig establishes quite clearly is that the same dichotomy that exists when you have contracting parties exists with respect to lower keys  determination of third parties it is no different if i am not and you explain what you mean by yes yes if i am bound by a contract to somebody i am in no different position than the rest of the world if my contracting party injures me with their negligence there is no distinction i'm working as an independent contractor at an apple orchard and the person i'm contracted with for that next over the latter i'm working on there is no question in that circumstance that once he acts in that capacity and he commits a negligent act he's he is he is a duty to me it was that i mean it was heart a we could find dozens and dozens of cases because the point is low a key and faults were obviously in the context of third parties but the same thing has to apply to contracting parties and the reason is that where the contracting party acts whether whether as opposed to failing to act and that's the difference obviously and loic where that contracting party acts and they act negligently you cannot be confined for recourse for that injury particularly a physical injury to the contract you cannot i mean normally you know parties rights you know visa v the other contract or party with respect to the very duties prescribed in the contract are governed by contract not tort law they are governed they are governed by tort law i'm sorry to say with respect to any type of misfeasance any type of act but we're i'm sorry i'm sorry ok but i mean negligence you know i mean that's the supreme court said in lower case they use the word undertaking where you undertake and you act negligently then you are in fact guilty or responsible in tort that is and it's exists in many many places this i cited in my reply brief i think five cases from this court which talked about  e they may have been totally in contract law but the simple fact is they applied the same analysis to the distinction between contract and court that  that if you had a situation even if you had a situation which says here's what you're supposed to do a contract if you if you do something just if you do something straight up breach of contract many strict breaches of contract are also going to give rise to tort liability under your no theory no the one you just described does not yet know it doesn't i think the reason it doesn't is is i don't know how it works elsewhere but tort law draws a dramatic distinction and always has between acting and failing to act what you're describing is failing to act  talking about something that you can recast that you know how about the reason they failed to act is they didn't get a say warning signal and they didn't get a warning signal because they improperly installed the wiring for the system just hypothetically it's acting that's acting and it's it's negligent and it was a breach of their obligations and so now they can be sued in tort and contract well i don't know if anybody would pick contract but the simple fact is  remember the key word at least i take from lower key is undertaking they have undertaken in this case for example there are two undertaking that we have cited to that do in fact give rise to tor liability and that it's obviously the design of the of the system and the installation of the system those are x and under low a key and you compare locate a heart versus ludwick and  contraction this is something i would ask you to go back to heart versus ludwig because this is the wrestling match that exists intellectually in this particular area with the intersection of tort and contract but heart versus says precisely what i've been saying and precisely what loic he says the distinction that has to be drawn is between misfeasance and nonfeasance that's what hart said long time ago well established michigan law you would be breaking no new ground if you recognize in this case that there is in fact potential tort liability for the two active components of this i'm going to move on to address  spangler or what applies here in your view yes spangler it apparently is being argued on the two points one is in fact on the limitation of any liability and on the limitation of damages limitation of damages clearly doesn't apply with respect to spangler precisely because the only two issues raised further by the plaintiff to try to defeat the limitation on damages were i think the michigan consumer protection act and unconscionable there was no discussion in spangler as to gross negligence which i don't think there's any debate under michigan law that gross negligence is in fact an exception to a limitation on damages with respect to the other issue that is the whether it's the limitation on liability i would first of all say to you that clearly spangler was decided in the interregnum if you will between faults and case it did not have access to locate however what's more important is that maybe this is the answer to your question the court made a specific point of saying that there's this was nonfeasance which court word to take from fultz a from the from lower key is in fact undertaking when you undertake to do something you have a duty independent of the contract you have you the point of low i can the point of lower key is what happens if you throw the contract out specifically just as kavanagh said in low ok ok put the contract inside a psych don't read the contract now in that situation does this person have a duty under the common law they don't have a duty to call the police absent a contract they don't have a duty they don't have a duty regrettably under tort law to call the police and again that's because of the long line clause there's been what i think is a very significant court of appeals clarification yet another clarification of michigan law in the area of the effect of the merger clause the u a w g m case is what cited are not incorporated into a contract all of this if i can is probably moot in light of the fact that the michigan supreme court's most recent pronouncement in two thousand and twelve in the titan v heighten case actually eliminates the reason will this requirement dealing with here here we're dealing with the case involves two commercial entities that entered into a contract the only thing that loki did was said and it didn't overrule faults at all it just said since faults courts have gotten the wrong idea that if i have a contract with another company just because i'm performing under that contract i now have a shield from tort liability viz a viz the rest of the world and as against claims brought by third parties who are injured by a peril created in the performance of the contract the ok said you don't get to use the fact that you're working under a contract as a get out of jail free card visa via the entire world and i think this court in the davis case characterized that very well in one sentence and it said something very much like that that the fact you have a contract that defines two parties relationship does not define those parties relationship these are via the rest of the world and that was the clarification of louis keith isn't limited to it isn't what it arose in that context clearly because it's talking about fultz and it's rising in that context but isn't the analysis just just completely mode of analysis entering into a contract with another pursuant to which one party promises to do something does not alter the fact that there exists a preexisting obligation or duty to avoid harm when one acts  the the analysis there appears to me to apply beyond just the human i have a contract and i drop a cement block on judge col can he come against me isn't it about and doesn't the analysis to self adrift separate duty that you and i have to one another even though we are in a contractual relationship but the short answer is i think yes to analysis could be similar and it still speaks to the same saying that what loci did was adopted contract law contract or separation principles that existed between the contracting parties and expanded those concepts in the third party setting and its holding was limited to that but all of the law that it cites by and large other than the faults case arises out of the direct contract situation so for an instance like the hypothetical that we included in our brief the fact that if we set out to perform under a contract were out on a job site installing an alarm under that contract and were hammering on the roof and the agent throws his hammer off the roof and it hit somebody whether it hits the owner of the business who is a party to the contract or whether it hits an innocent bystander to your point you might have tort liability there because if without reference to the contract whether i'm on the roof just for fun fixing things or because i have a contract i have a duty not to create a hazard that could hurt somebody with or without reference to the contract and so then if you go back to and all of the case law that has not changed on the duty analysis and spit spangler the true two prongs for whether or not you have a duty in tort that can arise out of a contractual performance remain the same and the first question it's not the slippery slope nonfeasance there's been half a dozen michigan and federal opinions out of this court interpret in michigan law that prong one you start with is there a separate and distinct duty in tort that would exist in tort even in absence of the contract if you satisfy that then and this is unfolds in full to its conclusion then you look to see did it arise out of active negligence or mis as the case law explains it doesn't mean you're just scrutinizing the contract performance saying could you have done a better job or did you not perform under the contract as well as we would have liked it's instead you did an affirmative act that created a new peril or a new hazard that but for your action that has or didn't exist so if you use the example of the guy working on the roof and he throws the hammer off the roof whether he's there in contract or whether he's there just on his own that peril didn't exist but for the fact that he did that act on the roof on the other hand even setting aside the duty component which is where it ends here because the duty to install the alarm system the way they thought it was going to be installed and to properly respond if you get alarm signals all arises out of the contract but if under spangler in the framework that spangler properly adopted from michigan if you look at if you get to the nonfeasance question and ask was there a peril created or some sort of hazard that was created that wouldn't have existed but for a t t s contact conduct in this case the answer to that is also no because the risk that this involved was somebody might break in and steal your valuables the criminals created that risk by deciding to try and break in and steal jory that's not something that if a d t did or did not install an alarm system would have existed that exist are protected from anything so expressed remedies under the contract you have no duty no duty to perform in a way that's not grossly negligent we have a duty to perform in a manner that's not grossly negligent if there is a separate and distinct duty created that the common law but anything under the contract is is limited to the letter of the contract the duties that the parties expressed to one another and agreed to by the terms of the commercial c contract with its common law creates a duty in relationship between you and the party with whom you contract then they have a fault affection if you follow spangler in all of the michigan cases that th spangler followed the spin the law if there is a separate and independent duty that would exist without reference to the contract and if your conduct is misfeasance or creates a hazard or peril that would not have existed but for your conduct then yes then you can have tort and contract existing out of the same set of factual circumstances but i guess i mean to maybe try to apply the distinction you're talking about here would it be or argument then that if you're if a d t when they were installing the system left a back door to a restore open and then that night burglars  and committed the same for every that they would be liable and tort there because they enhanced a hazard that a risk that was already present but that's different than not diminishing the risk in the manner that the parties contract for i certainly think that that example would get you a lot closer to the way the test is laid out i don't mean to the real did you want to ask i was going to ask about the false decide i'm not going to put in that system i'm not going to monitor that system they had no use you would say under that the only remedy if i didn't go out and contract with someone else if i didn't protect myself in some other was a lonely remedy for your flight right refusal to perform what i've paid you to do is whatever is in the contract  if limitations are in the contract on that remedy would be yes under michigan law it would be to sue on the contract because there you haven't satisfied either prong of what would create a separate tort duty and less the facts add something that gave rise to you know a fraud or statutory claim that a forcing under negligence or gross negligence what you have just described is not performing at all i mean even if it's an intentional breach of policy bases you know there's there's the whole you know economically justified intentional breach the whole idea behind contract law is that sometimes it's advantageous to breach and that is sometimes a reason parties do breach on purpose which you know if you're on a continuum would be worse than a very reckless breach if such a thing existed so yeah and that's instance if you sign a contract and somebody doesn't do it your remedy is not in tort law it's to sue on the contract and based on michigan law you would fail both of the components that you would need to  because there's not a duty separate and an independent from your decision to hire a company to install the alarm to do it and secondly even if there were such a duty if you go to the misfeasance nonfeasance dichotomy which is kind of if the plaintiff is alleging a breach of an independent d d wouldn't that sort of the two of the six motion well not if as a matter of laws the court construed it here the allegations of the complaint very very clearly just stated duties that arose out of a contract in fact i think some of the paragraphs of the complaint sounds like they are asserting a contract breach and just wrapped into a negligence claim so the district court in this case did exactly as it should have done which was to accept as true the allegations and look at the source of the duty and ask whether or not if we sweep away this contract do you have a duty to properly install monitor maintain an alarm system and s and so i mean you can respond to that but really what i'm interested in is whether you think that the michigan courts as i understand it have little has said you cannot have a fraud claim if the representation is simply a future promise correct and i think you and you say that that doctrine carries over to false advertising but i think the michigan courts have applied that with respect to section four four five three five one and here three one five case is that matter in your view how do you extend that the application of that one section to this one well you know to be candid that's not an issue that we looked at in terms of this is a statutory issue and whether there's a there's overlap  i i think probably the easier basis would be you have several grounds the district judge had four separate grounds on which she dismissed the fraud and statutory fraud claim one of which was a nine b analysis which the district court a court that doesn't work has broad discretion particularly after one amendment has been allowed and no request for a further amendment was allowed to dismiss under nine b and did that because the complaint is clearly lacking the who what where when that would be required to satisfy nine b and the issue on the reliance prong i think i didn't hear anything from counsel's description of these the new michigan cases that based on what was reduced to writing where you have a signature and acknowledging that this is merged into our full understanding of the agreement that you can't then later assert that you've relied upon something that you know whether it's  sloganeering or whether it is a fact representation you can't look back and say well that was the only reason i entered it when you've got a merger and integration clause that says to the contrary that does defeat any sort of reliance component in the reasonableness of the fraud claim altogether and i think even if you don't get down into the weeds of whether or not you need to look to a different section of the michigan consumer protection statutes there are ample bases there's four separate bases on which you could affirm the dismissal of the statutory count as well as the common law fraud count and any one of those is sound based on the district court's reasoning but if the allegation is that the for all of its sales he's in the contract would that motion if the allegation were made and not deficient that the integration clause was fraudulent only induced or that there was some legal deficiency with the enter gratian clause then the answer under michigan law is yes that might allow the fraud claim to survive but that argument has never been made there was never anything contesting the validity of the contract it's what was promised in the contract and whether i whether i got what i thought i was getting in this contract so the fraud and the fraud claims never attacked the validity of entering the contract or the validity in particular which is what the key distinction is under the u a w case and the cook case which is out of the circuit applying michigan law is was the merger integration clause valid and was was the validity of that clause on fraud or other grounds ever contested and the answer to that is no and that's why that claim to be i'm not clear i thought there was an argument that not fit there was a promise in the inducement but that the court below paled that the that the ul certificate was a part of the contract and the ul certificate does not make a promise the us do you all certificates say we have installed this type of facility in your business and it will perform as it is supposed to perform that's the warranty in the us now the court below hailed that's part of the contract if that's a lie isn't that fraud within the contract no i think if that were true then any time you had a warranty and whatever you have whatever you ended up with you later discovered didn't meet what the warranty was every warranty claim is a fraud claim which is why there is a body of case law that any in your answer includes a warrant that you have proof because not a warrant of this is a great product and it'll be better than anything else you can ever buy but a warrant that i have  this part of my job has installed this item in your business when in fact you have not is that not fraud within the contract not a representation of a promise  representation of something not done i still think that comes back to if it's if it's part and parcel of the contract and you warranted that the system that i installed meets this and then it knows i'm i'm sorry my question is if you warranted that you had installed it not what it does but you say here's the piece of paper it's part of the contract it says i have done this and you have not done i don't think that meets all the common law elements of a fraud claim i still think we're within warranty and contract law under those facts fraud claim has a lot of heightened requirements that you're not going to get just by representing on a piece of paper this is what we're installing and if it later doesn't meet the elements of what you said you installed you're still within contract law unless you've met all the common law fraud elements and i don't think that scenario does and as a factual clarification the ul certificate argument that was presented to the district court about that being a separate contract and whether or not that separately gave rise to a different cause of action that has been abandoned on the appeal that was an argument the separate ul contract argue was the loss that they lost that i didn't feel that what i'm talking about is the decision of the district court that is before us in which the district court said the u certificate saying i have installed this equipment is part of the contract it's not separate because that's what the district court hild correct so it's part of the contract it's not separate that's what my question and i thank you he's given  contract that's a complete exception to the usual rule getting back to your question before i came here thinking spangler was something that was in their favor but it's not now in light of the questions that you've asked with tort action between two contracting parties obviously it's the same sort of case spangler it involves an alarm system and it's said citing hart and the court held that we're the only violation was that of a broken promise to perform a contract and there existed no independent duty outside the contract liability must rest solely on breach of contract now the question i would ask you to ask yourself is why is that statement in spa if your assessment of the distinction between tort and contract is correct this statement did not have to be made in spangler the simple fact is they were referring to hart versus ludwig they were referring to the distinction would have been embarrassing if i did you know but the point is the point is and again hard vs ludwig is the first case that i would cite too if i knew you were going to ask these question and i really could come up with a lot of cases involving contracting parties and a tort arising out of the country acting parties i want but that against others i will not hold that omission against you can't i didn't think it was an issue actually before the court at the present time but it did let me close by citing to you what loic e says about contract determining whether a duty arises separately and distinctly from to country actual agreement generally does not necessarily involve reading the contract noting the obligations required by it and determining whether the plaintiff's injury was contemplated by the contract in other words if your determining duty under michigan law and it happens to be duty that is associated with the performance of the contract throw the contract out and determine on that basis is there a common law and again the common law duty that exists in lower key and existed in clark versus dolman and hard first is ludwig long before is every person engaged in any undertaking any undertaking has a common law duty of due care under michigan law they act once you act you have a common law duty to act in a non negligent fashion this point you can