Court Opinion

ID: 9701359
Source: CourtListenerOpinion
Date Created: 2023-08-25 22:16:51.315778+00
Date Added: 2024-06-11T18:21:22.823273
License: Public Domain

Levin, J.
(concurring). I have signed the opinion of the Court, but write separately to emphasize the narrowness of the holding and to express my *141concern about the development of a rule authorizing contractually shortened periods of limitation.1
We deal here with one specific form of insurance contract — a labor and materials payment bond— and a type of third-party beneficiary unique to such contracts. I do not understand the Court’s opinion as authorizing contractually shortened periods of limitation in other insurance contracts or against other types of third-party beneficiaries.
The rationale of the rule allowing parties to contractually shorten statutory periods of limitation is that the shortened period is a bargained-for term of the contract. Allowing such bargained-for terms may in spme cases be a useful and proper means of allowing parties to structure their business dealings.
In the case of an adhesion contract, however, where the party ostensibly agreeing to the shortened period has no real alternative, this rationale is inapplicable. The rationale may similarly be inapposite as to the typical third-party beneficiary who neither participates in the bargaining process nor receives actual notice of the shortened period. In such situations, the public policy expressed in the statutes of limitation should presumptively control.
Without this bargained-for element, what has occurred in practical terms is that one of the contracting parties has supplanted the period of limitation mandated by the Legislature. I question whether the public policy embodied in a statutory limitation period is subject to unilateral preemption.
Three factors serve to distinguish this case. First, Camelot is not a typical third-party benefi*142ciary. Subcontractors such as Camelot are made beneficiaries as a means of better protecting the owner; the purpose is not to benefit subcontractors.
Second, the period here has been shortened to match the actual risk sought to be covered. The bond is designed to protect the owner from mechanics’ liens filed by unpaid subcontractors and materialmen. The contractually limited period has been tailored to cover only the period during which such liens may be filed and enforced under state statutes.2 The shortened period thus limits the bond to the coverage actually needed by the owner, the primary beneficiary. Such congruence between the shortened period and the risk to be covered by the insurance policy would not be present if a comparable term were included in typical homeowners, auto or life insurance contracts.
Third, at least as to this type of insurance contract, the Legislature has indicated that the one-year period may be reasonable by so limiting the time for bringing actions on statutorily required labor and materials payment bonds covering public construction.3 Also, the congruence between the shortened period and the risk being covered would support the reasonableness of this shortened period.
These factors, unique to labor and materials payment bonds and to such an ancillary third-party beneficiary, distinguish this case from situations involving other insurance contracts. An adhesion contract — such as most contracts of insurance — 4njwhiohLtheshortenedj^ *143ally been bargained for, or which operates to defeat the claim of an intended beneficiary not involved in the bargaining process, will present a different case.

 See cases collected in Anno: Validity of contractual time period, shorter than statute of limitations, for bringing action, 6 ALR3d 1197.

 MCL 570.1 et seq.; MSA 26.281 et seq.

 MCL 129.209; MSA 5.2321(9). See also, as to construction and maintenance contracts of the Department of Transportation, MCL 570.104; MSA 26.324; restricted by MCL 129.211; MSA 5.2321(11).