Court Opinion

ID: 4561015
Source: CourtListenerOpinion
Date Created: 2020-08-28 09:06:40.699822+00
Date Added: 2024-06-11T09:27:42.420062
License: Public Domain

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

JOSHUA ZACKS,                                                        UNPUBLISHED
                                                                     August 27, 2020
               Plaintiff,

v                                                                    No. 342274
                                                                     Wayne Circuit Court
JEFF ZACKS, doing business as UNLIMITED                              LC No. 16-000653-NI
INSTALLATIONS SERVICES,

               Defendant.
and

1101 WASHINGTON, LLC,

               Defendant/Cross-Plaintiff-Appellant,
and

TOTAL OUTDOOR CORPORATION,

               Defendant/Cross-Defendant-Appellee.

Before: GLEICHER, P.J., and STEPHENS and CAMERON, JJ.

PER CURIAM.

        Defendant-Cross-Plaintiff, 1101 Washington, LLC (“Washington”), appeals the trial
court’s order denying its motion for summary disposition. We affirm.

                                       I. BACKGROUND

        In November 2013, Total Outdoor Corporation (“Total Outdoor”) entered into a lease
agreement with Washington for the purpose of installing, operating, and maintaining an
advertising sign on the exterior of a building located at 1101 Washington Boulevard in Detroit,
Michigan. After entering into the lease, Total Outdoor contracted with defendant Jeff Zacks, doing
business as Unlimited Installations Services (“Unlimited Installations”), for the installation of an
advertising sign. On November 1, 2015, Jeff Zacks (“Jeff”) asked plaintiff Joshua Zacks

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(“plaintiff”) to come to the building the next day and to bring lunch for the workers installing the
sign.

        On November 2, 2015, plaintiff went to the building and proceeded to the building’s roof.
Plaintiff reached the roof by utilizing a staircase. After collecting lunch orders from the installation
crew, plaintiff walked down the staircase to the building’s second floor. Plaintiff did not recognize
his surroundings. Instead of continuing down the stairs, plaintiff turned right and walked down an
unlit hallway. Thereafter, plaintiff fell down an abandoned elevator shaft and sustained injuries to
his head, back, feet, spinal cord, and pelvis.

         Plaintiff filed suit in the trial court against several defendants. After commencement of the
underlying action, Washington filed a cross-claim against Total Outdoor, seeking a declaration
that Total Outdoor was contractually obligated to defend and indemnify Washington against
plaintiff’s claims under their lease agreement, which contained a “hold harmless” provision. After
the close of discovery, Washington moved for summary disposition on its cross-claim, asserting
that Total Outdoor was contractually obligated to defend and indemnify Washington. In response,
Total Outdoor argued that Washington’s motion should be denied because plaintiff’s injuries did
not occur on a portion of the “ ‘leased premises’ that formed the basis of the contract between
Washington and Total Outdoor.” In a reply brief, Washington argued that the hold harmless
provision in the lease applied to activities “in, on, or around the Building” and was not limited to
activities occurring within the leased portion of the premises. Washington also argued that the
lease provision broadly applied to claims “arising out of” Total Outdoor’s exercise of its rights
under the lease.

        After hearing oral argument, the trial court denied Washington’s motion in a January 16,
2018 opinion and order. The trial court determined that Washington was impermissibly seeking
to “expand” the hold harmless provision “to include not only the leased premises but the entire
building” and that Washington had failed to provide necessary facts to support its motion for
summary disposition. The trial court also determined that Total Outdoor was not required to
indemnify Washington for the latter’s own negligence because the lease did not contain clear and
explicit language expressing the parties’ intent to that effect.

       Washington sought, and was denied, interlocutory review in this Court. Zacks v 1101
Washington, LLC, unpublished order of the Court of Appeals, entered April 20, 2018 (Docket No.
342274). Subsequently, Washington sought leave to appeal to our Supreme Court. Under MCR
7.305(H)(1) and in lieu of granting leave to appeal, our Supreme Court remanded this case to this
Court for consideration as on leave granted. Zacks v Zacks, 503 Mich. 1013 (2019).

                                  II. STANDARDS OF REVIEW

         “This Court reviews de novo whether a trial court properly granted a motion for summary
disposition.” Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich. App. 362,
369; 775 NW2d 618 (2009). In reviewing a grant or denial of summary disposition under MCR
2.116(C)(10), this Court considers “the pleadings, admissions, and other evidence submitted by
the parties in the light most favorable to the nonmoving party. Summary disposition is appropriate
if there is no genuine issue regarding any material fact and the moving party is entitled to judgment

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as a matter of law.” Sallie v Fifth Third Bank, 297 Mich. App. 115, 117-118; 824 NW2d 238 (2012)
(quotation marks and citations omitted).

       The interpretation of clear contractual language is an issue of law that is reviewed de novo
on appeal. DeFrain v State Farm Mut Auto Ins Co, 491 Mich. 359, 366-367; 817 NW2d 504
(2012). “Whether contract language is ambiguous is a question of law, which this Court reviews
de novo.” Farm Bureau Mut Ins Co v Nikkel, 460 Mich. 558, 563; 596 NW2d 915 (1999).

                                          III. ANALYSIS

        Washington first argues that the trial court erred by denying its motion for summary
disposition because, under the clear and unambiguous terms of the lease, Total Outdoor was
required to defend and indemnify Washington against plaintiff’s claims. We disagree.

         Contracts are interpreted according to their ordinary and plain meaning. DeFrain, 491
Mich. at 367. If a contract’s language is clear, its construction is a question of law for the court.
Henderson v State Farm Fire & Cas Co, 460 Mich. 348, 353; 596 NW2d 190 (1999). However,
“[i]f the contract is subject to two reasonable interpretations, factual development is necessary to
determine the intent of the parties and summary disposition is therefore inappropriate. If the
contract, although inartfully worded or clumsily arranged, fairly admits of but one interpretation,
it is not ambiguous.” Meagher v Wayne State Univ, 222 Mich. App. 700, 722; 565 NW2d 401
(1997).

       As relevant to this appeal, the relevant portion of the lease states:

               Hold Harmless. Tenant shall indemnify, defend and hold Landlord
       harmless from all claims, losses, damages, judgments and expenses, including
       reasonable attorney’s fees arising out of Tenant’s exercise of its rights under this
       Lease including the construction, installation, placing, operating, maintaining,
       servicing or removal of the Sign or otherwise occurring in, on, or around the
       Building from the acts or omissions of Tenant, its agent, employees, contractors or
       anyone acting at Tenant’s discretion.

        The parties agree that the hold harmless provision requires Total Outdoor to “indemnify,
defend, and hold [Washington] harmless from all claims, losses, damages, judgments and
expenses” that arise out of Total Outdoor’s exercise of its rights under the lease. However, the
parties disagree as to whether the provision also covers all claims and losses “otherwise occurring
in, on, or around the Building” that are unrelated to Total Outdoor’s exercise of its rights under
the lease, but resulting from the activities of Total Outdoor or its contractors.

         We conclude that the hold harmless provision is not subject to only one interpretation.
Specifically, when implementing the rules of contractual interpretation, it is unclear whether the
phrase “occurring in, on, or around the Building from the acts or omissions of Tenant, its agent,
employees, contractors or anyone acting at Tenant’s discretion” is intended to be included in part
of a disjunctive list or whether it is intended to be a standalone provision. The provision’s structure
begins with the general statement that Total Outdoor will indemnify and defend Washington from
all claims and losses arising from Total Outdoor’s exercise of its rights under the lease. The
provision then uses the word “including” to introduce a list of actions that comprise those rights,

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i.e., “the construction, installation, placing, operating, maintaining, servicing or removal of the
Sign[.]” The clause “otherwise occurring in, on, or around the Building” is preceded by the word
“or,” which “refers to a choice or alternative between two or more things.” AFSCME Council 25
v Wayne Co, 292 Mich. App. 68, 92-93; 811 NW2d 4 (2011). Thus, the provision’s grammatical
structure (although inartfully worded) could support that the clause is part of a disjunctive list that
concerns alternative ways in which Total Outdoor can exercise its rights under the lease. However,
the grammatical structure could also support that Total Outdoor is required to “indemnify, defend,
and hold [Washington] harmless from all claims, losses, damages, judgments and
expenses . . . otherwise occurring in, on, or around the Building from the acts or omissions of
Tenant, its agent, employees, contractors or anyone acting at Tenant’s discretion.” Because the
hold harmless provision is “subject to two reasonable interpretations, factual development is
necessary to determine the intent of the parties and summary disposition [was] therefore
inappropriate.” See Meagher, 222 Mich. App. at 722. Consequently, because the factfinder needs
to determine the intent of the parties, the trial court did not err by denying Washington’s motion
for summary disposition. See Farmers Ins Exch v Kurzmann, 257 Mich. App. 412, 418; 668 NW2d
199 (2003) (“Ambiguities in a contract generally raise questions of fact for the jury[.]”).

       Next, Washington argues that the trial court erred by requiring clear or explicit language
within the lease to evidence the parties’ intent that Total Outdoor was required to indemnify
Washington for Washington’s own negligence.1 We agree.

       When denying Washington’s motion for summary disposition, the trial court found that
there was “no express agreement contained in the Lease at bar which would require [Total
Outdoor] to indemnify [Washington] under the facts of this case.” In doing so, the trial court stated
that Michigan law followed the general rule that, absent clear and express language, an
indemnification agreement cannot be construed to require an indemnitor to indemnify an
indemnitee against its own negligence. However, as Washington points out, this rule of
construction is no longer used by Michigan courts. See Badiee v Brighton Area Sch, 265 Mich
App 343, 353; 695 NW2d 521 (2005) (holding that “[i]ndemnity clauses need not expressly
mention the indemnitee’s own acts to provide coverage for them”). Instead, courts are to determine
“the parties’ intent from other language in the contract, surrounding circumstances, or from the
purpose sought to be accomplished by the parties.” Id. (quotation marks and citations omitted).
Thus, Washington is correct that the trial court relied on an invalid rule of law when denying its
motion for summary disposition.

1
  Washington asserts the trial court raised this issue sua sponte when issuing its opinion denying
Washington’s motion for summary disposition. As a result, the issue does not conform to our
traditional preservation requirements for appellate review. See Hines v Volkswagen of America,
Inc, 265 Mich. App. 432, 443; 695 NW2d 84 (2005) (“Generally, an issue is not properly preserved
if it is not raised before, and addressed and decided by, the trial court.”). However, consistent with
previous holdings of this Court, we find that, because the trial court considered and decided the
issue, it is preserved for review. See Mills v White Castle Sys, Inc, 199 Mich. App. 588, 591-592;
502 NW2d 331 (1992) (“We believe that the trial court had the opportunity to consider the issue
and that it was sufficiently preserved for review.”).

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        Washington further asserts that the lease’s insurance provision provides suitable evidence
that the parties’ intended for Total Outdoor to indemnify Washington for its own negligence. The
insurance provision provides as follows:

               Insurance. Tenant will, at all times during the term of this Lease, maintain
       at Tenant’s expense a Commercial General Liability insurance policy naming the
       Landlord as an additional insured, with combined single limits of at least
       $1,000,000 for bodily injury or property damage. Tenant shall pay all premiums
       therefore as due and shall deliver, upon request of the Landlord, a copy of the
       certificate of insurance.

        Without reference to either the record or any legal authority, Washington asserts that the
only reason for this insurance provision would be for Total Outdoor to indemnify Washington and,
thus, provides evidence of the parties’ intent and serves as a basis for summary disposition
concerning Total Outdoor’s obligations under the lease. However, as a general rule “[s]ummary
disposition is suspect where motive and intent are at issue . . . .” Foreman v Foreman, 266 Mich
App 132, 135; 701 NW2d 167 (2005). Moreover, after reviewing the record, we conclude that the
arguments were not fully developed before the trial court.

       Affirmed.

                                                            /s/ Elizabeth L. Gleicher
                                                            /s/ Cynthia Diane Stephens
                                                            /s/ Thomas C. Cameron

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