LEE CHURCHILL V JP KING AUCTION COMPANY INC
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STATE OF MICHIGAN
COURT OF APPEALS
LEE CHURCHILL and NANCY CHURCHILL,
UNPUBLISHED
April 10, 2008
Plaintiffs-Appellees,
v
No. 274461
Genesee Circuit Court
LC No. 04-079579-NM
J.P. KING AUCTION COMPANY, INC.,
Defendant-Appellant,
and
STEVEN L. REESER,
Defendant.
Before: Murray, P.J., and Sawyer and Cavanagh, JJ.
PER CURIAM.
Defendant J.P. King Auction Company, Inc. (defendant), appeals by leave granted from
an order granting partial summary disposition to plaintiffs Lee Churchill and Nancy Churchill
under MCR 2.116(C)(10).1 We reverse.
Plaintiffs filed this negligence action against defendant, their real estate broker and
auctioneer, alleging that it negligently drafted two purchase agreements that failed to contain an
adequate legal description of the property to be sold, thereby allowing the prospective purchaser,
Bryan Swarthout, to void the agreements. Plaintiffs’ separate lawsuit against Swarthout was
dismissed after the court in that case concluded that the purchase agreements were void because
they contained inadequate descriptions of the property to be sold.2 The trial court in this case
determined that defendant’s voluntary undertaking to prepare purchase agreements for the sale of
1
Another defendant, Steven L. Reeser, is not a party to this appeal.
2
This Court affirmed the dismissal of plaintiffs’ lawsuit against Swarthout in Churchill v
Swarthout, unpublished opinion per curiam of the Court of Appeals, decided April 11, 2006
(Docket Nos. 257151, 260843, 262093).
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plaintiffs’ land gave rise to a duty of care, enforceable in tort, thereby allowing plaintiffs to
proceed with their negligence action.
Defendant argues that the trial court erred in finding that it owed plaintiffs a duty of care,
enforceable in tort. We agree.
A trial court’s grant of summary disposition is reviewed de novo, on the entire record, to
determine whether the prevailing party was entitled to judgment as a matter of law. Allen v
Keating, 205 Mich App 560, 562; 517 NW2d 830 (1994).
In negligence actions, the existence of a duty is a question of law for the court, to be
reviewed de novo. Fultz v Union-Commerce Assoc, 470 Mich 460, 463; 683 NW2d 587 (2004).
There can be no tort liability unless a duty is found to exist. Id.
The trial court found that defendant owed plaintiffs a duty of care, enforceable in tort,
arising from a voluntary undertaking. As the trial court properly observed, a duty to act in a
nonnegligent manner may arise from a voluntary undertaking to perform an act, where there is
no obligation to do so. Id. at 465. In this case, however, defendant’s preparation of the purchase
agreements did not involve a voluntary undertaking. Rather, plaintiffs and defendant are parties
to an auction marketing agreement and plaintiffs rely on this agreement as the source for
defendant’s alleged duty. Indeed, in their brief on appeal, plaintiffs assert that “[i]t is clear [that
defendant] agreed by contract to draft purchase agreements for the Plaintiffs, and this Court need
only address if this would trigger a tort duty in this case.” Plaintiffs also assert that defendant
charged them “very large sums of money for special services,” and that “[t]he services Plaintiffs
paid for was [sic] to include drafting of conveyance instruments.” Thus, the material issue in this
case is whether plaintiffs may bring an independent action for negligence based on defendant’s
contractual obligations.
In Fultz, the Supreme Court noted that in determining whether a tort action will lie
“based on a defendant’s contractual obligations,” courts historically have drawn a distinction
between acts of misfeasance (action) and nonfeasance (inaction), according to the principle that
“a tort action will not lie when based solely on the nonperformance of a contractual duty.” Id. at
465-466. The Court rejected this misfeasance/nonfeasance distinction, however, finding that it
“obscures the proper initial inquiry: Whether a particular defendant owes any duty at all to a
particular plaintiff.” Id. at 466. Instead, the Court adopted the “separate and distinct” test, often
used in misfeasance cases, which asks whether the tort claim alleges the malfeasance “as the
‘violation of a legal duty separate and distinct from the contractual obligation.’ ” Id. at 467,
quoting Rinaldo’s Constr Corp v Michigan Bell Tel Co, 454 Mich 65, 84; 559 NW2d 647
(1997).
As noted by plaintiffs, Fultz involved a negligence claim brought by a nonparty to the
contract. However, nothing in the Court’s analysis suggests that the “separate and distinct” test
would not also apply where a negligence claim is asserted by a party to the contract. On the
contrary, in Rinaldo’s Constr, supra at 66-68, 78, on which the Fultz Court relied, a commercial
client sued the telephone company, in tort, for alleged negligence in performing its contractual
obligation to transfer the plaintiff’s telephone service to its new address, resulting in economic
damages to the plaintiff. In the context of determining whether the plaintiff could maintain an
action in tort, our Supreme Court stated that “the threshold inquiry is whether the plaintiff alleges
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violation of a legal duty separate and distinct from the contractual obligation.” Id. at 84. The
Court explained, relying on Hart v Ludwig, 347 Mich 559, 565; 79 NW2d 895 (1956), which
itself quoted Prosser, Handbook of Torts, 1st ed, § 33, p 205, that “if a relation exists which
would give rise to a legal duty without enforcing the contract promise itself, the tort action will
lie, otherwise not.”
In Hart, the Supreme Court held that a tort action could not be maintained against a
defendant who failed to adequately care for the plaintiff’s orchard under the parties’ oral
contract. The Hart Court explained that a tort action cannot be maintained where “[t]he only
duty, other than that voluntarily assumed in the contract to which the defendant is subject, was
his duty to perform his promise in a careful and skillful manner without risk of harm to others,
the violation of which [was] not alleged.” Hart, supra at 565.
Thus, relying on Hart, the Court in Rinaldo’s Constr, supra at 85, concluded that
“[w]hile the plaintiff’s allegations arguably make out a claim for ‘negligent performance’ of the
contract, there is no allegation that this conduct by the defendant constitutes tortious activity in
that it caused physical harm to persons or tangible property; and plaintiff does not allege a
violation of an independent legal duty distinct from the duties arising out of the contractual
relationship.” The Court explained that “regardless of the variety of names [plaintiff gives the]
claim, [plaintiff is] basically complaining of inadequate service and equipment,” Valentine v
Michigan Bell Tel Co, 388 Mich 19, 22; 199 NW2d 182 (1972), i.e., a contract violation, and no
tort action can be maintained. Id.
In this case, plaintiffs concede that defendant’s alleged obligation to use reasonable care
in preparing the purchase agreements arises from the parties’ agreement. Plaintiffs’ negligence
action does not seek to enforce a duty separate and distinct from the parties’ agreement.
Therefore, the trial court erred in finding that defendant owed plaintiffs a duty of care,
enforceable in tort.
Although plaintiffs argue that other factors, including principals of agency, defendant’s
status as a fiduciary, laws prohibiting the unauthorized practice of law, provisions of the
occupational code,3 and public policy, also support the existence of a duty of care, plaintiffs’
3
As argued by plaintiffs, 1999 AC, R 339.22307(4) provides that a licensed real estate
broker or salesperson “shall make certain that all terms and conditions of the real estate
transaction are included in the offer to purchase.” MCL 339.2508(2) requires that real estate
brokers and salespersons be licensed. Under MCL 339.2512a, an unlicensed broker or
salesperson may not maintain an action in Michigan to collect a commission. MCL 339.2512(h)
provides that “a licensed real estate broker may pay a commission to a licensed real estate broker
of another state if the nonresident real estate broker does not conduct in this state a negotiation
for which a commission is paid.”
Although “a violation of a statute creates a rebuttable presumption of negligence,
[whereas] a violation of an ordinance or administrative rules and regulations is only evidence of
negligence,” Johnson v Bobbie’s Party Store, 189 Mich App 652, 661; 473 NW2d 796 (1991), a
duty of care must first exist. In this case, any duty of care owed by defendant to plaintiffs arises
out of the parties’ agreement and, therefore, is not enforceable in tort.
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failure to identify a duty separate and distinct from defendant’s obligations under the parties’
agreement preclude them from maintaining a separate action for negligence.
Reversed.
/s/ Christopher M. Murray
/s/ David H. Sawyer
/s/ Mark J. Cavanagh
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