WALTER KISIEL V REIHOLD HOLZ
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STATE OF MICHIGAN
COURT OF APPEALS
WALTER KISIEL,
FOR PUBLICATION
August 29, 2006
9:00 a.m.
Plaintiff/Counter-DefendantAppellant,
v
REIHOLD HOLZ, a/k/a REINHOLD HOLZ, a/k/a
ROY HOLZ,
Defendant/Counter-Plaintiff/CrossPlaintiff/Third-Party Plaintiff,
and
BEVERLY HOLZ, HOLZ BUILDING
COMPANY, INC., HOLZ LEASING, INC., ABN
AMRO MORTGAGE GROUP, INC., and
STANDARD FEDERAL BANCORPORATION,
INC.,
Defendants,
and
GFA DEVELOPMENT, INC., and GARY
ABITHEIRA,
Defendants/Cross-DefendantsAppellees,
v
NAGY READY MIX, INC., STERLING
CONCRETE PRODUCTS, INC., and
THORNHILL CONSTRUCTION COMPANY,
Third-Party Defendants.
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No. 267487
Oakland Circuit Court
LC No. 2004-059260-CK
Official Reported Version
Before: Saad, P.J., and Jansen and White, JJ.
PER CURIAM.
Plaintiff appeals by leave granted the trial court's grant of partial summary disposition in
favor of defendant GFA Development (GFA) under MCR 2.116(C)(8) and (10). We affirm.
This case arose after plaintiff contracted with defendant Holz Building Company, Inc.,
for construction of a residence. Defendant Reihold Holz, an owner of Holz Building Company,
subcontracted with GFA for excavation work and the pouring of concrete. Sometime after the
concrete was poured and the residence was completed, numerous cracks appeared in the
basement walls and the basement floor. As a result, plaintiff sued Holz and several other
defendants. Plaintiff 's allegations against GFA and its principal, Gary Abitheira, included
breach of the oral subcontract between Holz and GFA, negligent performance of the subcontract,
and breach of the implied warranty of habitability.1
A trial court's decision on a motion for summary disposition is reviewed de novo.
Collins v Comerica Bank, 468 Mich 628, 631; 664 NW2d 713 (2003). A motion for summary
disposition under MCR 2.116(C)(8) tests the legal sufficiency of the complaint. Corley v Detroit
Bd of Ed, 470 Mich 274, 277; 681 NW2d 342 (2004). The motion should be granted only if the
claims are so clearly unenforceable as a matter of law that no factual development could justify
recovery. Id. A motion for summary disposition under MCR 2.116(C)(10) tests the factual
sufficiency of the complaint. Id. at 278. Summary disposition should be granted under MCR
2.116(C)(10) if there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Id.
Plaintiff argues that he was an intended third-party beneficiary under the oral subcontract
between GFA and Holz. We disagree.
Only intended, rather than incidental, third-party beneficiaries may sue when a
contractual promise in their favor has been breached. MCL 600.1405; Schmalfeldt v North
Pointe Ins Co, 469 Mich 422, 427; 670 NW2d 651 (2003). More specifically, an incidental
beneficiary has no rights under a contract. Kammer Asphalt Paving Co, Inc v East China Twp
Schools, 443 Mich 176, 190; 504 NW2d 635 (1993), citing Greenlees v Owen Ames Kimball Co,
340 Mich 670, 676; 66 NW2d 227 (1954). A third person cannot maintain an action on a simple
contract merely because he or she would receive a benefit from its performance or would be
injured by its breach. Id. "Third-party beneficiary status requires an express promise to act to
the benefit of the third party; where no such promise exists, that third party cannot maintain an
action for breach of the contract." Dynamic Constr Co v Barton Malow Co, 214 Mich App 425,
428; 543 NW2d 31 (1995). Further, a determination that a contract establishes an intended third-
1
Plaintiff does not challenge the trial court's dismissal of defendant Gary Abitheira individually,
and does not challenge the dismissal of his remaining claims against GFA.
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party beneficiary through a direct promise to the third party must be based on an objective
review of the form and meaning of the contract itself. Schmalfeldt, supra at 428.
In general, although work performed by a subcontractor on a given parcel of property
ultimately benefits the property owner, the property owner is not an intended third-party
beneficiary of the contract between the general contractor and the subcontractor. 9 Corbin,
Contracts (interim ed), § 779D, p 41; see also 2 Restatement Contracts, 2d, § 302, comment e,
illustration 19, p 444 (property owner is only an incidental beneficiary of construction
subcontract between general contractor and subcontractor). Absent clear contractual language to
the contrary, a property owner does not attain intended third-party-beneficiary status merely
because the parties to the subcontract knew, or even intended, that the construction would
ultimately benefit the property owner. See, e.g., 115 Harbor Drive Condo Ass'n v Harbor Point
Inc, 209 Ill App 3d 631, 646-647; 568 NE2d 365 (1991); see also Gentile v Ristas, 160 Ohio App
3d 765, 791-792; 828 NE2d 1021 (2005); Thompson v Espey Huston & Assoc, Inc, 899 SW2d
415, 419-420 (Tex App, 1995); Vogel Bros Bldg Co v Scarborough Constructors, Inc, 513 So 2d
260, 261-262 (Fla App, 1987).
In the present case, on the basis of an objective review of the contract, we conclude that
plaintiff was not an intended third-party beneficiary of the oral subcontract between GFA and
Holz. Before the start of construction, Holz orally subcontracted with GFA for excavation and
concrete work. Plaintiff does not dispute the scope of this oral subcontract. There is nothing in
the scope of the oral contract to suggest that GFA expressly promised to provide plaintiff with
concrete walls. Because the oral contract did not contain an express promise to create the
basement walls for plaintiff 's benefit, and because the contract was primarily executed for the
benefit of the contracting parties, plaintiff was only an incidental beneficiary. Accordingly,
plaintiff is unable to maintain an action against GFA for breach of the subcontract.2 Kammer,
supra at 190. Summary disposition of this claim was properly granted.
Plaintiff next argues that he has stated a claim for negligence based on GFA's alleged
failure to perform its duties under the subcontract. We disagree.
The failure to perform a contractual duty cannot give rise to a tort action unless the
plaintiff alleges a violation of a duty "separate and distinct" from the underlying contractual
obligation. Rinaldo's Constr Corp v Michigan Bell Tel Co, 454 Mich 65, 84; 559 NW2d 647
2
Plaintiff cites Greenlees in support of his argument that the he was an intended beneficiary
under the contract. However, Greenlees is distinguishable because the contract at issue there
contained a promise for the benefit of the plaintiff tenant and the tenants as a class. Greenlees,
supra at 676. In this case, the oral subcontract did not contain an express provision intended to
directly benefit plaintiff. Nor does the unpublished opinion provided as supplemental authority
during oral argument aid plaintiff 's position. Unpublished opinions of this Court are not binding
under the rules of stare decisis. MCR 7.215(C)(1). Moreover, the contract in that case contained
provisions that were intended to specifically benefit the property owner. No such provisions are
contained in the subcontract at issue in this case.
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(1997). This rule applies to a plaintiff who is not a party to the contract but alleges that a
contracting party failed to perform its obligation under that contract. Fultz v Union-Commerce
Assoc, 470 Mich 460, 467, 469-470; 683 NW2d 587 (2004). In this case, plaintiff 's negligence
claim fails as a matter of law because plaintiff does not allege that GFA owed him a duty
"separate and distinct" from the contractual obligation owed to Holz. Summary disposition was
properly granted on plaintiff 's negligence claim.
Plaintiff finally argues that he can maintain an implied warranty of habitability claim
against GFA. Again, we disagree.
The implied warranty of habitability provides a cause of action only against a "buildervendor" who sells a new home as part of a real estate transaction. Smith v Foerster-Bolser
Constr, Inc, 269 Mich App 424, 430-431; 711 NW2d 421 (2006). A general contractor that
agrees to construct a new home on land already owned by the purchaser is not a builder-vendor.
Id. Because Holz was not a builder-vendor within the meaning of Smith, it follows that GFA, a
subcontractor that merely agreed to perform excavation and concrete work, was not a buildervendor either. Because GFA was not a builder-vendor, plaintiff 's implied warranty of
habitability claim was properly dismissed.
In light of our conclusions in this case, we need not address the additional issue raised by
plaintiff on appeal.
Affirmed.
/s/ Henry William Saad
/s/ Kathleen Jansen
/s/ Helene N. White
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