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STATE OF MICHIGAN COURT OF APPEALS

UNITED SERVICES AUTOMOBILE ASSOCIATION CASUALTY INSURANCE, Plaintiff-Appellant, v JCS FIREPLACE, INC., Defendant-Appellee, and KW YODER CONSTRUCTION COMPANY, INC., Defendant.

UNPUBLISHED December 22, 2011

No. 299195 Cass Circuit Court LC No. 09-000005-NZ

RICHARD BURNS, Plaintiff-Appellant, v JCS FIREPLACE, INC., Defendant-Appellee, and KW YODER CONSTRUCTION COMPANY, INC., Defendant. No. 299196 Cass Circuit Court LC No. 09-000094-NZ

Before: HOEKSTRA, P.J., and K.F. KELLY and BECKERING, JJ. PER CURIAM.

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In this consolidated appeal, plaintiff Richard Burns and plaintiff United Services Automobile Association Casualty Insurance Company (USAA), challenge an order of the Cass Circuit Court, which granted summary disposition in favor of defendant-appellee JCS Fireplace, Inc. We reverse and remand for further proceedings. I. BASIC FACTS Burns lost his home to a fire caused by an improperly installed fireplace on the lower level of his home. He subsequently contracted with the original builder, defendant KW Yoder Construction Company, Inc., to rebuild the home. Yoder subcontracted the fireplace installation to JCS Fireplace. On February 9, 2007, the newly constructed home was destroyed by fire. An investigation revealed the cause of the fire to be heat generated by the first floor fireplace, with the fire originating within the wood hearth extension of that fireplace. Thereafter, Burns and his insurer, USAA, sued Yoder and JCS Fireplace in the Cass Circuit Court. The cases were consolidated. JCS Fireplace moved for summary disposition, arguing that plaintiffs' claims sounded strictly in negligence and, in keeping with Fultz v Union-Commerce Assoc, 470 Mich 460; 683 NW2d 587 (2004), it owed no duty to plaintiffs. While the Burns selected the type of fireplace unit to purchase, they did not have a contract with JCS Fireplace to purchase or install the unit. JCS Fireplace argued, "even accepting Plaintiffs' allegations of negligence as true, the failure to perform a contractual duty cannot give rise to a tort claim unless the Plaintiffs allege and proffer evidence of a duty `separate and distinct' from the underlying contractual obligations JCS Fireplace owed to KW Yoder. Stated otherwise, no tort liability arises for failing to fulfill a promise in the absence of a duty to act that is `separate and distinct' from the promise made." Plaintiffs responded that JCS Fireplace breached a duty separate and distinct from its contractual obligation with Yoder and that it created a new hazard by failing to properly install the fireplace. The trial court granted JCS Fireplace's motion pursuant to MCR 2.116(C)(8) and (C)(10), finding that it was constrained to do so under Fultz. Plaintiffs filed applications for leave to appeal to this Court on April 14, 2010. On June 25, 2010, and while these applications remained pending, the circuit court dismissed the complaints against Yoder with prejudice, upon stipulation of the parties. On July 16, 2010, both Burns and USAA claimed appeals as of right from the order of dismissal. The prior applications for leave to appeal were dismissed. United Servs Auto Assoc Cas Ins Co v JCS Fireplace, Inc, unpublished order of the Court of Appeals, entered August 12, 2010 (Docket No. 297535); Burns v JCS Fireplace Inc, unpublished order of the Court of Appeals, entered August 12, 2010 (Docket No. 297536). II. STANDARD OF REVIEW "This Court reviews de novo a trial court's decision on a motion for summary disposition. This Court also reviews de novo questions of law. Whether a defendant is under a legal obligation to act for a plaintiff's benefit--i.e., whether a defendant owes a particular plaintiff a duty--is a question of law." Loweke v Ann Arbor Ceiling & Partition Co, LLC, ___ Mich ___; ___ NW2d ___ (Docket No. 141168, decided June 6, 2011), slip op p 2. -2-

III. ANALYSIS Plaintiff argues that the trial court erred in granting summary disposition. While we agree, it is not quite fair to say that the trial court erred in granting summary disposition where it was clear that the trial court was attempting to follow Fultz and its progeny. Nevertheless, based on our Supreme Court's recent decision in Loweke, JCS Fireplace was not entitled to summary disposition. In Loweke, our Supreme Court sought to "clarify Fultz's `separate and distinct' mode of analysis." Loweke, slip op p 1. Recognizing that Fultz and its progeny had caused confusion, the Court adopted the reasoning in Davis v Venture One Constr, Inc, 568 F3d 570, 575, 577 (CA 6, 2009) and held "that a contracting party's assumption of contractual obligations does not extinguish or limit separately existing common-law or statutory tort duties owed to noncontracting third parties in the performance of the contract." Id. Our Supreme Court admonished that it is error to focus only on a contract in determining whether a defendant owes a legal duty to a plaintiff. Rather, in determining whether a legal duty exists, Fultz directs courts to look to whether a "separate and distinct" duty independent of the contract exists, utilizing "preexisting tort principles, including duties imposed because of a special relationship between the parties and the generally recognized common-law duty to use due care in undertakings." Loweke, slip op p 5. The Court wrote: Stated another way, under the "separate and distinct mode of analysis," "`[e]ntering 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.'" Rinaldo's Const, 454 Mich at 84, quoting Prosser & Keeton, Torts (5th ed),

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