CANDELARIA v. B. C. GEN

TALBOT, J.

Defendants B. C. General Contractors, Inc. (BC), and Horizon Cablevision, Inc., appeal as of right from a judgment for plaintiff Thomas Candelaria, III, as personal representative of the estate of Thomas Candelaria, Jr., deceased, entered after a jury trial. We reverse and remand.

I

Defendant Horizon, a company in the business of providing cable television service, hired defendant BC, as an independent contractor, to install cable television service in certain areas of Ingham County. BC, in turn, hired Bob Rego, also as an independent contractor, to perform a portion of the work involving aerial construction. Rego employed plaintiff's decedent, Thomas Candelaria, Jr. (hereafter Candelaria). Part of Rego's job involved laying cable wire across the surface of state trunk line M-106 in Ingham County. On the day of the accident, Rego's foreman and Candelaria were the only workers at the site. When the foreman needed more cable to work with, he asked Candelaria to release some slack from the reel. Instead of pulling slack from the reel by hand, which was the standard procedure, Candelaria turned the reel on its side and began pushing it like a wheelbarrow. Because the foreman was concerned that Candelaria's action might tighten the cable rather than create slack, he ran to the reel and flipped it back to its usual position. Just as the foreman turned the reel, a passing car snagged a portion of the cable that had become elevated from the surface of the highway. This caused the reel to jerk forward into Candelaria, killing him instantly.

Plaintiff filed a wrongful death action against defendants, alleging that their negligence caused Candelaria's death. At the close of the proofs, plaintiff's theory with respect to BC was that it could be held liable in negligence on the basis of its retention of control over the work performed by Rego. Plaintiff's theory with respect to Horizon was that it could be held liable in negligence pursuant to a nondelegable duty arising by virtue of the fact that it had obtained a permit issued by the Michigan Department of Transportation (MDOT). Defendants moved for directed verdicts and their motions were denied. The trial court granted plaintiff's motion for a directed verdict against Horizon with regard to the issue of its negligence. The jury found (1) that Horizon's negligence was a proximate cause of the accident, (2) that BC was negligent and that its negligence was a proximate cause of the accident, and (3) that Candelaria himself was negligent, that his negligence was a proximate cause of the accident, and that he was fifty percent at fault. The final judgment entered against defendants was in the amount of $248,248.48.

II

On appeal, BC argues that the trial court erred in denying its motion for a directed verdict. We agree. BC moved for a directed verdict on the ground that it did not retain and exercise sufficient control over Rego's work to be held liable for Candelaria's injury. The trial court reasoned that, although there was not a "great deal" of evidence of BC's control, there was enough to present the issue to the jury.

This Court reviews de novo a trial court's decision with regard to a directed verdict. Meagher v Wayne State Univ, 222 Mich. App. 700, 708; 565 N.W.2d 401 (1997). When evaluating a motion for a directed verdict, a court must consider the evidence and all legitimate inferences arising from the evidence in a light most favorable to the nonmoving party. A directed verdict is appropriate only when no material factual question exists upon which reasonable minds could differ. Caldwell v Fox, 394 Mich. 401, 407; 231 N.W.2d 46 (1975).

A

As a general rule, when an owner or general contractor hires an independent contractor to perform a job, the owner or general contractor may not be held liable in negligence to third parties or employees of the independent contractor. See Bosak v Hutchinson, 422 Mich. 712, 724; 375 N.W.2d 333 (1985); Funk v General Motors Corp, 392 Mich. 91, 101-102; 220 N.W.2d 641 (1974), overruled in part on another ground by Hardy v Monsanto Enviro-Chem Systems, Inc, 414 Mich. 29; 323 N.W.2d 270 (1982); Samodai v Chrysler Corp, 178 Mich. App. 252, 255; 443 N.W.2d 391 (1989); 2 Restatement Torts, 2d, § 409 comments, pp 370-371. Instead, the independent contractor is immediately responsible for job safety. Funk, supra at 102; Samodai, supra at 255. There are, however, certain circumstances under which an owner or general contractor may be held liable for either the independent contractor's negligence or for its own negligence. One commonly recognized exception to the general rule is the "doctrine of retained control." See, e.g., Funk, supra at 101-109; Plummer v Bechtel Constr Co, 440 Mich. 646, 648-673; 489 N.W.2d 66 (1992) (opinions of Levin, J., and Boyle, J.); Samhoun v Greenfield Constr Co, Inc, 163 Mich. App. 34, 45; 413 N.W.2d 723 (1987). Although the doctrine is often recognized, our review of the cases reveal some confusion accompanying its application.

The concept of "retained control" is pertinent to two distinct theories of liability: (1) the vicarious liability of an employer pursuant to the doctrine of respondeat superior, and (2) the direct liability of an owner or general contractor pursuant to the doctrine of retained control. In the former case, evidence of an employer's retained control is relevant to the issue whether there was in fact a contractee-contractor relationship. An independent contractor is defined as "`one who, carrying on an independent business, contracts to do work without being subject to the right of control by the employer as to the method of work but only as to the result to be accomplished.'" Kamalnath v Mercy Memorial Hosp Corp, 194 Mich. App. 543, 553; 487 N.W.2d 499 (1992) (citation omitted); cf. 1 Restatement Agency, 2d, § 2, p 12. If the employer of a person or business ostensibly labeled an "independent contractor" retains control over the method of the work, there is in fact no contractee-contractor relationship, and the employer may be vicariously liable under the principles of master and servant. See, e.g., Brinker v Koenig Coal Supply Co, 312 Mich. 534, 539-540; 20 N.W.2d 301 (1945); Alar v Mercy Memorial Hosp, 208 Mich. App. 518, 527; 529 N.W.2d 318 (1995); Jenkins v Raleigh Trucking Services, Inc, 187 Mich. App. 424, 428-429; 468 N.W.2d 64 (1991); Janice v Hondzinski, 176 Mich. App. 49, 53; 439 N.W.2d 276 (1989); see also 2 Restatement Torts, 2d, § 414, comment a, p 387.

In the latter case, the owner or general contractor's retention of supervisory control provides the basis for the imposition of an independent duty on the part of the owner or general contractor to exercise its retained control with reasonable care. The focus is not on the legal status of the relationship between the owner or general contractor and the independent contractor, but rather on the manner in which the owner or general contractor acts or fails to act in relation to the safety of the injured party. The "doctrine of retained control" refers to this second sort of retained-control liability. The seminal case in Michigan regarding the doctrine of retained control is Funk, supra, in which our Supreme Court reasoned that a landowner or general contractor could be "held responsible for its own negligence in failing to implement reasonable safety precautions," where its "retained and exercised" control over a project was sufficient to create a corresponding duty to implement such precautions. Funk, supra at 108 (emphasis added); see also Plummer, supra at 669 (BOYLE, J.).

Many of this Court's prior opinions have erroneously cited Funk (or cases relying on Funk) for the proposition that the doctrine of retained control subjects a contractee to liability for its contractor's negligence. See Reeves v Kmart Corp, 229 Mich. App. 466, 471; 582 N.W.2d 841 (1998); Phillips v Mazda Motor Mfg (USA) Corp, 204 Mich. App. 401, 407; 516 N.W.2d 502 (1994); Szymanski v K mart Corp, 196 Mich. App. 427, 429; 493 N.W.2d 460 (1992), vacated 442 Mich. 912 (1993); Little v Howard Johnson Co, 183 Mich. App. 675, 681-682; 455 N.W.2d 390 (1990); Wolfe v Detroit Edison Co, 156 Mich. App. 626, 627; 402 N.W.2d 16 (1986); Perry v McLouth Steel Corp, 154 Mich. App. 284, 296; 397 N.W.2d 284 (1986); Locke v Mach, 115 Mich. App. 191, 193-194; 320 N.W.2d 70 (1982). As noted, the focus of this sort of claim is properly on the contractee's own duty and breach. See Funk, supra; Plummer, supra at 669-670 (Boyle, J.). Accordingly, these opinions are somewhat misleading. See Misiulis v Milbrand Maintenance Corp, 52 Mich. App. 494, 498-499; 218 N.W.2d 68 (1974) (discussing the possibility of confusion arising from a disregard of the distinction between claims based on vicarious and direct liability).

The doctrine of retained control applies only in those situations involving "common work areas." Plummer, supra at 666-668 (Levin, J.), 669 (Boyle, J.); see also Groncki v Detroit Edison Co, 453 Mich. 644, 662; 557 N.W.2d 289 (1996) (Brickley, C.J.); Hughes v PMG Building, Inc, 227 Mich. App. 1, 5-6; 574 N.W.2d 691 (1997); Samhoun, supra at 45-46; Erickson v Pure Oil Corp, 72 Mich. App. 330, 336; 249 N.W.2d 411 (1976). This limitation is rooted in our Supreme Court's initial explanation of the doctrine's rationale:

Placing ultimate responsibility on the general contractor for job safety in common work areas will, from a practical, economic standpoint, render it more likely that the various subcontractors being supervised by the general contractor will implement or that the general contractor will himself implement the necessary precautions and provide the necessary safety equipment in those areas.

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We regard it to be part of the business of a general contractor to assure that reasonable steps within its supervisory and coordinating authority are taken to guard against readily observable, avoidable dangers in common work areas which create a high degree of risk to a significant number of workmen. [ Funk, supra at 104 (emphasis added).]

In order to have a "common work area," there need not be multiple subcontractors working on the same site at the same time. All that is required is that the employees of two or more subcontractors eventually work in the same area. See, e.g., Hughes, supra at 6.

There is no specific test to determine the degree of control sufficient to create an independent duty of care in an owner or general contractor under the doctrine of retained control, and the descriptions are somewhat varied. See Phillips v Mazda Motor Mfg (USA) Corp, 204 Mich. App. 401, 408; 516 N.W.2d 502 (1994) ("There must be a high degree of actual control; general oversight or monitoring is insufficient."); Burger v Midland Cogeneration Venture, 202 Mich. App. 310, 317; 507 N.W.2d 827 (1993) ("[T]he owner must retain at least partial control and direction of the construction work, beyond safety inspection and general oversight."); Samodai, supra at 256 ("The requisite nature of this standard requires that the owner retain at least partial control and direction of actual construction work, which is not equivalent to safety inspections and general oversight."); Miller v Great Lakes Steel Corp, 112 Mich. App. 122, 127; 315 N.W.2d 558 (1982) (explaining that "some sort of substantive control must be maintained by the owner over the contractor's work in order to render the owner liable for an injury to a contractor's employee"); Erickson, supra at 339 (holding that an owner's mere retention of the contractual right to terminate employment of those not in compliance with its rules and regulations was not sufficient). Again, the Supreme Court's reasoning in Funk, supra, is instructive:

[Defendant's representative] and his assistants did more than observe whether the contract was being properly performed. In many instances, what they said, or left unsaid, determined how the work would be performed. In the area of job safety their knowing acquiescence in nonperformance encouraged, if not legitimized, the derelictions of the sub- and general contractors. Having assumed a dominant role in this construction job, [Defendant] can properly be held responsible for the failure to implement adequate safety precautions. [ Funk, supra at 108 (emphasis added).]

Although formulations such as "high degree of actual control" and "dominant role" suggest a fact-specific inquiry, one clear rule can be gleaned from Funk and its progeny. At a minimum, for an owner or general contractor to be held directly liable in negligence, its retention of control must have had some actual effect on the manner or environment in which the work was performed.

B

In this case, plaintiff's claim against BC was not brought on a theory of respondeat superior. Instead, plaintiff advanced a claim that BC could be held liable for its own negligence under the doctrine of retained control. Therefore, we need not consider whether BC could properly be held liable as an employer under the principles of master and servant.

Any doubt that this was the basis for plaintiff's claim at trial is removed by the fact that, in responding to defendant BC's argument on appeal, plaintiff relies exclusively on the doctrine of retained control described in Funk, supra.

With respect to the doctrine of retained control, there was no evidence to suggest that Candelaria's work for Rego was performed in a common work area. To the contrary, the evidence suggested that Rego was the only subcontractor working for BC on the project. Consequently, BC could not properly be held liable pursuant to the doctrine of retained control. This particular failing, however, was not the basis for BC's motion for a directed verdict. Instead, BC argued that it did not retain sufficient control over the performance of the work to be held liable. On this basis too we conclude that BC could not properly be held liable. When viewed in a light most favorable to plaintiff, the evidence did not permit a finding that the control retained by BC had any effect on the manner or environment in which the work was performed. Cf. Funk, supra at 108. While Rego testified that his relationship with BC was such that, if BC's representative had "come out" to the work site and "seen something he didn't like, . . . he could stop what I was doing," the evidence was uncontroverted that, as a matter of fact, nobody from BC ever went to the job site or directed the manner in which the work was to be performed. Similarly, while BC's representative acknowledged, without explication, that BC had "control" over Rego's work with respect to correcting "unsatisfactory" work or behavior, there was no evidence that this control was ever exercised in any way. Cf. Burger, supra at 317 ("Contractual provisions subjecting the contractor to the owner's oversight alone are not enough to retain control."); Erickson, supra at 339. Therefore, the trial court erred in concluding there was sufficient evidence to present the issue to the jury.

For the reasons stated, we hold that the trial court erred in denying BC's motion for a directed verdict.

III

Horizon argues that the trial court erred in denying its motion for a directed verdict and in directing a verdict in favor of plaintiff regarding the issue of Horizon's negligence. We conclude that, under the unusual circumstances of this case, neither Horizon nor plaintiff was entitled to a directed verdict.

By statute, Horizon was required to obtain "the consent of the state highway commissioner" before commencing the cable construction work over state trunk line M-106. See MCL 247.184; MSA 9.264. On the day of the accident, Horizon applied for a permit from the MDOT that would allow it to perform the work described. Twelve days later the permit was issued subject to various conditions. Among these conditions were the following:

3. The permittee agrees as a condition of this permit to:

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d. Provide and maintain all necessary precautions to prevent injury or damage to persons and property from operations covered by this permit.

e. Furnish, install and maintain all necessary traffic controls and protection during permittee's operations in accordance with the Michigan Manual of Uniform Traffic Control Devices and any supplemental specifications set forth herein.

The permit also provided that "[c]ommencement of work set forth in the permit application constitutes acceptance of the permit as issued." Finally, the permit provided that "[t]he permittee is solely and fully responsible for all activities undertaken pursuant to the permit" and that "[t]he permit is not assignable and not transferable unless specifically agreed to by the [MDOT]." It is undisputed that the "necessary traffic controls" referred to in the permit were lacking.

As noted, Horizon contracted with BC to perform the work described in the MDOT permit; BC, in turn, contracted with Rego to perform that portion of the work at issue in this case. Accordingly, Horizon took no action with respect to the actual construction work, having delegated those responsibilities to BC. Plaintiff's theory with respect to Horizon was that it owed Candelaria a nondelegable duty arising by virtue of the fact that it had obtained the MDOT permit. The MDOT could not create a nondelegable duty in tort owed by Horizon to Candelaria simply by including a nonassignability provision in the permit issued to Horizon. The only conceivable basis for imposing a nondelegable duty on Horizon under which plaintiff could proceed in negligence is that described in § 428 of the Second Restatement of Torts:

An individual or a corporation carrying on an activity which can be lawfully carried on only under a franchise granted by public authority and which involves an unreasonable risk of harm to others, is subject to liability for physical harm caused to such others by the negligence of a contractor employed to do work in carrying on the activity. [2 Restatement Torts, 2d, § 428, p 420.]

This rule, or some variation of it, has been adopted in several other states. See, e.g., Eli v Murphy, 39 Cal.2d 598, 599; 248 P.2d 756 (1952); Hamid v Metro Limo, Inc, 619 So.2d 321, 322 (Fla App, 1993); Barry v Keeler, 322 Mass. 114, 126-127; 76 N.E.2d 158 (1947). The rationale for the rule is that it is contrary to public policy to allow a party given special permission by the state to engage in a particular activity to escape liability arising from that activity by contracting it away to others. See, e.g., Eli, supra at 599-600; Barry, supra at 127. Whether this rule, or a variation, should be adopted in Michigan presents a novel question that we cannot answer in this appeal.

At trial, plaintiff relied on Restatement Torts, 2d, § 428 in support of his claim that Horizon could be held liable under a nondelegable duty and Horizon argued against application of the rule. Nevertheless, when the trial court denied Horizon's motion for a directed verdict, it did so not on the basis of § 428, but rather on what can best be described as a third-party beneficiary theory based on the MDOT permit. The trial court reasoned that specific conditions imposed by the MDOT permit defined the scope of a nondelegable duty owed by Horizon to the people of Michigan, including (presumably) Candelaria. After endorsing the "third-party beneficiary" theory, the trial court declined to rule on plaintiff's request to be allowed to proceed under § 428 as well. It then granted plaintiff's earlier motion for a directed verdict of negligence against Horizon on the ground that Horizon did not comply with the specific conditions imposed by the MDOT permit. Because the trial court directed a verdict of negligence in his favor, plaintiff had no incentive to challenge the trial court's decision not to rule on the validity of his § 428 argument, or to encourage the trial court to instruct the jury regarding an additional theory under which Horizon might be found negligent.

The dissent reasons that "[b]ecause the trial court specifically ruled that there was no contract in this case, I do not think it is fair to characterize the trial court's ruling as a `third-party beneficiary' duty." Post at 90. We do not characterize the trial court's ruling as being a third-party beneficiary theory based on a contract, but rather as being a novel third-party beneficiary theory based on the permit. Our characterization is borne out by that portion of the trial court's ruling excerpted in the dissenting opinion.

Plaintiff moved for a directed verdict of negligence against Horizon after Horizon conceded in its opening statement that "the traffic control was not what it should have been." The trial court declined to rule with regard to plaintiff's motion before hearing the evidence. After the proofs were taken, the trial court instructed the jury as follows:

It was the duty of Horizon Cablevision to comply with the conditions and specifications of MDOT permit 38051-79-94-0637 issued by the Michigan Department of Transportation in connection with the cable stringing work that Thomas Candelaria was performing on the day he was killed. In that connection, I charge you that it was the duty of Horizon Cablevision to provide and maintain all necessary precautions to prevent injury or damages to persons from operations covered by this permit.

I also charge you that it was the duty of Horizon Cablevision to furnish, install and maintain all necessary traffic controls and protection during permittees [sic] operations, and in accordance with the Michigan Manual of Uniform Traffic Control Devices. I instruct you that Horizon did not satisfy those duties and that this constituted negligence.

As to Horizon, you need only determine whether its negligence was a proximate cause of Plaintiff's damages, and what those damages are, if any.

The unique theory forming the basis for the trial court's decision to deny Horizon's motion for a directed verdict, and to direct a verdict of negligence against Horizon, was not a viable theory of liability in this case. This is so primarily because the MDOT permit was not a contract, but rather a grant of permission. In order for a third-party beneficiary to enforce a promise, the promise must be made "by way of contract." See MCL 600.1405; MSA 27A.1405. Moreover, plaintiff pleaded a claim sounding in negligence rather than in contract. By directing a verdict of negligence on the basis of Horizon's failure to meet a specific condition of the MDOT permit, the trial court essentially ruled that Horizon's "violation" of the permit condition constituted negligence per se. Michigan does not subscribe to the doctrine of negligence per se. Zeni v Anderson, 397 Mich. 117, 128-129; 243 N.W.2d 270 (1976). Therefore, we hold that the trial court erred (1) in relying on the "third-party beneficiary" theory as the basis for denying Horizon's motion for a directed verdict, and (2) in directing a verdict of negligence against Horizon on the basis of its failure to meet a specific condition of the MDOT permit.

In Michigan, a violation of a statute creates a rebuttable presumption of negligence while the violation of an ordinance or administrative regulation constitutes evidence of negligence. E.g. Johnson v Bobbie's Party Store, 189 Mich. App. 652, 661; 473 N.W.2d 796 (1991).

To prevail in this case, plaintiff was required to overcome the general rule of nonliability for contractees already discussed in part II of this opinion. The rule described in Restatement Torts, § 428, if applicable, would allow plaintiff to do so by imposing a nondelegable duty on Horizon. Because plaintiff relied on § 428 below, we cannot determine whether Horizon was entitled to a directed verdict without first deciding whether § 428, or a variation of that rule, should be adopted in Michigan and applied in this case. As noted, the trial court made no ruling regarding this issue. Appellate review is generally limited to issues decided by the trial court. E.g., Bowers v Bowers, 216 Mich. App. 491, 495; 549 N.W.2d 592 (1996). Although we could resolve the issue, given that it is a question of law and the facts necessary for its resolution have been presented, see, e.g., Frericks v Highland Twp, 228 Mich. App. 575, 585; 579 N.W.2d 441 (1998), we decline to do so because the issue has not been briefed by Horizon. To attempt to decide this relatively complex issue of first impression without the benefit of briefing from both sides would force us to construct and then evaluate our own "arguments." That is certainly not a proper role for this Court. Moreover, we think it would be inappropriate to request supplemental briefing in the absence of a ruling on the issue by the lower court. Thus, we are unable to determine whether Horizon was entitled to a directed verdict.

Horizon does not address § 428 in its brief on appeal. In its reply brief, Horizon contends only that plaintiff's argument regarding § 428 is irrelevant because plaintiff did not file a cross appeal challenging the trial court's decision to "reject" the theory at trial. While Horizon is incorrect in its assertion that the trial court rejected plaintiff's § 428 theory, we do not deem the issue to have been forfeited because the question was not addressed below. With respect to plaintiff's failure to raise the issue in the context of a cross appeal, we note that a cross appeal is not necessary to urge an alternative ground for affirmance, even if the alternative ground was considered and rejected by the lower court. See In re Herbach Estate, 230 Mich. App. 276, 284; 583 N.W.2d 541 (1998).

Horizon makes one argument on appeal that is not dependent on plaintiff's underlying theory of liability. Horizon contends that, under the defective highway statute, MCL 691.1402; MSA 3.996(102), only the state itself can be held liable for a failure to keep M-106 reasonably safe and fit for public travel. This argument is without merit. On its face, the statute is inapplicable to the facts of this case.

The judgment against Horizon is reversed because the trial court erred in directing a verdict of negligence on the basis of Horizon's "violation" of the MDOT permit. Plaintiff's only remaining theory of liability against Horizon is its argument based on Restatement Torts, 2d, § 428. We offer no opinion regarding the viability of that theory in Michigan or its applicability to the facts of this case.

The dissent describes plaintiff's "theories" as being one based on the common law and another based on § 428. We disagree with this characterization. A careful reading of the record reveals that plaintiff advanced one theory based on the specific language of the permit and another based on the general common law as described by § 428.

IV

Horizon also contends that if plaintiff's recovery was based on Candelaria's status as a third-party beneficiary of the MDOT permit, his recovery should have been limited to actual damages. Because we reject the notion that plaintiff can recover under any sort of third-party beneficiary theory, we need not consider this issue further.

Both defendants also argue that the trial court erred in instructing the jury that the violation of certain regulations under the Michigan Occupational Safety and Health Act, MCL 408.1001 et seq.; MSA 17.50(1) et seq., would constitute evidence of negligence. Read in context, we think it is clear that this particular instruction was made applicable to BC only. Because we now hold that the trial court should have granted BC's motion for a directed verdict, we need not consider this issue further.

Finally, given the disposition of this appeal, we need not consider defendants' argument regarding the mediation sanctions awarded in the final judgment.

We reverse the judgment of the trial court and remand for a new trial with regard to defendant Horizon and for entry of an order dismissing the case with regard to defendant BC. We do not retain jurisdiction.

McDONALD, P.J., concurred.