Flippo Leone and Anna Leone v. BMI Refractory Services, Inc.

This appeal concerns the duty of care a contractor owes to a third party under Michigan tort law. When a piece of scrap metal seriously injured Filippo Leone

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No. 17-1632 Leone, et al. v. BMI Refractory Servs., Inc. Page 2

while he was on the job, he sued the contractor that his employer had hired to clear the debris.

Sitting in diversity, the district court granted summary judgment to the contractor, deciding that

the contractor owed no duty of care to Leone because it created no new hazard. Leone and his

wife timely appeal, arguing that the court interpreted Michigan law too narrowly. We agree, and

REVERSE.

I. BACKGROUND

A. Facts

The events giving rise to this suit transpired inside a degasser, a large vat that Leone’s

employer, A.K. Steel, used to extract gas impurities from molten steel. Over twenty-four feet

deep, with an interior diameter greater than eight feet, it was lined with layers of brick; the

innermost layer—called the face brick—deteriorates with use and requires occasional

replacement. The degasser’s components include an alloy chute near the top of the vat that

allows ingredients to be added to the molten steel during processing.

A.K. Steel hired BMI Refractory Services to perform a “tearout” of the degasser’s

deteriorated face brick. Although the contract did not include any work on the alloy chute, a

BMI employee testified that his team would dislodge loose bricks or slag1 from the vat’s

interior—including the chute—to ensure that nothing could fall on workers. He did not notice

any loose slag on the chute during the tearout.

After BMI finished the tearout, A.K. Steel supervisors assigned Leone to reline the

degasser with new face brick. For several days, Leone and his work crew frequently climbed

ladders near the alloy chute. They never spotted any loose slag on the chute.

Nonetheless, twenty-one days after BMI completed its one-day job, a forty-pound piece

of slag fell and struck Leone, injuring his back and right knee. Leone claims that the slag

detached from the alloy chute, although he has no reason to believe that the slag was loose when

BMI conducted its tearout. BMI theorizes that the slag may have been secure when BMI left the

site but that a variety of “vibrational forces from within the AK Steel mill” may have shaken it

1Slag is scrap metal that accumulates inside the degasser after extended use.

No. 17-1632 Leone, et al. v. BMI Refractory Servs., Inc. Page 3

loose afterwards. Because no molten metal could have created new slag between the end of

BMI’s tearout and the accident, the district court concluded (and the parties do not contest) that

the offending slag must have existed when BMI’s employees finished.

B. Procedural History

Arguing that BMI negligently failed to remove the slag that struck him, Leone sued for

his injuries; his wife asserted a derivative claim for loss of consortium. The district court

concluded that BMI owed Leone no duty of care under Michigan law and granted it summary

judgment. This appeal followed.

II. DISCUSSION

We review a district court’s grant of summary judgment de novo, “view[ing] the

evidence, all facts, and any inferences that may be drawn from the facts in the light most

favorable to the nonmoving party.” Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir.

2002).

A. Whether a Michigan Contractor-Defendant Must Create a “New Hazard” to be

Liable to a Third Party in Tort

In Michigan, as elsewhere, a prima facie negligence claim requires a plaintiff to show

that “(1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the legal duty,

(3) the plaintiff suffered damages, and (4) the defendant’s breach was a proximate cause of the

plaintiff’s damages.” Loweke v. Ann Arbor Ceiling & Partition Co., 809 N.W.2d 553, 556

(Mich. 2011). Additionally, a contractor can be liable to a third party in tort only if it owed the

third party a duty “separate and distinct from the defendant’s contractual obligations. If no

independent duty exists, no tort action based on a contract will lie.” Fultz v. Union-Commerce

Assocs., 683 N.W.2d 587, 592 (Mich. 2004). This “‘separate and distinct’ mode of analysis”

replaced Michigan’s prior emphasis on whether a contractor’s actions amount to “misfeasance”

or “nonfeasance” of a contractual obligation. Id. at 592; Loweke, 809 N.W.2d at 558 (“[A]fter

Fultz, courts were to forgo the misfeasance/nonfeasance distinction and, instead, employ a

‘separate and distinct mode of analysis.’” (internal quotation marks omitted) (quoting Fultz,

683 N.W.2d at 592)).

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So, did BMI owe Leone a duty “separate and distinct” from its contractual obligations to

A.K. Steel? BMI maintains that it had no duty because it neither created a “new hazard” in the

degasser nor exacerbated a pre-existing risk. BMI highlights Fultz, where the Michigan

Supreme Court held that a contractor owes a third party plaintiff no duty of care when the

plaintiff’s claim is rooted entirely in the contractor’s non-performance of its contractual

obligations. 683 N.W.2d at 591–92. Thus, a woman who fell on an icy parking lot could not

assert a negligence claim against the snow-plow company that completely failed to clear the lot,

breaching its contract with the lot’s owner. Id. at 589. Fultz distinguished another snow removal

slip-and-fall case, Osman v. Summer Green Lawn Care, Inc., 532 N.W.2d 186 (Mich. App.

1995), overruled on other grounds by Smith v. Globe Life Ins. Co., 597 N.W.2d 28 (Mich. 1999).

There, the contractor “breached a duty separate and distinct from its contractual duty when it

created a new hazard” due to how it moved snow on the premises. Fultz, 683 N.W.2d at 593; see

also Osman, 532 N.W.2d at 187.

In Fultz’s wake, Michigan-law cases where courts found that a contractor owed a

“separate and distinct duty” also happened to involve contractors creating new hazards. See

Loweke, 809 N.W.2d at 555, 561 (holding contractor could owe a duty to plaintiff after it created

a new hazard by stacking heavy boards that fell on plaintiff); Davis v. Venture One Constr., Inc.,

568 F.3d 570, 571 (6th Cir. 2009) (finding a duty where contractor created a new hazard in

propping up a door that fell on plaintiff).

The district court considered these authorities and reasoned that “[i]n order to fall on the

Loweke/Osman side of the line, Plaintiff would have to establish that BMI created some situation

of peril that did not previously exist inside the vessel.” Because Leone’s claim focuses only on

BMI’s failure to remove pre-existing slag, the court concluded that his negligence claim was

actually a claim that BMI shirked its contractual obligations, and that BMI owed Leone no

“separate and distinct” duty. BMI’s brief echoes the district court’s analysis, advancing no other

arguments in defense of the court’s grant of summary judgment.

Leone suggests the district court erroneously interpreted Michigan precedent. He argues

that the court “t[ook] one example of how a contracting party may be said to create a duty in

tort—by acting in such a way as to create a new hazard or a new situation of peril—and it made

No. 17-1632 Leone, et al. v. BMI Refractory Servs., Inc. Page 5

that one example an absolute essential [element] of the plaintiffs’ claim.” In the process, he

asserts that “the district court overlooked the long-established common law principles under

which a party owes a duty of due care to a third party while performing on a contract.”

We agree. The district court mistook a common feature of Osman, Davis, and Loweke—

the defendant’s creation of a new hazard—for a requirement. Although a contractor’s creation of

a new hazard can trigger a duty to third parties, the Michigan cases nowhere state that it is the

only way that such a duty might arise. Instead, a contractor can be liable to a third party if “any

legal duty independent of the contract existed.” Loweke, 809 N.W.2d at 560 (emphasis added).

Leone aptly posits that, even if BMI created no new hazard, it could still owe him a duty on

some other basis.

B. Whether BMI Owed Leone Any Duty

Michigan common law provides ample foundation for such a duty. In Clark v. Dalman,

the Michigan Supreme Court described “the basic rule of the common law, which imposes on

every person engaged in the prosecution of any undertaking an obligation to use due care, or to

so govern his actions as not to unreasonably endanger the person or property of others.”

150 N.W.2d 755, 760 (Mich. 1967). Fultz reaffirmed this principle, declaring that “[i]f one

voluntarily undertakes to perform an act, having no prior obligation to do so, a duty may arise to

perform the act in a nonnegligent manner.” 683 N.W.2d at 591. Likewise, Loweke stated the

matter clearly: “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.’” 809 N.W.2d at 561

(alterations in Loweke) (quoting Rinaldo’s Constr. Corp. v. Mich. Bell Tel. Co., 559 N.W.2d 647,

658 (Mich. 1997)).

In other words, Michigan law incorporates the voluntary-assumption-of-duty doctrine, a

“simple idea that is embedded deep within the American common law of torts . . . : if one

‘having assumed to act, does so negligently,’ then liability exists as to a third party for ‘failure of

the defendant to exercise care and skill in the performance itself.’” Id. (alteration in Loweke)

(quoting Davis, 568 F.3d at 575).

No. 17-1632 Leone, et al. v. BMI Refractory Servs., Inc. Page 6

When BMI performed on its contract—especially when it inspected the alloy chute for

any loose slag—it “assumed to act.” See id. It thereby took on “a duty . . . to perform the act in

a nonnegligent manner.” See Fultz, 683 N.W.2d at 591. Viewing the facts in the light most

favorable to the plaintiffs, Michigan law would recognize that BMI owed Leone a duty “separate

and distinct” from its contractual obligations to A.K. Steel.

BMI notes other potential problems with the plaintiffs’ case, such as Leone’s concession

that he has no reason to believe that the slag that hit him was loose when BMI completed its

work. See Part I.A, supra. But those issues pertain to whether BMI breached its duty to Leone

or whether any such breach was a proximate cause of Leone’s injury, not whether a duty existed

in the first place. And because BMI proffers no alternative arguments on those grounds, we are

confined to the duty question.

Therefore, we REVERSE the district court’s grant of summary judgment and REMAND

for further proceedings consistent with this opinion.