In Bailey, a man was brandishing a firearm and threatening to shoot people. A witness informed two security guards working for a company hired by the landlord of the dangerous situation. The witness pointed in the direction of the trouble, which was visible to the guards. Instead of calling the police or attempting to defuse the situation, the security guards dropped off an intoxicated person at another apartment. While security guards took the intoxicated person to the apartment, shots were fired and Bailey struck by two bullets. As a result of his injuries, Bailey sued the apartment complex and the security company. Bailey argued that the landlord and security company had a duty to call the police once they were apprised of the dangerous situation.

Because of the novel issue presented, the court discussed the evolution of premises liability with respect to merchants. The court then concluded that the same rules that apply to merchants also apply in a landlord-tenant relationship. The specific duty at issue in Bailey was the duty owed to persons on the premises when a situation poses a risk of imminent and foreseeable harm to those present.  The court ruled that the landlords owe their tenants and any invitees to the property a duty “to respond reasonably to situations occurring on the premises.” This includes the duty to call “the police when the criminal acts of a third party endanger a readily identifiable invitee.”

Although landlords have a duty to contact the police, it should be remembered that there is no duty to take further action. The landlord is under no obligation to personally break up any altercation. In order for landlords to protect themselves, they should put policies in place and train employees on how to handle dangerous situations as they arise. When landlords contract with private security firms, landlords should be diligent in confirming that the security guards are aware and trained in these situations.

Here is a scenario where a general release was used, which demonstrates the importance of reviewing the specific language used.   The example comes from the recent case of Levy v Ford Motor Company (Click here for a PDF of this decision).   Party A had a history of contracting with Party B for delivery of construction materials and services. In October 1998, an incident occurred involving a truck owned by Party A and a train owned by Party B. Each party maintained that the other was responsible. Party B issued a debit memorandum in 2001, and thereafter stopped paying invoices to offset its alleged losses from damage to its train.   In connection with other contracts, Party A sued Party B for payment for ready-mix concrete shipped after May 2004. The parties settled that case, and their agreement included a release that comprehensively waived any further claims Party A might have against Party B “from the beginning of time,” but “with the sole exception of any claim arising out of damage to the train equipment.

In 2007, Party A filed an action as a claim for payments due under invoices dating from “2001 and before” in connection with deliveries of materials to Party B.  Party A sought monetary contract damages plus an accounting.   However, the Court held that Party A had already released any and all claims it might have otherwise had against Party B arising from events prior to 2004, despite the fact that the claims were not related to the train accident. Because of the comprehensive language and nature of the release it had signed in the first settlement, Party A wound up releasing any and all claims it could have had against Party B, despite the fact the causes of action were completely different.

Always have an attorney review your settlement and release documents to ensure you are preserving valuable rights and not being taken advantage of in the settlement.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

The Michigan Court of Appeals continued this trend on September 29, 2009, when it issued its decision in Siuda v Tobin. The contract for purchase of a modular home stated that any claim had to be filed no more than one year from the date of sale of the home, rather than the normal six years.  The purchasers claimed that the home was damaged during construction, but failed to bring suit until three years after construction began.  The Court of Appeals rejected all of the purchasers’ arguments against the enforcement of the shortened Statute of Limitations.

You should review the forms and contracts that your company uses, and decide whether to shorten the time period that your customers or suppliers have to bring a lawsuit.  On the flip side, if you have a potential lawsuit, you need to review the contracts to make sure how long you have to bring a claim.   Don’t simply assume that the Statute of Limitations has not been modified.

Click to Download Case from Michigan Court of Appeals in PDF Format

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm

This is because many contracts contain a “choice of law” or “governing law” provision, by which the parties choose to apply the law of one particular state to govern their contract.  A choice of law provision may affect the outcome of a lawsuit if the law of the chosen state differs from Michigan law on a key issue.

When reviewing a proposed contract before signing it, it is essential to read and understand the entire contract.  This is not just the price or the interest rate.  It also includes the general provisions at the end or on the back of the page—otherwise known as the “fine print” or “boilerplate”.

Many companies do business in multiple states.  For them, it is important to have certainty about what their contracts mean.  As a result, their standard contracts will contain a choice of law provision.  In addition, they may choose the law of a state that is most favorable to them — such as the law of a state that allows lenders to charge higher interest rates without violating usury laws.

If the law of Michigan doesn’t differ from the law of the chosen state on any important issue for the contract, then the choice of law provision is moot.  If, however, there is an important difference, then the party being asked to accept the choice of law provision has three options:  (1) Negotiate to change the contract; (2) Refuse to sign the contract containing the choice of law provision; or (3) Sign the contract knowing that it contains that provision and its implications.  If you are dealing with a much bigger company, they may not be willing to alter their standard contract.  You need to go into the transaction with a full understanding of its terms, so you are not surprised when a dispute arises.

The Michigan courts will normally enforce a choice of law provision, with two major exceptions:

1. The chosen state must have some relationship to the transaction, such as one of the states being based there, or part of the transaction being performed there.  A choice of law provision may not be enforced if two Michigan companies, with a transaction to be performed in Michigan, try to choose the law of some other state for the purpose of avoiding the application of a Michigan law.
2. A Michigan court may also refuse to enforce a choice of law provision if that would violate Michigan public policy.  In other words, if the result would be contrary to an important Michigan law, and Michigan has a greater interest in the outcome than the state whose law was chosen by the parties, the Court may disregard the choice of law provision.  This does not occur very often, particularly where there is no irregularity in the making of the contract containing the choice of law provision.

Many contracts also contain a “choice of venue”  provision, by which the parties agree to litigate their disputes in the courts of a particular state.  Choice of venue provisions will be discussed in a future article.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm. Click here to view his professional resume.

That is why it’s imperative that an officer or employee who is executing an agreement in an official capacity on behalf of his or her company, make sure that the other party knows that they are entering into the agreement with your company– and not you personally.    Simple language in the agreement can easily alleviate the worry of being held personally liable when one’s company does not honor an agreement.   First, make sure in the beginning of the agreement, where the parties are listed, that your company is listed as one of the parties and not you personally.    Second, when signing the agreement, make sure that you write your company’s name above your signature, and your company title under your signature so it is evident that you are signing the agreement in your official capacity a a representative of the company.  You can also write in language under your signature that states “on behalf of Company X.”   That way there is will confusion and the other party to the agreement knows your intentions.

While adding a few words to an agreement may seem insignificant, it can they may save you being held personally liable for the debts of your company.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm. Click here to view his professional resume.