News 11.12.18

Real Estate Client Alert: Michigan Court of Appeals Held That Non-Tenants May Not Sue Landlords Under Common Theories of Liability

The Facts of the Case

Andrea Turner (“Turner”) signed a lease for a rental unit at a mobile home park; however, her boyfriend, Duane Morrish (“Morrish”), was only listed on the lease as an authorized occupant—Morrish never signed the lease.  During Morrish and Turner’s occupancy of the rental unit, Morrish twice reported leaks to the landlord.  After a particular rainy day, Morrish slipped on pooled water in the unit, which was the result of a new leak and fell.  Morrish brought suit against Sun Communities, Inc. (“Sun Communities”) alleging: (1) a statutory claim asserting a violation of MCL 554.139(1)(b) because Sun Communities failed to keep the rental unit in reasonable repair; and (2) a breach of contract claim asserting that Sun Communities breached the subject lease by failing to repair the leak.  Subsequently, Morrish requested leave to amend his Complaint to include a standard negligence claim and a claim under MCL 125.536, the Housing Law of Michigan.  After Sun Communities moved for summary disposition, the trial Court dismissed Morrish’s lawsuit pursuant to MCR 2.116(C)(8) and MCR 2.116(C)(10) and refused to allow Morrish to add a negligence or Housing Law claim.

The Significance of the Rental Status of the Plaintiff

On appeal, the Morrish Court began its analysis by addressing the breach of contract claim in Morrish’s Complaint—initially, discussing traditional principles of Michigan contract law.  The Morrish Court noted that “’generally, one who is not a party to an agreement cannot pursue a claim for breach of the agreement.”’  Morrish, unpub op, at *2 (citing First Security Savings Bank v. Aitken, 226 Mich. App. 291, 305 (1997)).  A third-party may only seek to enforce a contract if they are an intended beneficiary of the contract, meaning that the “’promisor either promised to do or refrain from doing something directly to or for’ the third-party.”  Morrish, unpub op, at *2 (citing MCL 600.1405(1)).

Since Morrish never signed the lease, he was not a party to that contract.  The Morrish Court was not persuaded by the fact that Morrish was listed as an authorized occupant on the lease and held that Morrish was an incidental, not an intended, third-party beneficiary of the lease.  Moreover, the lease contained language specifically indicating that the lease was for the benefit of the landlord and the tenant only.  Based on the Morrish Court’s rulings regarding the status of Morrish’s occupancy, the Michigan Court of Appeals held that the dismissal of Morrish’s breach of contract claim by the lower court was proper.

Morrish’s status as merely an authorized occupant was also pertinent to the Morrish Court’s analysis of the Court’s summary dismissal of Morrish’s statutory claim under MCL 554.139(1)(b).  Relying on Mullen v. Zerfas, 480 Mich. 989 (2007), the Morrish Court held that because Morrish was not a tenant, he could not recover under MCL 554.139(1)(b) because a landlord only has such a duty to a contracting party, and that duty does not extend to a social guest, such as Morrish.  Like Morrish’s breach of contract claim, the Michigan Court of Appeals affirmed the lower court’s dismissal of Morrish’s statutory claim against Sun Communities.

For reasons unrelated to Morrish’s status as an occupant, but not a tenant, the Morrish Court also refused to allow Morrish to add a negligence or Housing Law claim.  Central to this analysis was the fact that Morrish testified that the leak which caused the pool of water on which he slipped was in a tenant-controlled area of the rental unit and was a new leak—not a leak for which the landlord was previously placed on notice.

Unanswered Questions and Impact on Landlords

The Michigan Court of Appeals primarily focused on Morrish’s status as an authorized occupant and not a tenant.  This distinction was the primary, if not the only, reason for affirming the dismissal of several types of claims present in Morrish which may be commonplace in many other landlord-tenant disputes.  In doing so, the Michigan Court of Appeals noted that the lease in Morrish contained language specifically stating that the lease was “intended for the benefit of the landlord and the tenant only.”  Morrish, unpub op, at *2.  It is unclear whether the Morrish Court would have reached the same conclusions regarding the dismissal of Morrish’s claims if the lease had contained language to the contrary or had simply not included such language specifically addressing the intended beneficiaries of the lease.