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Price v. High Pointe Oil Company, Inc. 828 N.W.2d 660 (Mich. 2013)

In 2006, Beckie Price replaced the oil furnace in her house with a propane furnace. The oil furnace was removed, but the pipe that had been used to fill the furnace with oil remained in place.

At the time the furnace was replaced, Price canceled her contract for oil refills with the predecessor of High Pointe Oil Company, the defendant. Somehow, though, in November 2007, High Pointe mistakenly placed Price's address back on its "keep full list." Subsequently, a High Pointe truck driver pumped around 400 gallons of fuel oil into Price's basement through the oil-fill pipe before realizing the mistake. Price's house and her belongings were destroyed. The house was eventually torn down, the site was remediated, and a new house was built on a different part of Price's property. Price's personal property was all cleaned or replaced. All of her costs related to her temporary homelessness were reimbursed to her, as well. Thus, she was fully compensated for all of her economic losses resulting from High Pointe's error.

Nevertheless, Price sued High Pointe alleging a number of claims. The only of her claims to survive to trial was one focused on her noneconomic lossesfor example, pain and suffering, humiliation, embarrassment, and emotional distress. A jury found in Price's favor and awarded her $100,000 in damages.

High Pointe filed an appeal to the intermediate appellate court but lost. High Pointe then appealed to the Michigan Supreme Court, excerpts of whose opinion is below.

Markman, J.

III. Analysis

The question in this case is whether noneconomic damages are recoverable for the negligent destruction of real property. Absent any relevant statute, the answer to that question is a matter of common law.

A. Common Law

As this Court explained in [a prior case], the common law "is but the accumulated expressions of the various judicial tribunals in their efforts to ascertain what is right and just between individuals in respect to private disputes[.]" The common law, however, is not static. By its nature, it adapts to changing circumstances. ... The common law is always a work in progress and typically develops incrementally, i.e., gradually evolving as individual disputes are decided and existing common-law rules are considered and sometimes adapted to current needs in light of changing times and circumstances.

The common-law rule with respect to the damages recoverable in an action alleging the negligent destruction of property was set forth in [a 1933 case]:

If injury to property caused by negligence is permanent or irreparable, the measure of damages is the difference in its market value before and after said injury, but if the injury is reparable, and the expense of making repairs is less than the value of the property, the measure of damages is the cost of making repairs.

Michigan common law has continually followed [that] rule. ... Accordingly, the long-held common-law rule in Michigan is that the measure of damages for the negligent destruction of property is the cost of replacement or repair. Because replacement and repair costs reflect economic damages, the logical implication of this rule is that the measure of damages excludes noneconomic damages.

Lending additional support to this conclusion is the simple fact that, before the Court of Appeals' opinion below, no case ever in the history of the Michigan common law has approvingly discussed the recovery of noneconomic damages for the negligent destruction of property. Indeed, no case has even broached this issue except through the negative implication arising from limiting damages for the negligent destruction or damage of property to replacement and repair costs. ...

Moreover, the Court of Appeals has decided two relatively recent cases concerning injury to personal property in which noneconomic damages were disallowed. In Koester v. VCA Animal Hospital, the plaintiff dog owner sought noneconomic damages ... against his veterinarian following the death of his dog. ... The trial court [ruled in favor of the veterinarian], holding that "emotional damages for the loss of a dog do not exist." On appeal, the Court of Appeals affirmed, noting that pets are personal property under Michigan law and explaining that there "is no Michigan precedent that permits the recovery of damages for emotional injuries allegedly suffered as a consequence of property damage."

Later, in Bernhardt v. Ingham Regional Medical Center, the plaintiff [accidentally left] her grandmother's 1897 wedding ring (which was also her wedding ring) and a watch purchased in 1980 around the time of her brother's murder ... in the [hospital's] washbasin and left the hospital. Upon realizing her mistake, the plaintiff contacted the defendant and was advised that she could retrieve the jewelry from hospital security. However, when she tried to retrieve the jewelry, it could not be located. The plaintiff sued, and the defendant ... argu[ed] that the plaintiff's damages did not exceed the $25,000 [minimum amount for a valid case in the] trial court. The plaintiff countered that her damages exceeded that limit because the jewelry possessed great sentimental value. The trial court granted the defendant's motion. On appeal, the Court of Appeals affirmed, citing Koester for the proposition that there "is no Michigan precedent that permits the recovery of damages for emotional injuries allegedly suffered as a consequence of property damage". ... In support of its conclusion, Bernhardt quoted the following language from the Restatement Second of Torts:

If the subject matter cannot be replaced, however, as in the case of a destroyed or lost family portrait, the owner will be compensated for its special value to him, as evidenced by the original cost, and the quality and condition at the time of the loss. ... In these cases, however, damages cannot be based on sentimental value. Compensatory damages are not given for emotional distress caused merely by the loss of the things, except that in unusual circumstances damages may be awarded for humiliation caused by deprivation, as when one is deprived of essential elements of clothing.

While Koester and Bernhardt both involved negligent injury to personal property, they speak of property generally. Although the Court of Appeals in the instant case seeks to draw distinctions between personal and real property, neither that Court nor plaintiff has explained how any of those distinctions, even if they had some pertinent foundation in the law, are relevant with regard to the propriety of awarding noneconomic damages. In short, while it is doubtlessly true that many people are highly emotionally attached to their houses, many people are also highly emotionally attached to their pets, their heirlooms, their collections, and any number of other things. But there is no legally relevant basis that would logically justify prohibiting the recovery of noneconomic damages for the negligent killing of a pet or the negligent loss of a family heirloom but allow such a recovery for the negligent destruction of a house. Accordingly, Koester and Bernhardt underscore [the long-standing] exclusion of noneconomic damages for negligent injury to real and personal property.

Finally, we would be remiss if we did not address Sutter v. Biggs, which the Court of Appeals cited as providing the "general rule" for the recovery of damages in tort actions. Sutter stated:

The general rule, expressed in terms of damages, and long followed in this State, is that in a tort action, the [party that committed the tort] is liable for all injuries resulting directly from his wrongful act, whether foreseeable or not, provided the damages are the legal and natural consequences of the wrongful act, and are such as, according to common experience and the usual course of events, might reasonably have been anticipated. Remote contingent, or speculative damages are not considered in conformity to the general rule.

Although Sutter articulates a "general rule," it is a "general rule" that has never been applied to allow the recovery of noneconomic damages in a case involving only property damage, and it is a "general rule" that must be read in light of the more narrow and specific "general rule" [that Michigan has always followed with regard to the noneconomic damages exclusion in cases involving property damage].

The development of the common law frequently yields "general rules" from which branch more specific "general rules" that apply in limited circumstances. Where tension exists between those rules, the more specific rule controls. ... With respect to this case, although Sutter articulated a general rule, [the rule excluding noneconomic damages for property damages is] a more specific "general rule". ... Accordingly, because this case involves only property damage, the [latter] rule ... controls.

B. Altering the Common Law

Because the Court of Appeals determined that the "general rule" is that "in a tort action, the [party who committed the tort] is liable for all injuries," the Court of Appeals contended that it was not altering the common law but, rather, "declin[ing] to extend" to real property the personal property "exception" set forth in Koester and Bernhardt. However, as previously mentioned, the Court of Appeals' opinion constitutes the first and only Michigan case to support the recovery of noneconomic damages for the negligent destruction of property. Accordingly, contrary to the Court of Appeals' own characterization and for the reasons discussed [above], the Court of Appeals' holding represents an alteration of the common law. With that understanding, we address whether the common law should be altered.

"This Court is the principal steward of Michigan's common law," ... and it is "axiomatic that our courts have the constitutional authority to change the common law in the proper case. ..." However, this Court has also explained that alteration of the common law should be approached cautiously with the fullest consideration of public policy and should not occur through sudden departure from longstanding legal rules. ... Among them has been our attempt to "avoid capricious departures from bedrock legal rules as such tectonic shifts might produce unforeseen and undesirable consequences." ... As this emphasis on incrementalism suggests, when it comes to alteration of the common law, the traditional rule must prevail absent compelling reasons for change. This approach ensures continuity and stability in the law.

With the foregoing principles in mind, we respectfully decline to alter the common-law rule that the appropriate measure of damages for negligently damaged property is the cost of replacement or repair. We are not oblivious to the reality that destruction of property or property damage will often engender considerable mental distress, and we are quite prepared to believe that the particular circumstances of the instant case were sufficient to have caused exactly such distress. However, we are persuaded that the present rule is a rational one and justifiable as a matter of reasonable public policy. We recognize that might also be true of alternative rules that could be constructed by this Court. In the final analysis, however, the venerability of the present rule and the lack of any compelling argument that would suggest its objectionableness in light of changing social and economic circumstances weigh, in our judgment, in favor of its retention. Because we believe the rule to be sound, if change is going to come, it must come by legislative alteration. A number of factors persuade us that the longstanding character of the present rule is not simply a function of serendipity or of judicial inertia, but is reflective of the fact that the rule serves legitimate purposes and values within our legal system.

First, one of the most fundamental principles of our economic system is that the market sets the price of property. This is so even though every individual values property differently as a function of his or her own particular preferences. ... Second, economic damages, unlike noneconomic damages, are easily verifiable, quantifiable, and measurable. Thus, when measured only in terms of economic damages, the value of property is easily ascertainable. ... Third, limiting damages to the economic value of the damaged or destroyed property limits disparities in damage awards from case to case. Disparities in recovery are inherent in legal matters in which the value of what is in dispute is neither tangible nor objectively determined, but rather intangible and subjectively determined. ... Fourth, the present rule affords some reasonable level of certainty to businesses regarding the potential scope of their liability for accidents caused to property resulting from their negligent conduct. [U]nder the Court of Appeals' rule, those businesses that come into regular contact with real propertycontractors, repairmen, and fuel suppliers, for examplewould be exposed to the uncertainty of not knowing whether their exposure to tort liability will be defined by a plaintiff who has an unusual emotional attachment to the property or by a jury that has an unusually sympathetic opinion toward those emotional attachments.

Once again, it is not our view that the common-law rule in Michigan cannot be improved, or that it represents the best of all possible rules, only that the rule is a reasonable one and has survived for as long as it has because there is some reasonable basis for the rule and that no compelling reasons for replacing it have been set forth by either the Court of Appeals or plaintiff. We therefore leave it to the Legislature, if it chooses to do so at some future time, to more carefully balance the benefits of the current rule with what that body might come to view as its shortcomings.

IV. Conclusion

The issue in this case is whether noneconomic damages are recoverable for the negligent destruction of real property. No Michigan case has ever allowed a plaintiff to recover noneconomic damages resulting solely from the negligent destruction of property, either real or personal. Rather, the common law of this state has long provided that the appropriate measure of damages in cases involving the negligent destruction of property is simply the cost of replacement or repair of the negligently destroyed property. We continue today to adhere to this rule and decline to alter it. Accordingly, we reverse the judgment of the Court of Appeals and remand this case to the trial court for entry of summary disposition in defendant's favor.