Noneconomic damages are not recoverable for negligent destruction of real property


In its March 21, 2013 opinion in Price v High Pointe Oil Co, the Michigan Supreme Court held that a plaintiff may not recover noneconomic damages for negligent destruction of real property. Instead, a plaintiff is limited to the amount necessary to repair or replace the property. This decision reaffirms the Michigan Supreme Court’s commitment to treading cautiously when asked to create new common-law rights.

In Price, the plaintiff replaced her oil furnace with a propane furnace. Years later, however, the plaintiff’s home was placed on the defendant oil company’s “keep full” list. When the plaintiff was not at home, the defendant’s employee filled her propane furnace with oil. As a result, the house and all personal property within it were destroyed.

Although the plaintiff’s economic damages were fully reimbursed by the defendant’s insurer and her own insurer, she filed suit against the defendant oil company. Her claim for noneconomic damages was the only one left for trial, and the jury awarded her $100,000. The Court of Appeals affirmed this verdict in a published opinion.

The Michigan Supreme Court reversed and remanded for entry of summary disposition in the defendant’s favor. The Court’s analysis began with its 1933 opinion in O’Donnell v Oliver Iron MiningCo, where it held that a plaintiff bringing an action for negligent destruction of real property may recover the amount necessary to repair or replace the property. By defining available damages in this manner, the Price court reasoned, O’Donnell held by negative implication that noneconomic damages are not recoverable for negligent destruction of real property.

The Court explained that O’Donnell had been consistently followed by Michigan courts and, moreover, that no Michigan court had ever allowed noneconomic damages for negligent destruction of real property–at least until the Court of Appeals’ opinion in Price. Consequently, the Court saw no reason to depart from O’Donnell or to create a new common-law right.

This conclusion was not altered by the “general rule” for damages in tort cases. This rule, as stated in the Court’s 1966 opinion in Sutter v Biggs, provides that “[a] tort-feasor 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.” This general rule, according to the Price court, is subject to the specific rule stated in O’Donnell.

For these reasons, existing law compelled the conclusion that a plaintiff may not recover noneconomic damages for negligent destruction of real property. And the Court was not inclined to alter Michigan law for four reasons. First, an individual necessarily values his or her property above the market price; otherwise, he or she would not have purchased it. The law typically does not compensate parties for this individualized “surplus” value. Second, noneconomic damages are difficult to quantify. Third, allowing noneconomic damages would create a wide “disparity” in damage awards. Finally, Michigan’s current rule prohibiting noneconomic damages creates certainty that facilitates appropriate risk management.

Price is significant not only for its specific holding but also because it is part of a deeper logic in the Michigan Supreme Court’s jurisprudence. As exemplified by cases like Henry v Dow Chemical and now Price, the Court is reluctant to expand the common-law — to create new causes of action and forms of damages that could have unforeseen consequences. This approach is not a rejection of the common-law. Indeed, Price affirms the Court’s role as “principal steward” of the common-law. Rather, cases like Price suggest that, according to the Michigan Supreme Court, the wisdom of the common-law lies in tradition and the crucible of experience.

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