United States: Plaintiff Not a Beneficiary Under Lease Agreement

The Michigan Supreme Court has held that a private citizen was not an intended third party beneficiary of a lease contract between a city and a landowner. As such, she could not pursue a third party beneficiary claim for injuries she sustained when she tripped and fell on a crack in the sidewalk. Brunsell v. City of Zeeland, No. 120051 (Mich. Sept. 24, 2002).

The City of Zeeland leased property, including a sidewalk, from First Michigan Bank & Trust Company. The lease agreement provided that the sidewalk was among the "improvements" that the City was authorized to construct. The lease also provided: "The Lessee [the city] shall repair the improvements which it constructs on the premises as may be necessary for the public safety." Based on this provision in the lease, the Plaintiff argued that she was an intended third party beneficiary of this contract, and that the Defendant City owed her a contractual duty.

The Supreme Court disagreed. The Court explained that a third party beneficiary is one for whose direct benefit an action is done. The public as a whole is too expansive a group to be considered directly benefited by a contractual promise. The Court examined the contract language and found that there was no sufficiently defined class that would permit the filing of a third party beneficiary claim.

Instead, the Court found that the contract between the City and First Michigan reflected their obligations to each other concerning maintenance. The City was not acting for the purpose of directly benefiting the Plaintiff. Therefore, the Court upheld summary disposition in favor of the City because it was not liable to Plaintiff under a third party beneficiary claim.

The Brunsell decision is important for landlords defending claims brought by non-tenants. Following Brunsell, a non-tenant's claim for injuries sustained on the premises may not be based upon a contract between the landlord and another entity, such as a tenant or a snow removal contractor. However, landlords still face liability for injuries to non-tenants based on other theories of liability, such as negligent maintenance, negligent inspections, and negligent repairs.