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Roskam Baking Co., Inc. v. Lanham Machinery Co., Inc.

Michigan's statute of repose in favor of contractors was not affirmative defense subject to waiver, but rather served to extinguish tort claim arising from bakery fire and thus could be raised by contractor more than two years after plaintiff filed suit.

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The full case caption appears at the end of this opinion.

BOGGS, Circuit Judge. Roskam Baking Company (“Roskam”) and Maximo Dominguez appeal the district court’s grant of motions to dismiss Roskam’s and Dominguez’s diversity suits against Lanham Machinery Company, Inc., APV Consolidated, Inc., and APV Baker Company, Inc. (“APV”) seeking damages resulting from a fire allegedly caused by APV’s negligent installation of a baking oven. More than two years after Roskam and Dominguez separately filed suit, and after extensive motion practice and discovery, APV filed a motion in each case seeking dismissal on the basis that the action was barred by MCL � 600.5839(1), the Michigan statute of repose applicable to architects, engineers, and contractors who undertake improvements to real property (the “SOR”).(1) The district judge initially denied APV’s motion in both cases, holding that the statute was an affirmative defense that was waived when it was not raised in APV’s first responsive pleading. However, on reconsideration, the judge reversed himself in both cases and held that the defense offered by the statute was not waived because the statute serves to extinguish a cause of action before it accrues. Therefore, the court held that if the statute applied to their cases, Roskam and Dominguez had failed to state a claim upon which relief can be granted, and failure to state a claim is a defense that is not waived by failure to assert it in the party’s responsive pleading. With respect to Roskam, the court held that the issue of whether the statute applied to the circumstances at bar was decided on the merits in the affirmative in a parallel state court action involving the same parties and occurrence and that the state court’s conclusion was binding on the court by issue preclusion. Accordingly, the district court granted APV’s motion to dismiss.

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