On April 17, 2026, the Michigan Court of Appeals issued its unpublished per curiam opinion in Pearson Construction Company, Inc v The Dailey Company and High Top Buds, LLC, No. 369918 (Mich Ct App April 17, 2026) (link here), affirming an Oakland Circuit Court judgment of more than $1 million against a carpentry subcontractor.
The decision is a useful reminder that a property owner who is not a signatory to a subcontract may still enforce that subcontract as a third-party beneficiary under MCL 600.1405, and that a contractor who agrees to a pre-award scope form cannot later rely on prior bid revisions to rewrite the deal.
Factual and Procedural Background
High Top Buds, LLC (“HTB”) retained The Dailey Company as the general contractor for the construction of a commercial cannabis grow facility in Oakland County. Dailey, in turn, entered into a subcontract with Pearson Construction Company, Inc. (“Pearson”) to perform the carpentry work, including the installation of fiberglass-reinforced plastic (“FRP”) walls.
After completing its work, Pearson sued Dailey for breach of contract and HTB for unjust enrichment, alleging that it had warned Dailey about humidity levels affecting the FRP installation, that Dailey directed it to proceed anyway, and that HTB then refused to pay. HTB counterclaimed against Pearson for breach of duty, both at common law and as a third-party beneficiary of the subcontract, alleging that the FRP panels bubbled because Pearson installed them under excessive humidity, contrary to its own recommendations.
The trial court granted partial summary disposition to HTB under MCR 2.116(I)(2) on the third-party beneficiary issue, and later ruled that Pearson had breached the subcontract by failing to install perimeter partition walls. A jury found Pearson liable for $250,000 for the missing perimeter walls and $751,958.25 for breach of the interior wall work. Pearson appealed.
Third-Party Beneficiary Status Under MCL 600.1405
The centerpiece of the appeal was Pearson’s argument that HTB, as the project owner, was not a third-party beneficiary of the Pearson-Dailey subcontract and therefore had no standing to sue for breach.
MCL 600.1405 provides that “[a]ny person for whose benefit a promise is made by way of contract . . . has the same right to enforce said promise that he would have had if the said promise had been made directly to him,” and that a promise is deemed made for a person’s benefit when the promisor “had undertaken to give or to do or refrain from doing something directly to or for said person.”
Citing Schmalfeldt v North Pointe Ins Co, 469 Mich 422, 428; 670 NW2d 651 (2003), and Kisiel v Holz, 272 Mich App 168, 170-171; 725 NW2d 67 (2006), the Court reiterated that only intended, not incidental, third-party beneficiaries may sue, and that the inquiry is an objective one focused on the four corners of the contract.
The Court then canvassed the subcontract and concluded that Pearson had made several direct promises to HTB “as ‘owner’ of the property through clear contractual language.” Among the provisions the Court found dispositive:
The subcontract identified the project as “High Top Buds – Labar Dr.,” which the Court analogized to the naming convention found determinative in Vanerian v Charles L. Pugh Co, Inc, 279 Mich App 431, 436; 761 NW2d 108 (2008).
Section 3.5 required Pearson to indemnify and hold the “Owner” harmless from nonpayment claims by lower-tier parties.
Section 4.2 required Pearson to cooperate directly with the “owner” on coordinated drawings and schedules.
Section 12.1 contained an indemnification running to the “owner” for injury and death claims.
Sections 17.1 and 17.2 contained express warranties from Pearson “to Contractor and Owner” that the work would be of good quality and free from defects, and a promise to “promptly make good, without cost to Contractor or Owner,” any defective work.
Pearson pointed to the prime contract between HTB and Dailey, which disclaimed any contractual relationship “between the Owner and a Subcontractor,” and argued that the subcontract’s incorporation of the prime contract either displaced those direct promises or rendered the subcontract ambiguous. The Court rejected that argument, relying on the subcontract’s “conflicts” clause, which provided that “[i]n case of conflicts, the Subcontract shall control.” The direct promises to HTB, therefore, governed.
Scope of Work and the Perimeter Walls
The Court also affirmed that Pearson was liable as a matter of law for failing to construct the perimeter partition walls.
The subcontract’s Pre-Award Scope Form, which was expressly incorporated into the subcontract, included the perimeter walls in the base bid. An “Alt 2” option to deduct the perimeter partitions was specifically “not accepted,” while a separate “Alt 5A” adding FRP on DensGlass at interior partitions was accepted.
Pearson relied on an April 30, 2021 bid revision indicating that acceptance of Alt 5A would void Alt 2 and eliminate the perimeter walls. The Court held that the April 30 revision was not part of the subcontract and that the subcontract’s integration clause precluded resort to prior proposals to vary unambiguous terms. Citing Barclae v Zarb, 300 Mich App 455, 480; 834 NW2d 100 (2013), and Zwiker v Lake Superior State Univ, 340 Mich App 448, 476; 986 NW2d 427 (2022), the Court reaffirmed that parol evidence cannot be used to rewrite a clear and unambiguous written contract containing an integration clause.
Expert Qualification and Damages
The Court also rejected Pearson’s challenges to HTB’s liability expert, Terry Buschert, and its damages expert, Lance Hazel.
MRE 702 permits qualification based on “knowledge, skill, experience, training, or education,” and practical experience alone may support qualification. Mulholland v DEC Int'l Corp, 432 Mich 395, 403-404; 443 NW2d 340 (1989). Gaps in an expert’s specific experience “affect the weight of his or her testimony rather than the admissibility.” Woodruff v USS Great Lakes Fleet, Inc, 210 Mich App 255, 260; 533 NW2d 356 (1995). As to damages, the Court held HTB had provided a “reasonable basis for computation” under Chelsea Investment Group LLC v Chelsea, 288 Mich App 239, 255; 792 NW2d 781 (2010).
Significance
Pearson is an unpublished decision and not a binding precedent, but it offers several takeaways for Michigan contractors and subcontractors.
First, boilerplate promises running to the “Owner” — warranties, indemnities, cooperation obligations, and even naming the project by the owner’s name — can be enough to confer third-party beneficiary status under MCL 600.1405, even where the prime contract disclaims privity with subcontractors. Where that is not the intent, subcontractors should negotiate express “no third-party beneficiary” language and confirm that the subcontract’s “order of precedence” clause does not subordinate the prime contract’s disclaimer.
Second, a pre-award scope form attached to a subcontract will be enforced according to its plain terms, and post-bid revisions that never make it into the four corners of the subcontract will not save a contractor from a scope dispute.
Finally, Pearson is a reminder that an integration clause, coupled with a “subcontract controls” provision, is a powerful tool — but one that cuts both ways.