328-barry-avenue-llc-v-nolan-properties-group-llc-and-third-party-v ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0724
328 Barry Avenue, LLC,
Appellant,
vs.
Nolan Properties Group, LLC, defendant and third party plaintiff,
Respondent,
vs.
Carciofini Company, third party defendant,
Respondent,
Marvin Windows, Inc., third party defendant,
Respondent,
Minuti-Ogle Co., Inc., third party defendant,
Respondent,
R. T. L. Construction, Inc., third party defendant,
Respondent,
Stellar Contractors, Inc. d/b/a Stellar Concrete & Masonry, third party defendant,
Respondent.
Filed February 2, 2015
Affirmed
Reyes, Judge
Hennepin County District Court
File No. 27-CV-12-20125
J. Robert Keena, Hellmuth & Johnson, P.L.L.C., Edina, Minnesota (for appellant)
Michael A. Breen, Amy M. Sieben, Fisher, Bren & Sheridan, L.L.P., Minneapolis,
Minnesota (for respondent Nolan Properties Group, LLC)
Cara C. Passaro, Murphy & Passaro, P.A., Mendota Heights, Minnesota (for respondent
Carciofini Company)
Michael E. Obermueller, Winthrop & Weinstine, P.A., Minneapolis, Minnesota (for
respondent Marvin Windows, Inc.)
Justin P. Short, Timothy A. Sullivan, Kyle R. Hardwick, Best & Flanagan, L.L.P.,
Minneapolis, Minnesota (for respondent Minuti-Ogle Co., Inc.)
Neal J. Robinson, The Cincinnati Insurance Co., Coon Rapids, Minnesota (for respondent
R.T.L. Construction, Inc.)
Considered and decided by Reyes, Presiding Judge; Worke, Judge; and
Johnson, Judge.
UNPUBLISHED OPINION
REYES, Judge
On appeal from the district court’s grant of summary judgment to respondents,
appellant argues that (1) genuine issues of material fact exist as to when appellant
discovered its injury for statute-of-limitation purposes; (2) the district court
misinterpreted Minnesota’s statute of limitations; and (3) genuine issues of material fact
exist regarding whether equitable estoppel should have precluded summary judgment.
We affirm.
FACTS
Appellant 328 Barry Avenue, LLC (328 Barry) and respondent Nolan Properties
Group, LLC (NPG) are limited-liability companies located at 328 Barry Avenue in
Wayzata. Both companies have the same sole owner, John Nolan. 328 Barry owns the
property and used NPG as general contractor for the construction of a building on the
property. Construction began in 2008. As general contractor, NPG entered into contracts
with several subcontractors, including respondents Carciofini Company, Marvin
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Windows, Inc., Minuti-Ogle Co., Inc. (MOC), R.T.L. Construction, Inc., and Stellar
Contractors, Inc. d/b/a Stellar Concrete & Masonry. But, according to Nolan, there was
no construction contract between 328 Barry and NPG.
In October 2009 while construction was ongoing, NPG discovered water intrusion
on the property. It asked MOC to correct the water leakage on the east side of the
building. MOC applied clear silicone to two window joints and suggested that NPG get
the window tested. Two weeks later, NPG asked MOC to perform additional work
because water was still leaking. When MOC returned to inspect the property on
November 3, NPG and MOC used a garden hose to spray the building and saw water
“slowly seep[ing] in” through a window. MOC again told NPG to get the window tested.
The record contains no evidence that MOC corrected the problem or that NPG tested the
windows at this time. When 328 Barry received a certificate of occupancy for the
property in January 2010, not every floor of the building had been completed.
NPG next contacted MOC in August 2010 regarding water infiltration. In
response, MOC again recommended that NPG test the windows and window caulking.
MOC referred NPG to a forensic building scientist who could test the windows.
In early 2011, NPG hired Indigo Environmental “to assess the stucco cladding at
the East elevation to determine the source for the water intrusion into the 2008
constructed building.” According to Indigo, water infiltration had previously been
observed “on the East elevation first and second floor[s]” but was now observed “from
the North first and second floor windows” and occasionally “from the middle windows
on each floor.” Indigo completed its report in June 2011 and determined that “building
3
materials were installed contrary to the written specifications.” NPG later hired other
companies to analyze the property and discovered several areas of water damage.
On October 3, 2012, 328 Barry filed suit against NPG, alleging that its actions as
general contractor were negligent. NPG denied responsibility and sued Carciofini,
Marvin, MOC, and R.T.L. for contribution and indemnification. NPG later amended its
third-party complaint to include Stellar.
Nolan was deposed as both the representative of appellant 328 Barry and the
representative of respondent NPG. On behalf of NPG, he stated that all of the issues
raised during construction in 2009 with the windows, doors, and caulking were
“addressed and corrected” by the subcontractors. As a result, according to NPG,
everything was fixed and there were no water-intrusion issues until August 2010. Nolan
agreed that the location of the current water intrusion was the same as the intrusion in
2009 but disagreed that the cause of the intrusion was the same.
The parties brought five motions for summary judgment, and the district court
conducted a hearing on the competing motions.1 In February 2014, the district court
granted Carciofini and MOC’s joint motion for summary judgment based on 328 Barry’s
failure to bring suit within the statute of limitations and dismissed the other motions. The
district court explained that, because 328 Barry served NPG with its summons and
complaint on June 14, 2012, it must have discovered its injury after June 14, 2010 to have
1
After the hearing, 328 Barry reached a settlement with Stellar Contractors “on a
[Pierringer] basis.” In a Pierringer release, a plaintiff settles a claim with one or more
defendants, the settling defendants are dismissed, and any cross-claims involving those
defendants are also dismissed. Frey v. Snelgrove, 269 N.W.2d 918, 922 (Minn. 1978).
4
met the statute of limitations. See Minn. R. Civ. P. 3.01(a). The district court concluded
that 328 Barry first discovered the water infiltration in October 2009 and that this water
infiltration “is the same injury [328 Barry] is complaining of now.” The district court
therefore dismissed 328 Barry’s complaint because it failed to file suit within the statute
of limitations.
328 Barry requested reconsideration of the district court’s order, arguing that the
district court erred in its analysis of the statute of limitations. One day before the filing of
this request, the district court judge who had heard the case retired. After another district
court judge was assigned to the case, 328 Barry again moved for reconsideration. The
new district court judge denied 328 Barry’s motion for reconsideration. 328 Barry
appeals.2
DECISION
I.
A district court shall grant summary judgment “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that either party is entitled
to a judgment as a matter of law.” Minn. R. Civ. P. 56.03. On appeal from an award of
summary judgment, this court reviews de novo whether there is a genuine issue of
material fact and whether the district court erred when it applied the law. STAR Ctrs.,
Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002). “We view the
2
After the filing of this appeal, the parties stipulated to the dismissal of all claims against
Stellar, and the district court ordered the dismissal.
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evidence in the light most favorable to the party against whom summary judgment was
granted.” Id.The statute of limitations at issue states:
Except where fraud is involved, no action by any
person in contract, tort, or otherwise to recover damages for
any injury to property, real or personal, or for bodily injury or
wrongful death, arising out of the defective and unsafe
condition of an improvement to real property, shall be
brought against any person performing or furnishing the
design, planning, supervision, materials, or observation of
construction or construction of the improvement to real
property or against the owner of the real property more than
two years after discovery of the injury, nor in any event shall
such a cause of action accrue more than ten years after
substantial completion of the construction. Date of
substantial completion shall be determined by the date when
construction is sufficiently completed so that the owner or the
owner’s representative can occupy or use the improvement
for the intended purpose.
Minn. Stat. § 541.051, subd. 1(a) (2014). Under this subdivision, “a cause of action
accrues upon discovery of the injury.” Id., subd. 1(c) (2014).
328 Barry argues that, under section 541.051, subdivision 1(a), “[a]n ‘actionable’
injury requires knowledge of NPG’s and its [s]ubcontractor[s’] negligence and resulting
damage that required repair.” (Emphasis omitted). But 328 Barry misstates the statutory
standard. Before the amendment of this statute of limitations in 1988, “one had to be
aware of the defect causing the injury.” Dakota Cnty. v. BWBR Architects, 645 N.W.2d
487, 492 n.3 (Minn. App. 2002), review denied (Minn. Aug. 20, 2002). Now, “the statute
of limitations begins to run when an actionable injury is discovered or, with due
diligence, should have been discovered, regardless of whether the precise nature of the
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defect causing the injury is known.” Id. at 492. “[A] party need not be aware of the
extent of its injury for the statute of limitations to begin to run so long as the party is
aware of the injury and the need for repairs.” Day Masonry v. Indep. Sch. Dist. 347, 781
N.W.2d 321, 334 (Minn. 2010).
The district court determined that 328 Barry learned of the water intrusion in
October 2009, that the 2009 problem was not fixed, and that 328 Barry sued for the
“same injury” in 2012. 328 Barry argues that a genuine issue of material fact exists about
when it discovered its injury because the 2009 water intrusion was corrected, and it
discovered a new injury in August 2010.3 As evidence, 328 Barry cites Nolan’s
deposition, in which he stated that all issues discovered during construction in 2009 were
“addressed and corrected” by the subcontractors and that there were no water-intrusion
problems until August 2010. Even viewing Nolan’s testimony in the light most favorable
to 328 Barry, Nolan’s testimony merely averred that the 2009 water-intrusion problem
was corrected. This averment is not enough to resist a motion for summary judgment.
See DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997) (“[T]he party resisting summary
judgment must do more than rest on mere averments.”).
Contrary to 328 Barry’s assertion, the record contains no evidence supporting
Nolan’s averment that the 2009 water-intrusion problem was corrected. MOC applied
3
The parties do not dispute that 328 Barry discovered water infiltration in October 2009.
Because Nolan acted as the sole owner and decision-maker for both 328 Barry and NPG,
NPG’s knowledge can be imputed to 328 Barry. See Travelers Indem. Co. v.
Bloomington Steel & Supply Co., 718 N.W.2d 888, 896 (Minn. 2006) (explaining that
knowledge is attributed from agent to principal when agent acquires the knowledge in the
course of his employment); see also Day Masonry, 781 N.W.2d at 334 (stating that
custodians’ knowledge of leaks is imputed to their employer).
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clear silicone to two window joints in October 2009. But this action did not fix the water
leakage, and NPG asked MOC to perform additional repairs. MOC returned to inspect
the property in November 2009 and, with NPG, performed an unscientific garden-hose
test, which uncovered continued water leakage. The record contains no evidence that
MOC performed any additional repairs in November 2009. Similarly, MOC told NPG to
get the windows tested, but there is no evidence that NPG tested the windows or any
other part of the building until early 2011, after noticing water infiltration in August
2010.
Section 541.051, subdivision 1(a) requires a plaintiff to file suit no more than two
years after discovering an actionable injury. Minn. Stat. § 541.051, subd. 1(a). But the
statute of limitations begins to run when the plaintiff discovers or should have discovered
an actionable injury. BWBR Architects, 645 N.W.2d at 492. Even viewing the record in
the light most favorable to 328 Barry, we agree with the district court that 328 Barry
discovered its injury in October 2009. At the latest, 328 Barry should have discovered its
injury in November 2009 because the garden-hose test uncovered continued leakage and
there is no evidence that this leakage was corrected. Given the leakage during the
garden-hose test, it was not reasonable for 328 Barry to conclude that the problem was
corrected in 2009. Because 328 Barry discovered its injury in October 2009, was aware
of the need for repairs, and did not correct the problem, the statute of limitations began to
run at that time. See Day Masonry, 781 N.W.2d at 334 (explaining that the statute of
limitations begins to run when “the party is aware of the injury and the need for repairs”);
8
BWBR Architects, 645 N.W.2d at 492 (suggesting that, when an injury is discovered and
not corrected, the statute of limitations begins to run at the date of discovery).
The district court did not err in determining that there were no genuine issues of
material fact regarding 328 Barry’s knowledge of its injury in October 2009 and that the
statute of limitations began to run at that time. Because 328 Barry served its summons
and complaint in June 2012—over two years after discovering its injury—the district
court properly granted summary judgment to respondents. See Minn. Stat. § 541.051,
subd. 1(a).
II.
328 Barry next argues that the statute of limitations cannot begin to run until the
completion of construction. The district court rejected this argument as a confusion of
the statute of limitations and statute of repose.4
Section 541.051 contains both a statute of limitations and a statute of repose.
Weston v. McWilliams & Assocs., Inc., 716 N.W.2d 634, 643 (Minn. 2006). “[A] statute
of limitations limits the time within which a party can pursue a remedy (that is, it is a
procedural limit), whereas a statute of repose limits the time within which a party can
acquire a cause of action (thus it is a substantive limit).” Id. at 641. Based on the clear
4
328 Barry also argues that the district court used an “improper trigger” for the statute of
limitations because it referred to the “defect” and the “discovery of the defect” several
times in its written order. But the district court also made multiple references to the
“injury” and cited the proper legal standard that “a cause of action accrues upon
discovery of the injury.” See Minn. Stat. § 541.051, subd. 1(c). Given the district court’s
conclusion that the 2009 and 2010 water infiltrations were the “same injury” and that 328
Barry was aware of its “injury” in 2009, we disagree that the district court applied an
improper legal standard under section 541.051, subdivision 1(a).
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language of section 541.051, subdivision 1(a), a plaintiff has “two years after discovery
of the injury” to bring suit and meet the statute of limitations, and “ten years after
substantial completion of the construction” to accrue a cause of action and meet the
statute of repose. See Minn. Stat. § 541.051, subd. 1(a); see also Fiveland v. Bollig &
Sons, Inc., 436 N.W.2d 478, 481 (Minn. App. 1989) (“[T]he legislature has expressly
provided two separate limitation periods: one running for two years commencing upon
discovery of the injury; and the other running for 10 years from the substantial
completion of construction.”), review denied (Minn. Apr. 24, 1989). At oral argument
before this court, 328 Barry conceded that the language “substantial completion of the
construction” does not apply to the two-year statute of limitations under section 541.051,
subdivision 1(a).
But 328 Barry argues that the concept of “substantial completion” should still
apply to the two-year statute of limitations. This argument has been previously rejected
by this court. In Fiveland, we concluded that “[t]he legislature has . . . considered the
importance of the time of substantial completion of construction as a measure for
commencing a time period, and has chosen not to use this point as commencement for the
two-year limitation period.”5 436 N.W.2d at 481.
5
328 Barry suggests that section 541.051, subdivision 4 and Vlahos v. R&I Constr. of
Bloomington, Inc., 676 N.W.2d 672 (Minn. 2004) support its argument that the statute of
limitations “cannot begin to run until the improvement is completed.” We disagree.
Section 541.051, subdivision 4 applies to suits based on a breached warranty, and is
inapplicable to 328 Barry’s lawsuit. See Minn. Stat. § 541.051, subd. 4 (2014).
Moreover, in Vlahos, the supreme court rejected a respondent’s argument that a phrase in
subdivision 1 was synonymous with a different phrase in subdivision 4. 676 N.W.2d at
677 n.4.
10
328 Barry also argues that no Minnesota case has “dismissed a lawsuit because a
defect was discovered during ongoing construction and before substantial completion of
construction.” But respondents cite two cases dismissing lawsuits when injuries were
discovered before the completion of construction. In O’Connor v. M.A. Mortenson Co.,
an employee was injured while working on a construction site and sued over five years
later. 424 N.W.2d 92, 93 (Minn. App. 1988), review denied (Minn. July 28, 1988). This
court applied a previous version of Minn. Stat. § 541.051, subd. 1, and determined that
the employee’s suit was “barred by the statute’s two-year statute of limitations.” Id. at
94-95. In Fiveland, a homeowner sued the contractor and subcontractors working on his
home over two years after he was injured during construction. 436 N.W.2d at 479. This
court again determined that the suit was barred by the two-year statute of limitations. Id.
at 481.
328 Barry argues that O’Connor and Fiveland are inapplicable because they
involve personal injuries. But neither case contains language limiting its analysis of the
two-year statute of limitations to personal-injury actions. Indeed, the statute is clear that
it applies to both personal and property injuries. See Minn. Stat. § 541.051, subd. 1(a).
In Fiveland, this court explained that the two-year statute of limitations commences upon
discovery of an injury and that the legislature did not toll this limitation period during the
course of construction. 436 N.W.2d at 481.
The district court properly concluded that construction need not be completed
before the start of the two-year limitation period, and it did not err in its analysis of
section 541.051, subdivision 1.
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III.
Finally, 328 Barry argues that genuine issues of material fact regarding its
equitable-estoppel argument precluded summary judgment. Equitable estoppel is
“intended to prevent a party from taking unconscionable advantage of his own wrong by
asserting his strict legal rights.” Brown v. Minn. Dep’t of Pub. Welfare, 368 N.W.2d 906,
910 (Minn. 1985) (quotation omitted). “Specifically with regard to Minn. Stat.
§ 541.051, estoppel is pled where, after discovery of a cause of action, the injured party
has been induced to forego suit in reliance on the other party’s assurances that corrective
action would be taken.” BWBR Architects, 645 N.W.2d at 493.
In Rhee v. Golden Home Builders, Inc., the homeowners notified their builder of
water infiltration in their new home. 617 N.W.2d 618, 620 (Minn. App. 2000). The
builder then assured the homeowners that it would fix the problem, “made numerous
unsuccessful repair attempts and repeatedly told the [homeowners] that eventually the
problem would be solved.” Id. When the homeowners finally sued, the builder
attempted to assert a statute-of-limitations defense. Id. This court held that there was a
genuine issue of material fact regarding whether the builder “is equitably estopped from
asserting a statute-of-limitations defense.” Id. at 622.
328 Barry argues that “[t]his case is on point with Rhee” because NPG assured it
that the building would be repaired. But the record contains no evidence of an assurance
from NPG to 328 Barry. Contrary to 328 Barry’s allegation, NPG’s decision to ask MOC
to perform additional work in 2009 does not provide evidence of an assurance to 328
Barry that it would correct the problem. In addition, there is no evidence that MOC or
12
any other subcontractor provided assurance to NPG. To the contrary, MOC
recommended that NPG test the windows and denied responsibility for the water
intrusion; it did not assure NPG that it would take corrective action.
Rather than being “on point with Rhee,” this case is similar to Oreck v. Harvey
Homes, Inc., 602 N.W.2d 424 (Minn. App. 1999), review denied (Minn. Jan. 25, 2000).
In Oreck, the homeowners notified their contractor of several continuing problems
involving water leakage. 602 N.W.2d at 426. The contractor examined the house, asked
a subcontractor to perform repair work, and made other suggestions regarding the
problems. Id. The homeowners sued the contractor over two years after discovering
their injuries. Id. Because there was no evidence that the contractor made assurances to
the homeowners that it would correct the problems, this court concluded that the
contractor was not equitably estopped from asserting a statute-of-limitations defense. Id.
at 429, 431. As in Oreck, there is no evidence that NPG promised to correct 328 Barry’s
water-infiltration problem and there is no evidence that NPG induced 328 Barry to delay
filing suit. See id. at 429.
Because there is no evidence that 328 Barry relied on any assurances that
corrective action would be taken, it cannot raise an equitable-estoppel argument to the
running of the statute of limitations. See BWBR Architects, 645 N.W.2d at 493. And
there is no genuine issue of material fact regarding whether equitable estoppel precluded
the district court’s grant of summary judgment to respondents. See Oreck, 602 N.W.2d at
13
428 (“[W]hen only one inference can be drawn from the facts, the question is one of
law,” rather than one for the jury. (quotation omitted)).6 We therefore affirm.
Affirmed.
6
Because we affirm the district court’s grant of summary judgment to respondents, we do
not consider respondents’ argument that the summary-judgment order could be affirmed
on alternative grounds.
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