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Bassford Remele is a full service litigation firm located in Minneapolis, Minnesota. Founded in 1882, the firm represents local, national and international clients in all areas of civil litigation and dispute resolution.
Case Law Update
Date: Nov 9, 2007 — Minneapolis, MN
During the week of November 9, 2007, the Minnesota appellate courts released an opinion on the following topic that may be of interest to our clients:
CONSTRUCTION - BREACH OF STATUTORY AND EXPRESS WARRANTY
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The ten-year statute of repose contained in Minn. Stat. § 541.051, subd. 1(a) applies to actions for breach of statutory new-home warranties set forth in Minn. Stat. § 327A.02.
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For purposes of the statute of repose contained in Minn. Stat. § 541.051, subd. 1(a), a cause of action for breach of statutory new-home warranties or express warranties accrues on discovery of the breach.
In 1994, plaintiffs contracted with defendant builder for the construction of a new home. The home was substantially completed on October 19, 1994. On October 12, 2004, plaintiffs hired a home inspection company to perform a moisture analysis, which revealed high levels of moisture in the home. In early 2005, plaintiffs hired a structural engineering firm to conduct a structural analysis of the home, which revealed that the home had “serious structural and fungal infestation problems[.]” In May 2005, plaintiffs sent written notice to defendant about the structural engineering report. In November 2005, plaintiffs sued defendant for negligence, breach of express and statutory warranties, breach of contract, and breach of implied warranty. The builder filed a third-party action against the window manufacturer.
Defendant and third-party defendant moved for summary judgment asserting that plaintiffs’ claims were barred by the six-month written notice requirement in Minn. Stat. § 327A.03, the two-year statute of limitations, and ten-year statute of repose contained in Minn. Stat. § 541.051, subd. 1. In response, plaintiffs conceded that their negligence, breach of contract, and breach of implied warranty claims were untimely, but contended that their express and statutory warranty claims were timely because the moisture test dated October 12, 2004, which is less than ten years after substantial completion, constituted discovery of the injury to their home.
The trial court granted summary judgment, finding that plaintiffs did not discover the structural problems with their home upon receipt of a report from their structural engineer in 2005, more than ten years after substantial completion, and therefore their statutory warranty claims under Minn. Stat. § 327A.02 were barred by the statute of repose contained in Minn. Stat. § 541.051, subd. 1. The trial court also held that plaintiffs had conceded their express warranty claims were barred by the statute of limitations.
On appeal, plaintiffs argued that the ten-year statute of repose contained in Minn. Stat. § 541.051, subd. 1 does not apply to statutory or express warranty claims; rather, they contended that Minn. Stat. § 541.051, subd. 4 applies, and that it has a twelve-year statute of repose. The Court of Appeals rejected this argument, stating that a 2004 legislative amendment made Minn. Stat. § 541.051, subd. 1 applicable to statutory and express warranty claims, thereby requiring any such claim to accrue within ten years of substantial completion of a home. The Court also reiterated that statutory and express warranty claims accrue upon discovery of a contractor’s breach (not merely upon discovery of an injury, which is the standard for all other claims related to improvements to real property).
Notwithstanding its rejection of plaintiffs’ legal arguments, the Court of Appeals reversed the grant of summary judgment and remanded the case to the trial court holding that there was no factual basis for the trial court’s finding that plaintiffs had conceded their express warranty claims, and that there were fact questions as to when plaintiffs became aware of structural defects with their home and when they became aware of the defendant’s breach of the ten-year structural warranty.
Gomez v. David A. Williams Realty & Constructing, Inc., Minnesota Court of Appeals, No. A06-2155, November 9, 2007.
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