Opinion
No. A03-1135.
Filed April 6, 2004.
Appeal from the District Court, Hennepin County, File No. CT-02-008806.
David D. Hammargren, Hammargren Meyer, P.A., and Nicholas Klehr, (for appellants)
James D. Knudsen, Leo I. Brisbois, Stich, Angell, Kreidler Dodge, Pa, (for respondent Kroiss Construction)
Todd Nissen, Drawe Heisick, (for respondent Stephen R. Kroiss)
Considered and decided by Klaphake, Presiding Judge, Toussaint, Chief Judge, and Randall, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
On appeal from summary judgment in this construction dispute, appellants argue that (1) fact issues exist regarding whether they sued within the two years of the discovery of their injuries; and (2) their cause of action is not time barred because the prior owners of the home did not have knowledge of any injuries sufficient to maintain a cause of action against respondent Kroiss. We affirm.
FACTS
In 1994, Respondent Kroiss Construction, a Minnesota corporation d/b/a S. Kroiss Homes completed construction of a home located in Eden Prairie. The home was originally built as a model home, and on or about August 22, 1994, Joe and Donna Kroeninger purchased it. The Kroeningers eventually sold the home to Paul and Judith Kelly (the Kellys), who then sold the home to Appellants Casey and Molly Oie on July 6, 1999.
In the summer of 1998, appellants first became interested in purchasing the home. During their inspection of the home that summer, appellants noticed problems with water and moisture in two rooms located in the basement, broken windows, and gutter issues. Appellants also observed discoloration to the exterior stucco of the home. The Kellys provided appellants with a property disclosure statement dated June 29, 1998, which disclosed that there was "water in the basement" of the home. Appellants hired an inspector from AmeriSpec Home Inspection Services. On August 20, 1998, the inspection by AmeriSpec was completed and the following problems were revealed:
Gutters/Downspout: Suggest installing gutters as needed for preventative maintenance. . . .
Basement Comments: Visible water noted in basement. Gutters, landscaping, sealing seams, and waterproof paint are just some of the methods that can be used to control this problem. If client desires more information a licensed contractor should be consulted. . . .
Windows: Casement, cracked/broken window noted. . . .
[Exercise Room]: Wet carpet noted, visible stains evident. . . .
[Master Bathroom Windows]: Casement, deterioration present on the sill from continued moisture buildup. . . .
[Living Room Windows]: Casement, cracked/broken window noted. . . .
Siding: Stucco, appears intact. Greenish stains which appear to be bleeding through the stucco noted. . . .
The report by AmericSpec also stated that:
Water seepage and moisture penetration are common in basements and are usually resulting from inadequate water management above ground. Most causes can be corrected by improving drainage and draining . . . Our review of the basement cannot always detect the past or future possibility of water in this area. If concerned we suggest you inquire with the owner.
Appellants contend that they decided not to purchase the home in 1998 due to financial concerns, and not because of the problems with the home. In the spring of 1999, appellants again became interested in purchasing the home. In April 1999, the Kellys provided appellants with a second property disclosure statement, which reported "minor" water in the basement of the home. The statement also indicated that the Kellys had re-landscaped the yard, installed gutters, and would replace the sump pump and drain tile. The Kellys indicated that they had had no water problems since they made these repairs.
Appellants told the Kellys they would purchase the home only if the Kellys agreed to replace the broken windows and restore the window frames by the closing date. The Kellys complied. The stucco discoloration was not repaired prior to the closing date. Appellants maintain that they were told that the water running down the side of the home caused the discoloration, and they could easily clean the stain off the wall. Appellants also stated that they noticed peeling paint on a window in the master bathroom prior to purchasing the home. Appellants believed that this was caused by moisture and water splashing onto the windowsill from the open shower and bathtub, and not by water leaking into the home from outside.
Appellants' realtor Diane Thiel began working with appellants in 1998 and continued her work with them until they purchased the home. Thiel observed and pointed out numerous problems with the home to appellants. In 1998, Thiel reported to appellants that she observed wet carpeting as well as moisture that "ran [along] much of the front of the house under the front entry, running in the exercise room and on into an unfurnished furnace area." Thiel stated that landscape and gutter work was required on the home, the boards needed to be replaced, and this information was communicated to appellants. Thiel also stated that she observed "dripping water on the furnace" of the house, and that although she could not remember, she stated that in the normal course of business she likely would have told appellants about this observation.
During the final walk-through and inspection of the home, Thiel stated that both she and appellants observed two windows in the "informal dining area that were wet at the bottom, and the paint had all come off and the sills were wet." Appellants maintain that Thiel never informed them of any moisture build-up on the two windows. They contend that the two windows in the informal dining room were replaced because they were cracked and broken, not because of moisture build-up. Appellants stated that they did not experience any problems with the windows once they were replaced. Thiel also stated that she observed bird damage to the stucco exterior prior to the closing date, and she communicated this to appellants. Appellants maintain that they were unaware of any bird damage until the spring of 2000.
Appellants believed that the Kellys' replacement of the drain tile and sump pump, installation of gutters, and re-landscaped area around the home to improve water drainage solved all of the problems identified in the AmeriSpec report. Appellants purchased the home on July 6, 1999. Between July 1999 and late summer or early fall of 2000, they did not experience any moisture problems in the basement.
In the spring of 2000, appellants contend that they began to notice damage to the exterior of the home caused by birds pecking holes into the stucco. In the late summer or early fall of 2000, appellants contend that they first noticed water infiltration during a rainstorm. They observed water coming into a window on the south side of the living room. Appellants contacted Ernie Swan of Christians, Inc. to inspect the home. After his inspection, Swan informed appellants that they had a water infiltration problem. A short time after Swan inspected the home, appellants noticed mold growing on the wall of their daughter's bedroom which is located in the basement. A spray test revealed that the windows leaked and were improperly installed, which allowed water infiltration into the exterior wall cavities and into the interior of the home.
On November 13, 2001, appellants commenced a lawsuit against respondent Kroiss alleging construction defects. The claims included allegations of water leakage through and around the windows, problems with the stucco exterior of their home, breach of statutory warranty, breach of implied warranty, negligence, and deceptive trade practices. Kroiss subsequently commenced a third-party action for contribution and indemnity against Steven A. Caouette (The Lutz Company) and other subcontractors including Scott Gertijensen. Gertijensen commenced a fourth-party action against the window installer, Joe Zylman.
Kroiss brought a summary judgment motion alleging that the claims were untimely and barred by Minn. § 541.051 (2002), a statute of limitations which limits claims against entities involved in providing improvements to real property to two years from "discovery of the injury." Kroiss alleges that the two-year statute began to run on or about July 6, 1999, making November 13, 2001 untimely as a matter of law. The motion was joined formally by Steven A. Caouette, and informally by several other third-party defendants. May 28, 2003, the district court took the matter under advisement, and on June 18, 2003, the court issued an order granting Kroiss' motion. The court found that the statute of limitations barred appellants' claims because appellants had discovered aspects of the damage to their home before the July 1999 closing date. The district court dismissed the remaining motions as moot. This appeal follows.
DECISION
As a preliminary matter, we reject appellants' argument that this court should disregard respondent's brief as untimely. Respondent filed its brief five days after the expiration of the 30-day period permitted by applicable rules. See Minn. R. Civ. App. 131.01, subd. 2 (requiring respondent to serve and file a brief within 30 days after service of appellant's brief). Appellants argue that respondent's brief was due on October 15, 2002, which was 30 days after appellants' brief was personally served on September 15. But appellants filed two affidavits with their brief. One affidavit indicated that the brief was served personally on September 15, and the other affidavit indicated that the brief was served by mail on September 15. Respondent's brief was served and filed by mail on October 20. If appellants' brief was served by mail, then, because October 18 fell on a weekend, respondent's brief was timely. See Minn. R. Civ. App. P. 125.03 (three days added to prescribed period if service of triggering document is by mail); see also Minn. R. Civ. App. P. 126.01 (incorporating Minn. R. Civ. P. 6.01, which provides that if last day of prescribed period falls on Saturday, Sunday, or legal holiday, period is extended until the end of next business day). Respondent's counsel states that he calculated respondent's briefing deadline based on appellants' affidavit of service by mail, and that counsel did not become aware of the affidavit of personal service until appellants raised the issue on appeal.
Although appellants' brief was served both personally and by mail on September 15, the earlier deadline applies. See Huntsman v. Huntsman, 633 N.W.2d 852, 854 n. 1 (Minn. 2001) (noting that where notice of filing was served by facsimile transmission and by mail on same day, service was perfected on completion of facsimile transmission and rule allowing additional three days for mailing did not apply). But except for the time to file a notice of appeal, the appellate court may permit an act to be done after the expiration of the prescribed time if the failure to act was excusable under the circumstances. Minn. R. Civ. App. P. 126.02. In view of the confusion created by appellants' counsel's decision to serve their brief both personally and by mail, any error by respondent's counsel was excusable. In addition, appellants did not file a response to respondent's motion to accept the brief; they have failed to demonstrate any prejudice if respondent's brief is accepted. Cf. Minn. R. Civ. P. 61 (requiring harmless error to be ignored).
1. Standard of Review
When reviewing a district court's order granting summary judgment, the appellate court reviews the record to determine whether any genuine issues of material fact exist and whether the district court properly applied the law. Patterson v. Wu Family Corp., 608 N.W.2d 863, 866 (Minn. 2000). When deciding whether or not a material-fact issue exists, the evidence is viewed in the light most favorable to the nonmoving party. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). A material-fact issue does not exist when the non-moving party presents evidence that only creates a "metaphysical doubt as to a factual issue," not "sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions." DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). The interpretation of a statute is a legal determination that this court reviews de novo. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). The relevant statute provides:
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, nor any action for contribution or indemnity for damages sustained on account of the injury, 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 or, in the case of an action for contribution or indemnity, accrual of the cause of action, nor, in any event shall such a cause of action accrue more than ten years after substantial completion of the construction.
Minn. Stat. § 541.051, subd. 1(a) (2002). 2. Notice of the Injury
The current version of the statute is identical to the statute in effect at the time appellants purchased the home and filed this action. For clarity, this opinion refers to the current version of the statute.
Appellants argue that fact issues exist about when they had knowledge of injuries sufficient to maintain a cause of action against respondent Kroiss. Respondent argues that the evidence indicates that appellants knew about the water infiltration problems when they purchased the home. The district court concluded that appellants knew or should have known of the construction defects when they assumed ownership on July 6, 1999. Thus, the district court found the November 13, 2001 suit was untimely. The district court decided that no fact issue existed as to whether or not appellants knew of water penetration problems for purposes of initiating the two-year statute of limitations period.
"When reasonable minds may differ about the discovery of the injury or condition, the issue is one for the trier of fact." Metro. Life Ins. Co. v. M.A. Mortenson Companies, Inc., 545 N.W.2d 394, 399 (Minn. App. 1996) review denied (Minn. May 21, 1996). In Metro. Life, the defect was leaking windows. Id. at 397. This court affirmed the district court's grant of summary judgment stating that:
The facts here do not include a temporary solution or cessation of the injury. The building engineer testified that he observed the condition "more or less continually" after late 1987 or early 1988. Met Life's water problem was neither intermittent nor thought to be insignificant, and its discovery occurred more than two years before Met Life brought this action.
Id. at 399.
Here, appellants concede that the problems they were aware of when they assumed ownership of the home in 1999 were similar to the damage they discovered in 2000. But appellants contend that the earlier problems were minor, unrelated, and, thus, the statute did not begin to run until the year 2000, making their November 2001 lawsuit timely within the statute. Appellants provided no evidence to support their contention that the problems in 2000 were unrelated to problems they were aware of in the summer of 1999 and before, when they viewed the house and ultimately purchased it. Appellants had discussed the water problems with the Kellys. The Kellys provided appellants with two separate disclosure statements stating that there was water present in the basement of the home. Appellants also hired an inspector who reported to appellants the presence of water in the basement. Appellants conceded that they knew about the water and moisture in the basement, and the stucco discoloration. The district court concluded that these facts placed them on notice and, thus, the two-year statute was triggered at that time. Accordingly, the district court determined that appellants had notice of the injury to the house more than two years prior to appellants' initiation of the lawsuit. The district court did not err in granting summary judgment.
3. Statute of Limitations
Appellants also argue that the district court erred by imputing that the Kellys had knowledge of injuries to appellants, thereby barring appellants' cause of action under the statute of limitations.
The Minnesota Supreme Court is currently reviewing this court's recent decision in Vlahos vs. RI Construction, Inc., 658 N.W.2d 917, 921-22 (Minn. App. 2003) review granted (Minn. Jun. 17, 2003), where this court held that a previous owners' knowledge of water damage to a home could be imputed to the current home owners for purposes of the statute of limitations. The court determined that Minn. Stat. § 541.051, subd. 1(a) used the terms "any person" and "any injury" instead of the "claimant's injury" or "discovery of the injury by claimant" so that the previous owners notice of the injury was imputed to the current owners. Id. Appellants argue that this case is unlike Vlahos because the Kellys did not know about "construction defects," did not experience significant water infiltrations, and did not make the repairs due to water infiltration. Respondent contends that this court need not rely on Vlahos because the material facts in this case and the controlling rules of law independently support summary judgment. We agree with respondent.
Respondent argues that it is not necessary that the claimant know the exact cause of the injury, "because it is knowledge of the injury, not the defect, which triggers the statute of limitations." Dakota County v. BWBR Architects, 645 N.W.2d 487, 492 (Minn. App. 2002) review denied (Minn. Aug. 20, 2002).
In BWBR, appellant Dakota County entered into a contract with the respondent BWBR Architects, Inc., to design a new building. 645 N.W.2d at 490. Dakota County maintenance workers were notified about leaks in the building, and between 1992 and 1994, they issued more than two-dozen work orders in order to repair leaks or water infiltration in the building. Id. On September 15, 1994, a Dakota County maintenance supervisor sent a letter to BWBR asking that they investigate and repair a chronic leak. Id. On October 7, 1994, the supervisor met with BWBR to discuss the water problems. Id. at 491. The appellant then initiated a lawsuit against BWBR on November 23, 1998. Id. The district court determined that an actionable injury existed at least as of 1994. Id. at 493. Accordingly, this court affirmed the district court's granting of summary judgment for the respondent based on the fact that the two-year statute of limitations period had passed by 1998. Id.
Whether the Kellys knew about any water infiltration and whether this knowledge is imputed to appellants is not essential because appellants were aware of an actionable injury by at least July 6, 1999, when they purchased the home. Appellants argue that BWBR, is distinguishable because the problems they were aware of in 1999 were minor, isolated and unrelated to the construction defects and building code violations they discovered in 2000. Appellants offer no evidence to support this argument. Instead, they rely on the report submitted by the inspector which stated "[w]ater seepage and moisture penetration are common in basements and are usually resulting from inadequate water management above ground. Most causes can be corrected by improving drainage and draining." But the sentence immediately preceding states, "[o]ur review of the basement cannot always detect the past or future possibility of water in this area."
The notice issue is close, but we conclude the district court did not err by finding appellants were aware of water damage in the house by at least July 6, 1999, and they knew enough about potential damage to trigger the statute.
It was reasonable for the district court to conclude that the injuries present in 2000, existed in 1999, and that appellants were aware of them. The district court properly found that the statute of limitations began to run at least by July 6, 1999, and that appellants are barred from bringing this action by the applicable statute of limitations.
4. Thiel's Testimony
As part of their argument, appellants contend that summary judgment was inappropriate because there is a factual dispute between their testimony and affidavits, and the testimony of their real estate agent Diane Thiel. Respondent counters by arguing that because Thiel was appellants' real estate agent, any observations or information she maintained was communicated to appellants is admissible against them as admissions against interest. See Minn. R. Evid. 801(d)(1)(D) (2002). Respondent argues that Thiel's testimony is essentially imputed as appellants' testimony, and therefore, appellants cannot create a dispute of a material fact by submitting affidavits that refute Thiel's testimony. We do not need to resolve the issue of "imputed testimony." Thiel's testimony and appellants' testimony and affidavits submitted to the district court are not inconsistent as to the material facts of this case. Appellants contend that a material issue fact exists because Thiel stated that she and appellants noticed two wet windows during the final walk through of the home, while appellants claim that they were unaware of moisture build-up on the two windows in the informal dining room. But appellants knew that the windows were broken and needed to be replaced. Appellants refused to buy the home unless the Kellys agreed to replace all of the broken windows in the home. Appellants also maintain that a material issue of fact exists because Thiel stated that she observed and communicated to appellants that the stucco had suffered bird damage in 1999, while they contend that they did not notice the bird damage until spring of 2000. Appellants were aware of stucco discoloration to the exterior of the home as well as other problems with the home by July of 1999. Given the record, the district court correctly concluded that no genuine issue of material fact existed as to when appellants knew about the water infiltration and other problems with house. See Russ, 566 N.W.2d at 69 (Minn. 1997) (stating that no issue of material fact exists where the record taken as whole could not lead the fact finder to find for the nonmoving party and a genuine issue for trial is not established by substantial evidence).