Greenbrier Village Condominium Two Ass'n v. Keller Investment, Inc.

Citations: 409 N.W.2d 519; 1987 Minn. App. LEXIS 4577Docket: No. C0-87-104

Court: Court of Appeals of Minnesota; July 21, 1987; Minnesota; State Appellate Court

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Condominium homeowners’ association filed a lawsuit on behalf of itself and unit owners against the seller, developer, architect, general contractor, and certain subcontractors, citing defects in the building under Minn. Stat. 515A.3-102(a)(4). Allegations included breach of contract, negligent design and construction, and breach of warranties. The trial court granted summary judgment to defendants, applying the two-year statute of limitations from Minn. Stat. 541.051, subd. 1, and the association appealed the decision, which was ultimately affirmed. 

The Greenbrier Village Condominium Two, a 70-unit building completed in 1977, was sold to the association. In September 1983, the association identified various defects, such as inadequate roof flashing, health hazards from basement ceiling mortar, sunken patios, lack of expansion joints, cracks in units, settled entrance walk, water leaks, and rusted flashing. The respondents contended that the claims were barred by the statute of limitations, showcasing evidence that the defects were known prior to September 1981. Key evidence included a May 12, 1981, memorandum from the condominium's Maintenance Committee detailing concerns about sinking patios, rusting metal, and structural cracks, as well as a letter from the building inspector regarding previous inspections for these issues. Additional board meeting minutes from 1980 and 1981 confirmed ongoing discussions and attempts to address the identified problems.

On March 4, 1981, Don Semple reported multiple homeowner complaints regarding structural issues in the building, particularly concerning settling first-floor terraces and rusting trim. By April 1, 1981, Les Dahl was expected to provide updates on these structural problems. At a May 6, 1981 HOA meeting, it was revealed that a contractor estimated $100,000 to address the structural deficiencies in Building 3 (appellant Greenbrier is Building 6). Condo attorney Mr. Eide was scheduled to discuss legal standing with Keller. Additional concerns included cracks on the deck wall and patio floor, with a recommendation to consult an outside contractor regarding the cause. Discussions also noted the need to investigate water damage to the flashing on the roof.

By June 3, 1981, the group considered hiring an engineering firm for $1,600 to document the issues for presentation to Keller. Agreement was reached to pursue this survey. On July 1, 1981, the original engineering firm was deemed unsuitable, prompting the search for another firm to assist four buildings. By August 5, 1981, Les Dahl had communicated with the City Engineer about the building problems, resulting in an agreement from Mr. Keller to provide a new metal chimney.

Respondents sought summary judgment, arguing that Greenbrier's claims fell under the two-year statute of limitations in Minn. Stat. 541.051 (1980) and that Greenbrier became aware of the defects before September 1981. The trial court granted summary judgment, leading to Greenbrier's appeal on two issues: whether Minn. Stat. 541.061, subd. 1, restricts claims for damages due to defective workmanship in property improvements, and whether the trial court mistakenly determined that Greenbrier discovered the defects more than two years prior to filing suit. The appellate court's role is to assess if genuine material facts exist for trial and whether the trial court correctly applied the law. Greenbrier argued that the trial court wrongly applied the two-year statute of limitations to defective workmanship claims, but the court upheld that the legislative amendments to section 541.051 indicate an intent to limit such actions. Section 541.051, subd. 1 specifies that actions for damages related to defective improvements must be initiated within two years of discovery, barring fraud-related claims.

The Minnesota Supreme Court's interpretation of section 541.051, first established in Kittson County v. Wells, Denbrook Associates, Inc., clarified that the statute, which limits actions for property damage or bodily injury due to defective improvements to real property to two years after discovery, did not initially specify the types of actions or parties included in its limitations. In Kittson, the court reversed a trial court's summary judgment that restricted the statute's application to warranty and contract claims, determining that it applied only to tort actions by non-privity parties. The court noted that other jurisdictions included broader language in similar statutes, which the Minnesota legislature later adopted in 1980 by amending section 541.051 to explicitly include claims in "contract, tort, or otherwise." Greenbrier's argument that the absence of certain language from the New Jersey statute indicated an intent to exclude deficient workmanship claims was rejected, as the amended statute was deemed sufficiently broad to encompass such actions. Consequently, the trial court's ruling that the two-year statute of limitations applied to Greenbrier’s claim was upheld.

Greenbrier argues that the trial court incorrectly determined that defects were discovered before September 1981. However, evidence, including a May 12, 1981 memo and meeting minutes, supports the trial court's conclusion. Citing Bulau v. Hector Plumbing and Heating Co., the Minnesota Supreme Court established that the statute of limitations begins at the time of the negligent act, but in Minnesota, it does not commence until damage occurs, even if the full extent of damages is unknown. Section 541.051 requires that a defective condition be discovered before the two-year limitation period begins. The court clarified that the limitation period starts when a plaintiff discovers, or reasonably should have discovered, an injury sufficient to support a cause of action, which must include allegations of breach and resulting damage.

Greenbrier's complaint identifies eight specific defects. On appeal, Greenbrier acknowledges that the discovery of sunken patios and rusted flashings is established. The other defects include inadequate flashing, hazardous basement ceiling mortar, cracks in hallways and units, settling entrance walk, and exterior leaks needing flashing or caulking. The court finds that Greenbrier discovered these additional defects before September 1981, leading to a cause of action arising at that time. Greenbrier claims these defects differ not only in degree but also in kind; however, the court insists that a cause of action existed for these defects prior to September 1981. Greenbrier's attempt to differentiate between symptoms of defective workmanship and the underlying deficiencies is rejected, as the discovery documents indicate awareness of these defects and suspicion of structural issues as early as May 12, 1981. The memo expresses belief in faulty engineering or construction and the need for professional assessment.

Greenbrier engaged various professionals regarding construction defects prior to September 1981, including contacting an engineering firm, meeting with an attorney, and discussing hiring an outside contractor. A complaint was not filed until September 1988. The Iowa Supreme Court's precedent establishes that a plaintiff's knowledge of injury does not dictate the starting point for the statute of limitations; rather, it is determined by what the plaintiff could have reasonably known. In this case, Greenbrier's discovery of defects before September 1981 initiated the statute of limitations against all defendants involved, including the developer, architect, general contractor, and subcontractors. The court found that Greenbrier's situation differed from that in Wittmer v. Ruegemer, where unique circumstances allowed for a different outcome regarding the statute of limitations. Greenbrier's argument for estoppel based on repairs was not addressed since it was not raised in the trial court. The court affirmed that the two-year statute of limitations under Minn. Stat. 541.051 applies to claims of defective workmanship, and summary judgment for the defendants was appropriate as defects were discovered over two years prior to the suit. Additionally, any new defects Greenbrier sought to introduce did not alter the outcome, and the trial court accepted a memo produced by Greenbrier as part of discovery, despite its initial objections.