Mark Fuhr, et al., Appellants, vs. D.A. Smith Builders, Inc., Defendant and Third-Party Plaintiff, Respondent, vs. Battin Stucco, Third-Party Defendant, Respondent.

Mark Fuhr, et al., Appellants, vs. D.A. Smith Builders, Inc., Defendant and Third-Party Plaintiff, Respondent, vs. Battin Stucco, Third-Party Defendant, Respondent. A04-2457, Court of Appeals Unpublished, December 13, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-2457

 

Mark Fuhr, et al.,
Appellants,
 
vs.
 
D.A. Smith Builders, Inc.,
Defendant and Third-Party Plaintiff,
Respondent,
 
vs.
 
Battin Stucco,
Third-Party Defendant,
Respondent.

 

Filed December 13, 2005

Affirmed in part, reversed in part, and remanded

Minge, Judge

 

Anoka County District Court

File No. C2-03-10107

 

 

Joan M. Quade, Barna, Guzy & Steffen, Ltd., 400 Northtown Financial Plaza, 200 Coon Rapids Boulevard, Coon Rapids, MN 55433 (for appellants)

 

Michael D. Hutchens, Erica Gutmann Strohl, Chad J. Stepan, Meagher & Geer, P.L.L.P., 33 South Sixth Street, 4200 Multifoods Tower, Minneapolis, MN 55402 (for respondent D.A. Smith Builders)

 

James A. Reding, Jr., Eric L. Nelson, Reding & Pilney, PLLP, 8661 Eagle Point Boulevard, Lake Elmo, MN 55042 (for respondent Battin Stucco)

 

            Considered and decided by Minge, Presiding Judge; Kalitowski, Judge; and Shumaker, Judge.

U N P U B L I S H E D  O P I N I O N

MINGE, Judge

            Mark and Jane Fuhr appeal from summary judgment denial of their claims for damages for alleged defects in the construction of their residence, claiming that the limitations period in Minn. Stat. § 541.051, subd. 1 (2004) had not run and that they did not have to give written notice of breaches of statutory warranties pursuant to Minn. Stat. § 327A.03(a) (2004).  Because factual issues exist with respect to the injuries suffered and the time of their discovery, the district court erred in granting summary judgment based on the limitations period.  Because, however, the Fuhrs have not established any exception to the written notice requirement for claims of breach of statutory warranties, we affirm summary judgment dismissing those claims.  We affirm in part, reverse in part, and remand.

FACTS

            In 1993, appellants Mark and Jane Fuhr contracted with respondent D.A. Smith Builders, Inc. (Smith) to build their home.  Acting as the general contractor, respondent Smith subcontracted with respondent Battin Stucco to apply stucco to appellants' home. Fuhrs took possession of the home in March 1994.  They found water in their basement each year. 

            In 1998, Fuhrs discovered water damage in the form of discolored sheetrock beneath the window in their dining room.   Fuhrs notified their insurer and that insurer sent an adjuster to inspect the damage.  The adjuster identified the cause of the damage as the exterior stucco crumbling and chipping under the window.  The insurer agreed to cover the interior damages, but not the repairs to the exterior of the home.

            Fuhrs removed and repaired the damaged sheetrock themselves.  Mark Fuhr does not remember whether he removed the insulation under the sheetrock or saw the sheathing behind the insulation, but he did see the studs behind the sheetrock and described them as "clean as a whistle."  To prevent future exterior stucco damage, appellants had a sealant called Dryvit applied to the exterior of their home in 1998.  Mark Fuhr claims that he contacted David Smith, from respondent Smith, and that David Smith indicated that Fuhrs should contact respondent Battin Stucco regarding these problems.  David Smith does not recall this conversation. 

            In 1998, Fuhrs brought a claim against Battin Stucco in conciliation court, seeking damages to cover the cost of the repairs and the Dryvit application.  The conciliation court dismissed Fuhrs' case because they did not provide expert testimony on defective workmanship. 

            In November or December 2002, Fuhrs again noticed water damage near the dining room window, this time in the form of a rotted interior window sill.  Fuhrs cut a hole in the sheetrock to investigate and found "massive mold."  The studs were black and rotten.

            In early 2003, Fuhrs hired a moisture-testing service to perform an inspection of the house.  The service's report indicated mold and moisture problems not just near the dining room window but throughout the house.  The report attributed the problems to defective stucco work, including unsatisfactory caulking and improper flashing where the stucco met the other exterior surfaces, lack of a weather-resistant barrier under the stucco, and stucco installation below grade.  Respondent Smith's insurer hired a company to perform an inspection of the home, and the company's report also identified the stucco installation as the source of the problem. 

            Mark Fuhr testified that he talked to David Smith regarding these problems and may have sent him a letter.  Fuhr's notes indicate that he informed David Smith he would send a letter.  David Smith does not deny the possibility of a letter, and admits that he talked with Fuhrs about the problems in the spring of 2003 or 2004.  As early as March 2003, Mark Fuhr discussed the condition of the home with Smith's insurer, which opened a file for Fuhrs' claims.  The insurer sent a number of letters to Fuhrs and other interested parties regarding the situation and sent copies of these letters to Smith. 

            In October 2003, Fuhrs brought this action against Smith, and Smith filed a third-party complaint against Battin Stucco.  Battin Stucco brought a motion to dismiss, arguing that the disposition of the 1998 conciliation court action collaterally estopped the current claim.  The district court denied this motion.  Smith then moved for summary judgment, arguing that Fuhrs failed to bring suit within the applicable statute of limitations period and failed to provide the required written notice to respondent Smith.  Summary judgment was granted and Fuhrs appeal. 

D E C I S I O N

            When reviewing summary judgment, an appellate court asks: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  Summary judgment is proper when the evidence in the record shows there is no genuine issue of material fact and either party is entitled to a judgment as a matter of law.  Minn. R. Civ. P. 56.03; DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997).  "On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted."  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).         

I.

            The first issue is whether Fuhrs' lawsuit is barred because it was not brought within the limitations period.  The statute of limitations for claims based on improvements to real property provides as follows:

            Subdivision 1. Limitation; service or construction of real property; improvements. (a) 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 . . . nor, in any event shall such a cause of action accrue more than ten years after substantial completion of construction . . . .

            (b) For purposes of paragraph (a), a cause of action accrues upon discovery of the injury . . . .

            . . . .

 

            Subd. 4. Applicability. For the purposes of actions based on breach of the statutory warranties set forth in section 327 A. 02, or to actions based on breach of an express written warranty, such actions shall be brought within two years of the discovery of the breach.

 

Minn. Stat. § 541.051 (2004).

            Under this provision, "the statute of limitations begins to run when an actionable injury is discovered or, with due diligence, should have been discovered."  Dakota v. BWBR Architects, 645 N.W.2d 487, 492 (Minn. App. 2002).  But when reasonable minds can differ about when the injury was discovered, a question of fact is presented, which renders summary judgment inappropriate.  Lake City Apartments v. Lund-Martin Co., 428 N.W.2d 110, 112 (Minn. App. 1988), review denied (Minn. Oct. 19, 1988).

            This court has held various claims time-barred under this statute when a party discovered an injury more than two years before bringing suit and then continuously experienced the injury.  See, e.g., Nolan & Nolan v. City of Eagan, 673 N.W.2d 487, 497 (Minn. App. 2003) (affirming dismissal of claim where flooding was "frequent, regular, and permanent"), review denied (Minn. Mar. 16, 2004); Metro. Life Ins. Co. v. M.A. Mortenson Cos., 545 N.W.2d 394, 399 (Minn. App. 1996) (affirming summary judgment where condition was observed "more or less continually"), review denied (Minn. May 21, 1996). 

            The Minnesota Supreme Court has also held that the statute of limitations begins to run when the injury is first discovered, even though the full extent of the injury may not be known at that time.  In Hyland Hill North Condo. Ass'n. v. Hyland Hill Co., the appellant noticed sporadic water leaks in the roof of their building, and hired a specialist to investigate.  549 N.W.2d 617, 619 (Minn. 1996) (overruled on other grounds by Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W.2d 672, 677 (Minn. 2004)).  The specialist initially told the appellant that its roof needed repairing, but then after more leakage, determined that the damage was more extensive and required replacement of the entire roof.  Id.  The supreme court upheld the district court's determination that the statute of limitations began to run when the appellant was aware of the roof leaks.  Id. at 621. 

            If an injury is continuous and becomes more serious without appearing to be corrected, the limitations period begins to run upon the initial discovery.  Summary judgment is appropriate in that situation.  But summary judgment should not be granted when the homeowner initially discovers a problem and takes corrective action that is apparently appropriate to fix the defect, and then a new injury appears and there is evidence that the new injury is different in kind, location, cause, and appropriate corrective action.  In such a situation, the finder of fact should determine whether the initial and the subsequent problem constitute the same or different injuries and when the homeowners knew or should have known of the injury for which they are claiming damages.  

            Here, there is a factual issue as to whether the injuries are the same and when appellants knew or should have known of their current injury.  In 1998, when Fuhrs first noticed water damage under the dining room window, they were told that it was caused by the stucco crumbling off the exterior of the house.  There is evidence that at that time, the studs under the window were "clean."  Fuhrs fixed what they understood to be the problem and did not experience more water damage for over four years.  They then discovered extensive mold and water damage throughout the house, and reports identified the cause of the damage as various systemic problems with the stucco installation.[1]  Summary judgment is therefore not appropriate because material facts are in varying degrees of dispute. 

            A contrary result would force Fuhrs to choose between taking what they claim was a prudent corrective action and then being barred by the statute of limitations from further claims, and undertaking an exhaustive, invasive inspection of their entire home, including tearing out sheetrock and insulation to determine whether systemic problems exist.  We do not assume that the legislature intended to require homeowners to engage in an exhaustive investigation absent facts that would place a reasonable person on notice that such an investigation is prudent.

            In Hyland Hill, the court addressed a situation where the initial injury appeared modest, and the same type of damage continued to occur.  549 N.W.2d at 619.  Here, there are indications that the cause, location and type of injury are different from the initial water damage Fuhrs discovered.  Hyland Hill does not require homeowners to choose between destructive investigative action and a loss of remedy.

            Fuhrs also argue that the law of the case doctrine bars consideration of their statute of limitations problem in this appeal.  The law of the case doctrine applies to issues actually decided.  Lange v. Nelson-Ryan Flight Serv., Inc., 263 Minn. 152, 155-56, 116 N.W.2d 266, 269 (1962).  Fuhrs contend that the law of the case doctrine precludes characterizing the extensive damage due to defective stucco work discovered in 2002 as a continuation of the damage due to stucco work discovered in 1998.  This argument is based on the district court's order of July 22, 2004, rejecting Battin Stucco's motion for dismissal.  In the proceedings leading up to that order, Battin Stucco claimed that the unsuccessful 1998 conciliation court action constituted res judicata and collaterally estopped Fuhrs' current claim.  Fuhrs now characterize that July 22, 2004 order as a ruling that their 1998 claim and their current claim are separate and distinct.

            As the previous discussion indicates, we agree that there is enough evidence that the injuries are different to reverse the summary judgment decision currently on appeal.  However, Fuhrs are taking the July 22, 2004 ruling too far by treating it as dispositive of the current summary judgment ruling.  The thrust of the July 22, 2004 order is that Fuhrs did not have a full and fair opportunity to litigate the defective stucco issues in the earlier conciliation court proceeding for several reasons.  Because the November 24, 2004 summary judgment now before us did not disturb the district court's earlier rejection of Battin Stucco's collateral estoppel and res judicata claims, we conclude that the district court's November 24 judgment does not offend the law of the case principle in this proceeding.   

II.

            The second issue is whether the district court erred in granting summary judgment dismissing Fuhrs' breach-of-statutory-warranty claims because Fuhrs did not provide written notice to respondent Smith. 

            Minn. Stat. § 327 A. 02, subd. 1 (2004), provides certain statutory warranties on new homes.  The next section of the statutes excludes from this warranty "[l]oss or damage not reported by the vendee or the owner to the vendor or the home improvement contractor in writing within six months after the vendee or the owner discovers or should have discovered the loss or damage."  Minn. Stat. § 327A.03(a) (2004).

            The district court ruled that Fuhrs failed to give written notice of their claim within the six-month period.  Fuhrs argue that they presented sufficient evidence that they provided written notice to defeat a summary judgment motion. 

There is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is 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., 566 N.W.2d at 71.  Fuhrs rely on testimony about the possibility of a letter to argue that there is a genuine issue of material fact.  Mark Fuhr testified, "I mean, I'd say more than likely not; but yeah, there may be a letter that I sent them."  Mark Fuhrs' testimony that he may have sent respondent a letter and his notes indicating he told David Smith he was going to send a letter are not sufficient to show a genuine issue of material fact. 

            Fuhrs also argue that Smith had actual notice of their claim.  Actual notice is not sufficient.  The statute itself clearly requires written notice.  "When the meaning of a statute's language is clear, we interpret the language according to its plain meaning without resorting to further construction."  Thorson v. Billy Graham Evangelistic Ass'n., 687 N.W.2d 652, 656 (Minn. App. 2004) (citing Minn. Stat. § 645.16 (2002)). 

            Fuhrs further argue that Smith received written notice of the claim when it received copies of its insurer's correspondence with Fuhrs and other parties.  Written notice from other parties is not sufficient under the language of the statute, which requires that the damage be reported "by the vendee or the owner to the vendor or the home improvement contractor."  Minn. Stat. § 327A.03(a) (emphasis added); see also Vlahos, 676 N.W.2d at 681 (citing Minn. Stat. § 327A.03(a) and noting, in dicta, that "the owner cannot recover if the owner fails to report the loss or damage to the vendor in writing within [6] months of discovery").  Summary judgment was appropriate on Fuhrs' breach-of-statutory-warranty claims.[2]      

III.

            Fuhrs contend that Smith did not request summary judgment on all of their claims, so the district court should not have granted summary judgment on all of their claims.  In its summary judgment motion, Smith argued that the two-year statute of limitations barred all of Fuhrs' claims other than those for breach of statutory warranty, which were barred by the failure to give written notice.  Because summary judgment was requested and granted on all claims, Fuhrs' argument fails. 

            The district court also granted summary judgment on grounds independent of the statute of limitations and the written notice requirement on Fuhrs' claims of deceptive trade practices, consumer fraud, fraud, intentional misrepresentation, negligent misrepresentation, and attorney fees.  Summary judgment on these other grounds was not appealed.  Therefore, on remand the claims for breach of contract, breach of express warranties (to the extent that the express warranties are independent from the statutory warranty claims disposed of above), breach of implied warranties, and negligence remain for consideration.

            Affirmed in part, reversed in part, and remanded.

[1] We note that there is evidence of water in the basement each year.  There is no claim that this condition is related to, caused by or part of the stucco work or is otherwise part of the problems involved in this proceeding. 

[2] There is no claim that Fuhrs gave any written notice to Smith's insurer.  In an appropriate case, there might be a basis for estoppel or waiver of written notice when the builder or the insurer, as its agent, acknowledges the homeowner's claim.  Cf. Hyland Hill, 549 N.W.2d at 619-20.  We do not consider this argument because it was not presented in this case.