Bruce L. Hilke, et al., Appellants, vs. Three Rivers Dairy and Farm, Inc., Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C6-02-1646

 

Bruce L. Hilke, et al.,

Appellants,

 

vs.

 

Three Rivers Dairy and Farm, Inc.,

Respondent.

 

Filed June 9, 2003

Reversed and remanded Willis, Judge

 

Winona County District Court

File No. C9991764

 

 

B.J. Hammarback, Daniel P. Murray, Michelle W. Heckmann, Hammarback, Murray & Jacobson, S.C., 714 North Main Street, P.O. Box 467, River Falls, WI 54022 (for appellants)

 

Peter C. Sandberg, Dunlap and Seeger, P.A., 206 South Broadway, 505 First Federal Bank Building, P.O. Box 549, Rochester, MN  55903-0549 (for respondent)

 

            Considered and decided by Anderson, Presiding Judge, Schumacher, Judge, and Willis, Judge.

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

            In this appeal from the district court's grant of respondent's motion for judgment notwithstanding the verdict (JNOV), appellants contend that the district court's findings of fact supporting its application of the two-year statute of limitations in Minn. Stat. § 541.051, subd. 1 (2002), are clearly erroneous.  We reverse the district court's grant of JNOV and remand for reinstatement of the jury's verdict.

FACTS

Appellants Bruce and Wendy Hilke are dairy farmers in Altura, Minnesota.  In the mid-1990s, the Hilkes became interested in purchasing new milking equipment that would make it easier to expand their herd and allow them to use hired help and thereby spend more time with their children.

            Before 1995, the Hilkes' farm had a stanchion barn, in which milking equipment had to be taken from cow to cow.  In 1995, the Hilkes decided to create a flat barn parlor, in which cows could instead be led to the milking equipment.  The Hilkes entered into an agreement with respondent Three Rivers Dairy and Farm, Inc. ("Three Rivers") for the purchase and installation of the equipment necessary for the flat barn parlor.  Three Rivers is a partnership among John Peterson, Dave Peterson, and a third person.  The Hilkes at the same time entered into a separate agreement with Dave Peterson and the construction company that he operated to remodel and convert the existing barn into a flat barn parlor.

            By January 1996, Three Rivers had installed new milking units and a vacuum sensor in the barn and had adjusted the existing milk line, used to transport milk from the units to the receiver jar.  Soon thereafter, the farm's milk production began to decline.  Over the next three years, the Hilkes tried to remedy the problem but milk production did not improve.  Finally, in November 1999, an engineer inspected the system and concluded that the slope of the milk line was incorrect, causing milk to back up in the milk line due to a lack of gravity and thus causing fluctuation in vacuum pressure at the teat ends of the milking units.  The engineer recommended readjusting the slope of the milk line, relocating the vacuum sensor, and lowering the receiver jar.  Immediately after the Hilkes made the recommended changes, production improved.

            In December 1999, the Hilkes commenced this suit against Three Rivers, alleging negligence and breach of contract in the installation of the milking units.  Three Rivers asserted the defense of statute of limitations.  Four days before the April 2002 trial, Three Rivers moved for a directed verdict, arguing that the suit was time barred by the two-year statute of limitations provided by Minn. Stat. § 541.051, subd. 1 (2000), for actions arising from improvements to real property.  The Hilkes argued that the general six-year statute of limitations in Minn. Stat. § 541.05, subd. 1 (2000), applied instead.  The district court delayed consideration of the motion until after the trial, in which the jury found for the Hilkes and awarded them $627,000 in damages.  Three Rivers moved for JNOV, arguing again that the suit was time barred by the two-year statute of limitations.

The district court found that because the Hilkes purchased the new milking units to expand their herd and use hired help, the purchase enhanced the value of the Hilkes' barn and was thus an "improvement to real property," requiring application of the two-year statute of limitations.  The district court granted Three Rivers' JNOV motion, and this appeal follows.

D E C I S I O N

Whether the district court erred by granting JNOV presents a question of law, which we review de novo.  See Diesen v. Hessburg, 455 N.W.2d 446, 449 (Minn. 1990).  But we will set aside the district court's findings of fact supporting the grant of JNOV only if they are clearly erroneous and lacking in reasonable evidentiary support.  See Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999).

            The Hilkes maintain that they properly commenced this action within the six-year statute of limitations provided by Minn. Stat. § 541.05, subd. 1 (2002).  But in granting Three Rivers' JNOV motion, the district court concluded that the two-year statute of limitations set forth in Minn. Stat. § 541.051, subd. 1 (2002), applies.  That statute provides that no action to recover damages "arising out of the defective and unsafe condition of an improvement to real property" shall be brought more than two years after discovery of the injury.  Id., subd. 1(a).  While strict construction of Minn. Stat. § 541.051, subd. 1, is appropriate, courts must give effect to the plain meaning of the statute without resort to technical legal constructions of its terms.  Pac. Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 554 (Minn. 1977).

            Relying on language in Brandt v. Hallwood Mgmt. Co., 560 N.W.2d 396 (Minn. App. 1997), review denied (Minn. June 11, 1997), the district court appears to have concluded that any activity that enhances the value of real property constitutes an improvement under Minn. Stat. § 541.051, subd. 1.  But in Brandt this court held that where "the individual does not install any item or fixture that permanently alters real property, there is no improvement to real property" under Minn. Stat. § 541.051, subd. 1.  Id. at 397 (emphasis added).  Furthermore, the supreme court's definition of "improvement," which this court followed in Brandt, refers to a

"permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor and money and is designed to make the property more useful and valuable as distinguished from ordinary repairs."

 

Id. at 400 (emphasis added) (quoting Pac. Indem., 260 N.W.2d at 554 (quotation omitted)).  Thus, whether the purchase and installation of the milking units enhanced the value of the Hilkes' barn is irrelevant if the purchase and installation did not constitute a permanent addition to or betterment of the barn.

            In many instances, Minnesota appellate courts have concluded that equipment installed on real property constitutes a permanent addition to or betterment of the property, requiring application of the two-year statute of limitations.  See, e.g., Sartori v. Harnischfeger Corp., 432 N.W.2d 448, 452 (Minn. 1988) (overhead rail crane installed at mine); Kline v. Doughboy Recreational Mfg. Co., 495 N.W.2d 435, 438 (Minn. App. 1993) (above-ground swimming pool); Patton v. Yarrington, 472 N.W.2d 157, 160 (Minn. App. 1991) (smoke detectors "permanently wired" into duplex's electrical system), review denied (Minn. Aug. 29, 1991); Johnson v. Steele-Waseca Coop. Elec., 469 N.W.2d 517, 519 (Minn. App. 1991) (electrical equipment and wiring installed in barn), review denied (Minn. July 24, 1991).  But see, e.g., Ritter v. Abbey-Etna Mach. Co., 483 N.W.2d 91, 93 (Minn. App. 1992) (holding that steel-tube mill in factory was not permanent addition or betterment), review denied (Minn. June 10, 1992).

The Hilkes' contract with Three Rivers concerned exclusively the purchase of new milking units and the connection of those units to the existing equipment in the Hilkes' barn.  The new milking units are easily portable:  a photograph admitted as evidence at trial shows that the units are affixed to the barn merely by hanging them on a hook or length of pipe.  No significant change in the preexisting milk line, other than adjusting its slope and length, was required.  Three Rivers replaced the existing vacuum line, to which the milking units are also connected, with a different type of PVC tubing, but this was simply an adjustment made to accommodate the new units and furthermore did not cause the "defective and unsafe condition" from which the Hilkes' claim arises.  The more permanent changes to the barnthe removal and discarding of the stalls and stanchionswere performed under a wholly separate contract, involving a different entity, that is not at issue in this suit.  The evidence thus convinces us that the purchase and installation of the milking units did not amount to a permanent addition to or betterment of the Hilkes' barn.

After reviewing the record, we are left with a definite and firm conviction that the district court mistakenly found that the Hilkes' suit arises from an improvement to real property, requiring application of the two-year statute of limitations in Minn. Stat. § 541.051, subd. 1.  See Fletcher, 589 N.W.2d at 101.  We conclude, therefore, that the district court's application of the two-year statute of limitations was based on a clearly erroneous finding of fact, and we need not consider the Hilkes' alternative arguments.  We accordingly reverse the grant of JNOV and remand for reinstatement of the jury's verdict.

            Reversed and remanded.