Rachel Goetzmann, et al., Plaintiffs, vs. Domestic Development, Inc., et al., Defendants, and Domestic Development, Inc., defendant and third-party plaintiff, Appellant, vs. Bill Ratzlaff, individually and d/b/a Bill's Stucco Service, third party defendant, Respondent, Scott King, individually and d/b/a L & S Construction, third party defendant, Respondent, C. H. Carpenter Lumber, third party defendant, Respondent, Westurn Cedar Supply & Roofing, third party defendant, Respondent, Schield Brothers, Inc. d/b/a Vetter Windows and Doors, Third Party Defendant.

Rachel Goetzmann, et al., Plaintiffs, vs. Domestic Development, Inc., et al., Defendants, and Domestic Development, Inc., defendant and third-party plaintiff, Appellant, vs. Bill Ratzlaff, individually and d/b/a Bill's Stucco Service, third party defendant, Respondent, Scott King, individually and d/b/a L & S Construction, third party defendant, Respondent, C. H. Carpenter Lumber, third party defendant, Respondent, Westurn Cedar Supply & Roofing, third party defendant, Respondent, Schield Brothers, Inc. d/b/a Vetter Windows and Doors, Third Party Defendant. A06-645, Court of Appeals Unpublished, February 13, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-645

 

Rachel Goetzmann, et al.,

Plaintiffs,

 

vs.

 

Domestic Development, Inc., et al.,

Defendants,

 

and

 

Domestic Development, Inc.,

defendant and third-party plaintiff,

Appellant,

 

vs.

 

Bill Ratzlaff, individually and d/b/a Bill's Stucco Service,

third party defendant,

Respondent,

 

Scott King, individually and d/b/a L & S Construction,

third party defendant,

Respondent,

 

C. H. Carpenter Lumber,

third party defendant,

Respondent,

 

Westurn Cedar Supply & Roofing,

third party defendant,

Respondent,

 

Schield Brothers, Inc. d/b/a Vetter Windows and Doors,

Third Party Defendant.

 

Filed February 13, 2007

Affirmed

Halbrooks, Judge

 

 

Dakota County District Court

File No. C3-05-6617

 

 

Kay Nord Hunt, Barry A. O'Neil, Valerie Sims, Lommen, Abdo, Cole, King & Stageberg, P.A., 2000 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for appellant)

 

James A. Reding, Jr., James J. Ranheim, Reding & Pilney, P.L.L.P., 8661 Eagle Point Boulevard, Lake Elmo, MN 55042; and

 

Paul Wocken, Willenbring, Dahl, Wocken & Zimmermann, 318 Main Street, P.O. Box 417, Cold Spring, MN 56320 (for respondent Bill Ratzlaff, individually and d/b/a Bill's Stucco Service)

 

R. Glenn Nord, R. Glenn Nord & Associates, P.A., 20686 Holyoke Avenue, P.O. Box 427, Lakeville, MN 55044 (for respondent Scott King, individually and d/b/a L & S Construction)

 

Jeffrey A. Magnus, Law Offices of Jeffrey A. Magnus, 340 Grandview Square, 5201 Eden Avenue, Edina, MN 55436 (for respondent C. H. Carpenter Lumber)

 

Timothy R. Murphy, Cara C. Passaro, O'Neill & Murphy, 1050 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (for respondent Westurn Cedar Supply & Roofing)

 

 

            Considered and decided by Halbrooks, Presiding Judge; Randall, Judge; and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellant challenges the district court's grant of summary judgment to respondents on the grounds that the district court erred in its determination that appellant's settlement agreement with the Goetzmanns is a Pierringer release that eliminated appellant's third-party claims against respondents and that appellant's claims are time-barred by operation of Minn. Stat. § 541.051 (2002).  Because we conclude that the district court did not err, we affirm.

FACTS

            The underlying facts in this matter are undisputed.  Appellant Domestic Development, Inc., a general contractor, built a home at 1626 Murphy Parkway in Eagan.  The home was substantially complete on April 29, 1993.  Rachel and Michael Goetzmann purchased the home in 2000.  In March 2004, the Goetzmanns discovered water-intrusion damage to their home.  As a result, they brought suit against appellant in May 2004, asserting claims of negligence, breach of statutory warranty, and breach of contract.  In February 2005, appellant initiated third-party actions against several subcontractors, including respondents Bill Ratzlaff, doing business as Bill's Stucco Service; Scott King, doing business as L & S Construction; C. H. Carpenter Lumber; Westurn Cedar Supply & Roofing; and Schield Brothers, Inc.,[1] doing business as Vetter Windows and Doors.  The Goetzmanns never asserted any direct claims against the respondents.

            The Goetzmanns and appellant negotiated a settlement of the Goetzmanns' claims on June 29, 2005.  In exchange for appellant's payment of $147,500 to the Goetzmanns, the parties released each other from any and all claims, and the Goetzmanns assigned any claims that they had or might have against respondents to appellant.  Appellant, in turn, agreed to hold the Goetzmanns harmless to the extent of any indemnity or contribution claims.  The Goetzmanns signed the settlement agreement in July 2005 and received the settlement proceeds.  When Vetter Windows requested a copy of the settlement agreement, appellant's counsel advised Vetter Windows that the agreement was being executed, although appellant had not yet signed it, and that the Goetzmanns had sold their house.  Based on the settlement agreement's reference to a Pierringer release,[2] Vetter Windows moved for summary judgment, and the other respondents, with the exception of Scott King, individually and d/b/a L & S Construction, joined.[3] 

            In response to the summary-judgment motion, the Goetzmanns and appellant revised the language in the settlement agreement in order to clarify their intent that appellant would retain its third-party claims against respondents.  Unlike the first settlement agreement, the revised agreement made no reference to a Pierringer release or its effect.  Appellant provided an unsigned copy of the revised settlement agreement to the district court at the summary-judgment hearing on September 27, 2005.  A fully executed copy of the settlement agreement was then submitted to the district court by appellant's counsel in a letter dated October 28, 2005. 

The district court granted summary judgment for respondents.  Appellant sought reconsideration, but the district court denied reconsideration and ordered dismissal.  This appeal follows.

D E C I S I O N

I.

            Appellant contends that the language of the revised settlement agreement accurately reflects the terms of its settlement with the Geotzmanns and that the district court erred in determining that the first settlement agreement applies.  Appellant also argues that the district court's determination that the settlement agreement is a Pierringer release that extinguishes its claims for contribution and indemnity is error. 

            The first settlement agreement, which the Goetzmanns signed in July 2005, stated that it was the parties' intent "to settle and release all of the claims by [the Goetzmanns] against [appellant], while preserving [appellant's] ability and right to pursue any and all claims against [respondents] or any other subcontractor, supplier or manufacturer."  The agreement also provided:

4.         In executing this Agreement and accepting the payment referenced above, [the Goetzmanns] hereby assign any and all claims relating to the Property that they have or may have against any of the [respondents] or any other subcontractors, suppliers or parties to [appellant].  In consideration for the above-mentioned Release and this Assignment, if [appellant] asserts a claim against a third party for indemnification or contribution arising out of the construction of the Property, then this Agreement shall act as a "Pierringer" release, and [appellant] shall defend, indemnify and hold the [Goetzmanns] harmless to the extent of that claim for indemnification or contribution.  It is the intention of the parties that this paragraph be construed in accord with the principles of Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963) and Frey v. Snelgrove, 269 N.W.2d 918 (Minn. 1978).

 

In addition, the agreement stated that "The parties agree that this Agreement fully and finally resolves the claims by the [Goetzmanns] against [appellant] in the Lawsuit but otherwise has no effect on the direct and assigned claims by [appellant] against the [respondents] in the Lawsuit or any other subcontractor, supplier, manufacturer or party." 

            The revised settlement agreement stated that

it is the desire and specific intent of the [Goetzmanns] and [appellant], the only parties to this Agreement, to settle and release all of the claims by [the Goetzmanns] against [appellant] and all other [respondents], subcontractors, suppliers and manufacturers, while preserving [appellant's] ability and right to pursue any and all claims in contribution and/or indemnity against the various [respondents] or any other subcontractor, supplier or manufacturer.

 

. . . .

 

5.         In executing this Agreement and accepting the payment referenced above, [the Goetzmanns] hereby release any and all claims they have against any and all parties, including [appellant and respondents] and any other subcontractors, suppliers or manufacturers relating to the construction of the Property.

 

6.         In consideration for the above-mentioned Release, if any party asserts a claim against [the Goetzmanns] for indemnification or contribution arising out of the construction of the Property, [appellant] shall defend, indemnify and hold the [Goetzmanns] harmless to the extent of that claim for indemnification or contribution.

 

. . . .

 

9.         The parties agree that this Agreement fully and finally resolves . . . all claims by the [Goetzmanns] against [appellant] and any other party in the Lawsuit and any and all subcontractors, supplier[s] and manufacturers, but otherwise has no effect [on appellant's] right or ability to seek contribution or indemnity against [respondents] in the Lawsuit or any other subcontractor, supplier, manufacturer or party.

 

            In dismissing on summary judgment appellant's third-party claims against respondents, the district court described the revised agreement as appellant's attempt to "recreate a cause of action that was previously extinguished by a release."  The district court thus found that the first settlement agreement controlled. 

When appellant sought reconsideration, the district court indicated that it was willing to reconsider its decision "[i]f the other parties agree with [appellant's] factual assertions and everyone was aware the first settlement document was not executed."  But the district court further stated that it would not reconsider its decision if appellant's counsel drafted the first agreement with appellant's assent, sent it to the Goetzmanns for signature, and "simply did not take the formal step of having your client sign the document."  Respondents subsequently advised the district court that it was the "latter of the two scenarios" and that the motion for reconsideration should be denied. 

            We conclude that the district court did not err by finding that the first settlement agreement controls.  While appellant had not yet signed it, the Goetzmanns had signed it and received the settlement proceeds a few months before the summary-judgment hearing.  But even if the district court was in error and the revised settlement agreement is the appropriate one to consider, we conclude that the result is the same because both agreements are modified Pierringer releases. 

Pierringer releases were recognized by the Minnesota Supreme Court in Frey v. Snelgrove, 269 N.W.2d 918, 921 (Minn. 1978), as a means for a plaintiff to settle its claims with one or more of multiple defendants while permitting the trial against the nonsettling defendants to go forward.  The basic elements of a Pierringer release are:  (1) the release of the settling defendants from an action with an equivalent discharge of that part of the cause of action attributable to the settling defendants' causal negligence; (2) the reservation by the plaintiff of all legal claims against nonsettling defendants; and (3) the plaintiff's agreement to indemnify the settling defendants from any claims of contribution made by nonsettling parties and to satisfy any judgment obtained from the nonsettling defendants to the extent that the settling defendants have been released.  Frey, 269 N.W.2d at 921 n.1.  "The legal effect of the Pierringer release is that each tortfeasor pays only its proportionate share of liability, and no more, and, thus, there can be no liability for contribution."  Bunce v. A.P.I., Inc., 696 N.W.2d 852, 856 (Minn. App. 2005).

We are guided in our analysis by this court's decision in Bunce.  In Bunce, the plaintiff used a Pierringer release to settle his personal-injury claim against A.P.I., Inc., one of 14 defendants that manufactured, sold, or distributed products that contained asbestos.  Id. at 854.  The settlement agreement stated, in part:

It is understood and agreed that the purpose, intent, and legal effect of this document is to bar forever any recovery, contribution, indemnity, or subrogation against releasees by any other party as a result of the accident except and other than such elements as are cognizable under the workers compensation statute and in accordance with NAIG [Naig] v. Bloomington Sanitation, 258 N.W.2d 891 (1977).  It is further understood and agreed that this document shall have the same effect as the releases described in [Pierringer] and in [Frey], and shall be so construed.

 

            . . . .

 

This release is intended to release only [Bunce's] claim against [A.P.I., Inc.].  [Bunce] expressly reserve[s] the balance of the whole cause of action or any other claim of whatever kind or nature not released which [Bunce] may have or hereafter have against any other persons or entities arising out of the above-described dispute.  It is also specifically agreed that [A.P.I., Inc.] reserve all claims [A.P.I., Inc.] may have for contribution, indemnity, or subrogation against other persons or entities who may be found liable to [Bunce], or who may be jointly or severally liable to [Bunce] with [A.P.I., Inc.].

 

Id. at 857 (alterations in original).[4] 

            Prior to the settlement, A.P.I. asserted third-party claims for contribution and indemnity against several entities that had not been sued directly by Bunce.  Id. at 854.  Following Bunce's settlement with A.P.I., those entities moved for summary judgment on the ground that, because of the Pierringer release, A.P.I. no longer had claims for contribution or indemnity.  Id.  The district court denied the motion but certified the question to this court as one that was important and doubtful under Minn. R. Civ. App. P. 103.03(i).  Id.

            A.P.I. acknowledged before this court that, if the settlement agreement had been a standard Pierringer agreement, it would lose on the merits.  Id. at 857.  But A.P.I. contended that because this agreement was a "modified" Pierringer that explicitly reserved its contribution and indemnity claims against entities that had not been sued directly by Bunce, the outcome was different.  Id.

            We disagreed, concluding that A.P.I.'s distinction was without a difference in the long-settled law of Pierringer releases.  Id. at 857-58.  We noted that "[A.P.I.] crafted its own legal theory to attempt to build in a chance to recoup more money, while remaining absolutely immune from having to pay anybody one dollar more than it paid Bunce, the original plaintiff.  Under Pierringer/Frey, it just can't be done."  Id. at 858.

            The circumstances here are strikingly similar to those in Bunce.  Appellant crafted settlement language in both agreements that settled the Goetzmanns' claims against it but preserved its third-party claims against respondents.  Because we conclude that these agreements are modified Pierringer releases, appellant has paid no more than its fair share of the common liability to the Goetzmanns.  Therefore, appellant has no remaining third-party claims.  The district court did not err in its ruling.

II.

            Appellant also argues that the district court erred by determining that its claims for contribution and indemnity are time-barred by Minn. Stat. § 541.051 (2002)[5] and that the district court's decision unconstitutionally deprives it of due process.[6]  The construction or application of a statute is a question of law, which we review de novo.  Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).

            Minn. Stat. § 541.051 (2002) provides:

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 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.  Date of substantial completion shall be determined by the date when construction is sufficiently completed so that the owner or the owner's representative can occupy or use the improvement for the intended purpose.

                        (b) For purposes of paragraph (a), a cause of action accrues upon discovery of the injury or, in the case of an action for contribution or indemnity, upon payment of a final judgment, arbitration award, or settlement arising out of the defective and unsafe condition.

                        . . . .

 

                        Subd. 2.  Action allowed; limitation.  Notwithstanding the provisions of subdivision 1, in the case of an action which accrues during the ninth or tenth year after substantial completion of the construction, an action to recover damages may be brought within two years after the date on which the action accrued, but in no event may an action be brought more than 12 years after substantial completion of the construction.

 

(Emphasis added.)

 

            Following briefing, but before oral arguments in this matter, the supreme court decided Weston v. McWilliams & Assocs., Inc., 716 N.W.2d 634 (Minn. 2006).  The issue in Weston required the supreme court "to determine the proper application of the statute of repose to contribution and indemnity claims by a general contractor against subcontractors or material suppliers arising out of an improvement to real property" under the 2002 version of section 541.051.  Weston, 716 N.W.2d at 636. 

            The underlying facts in Weston were undisputed.  Id. at 637.  The construction of the home involved was substantially completed in July 1993.  Id.  In May 2003, the homeowners sued the general contractor for damages based on water-intrusion problems that resulted in the growth of mold and resulting health problems for the homeowners.  Id.  The general contractor answered the complaint on January 30, 2004.  Id.  In March and April 2004, the general contractor sued several subcontractors for contribution and indemnity.  Id.

            One of the subcontractors moved for summary judgment on the ground that the third-party action was extinguished because it was not brought within the ten-year repose period.  Id.  The district court granted summary judgment.  Id.  We reversed, concluding that pursuant to the statute, a claim for contribution and indemnity could be timely brought in the eleventh or twelfth year after completion of construction.  Id. at 638.

            The supreme court granted review and reversed this court, reinstating the district court's dismissal of the claim.  Id. at 638, 645.  The supreme court held that the statute was unambiguous and that

the plain meaning of accrual does not confound a clear legislative purpose; to the contrary, it accomplishes the clear legislative purpose of preventing the accrual of a cause of action after a specified period of time from the completion of construction.

 

                        [General contractor] also argues that it had no control over when it could bring its contribution and indemnity claims because they are derivative of the underlying injury action and it had no control over when the injury action was commenced.  That argument presents a distinction that the legislature could have recognized, but did not.  We agree with [subcontractor's] assertion that, had the legislature wanted to declare a separate and different repose period for contribution and indemnity claims, it could have done so explicitly.

 

Id. at 638, 639.  Accordingly, the supreme court held that

the repose provision of section 541.051, subd. 1(a), bars a contribution and indemnity claim that has not accrued (i.e., where the principal claim has not been paid) and has not been brought within the 10 years from the completion of the construction.

 

Id. at 640 (footnote omitted).

            In this case, the home was substantially complete on April 29, 1993.  Appellant settled with and paid a settlement to the Goetzmanns in July 2005.  Because appellant's claims for contribution and indemnity had not accrued and were not brought within ten years of the completion of the home's construction, those claims are barred.  We, therefore, conclude that the district court did not err in its ruling.

            Finally, appellant asserts that to hold that its third-party claims are time-barred unconstitutionally deprives it of its due-process rights under the Minnesota and United States Constitutions.  The supreme court addressed this constitutional challenge in Weston, in which a similar argument was asserted.  The supreme court indicated that the "constitutional legitimacy of statutes of repose stems from their substantive, rather than procedural, nature."  Id. at 641.  The supreme court further explained that

            [A] statute [of repose] is intended to terminate the possibility of liability after a defined period of time, regardless of the potential plaintiff's lack of knowledge of his or her cause of action.  Such statutes reflect the legislative conclusion that a point in time arrives beyond which a potential defendant should be immune from liability for past conduct.

 

Id. (alterations in original) (quoting 51 Am. Jur. 2d Limitation of Actions § 18 (2000)).  The supreme court held that

the repose provision of section 541.051 is based on a legitimate legislative objective and does not violate the Due Process or Remedies Clauses of the Minnesota Constitution.  Because we see no reason to differentiate between the Due Process Clause of the Minnesota Constitution and that of the United States Constitution as applied to these facts, we likewise hold that the repose provision of section 541.051 does not violate federal due process.

 

Weston, 716 N.W.2d at 644.  Because this issue has been resolved in Weston, we conclude that appellant's due-process rights have not been violated.

            Affirmed.

[1] Appellant added Schield Brothers, Inc. d/b/a Vetter Windows and Doors by amended third-party complaint in July 2005. 

[2]  Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963).

[3]  Vetter Windows was voluntarily dismissed from this action before the summary-judgment hearing.

[4]  All alterations in original except for alterations referring to A.P.I., Inc.

[5] Appellant's dispute arose out of the Goetzmanns' lawsuit, filed in May 2004.  The legislature included housing warranties, Minn. Stat. § 327 A. 02 (2002), under the statute of limitations and repose, effective August 1, 2004.  2004 Minn. Laws ch. 196, § 1, at 356-57; see Minn. Stat. § 645.02 (2002) (setting effective date of new statutes at August 1).  Because the issues relating to this appeal began before the amendment took effect, we apply the 2002 version of the statute.  See Brink v. Smith Cos. Constr., Inc., 703 N.W.2d 871, 874 n.1 (Minn. App. 2005) (applying 2002 version of statute on appeal where dispute leading to the appeal arose before the amendment took effect), review denied (Minn. Dec. 21, 2005). 

[6] Respondents also claim that appellant could not sue respondents based on housing warranties under Minn. Stat. § 327 A. 02 (2002) because the respondents are not house vendors as required by the statute.  Respondents did not raise the argument previously.  Generally, respondents are required to file a notice of review for issues decided adversely.  Minn. R. Civ. App. P. 106.  Therefore, we do not consider respondents' argument.