Ngoan Van Dang, et al., Appellants, vs. Crist Construction, Inc., Defendant and third-party plaintiff, Respondent vs. Kerry D. Nelson, d/b/a S & K Stucco, Inc., Third-party defendant, Respondent, Versatile Constructions, Third-party defendant, Respondent, J.R. Concrete & Masonry, Inc., Third-party defendant, Respondent, Andersen Windows, Inc., Third-party defendant, Respondent, Steven M. Johnson, d/b/a Quality Construction Roofing Specialist, Third-party defendant, Respondent.

Ngoan Van Dang, et al., Appellants, vs. Crist Construction, Inc., Defendant and third-party plaintiff, Respondent vs. Kerry D. Nelson, d/b/a S & K Stucco, Inc., Third-party defendant, Respondent, Versatile Constructions, Third-party defendant, Respondent, J.R. Concrete & Masonry, Inc., Third-party defendant, Respondent, Andersen Windows, Inc., Third-party defendant, Respondent, Steven M. Johnson, d/b/a Quality Construction Roofing Specialist, Third-party defendant, Respondent. A06-1798, Court of Appeals Unpublished, July 17, 2007.

This opinion will be unpublished and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

A06-1798

 

Ngoan Van Dang, et al.,

Appellants,

 

vs.

 

Crist Construction, Inc.,

Defendant and third-party plaintiff,

Respondent

 

vs.

 

Kerry D. Nelson, d/b/a S & K Stucco, Inc.,

Third-party defendant,

Respondent,

 

Versatile Constructions,

Third-party defendant,

Respondent,

 

J.R. Concrete & Masonry, Inc.,

Third-party defendant,

Respondent,

 

Andersen Windows, Inc.,

Third-party defendant,

Respondent,

 

Steven M. Johnson,

d/b/a Quality Construction Roofing Specialist,

Third-party defendant,

Respondent.

 

Filed July 17, 2007

Affirmed in part, reversed in part, and remanded

Dietzen, Judge

 

Washington County District Court

File No. C4-05-5723

 

Robert T. Scott, Vincent F. Waters, Waters & Scott, PLLP, 2040 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellants)

 

Louise A. Behrendt, James D. Knudsen, Stich, Angell, Kreidler & Dodge P.A., 250 Second Avenue South, Suite 120, Minneapolis, MN 55401 (for respondent Crist Construction, Inc.)

 

Kerry D. Nelson, 1810 Tenth Avenue, Newport, MN 55055 (pro se respondent)

 

Scott D. Lake, Lake Law Firm, LLC, 18621 Hobby Hills Trail, Prior Lake, MN 55372 (for respondent J.R. Concrete & Masonry, Inc.)

 

Neal J. Robinson, Conley, Peterson & Borgeson, 2550 University Avenue West, Suite 220-S Court International, St. Paul, MN 55114 (for respondent Andersen Windows, Inc.)

 

Steven M. Johnson, Quality Construction Roofing Specialists, Inc., 26314 Denmark Avenue, Farmington, MN 55024 (pro se respondent)

 

            Considered and decided by Dietzen, Presiding Judge; Stoneburner, Judge; and Parker, Judge.*

U N P U B L I S H E D   O P I N I O N

 

DIETZEN, Judge

 

            Appellants challenge the district court's grant of summary judgment, dismissing their claims for breach of statutory warranty, breach of contract, and common law negligence, arguing that the court erred in concluding that a breach of statutory warranty
claim was barred for failure to comply with the six-month notice requirement of statute, and the contract and tort claims were barred by the applicable statute of limitations.  Because the district court erred in concluding that appellants' breach of statutory warranty claim was barred by the six-month statutory notification requirement, but correctly determined that appellants' breach of contract and negligence claims were barred by the applicable statute of limitations, we affirm in part, reverse in part, and remand.

FACTS

Appellants Ngoan Van Dang and My-Dung Nguyen, husband and wife, are the original owners of a home located in Woodbury, which they purchased from respondent Crist Construction in 1994.  In 2002, at the suggestion of a neighbor who had experienced moisture intrusion problems with his home, appellants hired Private Eye, Inc. to perform a moisture survey of their home.  Private Eye conducted a survey in June 2002, and inspected 12 sites of the exterior of the house.  It identified six sites as needing "repairs and/or modifications . . . to protect the home from moisture."  The report concluded:

You have one or more areas showing signs of excessive moisture intrusion and soft or damaged sheathing.  These areas should be opened up and explored further to determine if any structural damage is present.

 

You have one or more areas of moderate moisture intrusion without signs of structural damages.  You may attempt to stop the moisture intrusion by chalking, sealing, or adding missing flashing.

 

The report noted that kick-out flashing, which is necessary to prevent water from entering the interior wall of the house, was missing at several locations and needed to be installed.  Private Eye also observed that the stucco was installed below grade or within six inches of grade, which could result in moisture "wicking" up from the soil and entering into the walls of the building.  It recommended that the stucco be trimmed to six or eight inches above the existing grade of the property. 

Private Eye also reported that several locations of the house had moisture readings in excess of 20% which may indicate active mold growth.  It stated "[s]ince some molds can cause severe health problems you should consider testing for the presence of elevated mold spores in your home."  Finally, the report stated, "We suggest that a follow-up inspection be completed in six to twelve months after all repairs are completed to ensure that the corrections are working to prevent moisture intrusion."

            Appellants then contacted the City of Woodbury to determine how they should proceed, and were told by the City to contact respondent Crist Construction.  Appellant Nguyen spoke to Dennis Crist, president of the company, and requested that he "just fix [his] house."  Crist informed Nguyen that he was no longer in the construction business and made no offer to help her. 

Appellant also contacted the Minnesota Department of Commerce.  Subsequently, appellants received a letter dated October 16, 2002, from Zurich North America, Crist's liability insurance company, which stated that Zurich had received a claim regarding appellant's home, that it maintained a liability policy on behalf of respondent, and that it needed documentation and information from appellants in order to evaluate the claim under the terms of the insurance policy. 

            In March 2003, Claims Management Consulting, Inc. sent appellants a letter stating that it was "handling the investigation pertaining to the claim being made against our insured, Christ [sic] Construction, Inc."  The agent visited appellants home later that spring, took some photographs, and conducted a visual inspection.

            When appellants heard nothing further from respondent, Zurich, or Claims Management, they retained Advanced Building Solutions (ABS) to conduct an inspection of the home to locate any "damaged" areas.  In August 2003, appellants notified respondent and Claims Management Consulting that ABS would be inspecting appellants' home "to examine issues regarding water intrusion."  ABS then inspected the property and made six cuts in the stucco to conduct "forensic destructive testing."  ABS prepared a report that concluded that there were numerous construction defects and moisture damage to the structural components of the home.

            Appellants served respondent with a complaint in March 2005 alleging breach of warranty, breach of contract, and negligent design and construction.  In April 2006, respondent moved for summary judgment.  Following the hearing, the district court filed its order determining that appellants failed to satisfy the six-month written notice requirement of Minn. Stat. § 327A.03(a) (1994)[1] with regard to their statutory warranty claim, and failed to file their breach of contract and negligence claims before the statute of limitations, Minn. Stat. § 541.051, subd. 1 (2000),[2] had run.  This appeal follows.

D E C I S I O N

I.

Appellants argue that the district court erred in concluding that their claim for breach of warranty is barred by their failure to comply with the six-month statutory-notification requirement under Minn. Stat. § 327 A. 03 (1994).  "A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law."  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  On appeal from summary judgment, we review de novo whether there are any genuine issues of material fact and whether the district court erred in applying the law.  STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 77 (Minn. 2002).  In doing so, we view the evidence in the light most favorable to the party against whom summary judgment was granted.  Hickman v. SAFECO Ins. Co. of Am., 695 N.W.2d 365, 369 (Minn. 2005).

To survive summary judgment, a party need not show substantial evidence; it must only produce sufficient evidence to permit reasonable persons to draw different conclusions.  Schroeder v. St. Louis County, 708 N.W.2d 497, 507 (Minn. 2006).  And
"[w]hen reasonable minds can differ about when the injury was discovered, summary judgment is inappropriate because the issue should be left to the trier of fact."  Lake Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc., 715 N.W.2d 458, 472-73 (Minn. App. 2006), review denied (Minn. Aug. 23, 2006). 

Appellant claims that respondent breached its statutory warranty under Minn. Stat. § 327 A. 02, subd. 1(c) (1994), that "during the ten-year period from and after the warranty date, the dwelling shall be free from major construction defects."  A "major construction defect" in the statutory new-home warranty is defined as "actual damage to the load-bearing portion of the dwelling" occurring during and after the completion of construction.  Minn. Stat. § 327 A. 01, subd. 5 (1994); Vlahos v. R&I Constr. of Bloomington, 676 N.W.2d 672, 681 (Minn. 2004).  Respondent argued, and the district court agreed, that the exclusion in Minn. Stat. § 327A.03(a) bars appellants' claim.  It provides that the liability of the vendor under section 327 A. 02, does not extend to:

[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.

 

See also Peterson v. Johnson, ___ N.W.2d. ___, ___ 2007 WL 1816276, at *2 (Minn. App. June 26, 2007) (stating that Minn. Stat. § 327A.03(a) limits vendor liability in home-warranty disputes if the loss or damage is not reported in writing within six months after the owner discovers, or should have discovered, the loss or damage).

The district court concluded that the Private Eye report put appellants on notice of possible structural damage to their house, that appellants failed to provide written notice within six months after they received the Private Eye report and, therefore, their claim was barred.  Appellants assert that the Private Eye report did not put them on notice of loss or damage.  We disagree.

            The Private Eye report identified, among other things, six areas of the house as in need of repair or modification, one or more areas of "moisture intrusion and soft or damaged sheathing" that should be explored "to determine if any structural damage is present," and several areas of the house that had moisture readings in excess of 20%, which may indicate "active mold growth."  The report concluded that the house should be reinspected after the repairs were completed.  On this record, we conclude that the Private Eye report was sufficient to put appellants on notice of a claim of loss to the property.

A.        Waiver

Appellants next argue that respondent waived its right to receive written notice under Minn. Stat. § 327A.03(a) for the loss or damage to their house.  Specifically, appellants contend that appellants' conversation with respondent's president, together with the October 2002 letter from Zurich North America, acknowledged notice of their claim and, therefore, waived the right to receive written notice under the statute. 

Waiver is a "voluntary and intentional relinquishment of a known right."  Illinois Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 798 (Minn. 2004); Engstrom v. Farmers & Bankers Life Ins. Co., 230 Minn. 308, 311, 41 N.W.2d 422, 424 (1950).  "The party alleging waiver must provide evidence that the party alleged to have waived the right possessed both knowledge of the right in question and intent to waive that right."  Glass Serv. Co., 683 N.W.2d at 798.  The question is largely one of intention, and need not be proved by express declaration or agreement, but may be inferred from acts and conduct not expressly waiving the right.   Engstrom, 230 Minn. at 312, 41 N.W.2d at 424.  In Meagher v. Kavli, our supreme court stated,

waiver is ordinarily a question of fact for the jury. It is only where there is but one inference which can be drawn from the facts that the question of waiver becomes one of law. The general rule seems to be that where different inferences may be drawn waiver must be resolved as a fact question by the jury.

 

251 Minn. 477, 486 88 N.W.2d 871 878 (1958).

Respondent argues that there is no evidence that it "impliedly authorized Zurich to act on its behalf" and, therefore, summary judgment was appropriate.  In order to determine whether an agency relationship exists, the court must find "the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act."  Jurek v. Thompson, 308 Minn. 191, 197, 241 N.W.2d 788, 791 (1976) (quoting Restatement (Second) of Agency § 1 (1958)). An agency relationship may be created by express language or by conduct.  Darian v. McGrath, 215 Minn. 389, 393, 10 N.W.2d 403, 405 (1943).  An agency relationship need not be in writing.  PMH Props. v. Nichols, 263 N.W.2d 799, 803 (Minn. 1978).  An agency relationship is a question of fact.  Jurek, 308 Minn. at 197, 241 N.W.2d at 791. 

Two agency doctrines allow a third party to infer that a presumptive agent is acting on behalf of a principal: apparent authority and agency by estoppel.  "Apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal."  Hagedorn v. Aid Ass'n for Lutherans, 297 Minn. 253, 857-58, 211 N.W.2d 154, 158 (1973); see also Foley v. Allard, 427 N.W.2d 647, 652 (Minn. 1988) (stating that apparent authority requires, among other things that the principal must hold the agent out as having authority or must knowingly permit the agent to act on its behalf).  The relationship of principal and agent may be evidenced by acts of the alleged principal or by appearances of authority he permits another to have which lead to the belief that an agency has been created.  Duluth Herald & News Tribune v. Plymouth Optical Co., 286 Minn. 495, 498, 176 N.W.2d 552, 555-56 (1970); see also Savage v. Educators Ins. Co., 908 P.2d 862, 865 (Utah 1995) (stating that when dealing with third parties, the insurer acts as an agent for the insured with respect to the disputed claim). 

Under the doctrine of agency by estoppel, if the principal places an agent in such a situation that a third person is justified in assuming that the agent has authority to perform a particular act and deals with the agent on that assumption, the principal is estopped from denying the agent's authority.  See Plymouth Optical Co., 286 Minn. at 499-500, 176 N.W.2d at 556 (1970).

The district court concluded that there was "no evidence that [respondent] expressly or impliedly authorized Zurich to act on its behalf regarding the statutory notice."  We disagree.  Here, appellants gave respondent verbal notice of the claim.  Subsequently, appellants received a letter from respondent's insurer that stated:

Please allow this correspondence to acknowledge recent notice from Crist Construction Inc. of a claim relating to [appellants' home].  We maintain a Commercial General Liability ("CGL") policy on behalf of Crist Construction Inc., with effective dates from May 1, 1997, through May 1, 2002.  It will be necessary that the CGL carriers for Crist Construction Inc. prior to and after our policy effective dates be put on notice and immediately involved in this matter and we will work with Crist Construction Inc. to make sure that is done.

 

Thus, respondent, through its insurer, acknowledged that it had received notice of the claim, that respondent had a CGL policy through Zurich, and that Zurich should be "put on notice" and be "involved" in any further activity regarding the claim.  On this record, a fact-finder could conclude that appellant was justified in assuming that respondent authorized Zurich to acknowledge receipt of the claim, intended to waive its right to receive written notice under the statute, and was proceeding to investigate the claim.  See Foley, 427 N.W.2d at 652 (stating that apparent authority arises when the principal allows the agent to act on its behalf).  Thus, we conclude that there is sufficient evidence of an agency relationship under the doctrines of apparent authority and agency by estoppel to survive a motion for summary judgment.  See Plymouth Optical, 286 Minn. at 499-500, 176 N.W.2d at 556; see also Engstrom, 230 Minn. at 312, 41 N.W.2d at 424 (allowing waiver to be shown based on inference). 

            B.        Estoppel

 

Appellant argues that respondent is estopped from asserting that the claim is barred for failure to comply with the notice requirement of Minn. Stat. § 327A.03(a).  Respondent argues and that there was no agency relationship between respondent and Zurich and that it made no promises to repair the house or investigate the claim.

Equitable estoppel prevents the assertion of otherwise valid rights where one has acted in such a way as to induce another party to detrimentally rely on those actions.  Drake v. Reile's Transfer & Delivery, Inc., 613 N.W.2d 428, 434 (Minn. App. 2000).  In order to invoke the doctrine, the party seeking estoppel must prove that: (1) the party to be estopped made promises or inducements; (2) the party seeking estoppel reasonably relied on the promises; and (3) the party seeking estoppel will be harmed if estoppel is not applied.  Id.  The application of equitable estoppel presents a question of fact unless only one inference can be drawn from the facts.  Id. 

            The district court concluded that appellants failed to present sufficient evidence of equitable estoppel.  Based on our previous analysis, the relevant inquiry is whether appellant's conversation with respondent's president and Zurich's letter is sufficient evidence of an agency relationship, and that respondent intended to waive written notice under the statute.  We conclude that the evidence is sufficient to create a fact issue of whether respondent authorized Zurich to acknowledge receipt of the claim and intended to waive its right to receive written notice under the statute.   Therefore, we reverse and remand on that issue. 

We also observe that the parties did not argue before the district court or on appeal whether the two-year statute of limitations under Minn. Stat. § 541.051, subd. 4 (2000), bars appellants' warranty claims, and, therefore, we do not reach that issue. 

II.

Appellants contend that the district court erred in concluding that the breach of contract and negligence claims were barred by Minn. Stat. § 541.051, subd. 1 (2000), because equity required that the statute of limitations be tolled.  On appeal from summary judgment, we review de novo whether there are any genuine issues of material fact and whether the district court erred in applying the law.  STAR Ctrs., Inc.,644 N.W.2d at 77.  Construction and applicability of a statute of limitations is a question of law, which we review de novo.  Benigni v. County of St. Louis, 585 N.W.2d 51, 54 (Minn. 1998).

Minn. Stat. § 541.051, subd. 1, states that no action "arising out of the defective and unsafe condition of an improvement to real property" shall be brought against the builder or contractor after two years of the discovery of the injury.  See also Dakota County v. BWBR Architects, 645 N.W.2d 487, 492 (Minn. App. 2002).  A party allegedly responsible for remedying a defect in real property may be estopped to assert a statute of limitations defense when it has made "assurances or representations that the injury will be repaired," and the plaintiff "reasonably relies on these assurances to their detriment."  Oreck v. Harvey Homes, Inc., 602 N.W.2d 424, 428 (Minn. App. 1999), review denied (Minn. Jan. 25, 2000).  While equitable tolling ordinarily presents a question for the jury, "when only one inference can be drawn from the facts, the question is one of law."  Id. 

The district court did not specifically address this issue.  Appellants admit that neither respondent nor Zurich made assurances that they would repair the home.  While prior cases such as Oreck have limited equitable tolling to situations where builders or contractors made assurances to a party, appellants ask this court to fashion a new rule that when a party relies on an insurer's statements that the insurer will investigate that party's claim, the statute of limitations should be equitably tolled.  Appellants argue that because it was "reasonable" for them to rely on an insurer's statement that it will "investigate," public policy dictates that the statute of limitations should be equitably tolled.  We decline to accept appellants' invitation. 

            We do observe, however, that even if the court were to adopt such a rule, the facts of this case preclude any finding that appellants "reasonably relied" on assurances from Zurich.  Here, the statute of limitations was set to expire in June 2004.  Appellants received the letter from Zurich in October 2002 and had a follow-up visit from Claims Management Consulting in the spring of 2003.  After concluding that Zurich's investigation was going nowhere, appellants hired ABS in August 2003 and discovered the extent of the damage.  But appellants waited 20 months before filing a lawsuit, even though Zurich was unresponsive and appellants had full-knowledge of the extent of the injury from the ABS report.  Even if appellants were relying on Zurich's investigation, they relinquished reliance when they decided to have their own inspection done in August 2003.  At that time, appellants still had approximately 11 months to file the lawsuit. Therefore, equitable tolling of the statute of limitations is not required because appellants did not reasonably rely on Zurich's statements.   

            Affirmed in part, reversed in part, and remanded.     

 

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] The applicable statutory warranty accrued in 1994, the date when the construction of appellant's home was completed.  Thus, the appropriate statutory warranty is Minn. Stat. § 327 A. 02, subd. 1(c) (1994).  The law was amended and clarified in 2001 to warrant that a dwelling shall be free from major construction defects "due to noncompliance with building standards."  See 2001 Minn. Laws. c. 207, §§ 9, 10.  Minn. Stat. 327A.03(a) is an exclusion to the applicable statutory warranty, and, therefore, the 1994 version of that exclusion applies here.  Minn. Stat. § 327A.03(a) has remained the same since 1994, and for ease of reference, we will refer to the statute in the present tense.

[2] The applicable statute of limitations is the version in effect when the Private Eye report was conducted in June 2002.