IN COURT OF APPEALS
Mark and Laura Sletto,
individually and as parents and natural guardians of Travis Sletto,
Wesley Construction, Inc., d/b/a
Dale Kleven, et al.,
Wesley Construction, Inc., d/b/a
Steve Johnson, d/b/a Quality Construction,
Third Party Defendant,
Automated Building Components, Inc., third party defendant,
SNE Enterprises, Inc., d/b/a Crestline Windows and Doors, third party defendant,
Filed July 3, 2007
Affirmed in part, reversed in part, and remanded
Dakota County District Court
File No. CX-05-6498
David D. Hammargren, Anthony W. Thompson, Hammargren & Meyer, P.A., Suite 360, 7301 Ohms Lane, Minneapolis, MN 55439; and
Roger R. Roe, Jr., Best & Flanagan, LLP, Suite 4000, 225 South Sixth Street, Minneapolis, MN 55402 (for appellants Mark and Laura Sletto)
Robyn N. Moschet, Cheryl Hood Langel, McCollum, Crowley, Moschet & Miller, Ltd., 700 Wells Fargo Plaza, 7900 Xerxes Avenue South, Minneapolis, MN 55431-1141 (for respondent Wesley Construction, Inc.)
Nicholas J. Eugster, Messerli & Kramer P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent Steve Johnson)
Jeffrey A. Magnus, Law Offices of Jeffrey A.
Michael S. Kreidler, Stich, Angell, Kreidler
& Dodge, P.A., The Crossings,
Considered and decided by Lansing, Presiding Judge; Halbrooks, Judge; and Hudson, Judge.
S Y L L A B U S
I. A statute can be applied retroactively only if the text of the statute clearly and manifestly indicates the legislature’s retroactive intent. Because the text of the 2004 amendment to Minn. Stat. § 541.051 does not indicate the legislature’s retroactive intent, the amendment cannot be applied retroactively.
II. In determining whether a particular application of a statute is retroactive, we first examine the conduct regulated by the statute. If the conduct regulated by the statute occurred before the effective date of the statute, then the application of the statute to that conduct would be retroactive. Because the 2004 amendment to Minn. Stat. § 541.051 regulates accrual of claims and the commencement of claims following accrual, the amendment cannot be applied to claims that accrued before the effective date of the amendment.
O P I N I O N
After discovering mold and water damage in their house, the homeowners filed statutory-warranty and common-law negligence claims against the homebuilder. The district court concluded that the statute limiting actions arising from real-property improvements barred the suit and granted summary judgment against all of the homeowners’ claims. Because the 2004 amendment to the statute does not extinguish the homeowners’ statutory-warranty claim, we affirm in part, reverse in part, and remand.
F A C T S
Mark and Laura Sletto purchased a house in Rosemount from John and Linda Stark in 1993. The house had been built in 1990 by Wesley Construction (Wesley) and was sold to the Starks that same year.
About ten years after the Slettos’ 1993 purchase, they first noticed water damage and mold contamination in their house. The Slettos notified Wesley, vacated the house, and hired a contractor to repair the conditions.
In November 2004, the Slettos sued Wesley, raising a statutory-warranty claim under Minn. Stat. § 327A.05 (2004) and five common-law claims based on Wesley’s construction of the house. Wesley subsequently filed third-party contribution and indemnity claims against subcontractors who had worked on the construction of the house.
Wesley and the third-party defendants moved for summary judgment, arguing that the statute limiting actions arising from real-property improvements barred both the Slettos’ common-law claims and their statutory-warranty claim. The statute provides that, unless a defect is concealed through fraud, a common-law construction claim cannot “accrue more than ten years after substantial completion of the construction.” Minn. Stat. § 541.051, subd. 1(a) (2006). Wesley and the third-party defendants asserted that a 2004 amendment to the statute imposed a similar limitation on statutory-warranty claims. The subcontractors also argued that Wesley’s contribution and indemnity claims against them were barred by the statute.
The district court concluded that the amended statute applied to the Slettos’ statutory-warranty claim and therefore dismissed the claim. Furthermore, because the Slettos’ common-law claims were brought more than ten years after completion of construction, the district court concluded that those claims were barred unless the defects were fraudulently concealed. The district court therefore ordered that discovery continue solely on the issue of fraud. After further discovery, the district court granted summary judgment on the fraud issue as well. As a result, all of the Slettos’ claims were dismissed. Because all of the Slettos’ claims were dismissed, the district court also dismissed Wesley’s contribution and indemnity claims against the subcontractors. The Slettos appeal the application of the amended statute and the grant of summary judgment on the fraud issue.
I S S U E S
I. Does the text of the 2004 amendment to
II. Did the district court’s application of the amended statute to the Slettos’ statutory-warranty claim produce an impermissibly retroactive result?
III. Did the district court err by finding that the Slettos failed to support their common-law claims with sufficient evidence of fraudulent concealment of construction defects to withstand summary judgment?
IV. Can summary judgment be independently affirmed in favor of the third-party defendants?
A N A L Y S I S
The retroactivity of a statute presents a question of
law, which we review de novo. Gomon v. Northland Family Physicians, Ltd.,
645 N.W.2d 413, 415-16 (
Before the 2004 amendment, the statute stated, “This section shall not apply to actions based on breach of
the statutory warranties set forth in section 327A.02, or to actions based on
breach of an express written warranty, provided such actions shall be brought
within two years of the discovery of the breach.”
For the purposes of actions based on breach of the statutory warranties set forth in section 327A.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. In the case of an action under section 327A.05, which accrues during the ninth or tenth year after the warranty date, as defined in section 327A.01, subdivision 8, an action may be brought within two years of the discovery of the breach, but in no event may an action under section 327A.05 be brought more than 12 years after the effective warranty date.
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 . . . 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 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.
The text of the amended statute does not contain the word
“retroactive” and does not contain any similar indication of retroactive
intent. Therefore, the legislature has
not clearly and manifestly indicated that the amended statute should be applied
retroactively. In addition, the amendment
made significant changes and was not merely a clarification. See
Thompson Plumbing Co. v. McGlynn Cos., 486 N.W.2d 781, 785 (
Having established that the amended statute cannot be
applied retroactively, we must now address whether the district court’s application of the statute in this case
caused an impermissibly retroactive result.
This question presents an issue of law, which we review de novo. See
We begin our analysis with the text of the statute. The amended statute limits statutory-warranty
claims in two ways. First, the statute
provides that a statutory-warranty claim cannot “accrue more than ten years
after substantial completion of the construction.”
These limitations on
Because the legislation does not provide for retroactive application, the amendment’s limitation on accrual does not apply to the Slettos’ statutory-warranty claim. The Slettos’ statutory-warranty claim accrued in 2003 after they discovered the water damage and notified Wesley. See Vlahos,676 N.W.2d at 678 (holding that claim accrues upon discovery). Thus, the accrual occurred before the effective date of the statute. Because the limitation on accrual is not retroactive, it cannot apply to claims that accrued before its effective date.
The more difficult question is whether the amendment’s limitation on commencement can be applied to the Slettos’ statutory-warranty claim. Although the Slettos’ claim accrued in 2003, their claim was not commenced until after the effective date of the statute of repose. Thus, the limitation on commencement was in effect when the Slettos commenced their claim. Nonetheless, we conclude for three reasons that the limitation on commencement cannot be applied to the Slettos’ claim.
First, the limitation on commencement in section 541.051 cannot be read in isolation. The statute does not simply limit the commencement of claims. Instead, the text of the limitation states:
In the case of an action under section 327A.05, which accrues during the ninth or tenth year after the warranty date, as defined in section 327A.01, subdivision 8, an action may be brought within two years of the discovery of the breach, but in no event may an action under section 327A.05 be brought more than 12 years after the effective warranty date.
Second, the limitation on commencement cannot be applied
to the Slettos’ claim under existing
We conclude that Lovgren controls our decision. As in Lovgren, this case involves a statute that became effective between the relevant events and the commencement of the claim. We can find no basis for applying the statute differently in this case. Like the statute of limitations in Lovgren, the statute in this case limits the commencement of claims. Therefore, consistent with Lovgren, the limitation on commencement does not apply because the Slettos’ statutory-warranty claim accrued before the amended statute of repose was effective.
Wesley’s attempt to distinguish Lovgren is unconvincing.
Wesley is correct that the lawsuit in Lovgren was commenced in 1978, before
the new statute became effective. But
the electrician’s original claim was against Northern States Power Company. The relevant claim in Lovgren was made against Peoples Electric Company, a different
Third, although we have based our retroactivity analysis
on the conduct regulated by the statute, we would reach the same result under
the vested rights theory of retroactivity.
Under the vested rights theory, an application of a statute is
retroactive if it impairs rights that vested before the effective date of the
statute. Cooper v. Watson, 290
The Slettos also challenge the district court’s
determination that the statute limiting actions arising from real-property improvements
bars their common-law claims. Because
the Slettos’ common-law claims accrued more than ten years after substantial
completion of the construction, their common-law claims are barred unless the
defects were concealed through fraud.
On appeal from summary judgment, we review the record to
determine “whether there are any genuine issues of material fact and whether a
party is entitled to judgment as a matter of law.” In re
Collier, 726 N.W.2d 799, 803 (
To prove fraudulent concealment, tolling any statute of
repose or limitations, a party must show (1) the defendant made a statement
that concealed plaintiff’s potential cause of action, (2) the statement was
intentionally false, and (3) the concealment could not have been discovered by
reasonable diligence. Williamson v. Prasciunas, 661 N.W.2d
645, 650 (
The district court granted summary judgment because the
Slettos had failed to show that Wesley intentionally engaged in any affirmative
act that fraudulently concealed their potential cause of action. The Slettos argue that there was no need to
show any affirmative act because Wesley had a duty to disclose defects. Unless special circumstances apply, however,
there is no general duty to disclose. Hommerding v. Peterson, 376 N.W.2d 456,
Even if Wesley had a duty to disclose, the Slettos have provided no evidence that Wesley made intentionally false statements or omissions. The Slettos point to a checklist that Wesley received from the city building department. Because the checklist indicates that the windows needed flashing and flashing was not subsequently installed, the Slettos claim that Wesley must have known about the defect. The record indicates, however, that the checklist was completed in conjunction with the issuance of the building permit and was not an indication of a violation in need of correction. Similarly, the Slettos’ limited evidence about work Wesley did on other houses fails to establish any knowledge about the defects in this particular house. Thus, a reasonable jury could not conclude that Wesley knew about and then intentionally failed to disclose the alleged defects.
Because the Slettos failed to establish a genuine issue of material fact on fraudulent concealment, the statute of repose bars the common-law claims. Therefore, summary judgment was properly granted on the Slettos’ common-law claims.
When the district court granted summary judgment against the Slettos, it also dismissed Wesley’s third-party contribution and indemnity claims against three subcontractors. The subcontractors argue that Wesley’s indemnity claims against them should be dismissed despite our decision to permit the Slettos’ statutory-warranty claim to proceed to trial. See Weston v. McWilliams & Assocs., Inc., 716 N.W.2d 634, 641 (Minn. 2006) (affirming district court’s dismissal of homebuilder’s contribution and indemnity claim because claim had not accrued and was not brought within ten-year period). But the district court did not address the merits of the subcontractors’ motion to dismiss the contribution and indemnity claims. Instead, the district court dismissed those claims as moot based on its decision to dismiss all of the claims against Wesley. Therefore, Wesley has not had an adequate opportunity to respond to the subcontractors’ independent motion for summary judgment. Accordingly, the dismissal of Wesley’s indemnity claims against the subcontractors is reversed for consideration on remand.
D E C I S I O N
The language of the amended statute does not clearly and manifestly indicate the legislature’s intent that the statute will apply retroactively. Because the district court’s summary-judgment dismissal of the statutory-warranty claim is an impermissibly retroactive application of the 2004 amendment, we reverse and remand. The interrelated dismissal of Wesley’s third-party claims against the subcontractors is also reversed. The Slettos failed, however, to demonstrate any genuine issue of material fact on fraudulent concealment. Therefore, the statute was not tolled and the Slettos’ common-law claims are barred.
Affirmed in part, reversed in part, and remanded.
 The legislature again amended section 541.051 during
the 2007 legislative session. 2007