may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Universal Applicators, Inc., et al.,
Futura Coatings, Inc., et al.,
Filed January 5, 1999
Hennepin County District Court
File No. CT 94-12968
Paul W. Chamberlain, Michael L. Puklich, Chamberlain & Neaton, P.L.L.P., 445 Lake Street, Suite 333, Wayzata, MN 55391; and
Todd M. Johnson, Scott A. Johnson, Johnson Law Group LLP, 10801 Wayzata Boulevard, Suite 120, Minnetonka, MN 55305 (for appellants)
William M. Hart, Charles E. Spevacek, Meagher & Geer P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for respondents)
Considered and decided by Lansing, Presiding Judge, Randall, Judge, and Short, Judge.
Appellants assert that the district court erred in determining that they did not have a proper claim for indemnity or contribution against respondents. Appellants also assert that the district court erred in holding that they failed to meet their burden of proof to establish their fraud-related claims. We affirm.
In 1987, CL&P decided to add new basins at each of its plants, and CL&P and NUSCO (collectively, "the utility") decided to line the basins at three of the plants with Futura's products. Universal was hired as a subcontractor to apply the lining.
After lining application began in October 1988, pinholes began to form in the linings. In consultation with Futura, Universal used a number of products to fix the problem and completed the basin linings in early December 1988. Basin linings at one site began cracking and blistering in March 1989. Universal repaired the linings without charge to the utility and eventually had to completely strip and reline those basins. Basin linings at the other two sites also required some repairs in the summer of 1989, and Universal relined basins at those sites in 1990 and 1991. Additional repairs were made by Universal in summer 1993, and the utility made some of its own repairs in summer 1994.
Appellants commenced this action against respondents in July 1994. Appellants asserted the following: (a) fraud and misrepresentation; (b) negligent misrepresentation; (c) breach of express warranties; (d) breach of contract; (e) deceptive trade practices; (f) violation of the Consumer Fraud Act; (g) violation of the Unlawful Trade Practices Act; and (h) promissory estoppel.
The district court concluded that appellants' claims were all barred by Minn. Stat. § 541.051 (1996)'s two-year statute of limitations for defects in improvements to real property. The court also concluded, in the alternative, that (a) appellants did not sustain their burden of proof for fraud in the inducement, for fraud and misrepresentation, or for promissory estoppel claims; (b) the four-year statute of limitations under Minn. Stat. § 336.2-725 (1996) barred breach of warranty and breach of contract claims; and (c) appellants withdrew their consumer fraud and unlawful trade practices claims or, alternatively, they failed to sustain their burden of proof. Judgment was entered January 13, 1998. Appellants moved for amended findings and conclusions of law or for a new trial, and the district court denied their motions. Appellants now appeal from the judgment and the order denying amended findings and conclusions or a new trial.
An appellate court reviews legal issues de novo and need not give deference to the district court's conclusions. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). Only clearly erroneous findings of fact will be set aside on appeal. Minn. R. Civ. P. 52.01.
Appellants argue that the district court erred by not recognizing Universal's indemnity agreement with Futura, by not recognizing the settlement agreement between Universal and the utility, and by determining that the utility's claim against Futura was not in the nature of contribution. Appellants also assert that their indemnification and contribution claims are not barred by Minn. Stat. § 541.051, subd. 1(b) (1996).
Minn. Stat. § 541.051, subd. 1(a) (1996), states:
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.
A cause of action accrues when an injury is discovered or, in a contribution or indemnity action, "upon payment of a final judgment, arbitration award, or settlement arising out of the defective and unsafe condition." Minn. Stat. § 541.051, subd. 1(b).
An indemnification agreement is
an agreement by the promisor to indemnify or hold harmless the promisee against liability or claims of liability for damages arising out of bodily injury to persons or out of physical damage to tangible or real property.
Minn. Stat. § 337.01, subd. 3 (1996). Indemnity is applicable when one party pays damages for which another party is primarily liable. City of Willmar v. Short-Elliot-Hendrickson, Inc., 512 N.W.2d 872, 874 (Minn. 1994). Common liability is not required for indemnity. Hermeling v. Minnesota Fire & Cas. Co., 548 N.W.2d 270, 273 n.1 (Minn. 1996). It arises from an express or implied contractual relationship, under which one party is required to reimburse the other completely. Id.
In contrast to indemnity, for contribution to apply, two or more actors must have a common liability to the injured party and one of the actors must pay more than its fair share of the liability. City of Willmar, 512 N.W.2d at 874.
Common liability exists when both parties are liable to the plaintiff for the same damages, even though their liability may depend on different legal theories.
Id. (citation omitted). A contribution claim does not accrue until the party entitled to contribution has paid more that its fair share of the obligation. Hermeling, 548 N.W.2d at 273 n.1.
A. Universal's Claim Against Futura
The district court found:
Universal's own claim for damages, particularly its claim for its own lost profits, are not sums which Universal has paid as a result of a third-party claim culminating in a judgment, arbitration award or settlement against it. They are sums incurred by Universal for which Universal demands it be paid directly. No claim has been asserted in this action against Universal by Plaintiff CL&P or NUSCO, there is nothing against which Universal is to be "held harmless," and Universal's claims are not for contribution or indemnity.
Futura sent Universal warranties for each of the sites in February 1989. The warranties were identical with the exception that one of the agreements included a presigned addendum, which stated that Universal would hold Futura harmless for any problems related to a small portion of one of the basins where Universal previously acknowledged problems with the application process. Prior to signing the addendum, Universal's president, Peter Johnston, added the following language to it:
Peter J. Johnston signature appearing above, and, on enclosed copy of "Warranty Agreement" is contingent on Futura Coatings, Inc. providing [Universal] with "Hold Harmless" protection in the event of coating system failure at any one, or more of the (3) jobsites in Connecticut where the 5625/5020 lining system was installed by [Universal] for N.E. Utilities (Montville, Devon, and Middletown, Conn.) where primary reason for failure can be attributed to a coating material failure as opposed to a "workmanship" failure.
Universal sent the addendum back to Futura and forwarded the warranties to the utility. Universal made no other revisions to the warranties and raised no other objections, and the utility raised no objection to the warranties.
Appellants assert that the added language constitutes an indemnity agreement between Universal and Futura and that this agreement requires Futura to pay for repairs, including labor, if a lining failure is caused by the material itself. Appellants insist that because Futura did not object to this language, it became part of the contract.
Even assuming the added language became part of the contract, contrary to appellants' assertions, the language does not clearly state that Futura would be liable for all repair expenses, including labor. See Katzner v. Kelleher Constr., 545 N.W.2d 378, 382 (Minn. 1996) (holding ambiguous indemnity agreement shall be construed against drafter). Further, the warranties state on their face:
[I]t being the intention thereof that the sole remedy and full extent of Futura's obligation hereunder is provision of additional Urethane Coating, if required, sufficient to repair any failure in the Urethane Coating System * * * .
The record additionally indicates that prior to the commencement of this action, Universal itself informed the utility that Futura was liable only for materials. In a letter dated March 12, 1990, Universal informed NUSCO that the warranty provided that the "end-use" customer would pay for all labor required to install repair materials and Futura would provide the materials at no cost. Appellants concede that Futura provided all repair materials at no cost.
Even if Universal and Futura had entered into an indemnity agreement requiring Futura to pay for labor in addition to materials, appellants have not established that they (the utility and Universal) entered into a settlement agreement. See Minn. Stat. § 541.051, subd. 1(b) (stating indemnity or contribution claim accrues upon payment of final judgment, arbitration award or settlement). According to the utility and Universal, they entered into a "standstill settlement agreement," which provided that the utility agreed not to sue Universal, Universal agreed to perform the repairs at cost, and the utility agreed to provide interim funding. There is no documentation of this settlement in the record; rather, the record indicates that Univeral and the utility did not intend to settle. A NUSCO representative testified that the utility entered into an arrangement with Universal to complete repairs but also testified that the utility and Universal agreed that they would sort out the legal issues when the repairs were completed. Further, a purchase order, dated June 21, 1990, from the utility to Universal requesting Universal repair the coating, states in part:
Issuance and acceptance of this purchase order shall in no way be construed by either party to extinguish or lessen any of [Northeast Utilities'] warranty rights under the contract between [Northeast Utilities] and [the general contractor] for construction of the equalization basins at the Montville station and/or [the general contractor's] warranty rights under [the general contractor's] contract with Universal for coating the equalization basins. This purchase order is being issued in the interests of performing the repair work as expeditiously as possible during spring outage windows. Ultimate responsibility for the non-conforming work will be determined at a later date.
While the utility and Universal may have intended to enter into a standstill agreement whereby they each agreed to postpone any legal action against the other, the record demonstrates that they did not enter into a classic settlement agreement in which the parties agree not to bring legal action against each other in the future. Therefore, we cannot say that the district court erred in concluding that Universal does not have an indemnity or contribution claim against Futura. Because Universal does not have an indemnity or contribution claim against Futura, we need not address whether such a claim was barred by the statute of limitations under Minn. Stat. § 541.051, subd. 1 (1996).
B. The Utility's Claim Against Futura
With regard to the utility's contribution claim, the district court determined:
No claim was, or could, have been asserted against CL&P or NUSCO arising out of the failure of the equalization basins for which payment was made. CL&P's claim against Futura for monies paid and expenses internally charged to its account is not a claim for contribution or indemnity, but instead, a direct action for damages by an owner.
Contribution requires that at least two actors have a common liability to an injured party and those actors must be liable for a portion of the injury. City of Willmar, 512 N.W.2d at 874. Here, the utility argues that Futura is liable for the utility's damages, not that it has a common liability with Futura for a third party's damages.
The utility attempts to argue that the public is the injured third party here. Even assuming that the public is the injured third party, the utility is making an indemnity claim rather than a contribution claim because the utility is requesting reimbursement for all damages. See Hermeling, 548 N.W.2d at 273 n.1 (stating "indemnity secures entire reimbursement and contribution allows one to recover a proportionate share from the other liable party" (citations omitted)). Indemnity is a contractual remedy. Id. The utility does not attempt to state that it had an indemnity contract with Futura. Instead, the utility asserts that the settlement agreement between Universal and the utility provided that Universal would make the utility the beneficiary of Universal's indemnity agreement with Futura, in exchange for the utility releasing Universal from liability and in exchange for Universal performing repairs at cost. This claim was not properly raised below. Appellants note that they raised the issue in their motion for amended findings or a new trial. A party may not, however, assert a claim for the first time in a motion for a new trial. See Antonson v. Ekvall, 289 Minn. 536, 538-39, 186 N.W.2d 187, 189 (1971) (stating claim not pleaded, nor presented or litigated at trial, could not be raised for first time in motion for new trial).
Because the utility does not have a contribution claim and because it did not properly raise any possible indemnity claim, the district court did not err in denying the utility's claim for contribution or indemnity. We, therefore, do not address appellants' statute of limitations argument related to these claims.
II. Fraud, Misrepresentation, Consumer Fraud, and Related Claims
Appellants also argue that the district court's dismissal of appellants' unchallenged evidence relating to their fraud and misrepresentation claims was merely ancillary to the district court's conclusion that the statute of limitations under Minn. Stat. § 541.051 (1996) mandated dismissal of the claims. Because we conclude that appellants' fraud and misrepresentation claims are barred by the statute of limitations pursuant to Minn. Stat. § 541.051, we need not address the merits of appellants' fraud and misrepresentation claims.
 Appellants assert that there is no requirement that an indemnity claim be made only in a third-party action. It is true that Minnesota does not require an indemnity claim be brought only in a third-party action. Contrary to appellants' assertions, however, the district court did not state that Universal's claim for indemnity was barred because it was not brought in a third-party action. Instead, the district court referenced the fact that a third party (the utility) had made no claim against Universal, so there was nothing for which Futura could indemnify Universal.