This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).




Joel M. Holstad, et al.,



Smith Companies Construction, Inc., et al.,


Filed August 31, 1999


Klaphake, Judge

Washington County District Court

File No. C0-98-3317

John L. Lindell, Holstad & Larson, PLC, 3535 Vadnais Center Drive, Suite 130, St. Paul, MN 55110 (for appellants)

S. Todd Rapp, 15025 Glazier Avenue, Suite 401, Apple Valley, MN 55124 (for respondents)

Considered and decided by Klaphake, Presiding Judge, Anderson, Judge, and Halbrooks, Judge.



In 1998, appellants Joel M. Holstad and Jody Johnson Holstad sued respondent Smith Companies Construction, Inc., a business engaged in the construction of residential homes, and its president, respondent Rick Smith. Their complaint alleged that during the 1992 construction of their home, respondents installed (1) no flashing above the windows; (2) a garage floor slab with inadequate slope; (3) garage doors that are a foot shorter than specified in the contract; (4) exterior cedar shakes without properly sealing them; and (5) a bathtub that did not meet the specifications called for in the contract. Appellants further alleged that respondents did not complete the project by the date specified in the contract, causing appellants to incur damages in the form of an increased interest rate on their mortgage. Because appellants failed to request arbitration within six months as required by the terms of the parties' agreements, we affirm the district court's grant of summary judgment to respondents.


As both parties submitted matters outside the pleadings, the district court treated respondents' motion to dismiss for failure to state a claim upon which relief can be granted as one for summary judgment. See Minn. R. Civ. P. 12.02(e). Summary judgment is properly granted if the record demonstrates that there are no genuine issues of material fact and that either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03.

This case involves two documents signed on June 8, 1992, by respondent Rick Smith and appellant Joel Holstad: a "New Construction Agreement" and "Construction Specifications." The arbitration provision, which was part of the New Construction Agreement, provides that any claim of either party "arising out of or relating to the physical condition of the property * * * shall be settled by binding arbitration." The arbitration provision further provides that "[a] request for arbitration must be filed within 6 months of the date which the relevant facts regarding the claim were discovered or could reasonably have been discovered." Appellants moved into the house in October 1992; appellant Joel Holstad admitted that within a few months he "began to notice that water would seep in through the windows when it rained," and he was told the problem was a "lack of flashing above the windows."

Appellants first argued that the arbitration provision was unenforceable because appellant Jody Holstad never signed the New Construction Agreement and because appellant Joel Holstad did not read that agreement before he signed it. A party may not avoid a contract because he did not read it and was ignorant of its contents. Gartner v. Eikill, 319 N.W.2d 397, 398 (Minn. 1982). Nor may a party avoid a contract on the grounds that she did not sign it, when she acquiesces in, accepts, and acts on the writing. Taylor v. More, 195 Minn. 448, 452, 263 N.W. 537, 539 (1935); see also Krumholz v. Rusak, 230 Minn. 178, 183-84, 41 N.W.2d 177, 181 (1950) (court properly instructed jury that it could find contract existed between parties if signed by defendant or by her husband with her knowledge and consent).

In rejecting appellants' challenge to the arbitration provision, the district court reasoned that appellants cannot enforce the Construction Specifications document and avoid the New Construction Agreement. We agree. Appellant Jody Holstad did not sign any of the documents generated during the course of the project. By allowing appellant Joel Holstad to sign both agreements and to execute nine change orders, she authorized her husband to act as her agent.

The district court also properly rejected appellants' other challenges to the enforceability of the New Construction Agreement. The New Construction Agreement was not void or unenforceable under Minn. Stat. §§ 513.04, .05 (1998) (statute of frauds), 519.02, .06 (1998) (protecting married woman's right to contract), or 572.08 (1998) (requiring arbitration provisions to be written). These statutes either do not apply in this case or do not provide appellants with the relief they seek.

We also reject appellants' argument that respondents were equitably estopped from enforcing the arbitration provision or that respondents otherwise modified the agreement to exclude arbitration. According to the facts alleged by appellants, Joel Holstad met with Smith in the spring of 1994, and "agreed to address [the problems with the house] and to come out and view the property." By the spring of 1994, however, more than six months had passed since appellants discovered the defects, which were either plainly visible or identified by appellants to be problems. In addition, appellants do not allege that Smith made additional representations to them, nor do they explain why they did not bring this lawsuit until four years later.[1]

Under these circumstances, the district court did not err in rejecting appellants' equitable estoppel or modification claims; appellants simply have failed to allege sufficient genuine issues of fact to support these claims. See Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn. 1990) (continuous promises to repair may equitably estop seller from asserting statute of limitations, but only if buyer has acted with due diligence in asserting its claims); Eliseuson v. Frayseth, 290 Minn. 282, 288, 187 N.W.2d 685, 689 (1971) (absent evidence of any promises or active inducements by defendants which caused plaintiff to forbear bringing lawsuit, defendants not estopped from asserting statute of limitations); Albachten v. Bradley, 212 Minn. 359, 364, 3 N.W.2d 783, 786 (1942) (party may be estopped by oral promises if those promises are made before limitations period has run). Moreover, respondents had no obligation to notify appellants of the arbitration provision and did not need to raise the arbitration provision as a defense until appellants brought this action. Niazi v. St. Paul Mercury Ins. Co., 265 Minn. 222, 230-31, 121 N.W.2d 349, 355 (1963) (arbitration may be deemed waived if not raised once formal claim made).

Appellants finally argue that at least two of their claims are not covered by the arbitration provision and are thus not barred. Count six of their complaint alleged that respondents breached their statutory duty to warrant the home free from major construction defects for a period of ten years after construction as required by Minn. Stat. § 327A.02, subd. 1(c) (1998). However, the defects identified by appellants do not directly affect the "load-bearing portion of the dwelling" and are not covered by this warranty. See Minn. Stat. § 327A.01, subd. 5 (1998). Even assuming the defects are covered by this warranty, a vendor's liability does not extend to loss or damage not reported by the owner "in writing within six months after * * * the owner discovers or should have discovered the loss or damage." Minn. Stat. § 327A.03(a) (1998). Thus, the district court properly granted summary judgment to respondents on this claim.

Appellants' final claim alleged that they sustained damages in the form of an increased interest rate on their mortgage due to respondents' failure to complete the project by September 15, 1992, the date specified in the parties' agreement. Because this claim arguably "aris[es] out of or relat[es] to the physical condition of the property," it, too, was subject to binding arbitration. Even assuming this claim fell outside the arbitration provision, the only support for this claim is a statement in the complaint that the delay in closing was caused by respondents "sending workers off the site to a Parade of Homes site in North Oaks, MN." This sole statement is insufficient to raise a genuine issue of material fact, where it is undisputed that appellant Joel Holstad executed nine change orders and the New Construction Agreement specifically provided that "[c]hanges require processing time and may delay construction" and that the "[b]uilder will not be held responsible for delays caused by such change requests." See Minn. R. Civ. P. 56.05 (party cannot resist summary judgment by resting upon mere averments, but must allege specific facts that raise jury issue).

The district court's grant of summary judgment to respondents is affirmed.


[1] Appellants assert that they finally were "forced to commence this action" when the statute of limitations was in danger of running on their claims. Appellants apparently assume that the six-year statute of limitations for breach of contract actions applies to their claims. However, neither party discusses the two-year statute of limitations for improvements to real property, which applies to claims arising "out of the defective and unsafe condition of an improvement to real property." Minn. Stat. § 541.051, subd. 1(a) (1998). Thus, even if the arbitration provision was unenforceable, appellants' claims still would be barred because not brought within two years after discovery.