650 N. Main Ass'n v. Frauenshuh, Inc.

• Decision Date: 22 August 2016
• Docket Number: No. A15–1547.,A15–1547.
• Citation: 885 N.W.2d 478
• Parties: 650 NORTH MAIN ASSOCIATION, Respondent, v. FRAUENSHUH, INC. (Territorial Springs Riverview, LLC, Frauenshuh Sweeney, LLC ), Appellants, Kraus–Anderson Construction Company, Respondent, Doe Affiliates 1–20, et al., Defendants, and Kraus–Anderson Construction Company, Defendant and Third Party Plaintiff, v. Berwald Roofing Company, Inc., et al., Third Party Defendants.
• Court: Minnesota Court of Appeals

885 N.W.2d 478

650 NORTH MAIN ASSOCIATION, Respondent,

v.FRAUENSHUH, INC. (Territorial Springs Riverview, LLC, Frauenshuh Sweeney, LLC ), Appellants,Kraus–Anderson Construction Company, Respondent,Doe Affiliates 1–20, et al., Defendants,

and

Kraus–Anderson Construction Company, Defendant and Third Party Plaintiff,

v.Berwald Roofing Company, Inc., et al., Third Party Defendants.

No. A15–1547.

Court of Appeals of Minnesota.

Aug. 22, 2016.

Review Denied Nov. 23, 2016.

Hannah R. Stein, Levin Law Group, LLP, Minneapolis, MN, for respondent 650 North Main.

Peter M. Waldeck, Waldeck Law Firm P.A., Minneapolis, MN, for appellant Frauenshuh.

Considered and decided by JESSON, Presiding Judge; HALBROOKS, Judge; and HOOTEN, Judge.

OPINION

HOOTEN, Judge.

In this construction dispute, appellant-developer argues that the district court erred by (1) refusing to dismiss as untimely respondent common interest community association's motion for judgment as a matter of law (JMOL) and for failure to secure a hearing date within 60 days; (2) permitting respondent to assert that the building had architectural design defects; (3) granting respondent's motion for JMOL with regard to the architectural design defects found by the jury; and (4) awarding unreasonable attorney fees, costs, and disbursements to respondent. In its related appeal, respondent argues that the district court erred by denying its motion for JMOL with regard to the construction defects found by the jury and that therefore respondent is entitled to an increase in its attorney fee award. We affirm in part, reverse in part, and remand.

FACTS

In 2005, appellants Territorial Springs Riverview, LLC, and Frauenshuh Sweeney, LLC, (collectively Frauenshuh) began developing a residential building, the 650 North Main building. Frauenshuh hired respondent Kraus–Anderson Construction Company to construct the building and J. Buxell Architecture to design the building. Frauenshuh marketed and sold units of the building to individuals. Respondent 650 North Main Association (the association) is an association of the persons who own units in the building.

A few years after the construction, the association discovered that the building was experiencing significant water damage. The association brought suit against Frauenshuh¹ and Kraus–Anderson, asserting claims of negligence and breach of the statutory warranty provided by Minn.Stat. § 327A.02 (2014). With regard to Frauenshuh, the association also asserted claims of breach of the statutory warranties provided by Minn.Stat. § 515B.4–113 (2014), breach of warranties under the purchase and sale contracts, and breach of fiduciary duty. Frauenshuh filed a cross-claim against Kraus–Anderson for indemnity and/or contribution, based in part on the indemnification provisions in the contract between Frauenshuh and Kraus–Anderson. Kraus–Anderson filed third-party claims for contribution and indemnity against the subcontractors that worked on the building. J. Buxell was never made a party to the case.² Before trial, the association dismissed the claims of negligence, breach of warranties under the purchase and sale contracts, and breach of fiduciary duty, and the trial proceeded on the statutory warranty claims.

The jury delivered its special verdict on February 24, 2014. The jury found that Frauenshuh did not breach either the chapter 327A warranty or the chapter 515B warranties. The jury found, however, that the building had major construction defects due to its non-compliance with building standards, that Kraus–Anderson breached the chapter 327A warranty, and that Kraus–Anderson's breach of the warranty was a direct cause of the association's damages. The jury found also found that J. Buxell's design of the building was defective and that the defective design was a direct cause of the association's damages. The jury attributed $101,250 in damages to J. Buxell and $101,250 in damages to Kraus–Anderson, but attributed no damages to Frauenshuh. The jury also found that neither Kraus–Anderson nor Frauenshuh received written or actual notice of the defects within six months of when the association discovered or should have discovered the damage

On March 26, 2014, the association moved for JMOL or a new trial, arguing that the jury's answers on the special verdict form were contradictory and incapable of reconciliation. The district court refused to grant JMOL with regard to the construction defects, determining that Frauenshuh could not be held responsible for the damages attributed to Kraus–Anderson by the jury because Kraus–Anderson did not receive notice of the defects within six months, as required for liability under the chapter 327A warranty. See Minn.Stat. § 327A.03(a) (2014). However, the district court granted the motion with regard to the architectural design defects found by the jury, concluding that Frauenshuh was responsible for the architectural design defects and was liable to the association for the $101,250 in damages attributed to J. Buxell by the jury.

In addition to the $101,250 that the jury attributed to J. Buxell, the district court ordered that Frauenshuh pay $171,000 in attorney fees and $75,766.41 in costs and disbursements to the association, for a total judgment against Frauenshuh of $348,016.41. This appeal followed.

ISSUES

I. Did the district court err by refusing to dismiss the association's motion for JMOL for failure to comply with Minn. R. Civ. P. 59.03 ?

II. Did the district court err by partially denying the association's motion for JMOL with regard to the construction defects found by the jury?

III. Did the district court err by permitting the association to argue to the jury that the building's architectural design defects constituted a breach of the statutory warranties?

IV. Did the district court err by partially granting the association's motion for JMOL and holding Frauenshuh liable for the damages attributed to J. Buxell for architectural design defects?

V. Did the district court abuse its discretion in awarding attorney fees and should the attorney fee award be modified or remanded in light of this opinion?

VI. Did the district court err in awarding “costs of litigation” under Minn.Stat. § 515B.4–116(b) ?

ANALYSIS

I. The district court did not err by refusing to dismiss the association's motion for JMOL for failure to comply with Minn. R. Civ. P. 59.03.

A. The association timely filed its notice of motion for JMOL or a new trial.

Frauenshuh argues that the association failed to file its motion for JMOL or a new trial within 30 days of service of notice of the filing of the district court's order. Minn. R. Civ. P. 59.03 provides that “[a] notice of motion for a new trial shall be served within 30 days after a general verdict or service of notice by a party of the filing of the decision or order.” A motion for JMOL is subject to the same 30–day deadline. Minn. R. Civ. P. 50.02. “Failure to comply with the [now 30] day time limitation is a jurisdictional defect which deprives the court of the jurisdiction to hear and rule on the tardy motion.” Differt v. Rendahl, 306 N.W.2d 813, 814 n. 1 (Minn.1981). Subject matter jurisdiction cannot be waived and can be raised at any time. Williams v. Smith, 820 N.W.2d 807, 813 (Minn.2012). The existence of subject matter jurisdiction is a question of law, which we review de novo. Id. We also interpret the rules of civil procedure de novo. Eclipse Architectural Grp., Inc. v. Lam, 814 N.W.2d 692, 696 (Minn.2012).

The association filed its motion for JMOL or a new trial on March 26, 2014. The district court entered judgment based on the special verdict on July 10, 2014, stating specifically in its underlying order that it would “entertain appropriate post-trial motions, including [the association's] motion for [JMOL] or, in the alternative, for a new trial.” On July 14, 2014, Kraus–Anderson served a notice of the filing of the district court's July 10, 2014 order, starting the 30–day time limit for the filing of motions for JMOL or a new trial. On September 26, 2014, after the expiration of the 30–day time limit, the association filed an amended notice of motion for JMOL or a new trial.

The purpose of rule 59.03 “is to start the time for making post-trial motions.” Rieman v. Joubert, 376 N.W.2d 681, 684 (Minn.1985). Service of the notice of the filing of the district court's order “is essentially a timing mechanism.” Id. Because the time limitation for bringing posttrial motions under rule 59.03 commences upon service of the notice of filing of the district court's order, the failure to serve such notice means that the other party has an indefinite time to bring a motion. Id.; 2 David F. Herr & Roger S. Haydock, Minnesota Practice § 59.25 (5th ed.2011). Rule 59.03, which is concerned with timing limitations after service of notice of filing, does not prohibit a party from bringing posttrial motions before service of the notice of filing. See, e.g., Krech v. Comm'r of Revenue, 557 N.W.2d 335, 343 (Minn.1997) (holding that under rule 59.03, posttrial motions brought before either party served notice of filing of the court's order were timely). We conclude that the association's motion for JMOL or a new trial was timely filed and, therefore, the district court had subject matter jurisdiction over it.

B. Frauenshuh waived its right to object to the timeliness of the hearing on the association's motion for JMOL.

Frauenshuh argues that the association's motion for JMOL should have been denied because the association failed to secure a hearing within 60 days. A motion for JMOL or a new trial “shall be heard within 60 days after such general verdict or notice of filing, unless the time for hearing be extended by the court within the 60–day period for good cause shown.” Minn. R. Civ. P. 59.03 ; see Minn. R. Civ. P. 50.02 (providing that rule 59 applies to motions for JMOL). Unlike the requirement that notice of a motion for JMOL or a new trial be filed within 30 days, the 60–day time limit for...