De Vries v. L & L Custom Builders, Inc.

• Decision Date: 17 December 2021
• Docket Number: No. S-20-577.,S-20-577.
• Citation: 310 Neb. 543,968 N.W.2d 64
• Parties: Tabe DE VRIES, an individual, and Bonnie J. de Vries, an individual, appellees and cross-appellants, v. L & L CUSTOM BUILDERS, INC., a Nebraska corporation, appellant and cross-appellee.
• Court: Nebraska Supreme Court

310 Neb. 543

968 N.W.2d 64

Tabe DE VRIES, an individual, and Bonnie J. de Vries, an individual, appellees and cross-appellants,

v.L & L CUSTOM BUILDERS, INC., a Nebraska corporation, appellant and cross-appellee.

No. S-20-577.

Supreme Court of Nebraska.

Filed December 17, 2021

Brian T. McKernan, Robert D. Mullin, Jr., and Matthew G. Munro, of McGrath, North, Mullin & Kratz, P.C., L.L.O., Omaha, for appellant.

Gregory C. Scaglione, Quinn R. Eaton, Minja Herian, and Cody B. Nickel, of Koley Jessen, P.C., L.L.O., Omaha, for appellees.

Heavican, C.J., Cassel, Stacy, Funke, Papik, and Freudenberg, JJ., and Weimer, District Judge.

Per Curiam.

I. INTRODUCTION

The homeowners sued the builder of their house for defects in the construction of the house and in the preparation of the lot it was built on, part of which contains and the other part of which adjoins a riverbank bluff. The jury rendered a general verdict in favor of the homeowners, after finding in a special verdict form that the homeowners' claims were not barred by the statute of limitations. The builder appeals, raising issues pertaining to the statute of limitations and the amount of damages. The homeowners cross-appeal with respect to damages. We affirm the judgment.

II. BACKGROUND

Tabe de Vries and Bonnie de Vries brought suit on February 15, 2017, against L & L Custom Builders, Inc. (L&L), and Thompson, Dreessen & Dorner, Inc. (TD2). The parties agreed the house was substantially completed in November 2012 for a total price of $847,456.83. The land was purchased for an additional $70,152.61.

1. PLEADINGS

In their operative amended complaint, the de Vrieses alleged they had entered into a contract with L&L to build their home on an 80-foot-high bluff along a riverbend and that L&L assured them the selected site was safe to build on. Before the house was completed, TD2 prepared two reports of "Geotechnical Exploration" in relation to construction on the site, which indicated bluff failures. The de Vrieses asserted that L&L withheld a TD2 report and that this report was not disclosed to them until May 2016.

The de Vrieses alleged that after repairs were made following a walk-through inspection, a large crack appeared in the basement ceiling in July 2014. This began a series of geotechnical investigation reports by TD2 that recommended continued monitoring and study until a final report on May 20, 2016, suggesting two mechanisms caused the increasing observable distress at the house.

Also in May 2016, the de Vrieses observed that part of the riverbluff had fallen into the river. Subsequently, the de Vrieses discovered that L&L had never installed a "French drain," as L&L had represented.

The de Vrieses alleged that in a meeting between the de Vrieses, L&L, and TD2 on May 24, 2016, L&L and TD2 disagreed as to how to proceed with repairs. L&L pointed out that TD2's sixth report could not explain the cause of all the issues observed with the house. Another meeting between the de Vrieses and L&L took place on July 28, in which L&L continued to disagree with TD2's proposed plan, which led to the de Vrieses' decision to sue.

The de Vrieses alleged, based on these facts, several claims against L&L and TD2, including breach of contract. L&L alleged the statute of limitations as an affirmative defense. TD2 alleged as affirmative defenses the statute of limitations and that any damages suffered by the de Vrieses were caused by the acts or omissions of third parties over which TD2 had no control.

2. MOTIONS FOR SUMMARY JUDGMENT

L&L moved for summary judgment, alleging that there was no genuine issue that the de Vrieses' claims against it were barred by the statute of limitations. TD2 filed a similar motion.

L&L argued at the hearing on the motion that the de Vrieses had knowledge that a problem existed, albeit not the nature of the problem or necessarily that they had a cause of action, well before the expiration of the 4-year statute of limitations and, indeed, within the first 3 years after construction. Thus, the discovery period did not apply.

With regard to any claim that the statute of limitations was tolled by fraudulent concealment under a theory of equitable estoppel, L&L asserted that the de Vrieses could not invoke the doctrine of equitable estoppel because they did not plead it. Alternatively, L&L asserted that assurances by L&L, that they would make the necessary repairs whenever they were able to discern what precisely the cause of the problem was and what was needed to fix it, were insufficient to support equitable estoppel.

After consideration of all the evidence submitted at the hearing on the motions, the court found there was a genuine issue as to when the de Vrieses reasonably discovered their potential claims and as to whether there was a "continuing representation issue."

The court found it "ironic" that while arguing the de Vrieses should have known the existence of the problem as early as July 2014, L&L and TD2, as professionals in their respective fields, were not themselves able to discover the source of the problem for some time and continued to represent the observed distress as minor and completely normal.

3. SETTLEMENT WITH TD2

Shortly before trial was set to begin, the de Vrieses and TD2 filed a joint stipulation to dismiss the de Vrieses' action as against TD2 only, with prejudice. Per the stipulation, the court dismissed the de Vrieses' complaint as against TD2.

L&L did not object to the dismissal and did not move for the de Vrieses to produce the settlement agreement at that time.

The de Vrieses moved in limine to prohibit reference to the jury of their settlement with TD2. L&L agreed with the de Vrieses that it should not be able to mention to the jury that there had been a settlement between the de Vrieses and TD2. However, L&L wished to reserve its rights to question witnesses and bring up that TD2 was a party and had generated opinions concerning the case, on the grounds that it was relevant to whether L&L had proximately caused any of the damages. The de Vrieses responded that this issue could be explored without mentioning that TD2 had been a party.

The district court ruled that L&L could discuss with witnesses and experts facts and opinions pertaining to L&L's fault, or lack thereof, but not that TD2 was a party and settled. In ruling on the motion in limine, the court observed that L&L had not brought a counterclaim against TD2 on any theory of joint liability.

4. MOTION IN LIMINE ON "STIGMA" DAMAGES

The court sustained L&L's pretrial motion in limine to exclude any evidence by the de Vrieses at trial pertaining to its claim of "stigma" damages against L&L. The court described the term "stigma damages" as damages due to diminished market value of the home even after all repairs are made.

The de Vrieses and the court discussed the de Vrieses' intention to present an offer of proof regarding stigma damages. At trial, outside the presence of the jury, the de Vrieses made an offer of proof that their expert witness, an appraiser, would have testified that due to the real estate disclosure statement, the public aspect of the lawsuit, and the visual inspection of the bluff by any potential buyer, the fair market value of the property, even after completion of all corrective work, would be $213,000 less than it would have been but for the defects, as the expert elaborated upon in exhibit 277. Exhibit 277 was not offered or entered into evidence as part of the offer of proof but is found in the bill of exceptions.

5. EVIDENCE PRESENTED AT TRIAL

Bonnie testified at trial that she and Tabe decided to work with L&L to build a custom house before deciding on the lot. When they found the lot at issue, before buying it, she looked at it with Eric Lakeman, a co-owner of L&L. Adjoining the lot was a riverbluff, approximately 150 feet away. Bonnie specifically asked Lakeman whether it would be safe to build there, given that it was a hill alongside a riverbank. Bonnie testified that Lakeman assured her it would be safe to build there and "the bank wasn't a problem." In fact, he told Bonnie he had lived in the area his whole life, and Bonnie said she was assured by Lakeman the bank had not moved. The de Vrieses purchased the lot directly from the owner, along with a separate lot consisting of a 10-foot strip that encompasses the riverbluff. They entered into a contract with L&L to build a house on the lot.

The contract price did not include "landscaping" services. L&L subcontracted with DMS Landscaping (DMS) to construct four retaining walls, but, according to Lakeman, most of the work conducted by DMS was landscaping done through a contract directly with the de Vrieses. Lakeman described this as including the "rough and final grading" of the lot.

Lakeman testified that as a result of the retaining walls, a French drain was required, and that he understood DMS was going to install one. Sometime in 2015 or 2016, however, DMS discovered the French drain had not actually been installed. The owner of DMS testified that all the work DMS did on the de Vrieses' property was supervised and approved by L&L and that L&L was at all times acting as the general contractor. He testified DMS was not responsible for any of the drainage plan or installation of drainage "inside the envelope of the house."

(a) Preconstruction TD2 Reports From March 2011 and March 2012

TD2 had prepared a geotechnical investigation report on the lot on March 31, 2011, for a different prospective builder in relation to a different prospective client with an expected build of a single-story house with a walkout basement. The lot subject to the report did not contain the 10-foot strip alongside the river, which the de Vrieses acquired as part of their purchase of the land. L&L obtained from TD2 a copy of its report before commencing construction.

TD2 stated in the report that the encountered natural soils were "expected to be suitable for direct support of the structure utilizing shallow spread...