ALLIANZ INS. v. PM SERV. OF EDEN PRAIRIE, No. A04-898.

• Decision Date: 18 January 2005
• Docket Number: No. A04-898.
• Citation: 691 N.W.2d 79
• Parties: ALLIANZ INSURANCE COMPANY, Appellant, v. PM SERVICES OF EDEN PRAIRIE, INC., a Minnesota corporation, d/b/a Facilitech and Welsh Companies, LLC, a Delaware corporation, Respondent.
• Court: Minnesota Court of Appeals

691 N.W.2d 79

ALLIANZ INSURANCE COMPANY, Appellant, v. PM SERVICES OF EDEN PRAIRIE, INC., a Minnesota corporation, d/b/a Facilitech and Welsh Companies, LLC, a Delaware corporation, Respondent.

No. A04-898.

Court of Appeals of Minnesota.

January 18, 2005.

Michael D. O'Neill, O'Neill, Grills & O'Neill, P.L.L.P., St. Paul, MN; and Jeffrey R. Learned, (pro hac vice), Grotefeld & Denenberg, L.L.C., Bingham Falls, MI, for appellant.

Louise A. Behrendt, John F. Angell, Stich, Angell, Kreidler & Dodge, P.A., Minneapolis, MN, for respondent.

Considered and decided by TOUSSAINT, Chief Judge; SCHUMACHER, Judge; and MINGE, Judge.

OPINION

MINGE, Judge.

Appellant Allianz Insurance Company challenges summary judgment granted to respondent PM Services of Eden Prairie Inc., d/b/a Facilitech, arguing that the district court erred by applying the two-year limitation period of Minn.Stat. § 541.051 (2002) to its claims against respondent for damages caused by improper installation and repair of water-purification systems. Because the district court did not err by holding that installation and contemporaneous corrective work on the water-purification systems is an improvement to real property subject to the two-year statute of limitations for improvements to real estate, we affirm.

FACTS

In 2000, Buffets, Inc. (Buffets) hired respondent to install Ecolab water-purification systems to filter city water for soft drink and ice machines on each of the four floors of its corporate headquarters. Respondent began installing the water-purification systems on October 6, 2000. As part of the installation, respondent mounted the filter units in the kitchenette areas and plumbed the filters into the main water system through a series of plastic PVC "tee" fittings.

Within a week, the modified plumbing for the purification system on the first floor developed a pinhole leak, Buffets notified respondent of the problem, and on or about October 12, 2000, respondent returned and replaced the plastic "tee" fitting with a metal fitting. Respondent billed Buffets for installation and contemporaneous follow-up work on the purification systems at an hourly rate and submitted a billing invoice, which lists the dates of service for all the work occurring between October 6 and October 12, 2000. The invoice also states that respondent "[i]nstalled water filters on four[] floors for the pop and ice machines," then "[r]epaired a pinhole leak on the filter PVC `T'" by "replac[ing] and re-assembl[ing] the fitting as needed," and finally "[v]erified operations." Verifying operations generally involves turning the water back on, checking all the systems for leaks, and ensuring that the systems are working properly.

On October 15, 2000, the water-purification systems broke and caused considerable water damage to Buffets' building. A report prepared by appellant's expert on December 28, 2000, stated that the first, second, and third floor water-purification systems developed leaks due to over-tightening of the fittings during installation. The report went on to state that the PVC fittings on the second and third floor were broken and that part of the first-floor fitting was also damaged. Destructive testing of the fittings was conducted in November 2002, and the testing revealed that the PVC "tee" fittings in the basement, second, and third floors were cracked. In opposing respondent's motion for summary judgment, the same expert submitted an affidavit in which he stated that the proximate cause of the water damage resulted from respondent's negligent repair of the filtration system on or about October 12 and not the original installation.

Appellant insured Buffets for the damage resulting from October 15, 2000, leaks, covered Buffets' claims, and based on its subrogation rights filed a complaint on August 13, 2003, alleging that the original installation of the water-purification systems and the repair of the systems was negligent and resulted in the loss. The district court granted summary judgment in favor of respondent. The court concluded that the installation of the water-purification system was an improvement to real property and as such the claims were barred under the two-year statute of limitations of Minn.Stat. § 541.051 (2002). The district court also concluded that to the extent appellant's claims arose from the corrective work, it was part of the installation, and therefore barred by Minn.Stat. § 541.051. Finally, the district court concluded that appellant's expert's affidavit was insufficient to create a genuine issue of material fact and all of appellant's claims were barred by section 541.051 as a matter of law.

ISSUES

1. Is the installation of water-purification systems an improvement to real property subject to the two-year statute of limitations contained in Minn.Stat. § 541.051 (2002)?

2. Did the district court err in concluding that respondent's follow-up work on or about October 12, 2000, was part of the installation and therefore covered by Minn.Stat. § 541.051?

3. Did the district court err by granting summary judgment after concluding that there were no genuine issues of material fact?

ANALYSIS

The district court should grant summary judgment when there is no genuine issue of material fact and either party is entitled to a judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). On appeal from summary judgment, a reviewing court asks (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.1990)

. The evidence is viewed in a light most favorable to the party against whom judgment was granted. Fabio, 504 N.W.2d at 761. Even though an appellate court may disagree with the district court's analysis of some issues, summary judgment will be affirmed if it can be sustained on any grounds. Myers v. Price, 463 N.W.2d 773, 775 (Minn.App.1990),

review denied (Minn. Feb. 4, 1991). The construction and applicability of a statute of limitation is a question of law that is reviewed de novo. Benigni v. County of St. Louis, 585 N.W.2d 51, 54 (Minn.1998).

I.

We first address appellant's argument that the district court erred in holding that the water-purification systems were an improvement to real property, and therefore the claims are barred under Minn.Stat. § 541.051, subd. 1(a) (2002). The statute limiting claims on improvements to real property provides in relevant part:

Except where fraud is involved, no action by any person in contract, tort, or otherwise to recover damages for any injury to property ... 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 ... 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.

Minn.Stat. § 541.051, subd. 1(a).

The Minnesota Supreme Court defines an improvement to real property as "a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs." Sartori v. Harnischfeger Corp., 432 N.W.2d 448, 451 (Minn.1988) (quoting Pac. Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 554 (Minn.1977) for the definition of improvement to real property). We use a common sense approach when determining whether something is an improvement to real property for purposes of the statute of limitations. Williams v. Tweed, 520 N.W.2d 515, 518 (Minn.App.1994), review denied (Minn. Oct. 27, 1994). While statutes that limit damages based on improvements to real property are construed strictly, nonetheless, courts give effect to the plain meaning of the statute's words without resort to technical legal constructions of its terms. Kline v. Doughboy Recreational Mfg. Co., 495 N.W.2d 435, 439 (Minn.App.1993).

Although there is no Minnesota caselaw that directly addresses the issue of whether a water-purification system constitutes an improvement to real property, several court decisions deal with various types of improvements.¹ See, e.g., Red Wing Motel Investors v. Red Wing Fire Dep't, 552 N.W.2d 295, 297 (Minn.App.1996)

(treating a sprinkler system for fire protection purposes as an "improvement" to real property), review denied (Minn. Oct. 29, 1996); Kline, 495 N.W.2d at 438 (holding an above-ground swimming pool is an "improvement" to real property); Patton v. Yarrington, 472 N.W.2d 157, 159-60 (Minn.App.1991) (a smoke detector is an "improvement" to real property), review denied (Minn. Aug. 29, 1991); Frederickson v. Alton M. Johnson Co., 402 N.W.2d 794, 796-97 (Minn.1987) (electrical switchboards are an "improvement"); Bulau v. Hector Plumbing & Heating Co., 402 N.W.2d 528, 529-30 (Minn.1987) (treating fireplace as an "improvement"); Citizens Sec. Mut. Ins. Co. v. Gen. Elec. Corp., 394 N.W.2d 167, 170 (Minn.App.1986) (stating light fixtures constituted an improvement), review denied (Minn. Nov. 26, 1986); Henry v. Raynor Mfg. Co., 753 F.Supp. 278, 282 (D.Minn.1990) (a garage door opener is an improvement to real property).

Appellant claims the installation of water-purification systems on each floor was not an improvement to real property because the purification systems do not fit within the definition of an improvement to real property. Specifically, appellant argues that the purification systems are removable and do not enhance the building's capital value.

To be sure, compared to total building cost and even the total plumbing system, the water-purification systems are minor. However, the water-purification systems were plumbed into and thus were integrated into the building's water system and made the building more...