Juster Steel v. Carlson Companies
| Decision Date | 23 April 1985 |
| Docket Number | No. C1-84-2056,C1-84-2056 |
| Citation | 366 N.W.2d 616 |
| Parties | JUSTER STEEL, etc., Appellant, v. CARLSON COMPANIES, Braun Engineering Testing, Inc. Respondents. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
The trial court properly dismissed Counts I, II and IV of appellant's complaint, and properly granted summary judgment on Count III.
Daryle L. Uphoff, Minneapolis, for appellant.
J. Patrick McDavitt, Minneapolis, for Carlson Companies.
Glenn E. Purdue, Minneapolis, for Braun Engineering Testing, Inc.
Heard, considered and decided by LESLIE, P.J., and SEDGWICK and RANDALL, JJ.
The trial court dismissed Count I of appellant's complaint as barred by the statute of limitations, Counts II and IV on grounds of insufficient particularity in the pleading, or alternatively failure to state a claim, and granted summary judgment on Count III. We affirm.
Appellant Juster Steel and respondent Carlson entered into a purchase agreement for property in Hennepin County on February 20, 1976. As a condition to the agreement, Carlson agreed to undertake necessary excavation and landfill to accommodate the construction of a building along the southern portion of the property. Appellant agreed to hire respondent Braun to perform soil tests to determine whether the soil correction work was properly accomplished. Appellant and Carlson agreed to split the resulting costs. Appellant took possession of the property on July 1, 1976, after Braun's initial representation that the soil work had been done properly.
During the first phase of construction, in September 1976, the construction company hired by appellant informed appellant about soil deficiencies along the east edge of the fill that did not conform to compaction specifications. Appellant commenced litigation against Carlson, Braun and other defendants to recover its additional landfill costs. Settlement was reached on February 28, 1978.
Shortly after the soil compaction deficiency was discovered in September 1976, Braun performed additional soil testing to determine if portions of land designated for future expansion of the building met soil compaction specifications. Braun orally submitted its finding to appellant in October 1976, followed by a written report dated December 29, 1976. This report was submitted by Braun in connection with settlement of the first lawsuit. Braun's report noted a soil deficiency in the east building line of the original building area.
Appellant initiated its expansion of the building in August 1982. In addition, appellant hired a soil consultant, GME, to further examine the property. GME informed appellant that portions of the soil did not conform to specifications. As a result of the deficiencies, appellant directed the reexcavation and recompaction of the soil at an additional cost of $15,967. On April 5, 1983, appellant commenced this second litigation to recover its damages. On July 26, 1983, both Braun and Carlson moved for summary judgment or dismissal of the action. The trial court granted the motions by order dated August 8, 1984 and judgment was entered on September 27, 1984.
1. Did the trial court err in determining that the breach of contract claim in Count I was barred by the statute of limitations?
2. Did the trial court err in dismissing the misrepresentation claims in Counts II and IV on alternate grounds of insufficient particularity and failure to state a claim upon which relief can be granted?
3. Did the trial court err in rendering summary judgment on the negligence claim against Braun in Count III?
1. The trial court found appellant's breach of contract claim (Count I) barred by the six year statute of limitations under Minn.Stat. Sec. 541.05(1). In computing the six year period, the trial court explicitly noted that the statute of limitations began to run when the breach occurred; either on July 1, 1976 (the date of appellant's possession of the property) or on October 22, 1976 (the date appellant learned of soil deficiencies in the east building line). Since litigation was not commenced until April 5, 1983, the trial court determined that the action was barred regardless of which starting date was used.
Appellant argues that breach of contract claims must be brought within six years of discovery of the defect in August 1982. In support of this assertion, appellant points to Kittson County v. Wells, Denbrook, and Associates, 308 Minn. 237, 241 N.W.2d 799 (1976), and Continental Grain Co. v. Fegles Construction Co., 480 F.2d 793 (8th Cir.1973). Appellant's reliance on these cases is misplaced.
In Kittson County, the issue was the proper scope and application of Minn.Stat. Sec. 541.051(1), a two year statute of limitation for actions based on improvements to real property. The plaintiff had alleged breach of contract in the construction of a courthouse and the trial court held the action barred by section 541.051(1). The Supreme Court reversed and remanded the case because it found section 541.05(1) to be the governing statutory limitation period.
The instant case is an action sounding in breach of contract and in warranty, and the plaintiff is in privity with the defendants. Therefore Sec. 541.051 is not applicable and the action is governed by the 6-year statute of limitations in Sec. 541.05(1) * * *.
Appellant asserts that the concluding language to the above quote is controlling on this case:
Since it is apparently undisputed that the action was brought within six years of discovery of the defect, we reverse and remand * * *.
Id. (emphasis supplied).
While this language could suggest that the limitations period under section 541.05(1) is tolled until discovery of the breach, it is more probable that the reference to "discovery" is mere dictum. First, the tolling period of section 541.05(1) was not at issue in the case. Second, section 541.051 explicitly sets the limitation at within "two years after discovery * * *." Section 541.05(1) does not contain a similar provision. Third, the Minnesota Supreme Court has said that "where the legislature intends the limitation period to be contingent upon the knowledge of the aggrieved party, it has so provided." Murphy v. Country House, Inc., 307 Minn. 344, 240 N.W.2d 507, 510 (1976).
For similar reasons, appellant's reliance on Continental Grain is unfounded. In Continental Grain, the Eighth Circuit dealt specifically with interpretation of Minn.Stat. Sec. 541.051. As already discussed, section 541.051 is distinguishable from section 541.05(1) because it expressly provides that the statutory limitation period is tolled until discovery of the defect.
As the trial court noted, "It is generally accepted that ignorance or lack of knowledge of the existence of a cause of action does not toll the * * * limitations period for contract claims." Citing Wild v. Rarig, 302 Minn. 419, 234 N.W.2d 775 (1975).
The trial court did not err in dismissing Count I.
2. Appellant's Misrepresentation, whether negligent or fraudulent, constitutes fraud under Minnesota law. General Insurance Co. of America v. Lebowsky, 312 Minn. 370, 252 N.W.2d 252, 255 (1977).
Minn.R.Civ.P. 9.02 states:
In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.
In dismissing Counts II and IV on grounds of insufficient particularity, the trial court said:
At a minimum, Plaintiff is required to specifically state the false representation inducing reliance * * *. [The] Complaint merely refers to representations in Braun's letter dated December 29, 1976, and representations made by Carlson Properties, without specifically identifying the particular events and statements relied upon by the Plaintiff * * *.
Appellant argues that the complaint was pleaded with requisite particularity because it identifies the misrepresentation, reliance and damages stemming from the misrepresentation.
Minnesota cases support the trial court's action.
In Atcas v. Credit Clearing Corp. of America, 292 Minn. 334, 197 N.W.2d 448 (1972), the Minnesota Supreme Court listed five essential elements of fraud:
(1) False representations; (2) made with the intent to deceive; (3) plaintiffs took action or refrained from taking action in reliance on these misstatements; (4) resulting in damages; (5) which are proximately caused by the misstatements.
While paragraphs 19 and 26 in the complaint facially assert false representations by Braun and Carlson respectively, the complaint only vaguely refers to the content of the misrepresentations.
Paragraph 12 simply states that soil conditions "were not in accordance with the representations made by Braun * * *." Paragraph 19 states that the representations in Braun's December 1976 letter "contained material misrepresentations of fact * * *." Paragraph 26 asserts that Carlson's representations of excavation work in accordance with the agreement were "false." Under an Atcas standard, the complaint appears most insufficient by its failure to allege any "intent to deceive" on the part of either respondent.
Appellant argues that the affidavits of Melvin Juster and Cameron Kruse provided specificity to the complaint. But Juster's affidavit is also lacking in detail. The only reference to possible fraud by Braun was Juster's statement that the soil compaction work did not comport with "the representations expressed in [Braun's] letter and graph dated December 29, 1976."
Appellant's complaint is more in line with cases finding general allegations of fraud insufficient to meet the requirements of Rule 9.02. See Westgor v. Grimm, 318 N.W.2d 56 (Minn.1982); Fitzgerald v. St. Joseph's Hospital, 301 Minn. 493, 221 N.W.2d 702 (1974); Parrish v. Peoples, 214 Minn. 589, 9 N.W.2d 225 (1943).
The trial court further dismissed Counts II and IV on alternate grounds under ...
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