Kariniemi v. City of Rockford

• Decision Date: 27 July 2016
• Docket Number: No. A14–0796.,A14–0796.
• Parties: Nathan KARINIEMI, et al., Appellants, v. CITY OF ROCKFORD, Respondent.
• Court: Minnesota Supreme Court

882 N.W.2d 593

Nathan KARINIEMI, et al., Appellants,
v.
CITY OF ROCKFORD, Respondent.

No. A14–0796.

Supreme Court of Minnesota.

July 27, 2016.

Scott A. Johnson, Todd M. Johnson, Hellmuth & Johnson, PLLC, Edina, Minnesota, for appellants.

Paul A. Merwin, Patricia Y. Beety, League of Minnesota Cities, Saint Paul, MN, for respondent.

Joseph J. Langel, Nathan B. Shepherd, Ratwik, Roszak & Maloney, P.A., Minneapolis, MN, for amicus curiae Association of Minnesota Counties.

George C. Hoff, Justin Templin, Hoff, Barry & Kozar, P.A., Eden Prairie, MN, for amicus curiae City Engineers Association of Minnesota.

Daniel J. Cragg, Jared M. Reams, Eckland & Blando LLP, Minneapolis, MN, for amicus curiae Minnesota Association for Justice.

Paul D. Reuvers, Jason J. Kuboushek, Iverson Reuvers Condon, Bloomington, MN, for amicus curiae Minnesota Association of Townships.

Kenneth H. Bayliss, Dyan J. Ebert, Cally Kjellberg–Nelson, Quinlivan & Hughes, P.A., Saint Cloud, MN, for amicus curiae Minnesota Defense Lawyers Association.

882 N.W.2d 596

OPINION

GILDEA, Chief Justice.

The question presented in this case is whether a municipality is entitled to vicarious official immunity for the allegedly negligent acts that its non-employee City Engineer—a private engineering firm—performed under a contract with the municipality. Homeowners brought this action, alleging that the non-employee City Engineer was negligent and caused a nuisance. The district court awarded summary judgment to the municipality on the negligence claim based on vicarious official immunity. But the district court denied summary judgment on the nuisance claim. The court of appeals affirmed in part and reversed in part, holding that vicarious official immunity applied to both the negligence and the nuisance claims. Kariniemi v. City of Rockford, 863 N.W.2d 430, 436 (Minn.App.2015). Because we conclude that the municipality is entitled to vicarious official immunity for both claims, we affirm.

This case arises from the development of land located within the City of Rockford. As reflected in an agreement (the Agreement) between the City and the developer, the developer agreed to design and construct a grouping of townhomes named “Marsh Run.” Under the Agreement, the City agreed to design, construct, and install “improvements,” including “storm sewer mains,” “catch basins,” and “storm sewer retention ponds and structures.” The Agreement reserved a large amount of oversight to the City for the improvements at Marsh Run and stated that the City would act through the “City Engineer.”¹

The Rockford City Council (the City Council) approved the construction of Marsh Run. In doing so, the City Council confirmed that “the design of all public and private streets,” as well as “all grading, drainage, utilities and easements” at Marsh Run, would be subject to the “review and approval of the City Engineer.”

The City does not have an employee designated as the “City Engineer.” The City instead contracts with a private firm for the provision of those services. For several years, including during the Marsh Run project, Bonestroo, Rosene, Anderlik and Associates (Bonestroo) performed the functions of “City Engineer” under the terms of a Professional Services Agreement (PSA)² with the City. The purpose of the PSA was to permit the “City to obtain engineering and architectural services in a cost-effective and timely manner.” More specifically, the City “desire[d] to retain [Bonestroo] from time to time to provide such professional services for general engineering needs as well as for the planning, design, and construction of public works, all as may be directed by the City.” Under

882 N.W.2d 597

the PSA, for projects in which construction costs exceeded $50,000, the City paid Bonestroo a percentage of the construction cost of the project as determined by an applicable fee schedule. For projects under $50,000, the City paid Bonestroo on an “hourly basis.”

Under the PSA, Bonestroo was required to perform “Basic Services” in three general phases: (1) the Feasibility Report Phase; (2) the Design Phase; and (3) the Construction Phase. For example, in the Feasibility Report Phase, Bonestroo prepared a feasibility report with six elements, submitted that report to the City Clerk 5 days before review by the City Council, and then presented the data contained in the report to the City Council at a public hearing. In the Design Phase, Bonestroo designed and prepared “detailed plans and specifications for the Project,” while “periodically consult[ing] with the City to insure that the City's desires with respect to the Project [were] being satisfied.”³ Additionally, following the approval of the designs at a public hearing, and “[u]pon receipt of the City Council authorization to proceed,” Bonestroo “assist[ed] the City in obtaining and analyzing bids” and prepared a recommendation for the award of the Construction Contract. Finally, in the Construction Phase, Bonestroo organized, attended, and assisted the City at the preconstruction conference with the successful bidder; visited the Project site as necessary; and conducted “in the presence of the City's Representative, a final inspection of the Project.” The PSA also provided for “Additional Services,” including, for example, assisting “the City in preparing applications necessary for approvals, permits and licenses,” attending neighborhood meetings and public hearings, and completing “[d]esign revisions resulting from ... changes due to coordination of multi-agency reviews (e.g., City/County/MnDOT/etc.).” With respect to the provided-for services, the PSA noted, “[Bonestroo] ... act[ed] as the City's agent. ” (Emphasis added.)

The PSA additionally mandated that Bonestroo “maintain a professional liability insurance policy, insuring payment of damage for legal liability arising out of the performance of professional services for the City, in the insured's capacity as Engineer, if such legal liability is caused by negligent acts, errors, or omissions of the insured.” It also required that Bonestroo maintain other insurance, including comprehensive general liability insurance coverage.

Pursuant to the PSA, the City tasked Bonestroo with designing and overseeing the construction of the Marsh Run improvements. Accordingly, acting as “City Engineer,” Bonestroo designed and oversaw the construction of the storm-water drainage system at Marsh Run.⁴

Appellants Nathan and Sanna Kariniemi, whose home is located at Marsh Run, contend that Bonestroo's professional services with respect to the storm-water drainage system were negligent and caused a nuisance.⁵ Because of Bonestroo's

882 N.W.2d 598

alleged negligence, the Kariniemis assert, their property was flooded during significant rainfall in 2011 and again in 2013. The Kariniemis sought redress from the City on two occasions. But the City denied the Kariniemis relief, asserting that weed overgrowth, not a faulty design of the storm-water drainage system, caused the flooding. The City offered $4,500 to the Kariniemis to install protective measures to prevent further flooding but refused to pay for their claimed damages. The Kariniemis then commenced this action against the City, alleging negligence and nuisance claims.

The City moved for summary judgment, arguing that it is entitled to statutory immunity for the City Council's discretionary decisions and vicarious common law official immunity for Bonestroo's discretionary decisions in its capacity as City Engineer.⁶ Regarding official immunity, the City noted that “Plaintiffs allege that the design decisions of [Bonestroo] regarding storm water drainage at Marsh Run were negligent and the cause of their alleged nuisance.” The City then argued that because “[its] only role was to design and supervise construction of the public improvements,” and “because the design decisions required the exercise of professional judgment by the City's contract engineers,” the “City has [vicarious] official immunity.”

The Kariniemis opposed the City's request for summary judgment, contending that common law official immunity did not apply to Bonestroo's design decisions because it is an “independent contractor,” not a full-time City employee. The Kariniemis also filed a cross-motion for summary judgment, arguing that there were no genuine issues of material fact regarding the City's liability for the design, approval, and construction of the storm-water drainage system, which “created a nuisance and constituted negligence.”

The district court, ruling first on the City's motion, granted summary judgment to the City on the negligence claim. The court concluded that the City's contract City Engineer, Bonestroo, is entitled to official immunity for its discretionary design decisions and that the City, in turn, is entitled to vicarious official immunity for the negligent design claim. The court did not address the nuisance claim; instead, the court reasoned that due to the City's failure to address the nuisance claim until its reply brief,⁷ it would consider the nuisance claim only in addressing the Kariniemis' cross-motion.

Turning to the cross-motion, the district court denied summary judgment on the nuisance claim, reasoning...