Lederman v. Cragun's Pine Beach Resort

• Decision Date: 14 December 2000
• Docket Number: No. 00-1754,00-1754
• Citation: 247 F.3d 812
• Parties: (8th Cir. 2001) LILA LEDERMAN, APPELLANT, v. CRAGUN'S PINE BEACH RESORT; CRAGUN CORPORATION; CRAGUN ENTERPRISES, INC.; CRAGUN GOLF MANAGEMENT, INC.; CRAGUN PROPERTIES, INC.; CRAGUN SHORELINE CORPORATION; BRAD CLARK, DOING BUSINESS AS CLARK EXCAVATING, APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 812

247 F.3d 812 (8th Cir. 2001)

LILA LEDERMAN, APPELLANT, v. CRAGUN'S PINE BEACH RESORT; CRAGUN CORPORATION; CRAGUN ENTERPRISES, INC.; CRAGUN GOLF MANAGEMENT, INC.; CRAGUN PROPERTIES, INC.; CRAGUN SHORELINE CORPORATION; BRAD CLARK, DOING BUSINESS AS CLARK EXCAVATING, APPELLEES.

No. 00-1754

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: December 14, 2000

Filed: April 23, 2001

Appeal from the United States District Court for the District of Minnesota.

Before Loken and Magill, Circuit Judges, and Battey, ¹ District Judge.

Magill, Circuit Judge

On August 23, 1995, a pathway at Cragun's Pine Beach Resort collapsed beneath Lila Lederman, causing her to fall into a trench and break her ankle. On June 4, 1998, Lederman sued the various owners and operators of Cragun's Pine Beach Resort (together, "Cragun's"), as well as Brad Clark, the contractor who dug the trench, claiming that Clark negligently excavated the trench and Cragun's negligently failed to protect Lederman from harm. The district court ² granted the summary judgment motions of Clark and Cragun's, holding that a Minnesota statute of limitations bars Lederman's claim. Lederman appeals, but we affirm.

I.

Cragun's Pine Beach Resort is a vacation resort near Brainerd, Minnesota. In the summer of 1995, Cragun's began the Shoreline Suites construction project, which involved the destruction of an existing building and the erection of a four-story complex consisting of suites and conference rooms. As part of the project, Cragun's hired Brad Clark to dig a trench so that U.S. West workers could lower existing communications cable that served other Cragun's buildings, and relay the cable to serve the Shoreline Suites as well. The communications cable had to be lowered to make room for the construction of the Shoreline Suites. The trench was about four and one-half feet deep, eight to ten feet wide, and thirty to forty feet long.

About thirty minutes after Clark left the trench area, Lederman walked along a pathway adjacent to the trench. The trench caved in, causing the pathway to collapse underneath Lederman, who fell into the trench and broke her ankle. There were no warnings that the pathway was unsafe. Later that day, after U.S. West workers completed the lowering of the communications cable, Clark refilled the trench.

On June 4, 1998, Lederman sued Cragun's and Clark in district court under diversity jurisdiction, claiming that Clark negligently excavated the trench and Cragun's negligently failed to protect Lederman from harm. The district court granted Clark's motion for summary judgment, holding that Minnesota's two-year statute of limitations for actions to recover damages for injuries arising out of an unsafe condition of an improvement to real property barred Lederman's claim because the trench was an improvement to real property. See Minn. Stat. 541.051 (2000). Subsequently, the district court granted Cragun's motion for summary judgment, holding that 541.051 also barred Lederman's claims against Cragun's. Lederman appeals the district court's judgments. This court has jurisdiction pursuant to 28 U.S.C. 1291.

II.

We review the district court's grant of summary judgment de novo. Clark v. Kellogg Co., 205 F.3d 1079, 1082 (8th Cir. 2000). Summary judgment is appropriate when the evidence, viewed in the light most favorable to the non-moving party, demonstrates that there is no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. Id. In this diversity case, we apply the substantive law of Minnesota. See id. We review de novo the district court's application of Minnesota law, and, if Minnesota law is ambiguous, we do our best to predict how the Minnesota Supreme Court would resolve the issue. See id.

A.

In Minnesota, a six-year statute of limitations applies to most personal injury claims alleging negligence. Minn. Stat. 541.05, subd. 1(5) (2000). However, a two- year limitations period applies to actions for injuries arising out of "improvements to real property":

Except where fraud is involved, no action by any person in contract, tort or otherwise to recover damages . . . for bodily injury . . . arising out of the defective and unsafe condition of an improvement to real property . . . shall be brought against any person performing or furnishing the design, planning, supervision, materials, or observation of construction or construction of the improvement to real property . . . for more than two years after discovery of the injury.

Minn. Stat. 541.051, subd.1(a) (2000). 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." Pacific Indem. Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 554 (Minn. 1977).

The Shoreline Suites itself is an "improvement to real property" under the Pacific Indemnity test, as it: (1) is a permanent addition of real property; (2) enhances the value of the property; (3) involved the expenditure of labor and money; and (4) required work going well beyond mere repair. The district court reasoned that since the Shoreline Suites is an "improvement to real property," "it follows that excavation, which was an indispensable part of the process of building those suites, is an improvement to real property under Minn. Stat. 541.051." We agree that the excavation was an "indispensable part" of building the Shoreline Suites. Construction of the Shoreline Suites required U.S. West workers to lower existing communications cable to make room for the construction and to relay the cable to connect the Shoreline Suites; lowering the communications cable necessitated the trench at issue here.

Lederman, however, argues that the district court should have focused its analysis exclusively on the excavation of the trench rather than on the overall construction process. Since the trench was temporary, Lederman asserts that it cannot constitute an "improvement." We disagree.

Minnesota case law suggests that a temporary trench that is integral to a construction project constitutes an "improvement to real property" under 541.051. In Fiveland v. Bollig & Sons, Inc., 436 N.W.2d 478 (Minn. Ct. App. 1989), the Minnesota Court of Appeals held that 541.051 applied to bar a claim brought by a plaintiff who fell into an unguarded excavation that the defendant had dug to build a basement. Id. at 479-81. The Fiveland court never specifically addressed the issue of whether the excavation in that case was an "improvement to real property," apparently because the parties "conceded that the temporary excavation site was part of an improvement to the property." Brandt v. Hallwood Mgmt. Co., 560 N.W.2d 396, 401 (Minn. Ct. App. 1997). However, the Fiveland court at least assumed that the temporary excavation constituted an "improvement to real property."

Furthermore, the Minnesota Court of Appeals subsequently stated that the excavation at issue in Fiveland, "although temporary, was an integral part of the construction of an improvement to real property." Brandt, 560 N.W.2d at 401-02. Therefore, the Brandt court accepted, at least in dicta, that a part of an improvement need not be permanent to be covered by 541.051, as long as it is an "integral part of the construction." Id. (defining the word "construction" in 541.051 to mean "the act or process of building, or of devising and forming; fabrication, erection"). In addition, in an unpublished opinion, the Minnesota Court of Appeals has held that a temporary trench dug to install sewer and water pipes is an improvement to real property. Lutz v. J.R. Bruender Constr., Inc., No. C5-93-2097, 1994 WL 121636, at *2 (Minn. Ct. App. Apr. 12, 1994) ³ ; see also American Nat. Bank & Trust Co. v. Booth/Hansen Assocs., Ltd., 542 N.E.2d 925, 927 (Ill. Ct. App. 1989) (interpreting a statute similar to 541.051 and holding that "excavation prior to construction is an 'improvement'").

We therefore agree with the district court's decision to examine the overall process of constructing the Shoreline Suites to determine whether the trench constituted an "improvement to real property," rather than separating out the various parts of the construction. We find additional support for our conclusion in case law construing analogous statutes. The Seventh Circuit, for instance, stated:

[T]o artificially extract each component from an improvement to real property and view it in isolation would be an unrealistic and impractical method of determining what is an improvement to real property. . . . We find that if a component is an essential or integral part of the improvement to which it belongs, then it is itself an improvement to real property.

Hilliard v. Lummus Co., 834 F.2d 1352, 1356 (7th Cir. 1987); see also Travelers Ins. Co. v. Guardian Alarm Co., 586 N.W.2d 760, 762 (Mich. Ct. App. 1998) (holding that if a component of an improvement is an integral part of the improvement to which it belongs, then the component is an improvement to real property). Accordingly, because the trench at issue here was an integral part of building the Shoreline Suites, we hold that the trench, although merely temporary, was an "improvement to real property" under Minnesota law.

Lederman also contends that the Minnesota courts draw a distinction between construction activity, which is covered by 541.051, and "demolition-like activity," which purportedly is not. Lederman's contention relies primarily on Brandt, where the plaintiff brought suit after a live electrical line injured him during a renovation of office space. 560 N.W.2d at 398. The Brandt court held that 541.051 did not apply to bar the plaintiff's claim because the defendant had been hired only to remove existing light fixtures and to de-energize some...