Ocel v. City of Eagan

• Decision Date: 20 March 1987
• Docket Number: No. C6-86-369,C6-86-369
• Citation: 402 N.W.2d 531
• Parties: Thomas OCEL, et al., Respondents, v. CITY OF EAGAN, defendant and third party plaintiff, Respondent, v. GABBERT DEVELOPMENT, INC., Bonestroo, Rosene, Anderlik and Associates, Inc., Schimek Construction, Inc., third party defendants, petitioners, Appellants.
• Court: Minnesota Supreme Court

Page 531

402 N.W.2d 531

Thomas OCEL, et al., Respondents, v. CITY OF EAGAN, defendant and third party plaintiff, Respondent, v. GABBERT DEVELOPMENT, INC., Bonestroo, Rosene, Anderlik and Associates, Inc., Schimek Construction, Inc.,

third party defendants, petitioners,

Appellants.

No. C6-86-369.

Supreme Court of Minnesota.

March 20, 1987.

Syllabus by the Court

1. The 2-year statute of limitations of Minn.Stat. Sec. 541.051 (1986) begins to run from the discovery of the defective improvement to real property, and bars the third-party plaintiff's claims for contribution; the contribution claims were only inchoate at the time the statute was enacted, so application of the statute has no impermissible retroactive effect.

2. The exception from the 2-year statute of limitations for claims against "the owner or other person in possession" is inapplicable to the claims against the contractor, the developer, and the engineering firm.

3. The 10-year period for bringing claims of a vendee or purchaser for breach of statutory warranties is inapplicable here.

Lawrence M. Rocheford, St. Paul, for Schimek Const.

David B. Sand, Minneapolis, for Bonestroo, Rosene, et al.

Paul G. Neimann, Minneapolis, for Gabbert Development.

Don L. Day, Minneapolis, for City of Eagan.

Ronald H. Swanson, Minneapolis, for Thomas Ocel.

Considered and decided by the court en banc without oral argument.

SIMONETT, Justice.

This case raises the same main issue decided today in Bulau v. Hector Plumbing & Heating Company, 402 N.W.2d 528 (Minn.1987), namely: when does the 2-year statute of limitations begin to run on a contribution claim arising from a defective improvement to real estate? Following Bulau, we hold that the statute of limitations begins to run on discovery of the defective and unsafe condition, and that Minn.Stat. Sec. 541.051 (1986) is applicable to the facts of this case and bars the contribution action. We reverse the contrary court of appeals' ruling.

On March 8, 1978, a meeting was held at the site of a building lot in the City of Eagan. Represented at the meeting were Schimek Construction, Inc., a contractor, the City of Eagan, and Bonestroo, Rosene, Anderlik and Associates, Inc. (BRA), the city's engineering firm. The problem discussed was how Schimek might place and build a house on the lot to overcome a problem of surface waters discharged onto the property by the city's storm sewer. ¹ Following the meeting, Schimek began building a house on the lot in May 1978 for plaintiffs Thomas and Linda Ocel. Schimek completed the house that summer, the sale to the Ocels being closed in early November 1978. Even before closing, on September 11, 1978, the Ocels gave the city notice of a water damage claim pursuant to Minn.Stat. Sec. 466.05 (1986). The record indicates the earliest that plaintiffs and the city had knowledge of the defective condition of the lot for building purposes was the meeting on March 8, 1978, at the building site.

On June 20, 1979, less than 2 years after the March meeting, plaintiffs Ocel sued defendant City of Eagan, alleging negligent construction of the storm sewer system. In May 1981, more than 2 years after the March meeting but within 2 years after the city was sued, defendant City of Eagan served third-party suit papers on third-party defendants Schimek, BRA, and Gabbert Development, Inc., alleging generally their negligence, and claiming contribution if the city were found liable to plaintiffs.

On summary judgment motion, the trial court ruled the third-party contribution actions were barred by the 2-year limitations period of Minn.Stat. Sec. 541.051 (1986). The court of appeals reversed, holding that the limitation period did not begin to run until the defendant city was sued by plaintiffs. Ocel v. City of Eagan, 390 N.W.2d 445 (Minn.App.1986).

1. In Bulau, we held that section 541.051, subd. 1 (1986), ² bars an action for contribution commenced more than 2 years after the discovery of the defective and unsafe condition. Here the defective condition of the lot as a suitable residential building site was discovered by March 8, 1978, or, at the latest, by September 11, 1978, when the Ocels sent their notice of damages claim to the city. Because the city did not bring its contribution actions within 2 years of discovery of the defective condition, we hold that the city's contribution claims are barred.

True, the 2-year limitation period had begun to run before the defendant city was sued and hence before the city could itself sue, at least sue for contribution. But absent any constitutional restraint, the legislature can so devise its statute of limitations. While this court has expressed possible due process concerns if a defendant were left with insufficient time within the 2-year period to bring a contribution action, see, e.g., Bulau and Calder v. City of Crystal, 318 N.W.2d 838 (Minn.1982), these concerns are not implicated here. In this case the city, after being sued by the Ocels, had at least 9 months left out of the 2-year period in which to bring its third-party contribution actions. The city, we might also observe, does not argue its contribution claim against Schimek is for the defective construction of the house itself, separate and independent of the storm sewer system. But even if this claim were made, the house was built by the summer of 1978, its problems were then evident, and the city's contribution action against Schimek was still not commenced until more than 2 years thereafter.

2. The defendant city next argues that section 541.051, which was effective on August 1, 1980, cannot be applied retroactively to a contribution claim that existed prior to August 1, 1980. We agree the statute does not apply retroactively to existing claims. Lovgren v. Peoples Electric Co., 380 N.W.2d 791, 795 (Minn.1986). A claim for contribution, however, does not fully exist until the claimant has paid more than its fair share, and, in Calder v. City of Crystal, 318 N.W.2d at 841-44, we held...