E. Side Lutheran Church of Sioux Falls, S.D., Dakota Nonprofit Corp. v. Next, Inc.

• Decision Date: 06 August 2014
• Docket Number: No. 26776.,26776.
• Citation: 2014 S.D. 59,852 N.W.2d 434
• Court: South Dakota Supreme Court
• Parties: EAST SIDE LUTHERAN CHURCH OF SIOUX FALLS, South Dakota, a South Dakota Nonprofit Corporation, Plaintiff and Appellant, v. NEXT, INC., a South Dakota Corporation, Defendant, Third–Party Plaintiff and Appellee, v. Fiegen Construction Co., a South Dakota Corporation and Brown Architecture & Design Co. n/k/a Studio 360 Architecture, Inc., a Nebraska Corporation, Third–Party Defendants, Fourth–Party Plaintiffs and Appellees, v. M.J. Dalsin Co. of S.D., Inc., Fourth–Party Defendant, Fifth–Party Plaintiff and Appellee, v. Jeff Prins d/b/a AJ Construction, Fifth–Party Defendant.

852 N.W.2d 434

2014 S.D. 59

EAST SIDE LUTHERAN CHURCH OF SIOUX FALLS, South Dakota, a South Dakota Nonprofit Corporation, Plaintiff and Appellant,

v.NEXT, INC., a South Dakota Corporation, Defendant, Third–Party Plaintiff and Appellee,

v.Fiegen Construction Co., a South Dakota Corporation and Brown Architecture & Design Co. n/k/a Studio 360 Architecture, Inc., a Nebraska Corporation, Third–Party Defendants, Fourth–Party Plaintiffs and Appellees,

v.M.J. Dalsin Co. of S.D., Inc., Fourth–Party Defendant, Fifth–Party Plaintiff and Appellee,

v.Jeff Prins d/b/a AJ Construction, Fifth–Party Defendant.

No. 26776.

Supreme Court of South Dakota.

Argued April 29, 2014.

Decided Aug. 6, 2014.

Ronald A. Parsons, Jr., Johnson, Heidepriem & Abdallah, LLP, William D. Kunstle, Samuel M. Goodhope, Laura T. Brahms, Kading, Kunstle & Goodhope, LLP, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.

Paul W. Tschetter, Roger A. Sudbeck, Boyce, Greenfield, Pashby & Welk, LLP, Sioux Falls, South Dakota, Attorneys for defendant, third-party plaintiff and appellee NEXT, Inc.

Derek A. Nelson, William P. Fuller, Fuller & Williamson, LLP, Sioux Falls, South Dakota, Attorneys for third-party defendant, fourth-party plaintiff and appellee Brown Architecture & Design Co.

Michael L. Luce, Murphy, Goldammer & Prendergast, LLP, Sioux Falls, South Dakota, Attorneys for third-party defendant, fourth-party plaintiff and appellee Fiegen Construction Co.

Gregory J. Erlandson, Bangs, McCullen, Butler, Foye & Simmons, LLP, Rapid City, South Dakota, Attorneys for fourth-party defendant, fifth-party plaintiff and appellee M.J. Dalsin Co. of S.D., Inc.

SEVERSON, Justice.

[¶ 1.] East Side Lutheran Church (East Side) appeals from a summary judgment ruling that barred its claim for failing to timely file suit within the applicable six-year statute of limitations. We affirm in part and reverse in part.

Background

[¶ 2.] In April 2002, East Side contracted with NEXT, Inc. (NEXT) for construction of a new addition to East Side's church and renovation to its existing structure.NEXT worked as East Side's representative for the project and contracted with third-party defendants Brown Architecture & Design Company (Brown) and Fiegen Construction Company (Fiegen). Brown provided design and architectural work on the project and Fiegen served as the general contractor. Fiegen subcontracted with fourth-party defendant M.J. Dalsin Company (Dalsin) to complete the roof construction associated with the project. ¹ The project was substantially completed in August 2003.

[¶ 3.] In the months immediately following the project's completion, East Side experienced a variety of problems throughout the structure. The problems included ice dams, bats in the church, chipping concrete, hail penetration, and drainage issues, but the overriding problem was water infiltration.² The water infiltration persisted and resulted in this litigation.

[¶ 4.] East Side and NEXT communicated about, and NEXT attempted to eradicate, the water infiltration from the date of the project's completion until May 2009. On January 23, 2009, NEXT's attorney sent a letter to East Side explaining that Fiegen and Dalsin were “unwilling to perform any additional work[,]” and that NEXT had, without admitting liability, “notified its insurance carrier of a potential claim.” Later that spring, on May 28, 2009, NEXT's attorney informed East Side's attorney that NEXT “will be undertaking no additional repairs to” the church. The letter further stated that East Side “will need to either undertake its own repairs and proceed with litigation or contact Fiegen and Dalsin regarding any such repairs.”

[¶ 5.] In March 2010, East Side hired Michael Ollerich of American Technical Services. Ollerich's reports confirmed that the church was experiencing water infiltration. Ollerich's reports further indicated the project's design contained structural errors; the work completed contained construction errors; and the structure was experiencing ventilation and insulation problems. East Side filed suit against NEXT in July 2010.³

[¶ 6.] NEXT, Brown, Fiegen, and Dalsin (Defendants) moved for summary judgment on the basis that East Side filed its suit outside of the six-year statute of limitations. SeeSDCL 15–2–13. The Defendants argued that because East Side knew of the water infiltration immediately after construction was completed, the six-year statute of limitations began to run as early as August 2003. As a result, the statute of limitations lapsed in 2009 and East Side's July 2010 lawsuit was not timely filed.

[¶ 7.] East Side opposed summary judgment and argued that its lawsuit is based in part on the project's structural design errors and construction errors. Because it did not know of the structural design errors and construction errors until Ollerich's 2010 reports, it argued its claims did not accrue until 2010, making its suit timely. East Side also argued that equitable estoppel tolled the statute of limitations.

[¶ 8.] The circuit court granted summary judgment to Defendants on the statute of limitations issue because East Side “had actual or constructive notice of a cause of action immediately after the substantial completion [of the project] in August of 2003.” The circuit court also granted summary judgment to Defendants on the issue of equitable estoppel because there was no “genuine issue of material fact regarding whether or not any of the [D]efendants misrepresented or concealed material facts from [East Side] in order to induce [East Side] to change its position in reliance upon either those misrepresentations or that concealment.” East Side now appeals to this Court arguing the circuit court's rulings on the statute of limitations and equitable estoppel were error.⁴

Decision

Statute of limitations

[¶ 9.] The parties agree that the six-year statute of limitations prescribed by SDCL 15–2–13 controls East Side's claims. East Side commenced this action in July 2010. Thus, any claims that accrued before July 2004 are barred. As a result, we must resolve if there are any genuine issues of material fact as to whether any or all of East Side's claims accrued before July 2004.

[¶ 10.] A claim accrues when a plaintiff has actual or constructive notice of a cause of action. Strassburg v. Citizens State Bank, 1998 S.D. 72, ¶ 10, 581 N.W.2d 510, 514. “Actual notice consists in express information of a fact.” SDCL 17–1–2. “Constructive notice is notice imputed by the law to a person not having actual notice.” SDCL 17–1–3. “One having actual notice of circumstances sufficient to put a prudent person on inquiry about ‘a particular fact, and who omits to make such inquiry with reasonable diligence, is deemed to have constructive notice of the fact itself.’ ” Strassburg, 1998 S.D. 72, ¶ 10, 581 N.W.2d at 514 (quoting SDCL 17–1–4).

[¶ 11.] “Because the point at which a period of limitations begins to run must be decided from the facts of each case, statute of limitations questions are normally left for a jury.” Strassburg, 1998 S.D. 72, ¶ 7, 581 N.W.2d at 513 (citation omitted); see also Wissink v. Van De Stroet, 1999 S.D. 92, ¶ 11, 598 N.W.2d 213, 215 (citations omitted) (“This Court has recognized that, generally, statute of limitations questions are left for the jury.”); Huron Ctr., Inc. v. Henry Carlson Co., 2002 S.D. 103, ¶ 11, 650 N.W.2d 544, 548 (citation omitted) (“[T]he question of when accrual occurred is one of fact generally reserved for trial.”). “Here, we must ascertain whether there is any genuine issue of material fact concerning the date the cause of action accrued; if not, and if the applicable limitations period has expired as a matter of law, then the [Defendants are] entitled to summary judgment.” Strassburg, 1998 S.D. 72, ¶ 7, 581 N.W.2d at 513 (citation omitted).

[¶ 12.] There is no genuine issue of material fact concerning East Side's actual notice of the water infiltration prior to July 2004. It is undisputed East Side knew water infiltration existed throughout the building almost immediately after construction was completed in August 2003. Because East Side's actual notice of the water infiltration gave rise to a situation where East Side could have filed suit and sought relief, any claim with a sufficient relationship to the water infiltration so as to put East Side on constructive notice of that claim (water infiltration claim) accrued and statutorily lapsed prior to East Side's July 2010 lawsuit. See Spencer v. Estate of Spencer, 2008 S.D. 129, ¶ 16, 759 N.W.2d 539, 544 (citation omitted) (“A cause of action accrues when the right to sue arises.”).

[¶ 13.] We must next determine whether accrual of the water infiltration claims encompasses all of East Side's alleged design and construction error claims, and whether that is a factual or legal question. ⁵ East Side contends this case presents “different acts constituting breaches of contract,” which result “in separate or different damages” that “give rise to separately accrued claims.” East Side argues that “[m]any of the structural deficiencies and defects [discovered in 2010] had nothing to do with water infiltration[,]” and as a result, there is a factual dispute as to when the different claims accrued. Defendants argue that the water infiltration places East Side, as a matter of law, on constructive notice of any other defect in the building. Defendants contend there have not been different acts constituting separate breaches of contract, but only East Side learning the full extent of its damages.⁶

[¶ 14.] A claim can accrue “even when one may not yet know all the underlying facts or the full extent of damages.” Strassburg, 1998 S.D. 72, ¶ 13, 581 N.W.2d at 515 (citations omitted). But different causes of action can accrue under the same contract. See Dakota, Minn. & E.R.R. Corp. v. Acuity, 2006 S.D. 72, ¶ 23, 720 N.W.2d 655, 662 (providing that different causes of action existed under the same insurance contract). “Statut...