Sletto v. Wesley Const., Inc., A06-1413.

• Decision Date: 03 July 2007
• Docket Number: No. A06-1413.,A06-1413.
• Citation: 733 N.W.2d 838
• Parties: Mark and Laura SLETTO, individually and as parents and natural guardians of Travis Sletto, Appellants, Katrina Sletto, Plaintiff, v. WESLEY CONSTRUCTION, INC., d/b/a Wesley Homes, Respondent, Dale Kleven, et al., Defendants, and Wesley Construction, Inc., d/b/a Wesley Homes, defendant and third party plaintiff, Respondent, v. Steve Johnson, d/b/a Quality Construction, Third Party Defendant, Automated Building Components, Inc., third party defendant, Respondent, SNE Enterprises, Inc., d/b/a Crestline Windows and Doors, third party defendant, Respondent.
• Court: Minnesota Court of Appeals

733 N.W.2d 838

Mark and Laura SLETTO, individually and as parents and natural guardians of Travis Sletto, Appellants, Katrina Sletto, Plaintiff, v. WESLEY CONSTRUCTION, INC., d/b/a Wesley Homes, Respondent, Dale Kleven, et al., Defendants, and Wesley Construction, Inc., d/b/a Wesley Homes, defendant and third party plaintiff, Respondent, v. Steve Johnson, d/b/a Quality Construction, Third Party Defendant, Automated Building Components, Inc., third party defendant, Respondent, SNE Enterprises, Inc., d/b/a Crestline Windows and Doors, third party defendant, Respondent.

No. A06-1413.

Court of Appeals of Minnesota.

July 3, 2007.

David D. Hammargren, Anthony W. Thompson, Hammargren & Meyer, P.A., Roger R. Roe, Jr., Best & Flanagan, LLP, Minneapolis, MN, for appellants Mark and Laura Sletto.

Robyn N. Moschet, Cheryl Hood Langel, McCollum, Crowley, Moschet & Miller, Ltd., Minneapolis, MN, for respondent Wesley Construction, Inc.

Nicholas J. Eugster, Messerli & Kramer P.A., Minneapolis, MN, for respondent Steve Johnson.

Jeffrey A. Magnus, Law Offices of Jeffrey A. Magnus, Edina, MN, for respondent Automated Building Components.

Michael S. Kreidler, Stich, Angell, Kreidler & Dodge, P.A., Minneapolis, MN, for respondent SNE Enterprises, Inc.

Considered and decided by LANSING, Presiding Judge; HALBROOKS, Judge; and HUDSON, Judge.

OPINION

LANSING, Judge.

After discovering mold and water damage in their house, the homeowners filed statutory-warranty and common-law negligence claims against the homebuilder. The district court concluded that the statute limiting actions arising from real-property improvements barred the suit and granted summary judgment against all of the homeowners' claims. Because the 2004 amendment to the statute does not extinguish the homeowners' statutory-warranty claim, we affirm in part, reverse in part, and remand.

FACTS

Mark and Laura Sletto purchased a house in Rosemount from John and Linda Stark in 1993. The house had been built in 1990 by Wesley Construction (Wesley) and was sold to the Starks that same year.

About ten years after the Slettos' 1993 purchase, they first noticed water damage and mold contamination in their house. The Slettos notified Wesley, vacated the house, and hired a contractor to repair the conditions.

In November 2004, the Slettos sued Wesley, raising a statutory-warranty claim under Minn.Stat. § 327A.05 (2004) and five common-law claims based on Wesley's construction of the house. Wesley subsequently filed third-party contribution and indemnity claims against subcontractors who had worked on the construction of the house.

Wesley and the third-party defendants moved for summary judgment, arguing that the statute limiting actions arising from real-property improvements barred both the Slettos' common-law claims and their statutory-warranty claim. The statute provides that, unless a defect is concealed through fraud, a common-law construction claim cannot "accrue more than ten years after substantial completion of the construction." Minn.Stat. § 541.051, subd. 1(a) (2006). Wesley and the third-party defendants asserted that a 2004 amendment to the statute imposed a similar limitation on statutory-warranty claims. The subcontractors also argued that Wesley's contribution and indemnity claims against them were barred by the statute.

The district court concluded that the amended statute applied to the Slettos' statutory-warranty claim and therefore dismissed the claim. Furthermore, because the Slettos' common-law claims were brought more than ten years after completion of construction, the district court concluded that those claims were barred unless the defects were fraudulently concealed. The district court therefore ordered that discovery continue solely on the issue of fraud. After further discovery, the district court granted summary judgment on the fraud issue as well. As a result, all of the Slettos' claims were dismissed. Because all of the Slettos' claims were dismissed, the district court also dismissed Wesley's contribution and indemnity claims against the subcontractors. The Slettos appeal the application of the amended statute and the grant of summary judgment on the fraud issue.

ISSUES

I. Does the text of the 2004 amendment to Minn.Stat. § 541.051 clearly and manifestly indicate that the amended statute should be applied retroactively?

II. Did the district court's application of the amended statute to the Slettos' statutory-warranty claim produce an impermissibly retroactive result?

III. Did the district court err by finding that the Slettos failed to support their common-law claims with sufficient evidence of fraudulent concealment of construction defects to withstand summary judgment?

IV. Can summary judgment be independently affirmed in favor of the third-party defendants?

ANALYSIS

I

The retroactivity of a statute presents a question of law, which we review de novo. Gomon v. Northland Family Physicians, Ltd., 645 N.W.2d 413, 415-16 (Minn.2002). Statutes are presumptively prospective and not retroactive. Chapman v. Davis, 233 Minn. 62, 65, 45 N.W.2d 822, 824 (1951). "No law shall be construed to be retroactive unless clearly and manifestly so intended by the legislature." Minn.Stat. § 645.21 (2006). The language of the statute must contain clear evidence of retroactive intent, "such as mention of the word `retroactive.'" Duluth Firemen's Relief Ass'n v. City of Duluth, 361 N.W.2d 381, 385 (Minn.1985); see also K.E. v. Hoffman, 452 N.W.2d 509, 512 (Minn.App. 1990) (concluding that reference in statute to "actions pending" indicated retroactive intent), review denied (Minn. May 7, 1990). "Generally, it is immaterial in this state whether a law alters procedural or substantive rights; the legislature must still express its intention to make it retroactive." In re Estate of Murphy v. State, Dep't of Pub. Welfare, 293 Minn. 298, 308, 198 N.W.2d 570, 576 (1972).

Before the 2004 amendment, the statute stated, "This section shall not apply to actions based on breach of the statutory warranties set forth in section 327A.02, or to actions based on breach of an express written warranty, provided such actions shall be brought within two years of the discovery of the breach." Minn.Stat. § 541.051, subd. 4 (2002). The 2004 amendment deleted and replaced this provision. 2004 Minn. Laws ch. 196, § 1, at 356-57. The amended statute now provides:

For the purposes of actions based on breach of the statutory warranties set forth in section 327A.02, or to actions based on breach of an express written warranty, such actions shall be brought within two years of the discovery of the breach. In the case of an action under section 327A.05, which accrues during the ninth or tenth year after the warranty date, as defined in section 327A.01, subdivision 8, an action may be brought within two years of the discovery of the breach, but in no event may an action under section 327A.05 be brought more than 12 years after the effective warranty date.

Minn.Stat. § 541.051, subd. 4 (2006).¹ In addition, because the amendment removed the exemption for statutory-warranty claims, the limitation on accrual in subdivision 1 of the statute now applies to statutory-warranty claims. Subdivision 1(a) states:

Except where fraud is involved, no action by any person in contract, tort, or otherwise to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, 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 or against the owner of the real property more than two years after discovery of the injury . . . nor[ ] in any event shall such a cause of action accrue more than ten years after substantial completion of the construction. Date of substantial completion shall be determined by the date when construction is sufficiently completed so that the owner or the owner's representative can occupy or use the improvement for the intended purpose.

Minn.Stat. § 541.051, subd. 1(a) (2006).

The text of the amended statute does not contain the word "retroactive" and does not contain any similar indication of retroactive intent. Therefore, the legislature has not clearly and manifestly indicated that the amended statute should be applied retroactively. In addition, the amendment made significant changes and was not merely a clarification. See Thompson Plumbing Co. v. McGlynn Cos., 486 N.W.2d 781, 785 (Minn.App.1992) (noting that acts "that merely clarify, rather than modify, existing law may be applied retroactively"). For these reasons, we conclude that the amended statute can only be applied prospectively.

II

Having established that the amended statute cannot be applied retroactively, we must now address whether the district court's application of the statute in this case caused an impermissibly retroactive result. This question presents an issue of law, which we review de novo. See Midwest Family Mut. Ins. Co. v. Bleick, 486 N.W.2d 435, 438 (Minn.App.1992) (deciding as matter of law that application of statute was not retroactive), review denied in part, granted in part, and remanded (Minn. July 27, 1992).

We begin our analysis with the text of the statute. The amended statute limits statutory-warranty claims in two ways. First, the statute provides that a statutory-warranty claim cannot "accrue more than ten years after substantial completion of the construction." Minn.Stat. § 541.051, subd. 1(a). A statutory-warranty claim accrues when "the homeowner discovers, or should have discovered, the builder's refusal or inability to ensure the home is free from major construction defects." Vlahos v. R & I Const. of Bloomington, Inc., 676 N.W.2d 672, 678 (Minn. 2004). Thus, the statute regulates conduct that relates directly to...