Today, in a high-profile appeal argued by Arthur Chapman attorneys on behalf of the general contractor, the Minnesota Supreme Court issued a significant, unanimous decision that is good news to all Minnesota contractors who want repose for their work done on multi-unit residential buildings: Village Lofts at St. Anthony Falls Association v. Kraus-Anderson Construction Company, et al., No. A18-0256. At issue was a two-building condominium complex, each with dozens of separate residential units within. The plaintiff condominium association sued the developer, the general contractor, and all subcontractors who had contributed to the construction. The claim was that the heating, ventilation, and cooling (“HVAC”) systems in each were defective. The buildings were separate, and substantially completed two years apart. Each had a separate HVAC system.
The general contractor was Kraus-Anderson Construction Company. Kraus-Anderson was represented by a team of Arthur Chapman construction and appellate attorneys: Jon Zentner (construction), Steve Erffmeyer (construction), and Jeff Markowitz (appellate).
The district court granted the defendants’ motion for summary judgment, based on the 10-year statute of repose in Minn. Stat. § 541.051. The Minnesota Court of Appeals reversed in part, affirming summary judgment against the common-law claims, but reversing summary judgment against the 327A statutory warranty claims in Minn. Stat. § 327A.02, subd. 1(c). The Minnesota Supreme Court accepted cross-petitions to review, affirmed summary judgment against the common-law claims, and reinstated summary judgment for the defendants on the 327A statutory warranty claims.
Today’s decision ensures the repose for Minnesota condo contractors that the Legislature intended. It means that, for multi-building condominium complexes, each building is subject to one—and only one—10-year statute of repose. And it means two significant points, which are claim specific:
- When common-law claims are at issue, the 10-year repose period as to those claims begins upon “substantial completion” of each building—not substantial completion of the entire multi-building condominium complex. Village Lofts involved two buildings—Buildings A and B—substantially completed roughly two years apart. The condo association argued that, even though Building A was substantially completed roughly two years before Building B, it shared a repose period with Building B, which did not begin until Building B’s substantial completion. The Minnesota Supreme Court disagreed. It held that each Building was subject to one and only one statute of repose, with one and only one substantial completion trigger.
- When 327A statutory warranty claims are at issue, the 10-year repose period as to those claims begins on the multi-unit building’s one—and only one—“warranty date,” i.e., the date when the first buyer occupies or takes title to a unit in the building. The dispute on appeal was whether each building had only one warranty date (defendants’ position) or multiple warranty dates, one for every unit (the association’s position). That was significant because “warranty date” triggers not only the statute of repose, but also 1-, 2-, and 10-year warranties supplied by Chapter 327A. If the association were right, each building’s HVAC system would have had dozens of different warranty periods and repose periods. In effect, it would have meant that, in a 100-unit building, even if 99 units were owned and occupied for 20 years—and used the HVAC system for 20 years—if Unit 100 was not owned and occupied until Year 20, a 10-year repose period would be just getting started. The Court rightly concluded that the defendants’ single-warranty-date approach was the only way to ensure the “meaningful temporal limits” on 327A liability that the Legislature intended. The Legislature extended the statute of repose to 327A claims through a 2004 amendment.
The members of Arthur Chapman’s Construction Practice Group and Arthur Chapman's Appellate Practice Group stand ready to answer any questions you may have and assist in any way possible.
