328 Barry Avenue, LLC v. Nolan Properties Group, LLC
871 N.W.2d 745
Minn.2015Background
- 328 Barry Avenue, LLC (328 LLC) hired Nolan Properties Group, LLC (NPG) as general contractor for a commercial building; both companies are owned by John Nolan. NPG subcontracted most work and had no written contract with 328 LLC.
- During construction in Oct–Nov 2009, a subcontractor observed water intrusion around an east-side window; subcontractor applied some sealant and performed a hose test; no repairs beyond that are clearly documented.
- Certificate of occupancy issued Jan 2010; parties agree construction was substantially complete by May 2010 and occupied thereafter.
- In August 2010 328 LLC again observed water on the floor; later inspections (2011–2012) revealed leaks and widespread water damage around multiple windows and defective installations.
- 328 LLC sued NPG for negligence on June 14, 2012. District court granted summary judgment holding the suit time-barred under Minn. Stat. § 541.051, subd. 1(a) (2‑year discovery rule); the court of appeals affirmed. The supreme court affirmed the statutory interpretation but reversed in part and remanded on the factual discovery issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 541.051(1)(a) requires substantial completion before accrual | Limitations cannot run before substantial completion; pre-completion defects may be remediable and not an actionable injury | Plain text triggers accrual on "discovery of the injury," not on substantial completion | Court: statute unambiguous — accrual depends on discovery, not substantial completion; will not read "substantial completion" into the limitations clause |
| When did the 2-year limitations period begin (discovery date)? | Discovery occurred in Aug 2010 when widespread water intrusion was observed; the Oct–Nov 2009 leak was an isolated, remediable construction issue | Discovery occurred in Oct–Nov 2009 when leak was first observed and tested; that notice started the limitations clock | Court: factual dispute exists whether 2009 leak was remedied or constituted discoverable injury; summary judgment improper; remand for fact resolution |
| Whether owner must know the injury’s cause or extent to start limitations | Argues that mere knowledge of a leak during construction is not necessarily knowledge of an actionable injury | Defendants cite precedents holding notice of some injury or need to repair starts limitations | Court: owner need not know full cause/extent, but here reasonable minds could differ whether 2009 events constituted discovery of actionable injury |
| Effect of applying accrual during construction on statute of repose | Plaintiff: would render 10-year repose meaningless if limitations always runs during construction | Defendant: repose and discovery limitations serve different roles; repose still bars long-latency discoveries | Court: Repose remains meaningful for injuries discovered long after completion; no redundancy shown |
Key Cases Cited
- Great River Energy v. Swedzinski, 860 N.W.2d 362 (Minn. 2015) (standard of statutory interpretation; review de novo)
- Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W.2d 672 (Minn. 2004) (limitations on warranty claims — distinguished because this case is negligence)
- Day Masonry v. Indep. Sch. Dist. 347, 781 N.W.2d 321 (Minn. 2010) (discovery of leakage and need for repair can start limitations period)
- Seagate Tech., LLC v. Western Digital Corp., 854 N.W.2d 750 (Minn. 2014) (interpretive principle that differing language in same statute is intentional)
- Pamida, Inc. v. Christenson Bldg. Corp., 285 F.3d 701 (8th Cir. 2002) (example where owners reasonably discovered construction defects years after substantial completion)