885 N.W.2d 478
Minn. Ct. App.2016Background
- Developer (Frauenshuh entities) built 650 North Main, hired Kraus-Anderson (contractor) and J. Buxell Architecture (architect); unit owners formed 650 North Main Association (the association).
- After water intrusion and damage, the association sued developer and contractor under statutory warranty statutes: Minn. Stat. ch. 327A (vendor/contractor warranty) and Minn. Stat. ch. 515B (MCIOA declarant warranties). Architect was not a party.
- Jury found building had major construction and architectural design defects; attributed $101,250 damages to Kraus-Anderson and $101,250 to J. Buxell, but found Frauenshuh did not, by its own actions, cause the defects; jury also found no timely written or actual notice to Kraus-Anderson or Frauenshuh within six months (relevant to ch. 327A liability).
- District court refused JMOL on construction-defect recovery (citing lack of notice under ch. 327A) but granted JMOL on architectural-design defects, holding developer liable for the $101,250 attributed to the architect; awarded attorney fees and costs to the association.
- Appellate court reviewed whether developer can be liable under MCIOA for defects caused by contractors/architects it hired, whether contractor’s statute-of-notice defense under ch. 327A shields developer under ch. 515B, admissibility/expert-proof of architectural design defects, and whether attorney-fee/cost awards were proper; it affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of post-trial JMOL/new-trial motion | Association: motion filed/timely because filed before service of notice of filing; hearing date stipulation waived any objection | Frauenshuh: motion untimely under Minn. R. Civ. P. 59.03 and hearing not within 60 days | Motion timely; court had jurisdiction; parties waived objection to hearing date by stipulation |
| Whether developer is liable under MCIOA (§515B.4-113) for defects caused by hired contractor/architect | Association: §515B.4-113(b)(2) imposes warranty on declarant for improvements “made or contracted for by the declarant,” so declarant is liable even if third party caused defects | Frauenshuh: cannot be liable where jury found it did not cause defects; contractor shielded by ch. 327A notice rule so developer likewise should be insulated | Held: Developer liable as a matter of law under §515B.4-113(b)(2) for defects caused by contractor it contracted; ch. 327A notice defense does not bar developer’s §515B liability |
| Admissibility and sufficiency of evidence of architectural design defects (expert proof) | Association: forensic engineers’ testimony was competent to prove design defects and statutory-warranty breach under §515B | Frauenshuh: needed architect-expert and §544.42 professional-malpractice procedures should apply | Held: §544.42 inapplicable because claims were statutory warranty claims, not professional-malpractice; forensic-engineer testimony was competent to prove architectural/design defects for §515B purposes |
| Award of attorney fees and costs (including expert fees) under §515B.4-116(b) | Association: entitled to reasonable fees/costs; fee award should be re-evaluated if additional JMOL granted | Frauenshuh: fees excessive, should be limited by contingency agreement and proportionate to recovery; expert fees beyond §549.02/§549.04 not recoverable | Held: District court’s lodestar-based fee award was not an abuse of discretion but must be reevaluated on remand given increased recovery; “costs of litigation” under §515B.4-116(b) may include reasonable litigation expenses (including expert fees) beyond §549.02 amounts |
Key Cases Cited
- Differt v. Rendahl, 306 N.W.2d 813 (Minn. 1981) (failure to comply with post-trial motion timing rule can divest court of jurisdiction)
- Williams v. Smith, 820 N.W.2d 807 (Minn. 2012) (subject-matter jurisdiction is reviewed de novo)
- Eclipse Architectural Grp., Inc. v. Lam, 814 N.W.2d 692 (Minn. 2012) (interpretation of civil rules reviewed de novo)
- Moorhead Econ. Dev. Auth. v. Anda, 789 N.W.2d 860 (Minn. 2010) (standard for overturning jury answers on special verdicts)
- Peterson v. Bendix Home Sys., Inc., 318 N.W.2d 50 (Minn. 1982) (elements of a breach-of-warranty claim)
- Daly v. McFarland, 812 N.W.2d 113 (Minn. 2012) (court may change special-verdict answers as a matter of law)
- Blanchard v. Bergeron, 489 U.S. 87 (1989) (contingent-fee agreement is not necessarily the ceiling on statutory fee awards)
- Green v. BMW of N. Am., LLC, 826 N.W.2d 530 (Minn. 2013) (lodestar method and factors for reasonableness of statutory attorney fees)