• 328 Barry Avenue, LLC v. Nolan Properties Group, LLC a. Carciofini Company, et al., Court File #A14-0724. 
  • May 14, 2015 | Author: Elizabeth S. Poeschl
  • Law Firm: Meagher & Geer, P.L.L.P. - Minneapolis Office
  • This opinion is important because the Court of Appeals addressed questions related to the Minnesota two-year statute of limitations that applies to all construction projects. The construction project at issue began in 2008. In October 2009, when the construction was ongoing, the general contractor noticed water intrusion, and asked the subcontractor to fix the leak. The subcontractor made several efforts to fix the leak but water continued to seep into the building. The general contractor again noticed water infiltration in August 2010. In October 2012, the owner sued the general contractor for the construction defect. The contractors asked the District Court to dismiss the lawsuit because the owner was aware of the water infiltration in 2009, and that the owner failed to bring the lawsuit within two years. The owner opposed the dismissal, stating that it was not did not know the specific cause of the water infiltration problem in the lawsuit. The District Court disagreed with the owner and dismissed its claims. The Court of Appeals affirmed.

    This opinion is important because it confirms several aspects of Minnesota's statute of limitations case law including: (1) the two-year statute of limitations begins to run when a party discovers or should have discovered a construction defect; (2) a party does not need to be aware of the exact cause of the defect for the limitations period to begin running; and (3) construction does not need to be completed for the two-year limitation period to start.

    There is one additional important aspect of this opinion that is especially important to contractors and developers in large projects. The Court of Appeals specifically found that the general contractor had a representative who was acting as the sole decision-maker for both the owner and the general contractor. As such, the knowledge learned by the representative, as the general contractor, was imputed to the owner. For future projects, this could mean that information obtained by a general contractor or design professional acting as an owner's representative will be imputed to the owner for statute of limitations purposes. This arguably puts an extra responsibility on the representative to ensure that the owner is aware of any problems so that it can determine whether to bring a lawsuit within the limited time period.