In our prior construction law posts, we first looked at the type of claims that a homeowner may bring against a builder or remodeling contractor (link to post). In a second post, we focused on pre-lawsuit considerations such as the builder’s right to inspect the property and make an offer to repair and the home warranty dispute mediation process put forth by the Minnesota Department of Labor and Industry (link to post).
The topic of this post will turn to builder and contractor defenses against construction defect claims. Note that the defenses outlined below are just some of the many defenses that may be asserted.
Statutory Defenses and Exclusions Under Minn. Stat. § 327A
- Failure of owner to notify builder within six months after discovering damage. Minn. Stat. § 327A.03(a). If the builder has actual notice of the damage, the owner may be absolved of this statutory requirement.
- Owner supplied designs. If the owner provides their own design plans or specifications they may not be able to bring a construction defect claim against the builder who performed work according to the plans. Minn. Stat. § 327A.03(b); Zontelli & Sons v. City of Nashwauk, 373 N.W.2d 744 (Minn. 1985).
- “Loss or damage from normal wear and tear.” Minn. Stat. § 327A.03(d).
- Damage caused from dampness and condensation due to insufficient ventilation after occupancy by the owner. Minn. Stat. § 327A.03(f).
- Damage caused by the owner’s failure to maintain the home in “good repair.” Minn. Stat. § 327A.03(j).
- Accidental damage “described as acts of God, including, but not limited to: fire, explosion, smoke, water escape, windstorm, hail or lightning, falling trees, aircraft and vehicles, flood, and earthquake…” Minn. Stat. § 327A.03(m). Given the harsh climate changes seen in Minnesota, builder’s may avoid liability for damages resulting from occurrences in nature that are entirely out of their control.
This list is not exhaustive by any means as there are 16 statutory exclusions found in Section 327A.03 that may excuse a builder from liability.
Statute of Limitations
Construction defect claims do not extend into perpetuity and at some point in time, the owner (or subsequent owner) loses their right to bring a claim. In general, statutory construction defect claims must be brought within “two years of the discovery of the breach.” Minn. Stat. § 541.051. For major construction defects, the “breach” referred to in Section 541.051 occurs when the “homeowner discovered, or should have discovered, the builder’s refusal or inability to insure that the home was free from major construction defects.” Vlahos vs. R&I Construction of Bloomington, 676 N.W. 2d 672 (Minn. 2004.) The breach commonly happens when the homeowner notifies the contractor of the defect and the matter is not resolved.
Statute of Repose
Though the above-described statute of limitations serves to bar claims not brought within 2 years of discovery of the breach, what happens if the owner does not discover the defect until long after the construction was completed? Minn. Stat. § 541.051, subd. 1, provides a 10 year limit to bring claims following substantial completion of the work. In certain cases, this may be extended to 12 years if the condition was discovered in year 9 or 10 after completion by tacking on the 2 year statute of limitation discussed above. Minn. Stat. § 541.051, subd. 2.
Spoliation of Evidence
Almost every construction defect case involves the doctrine of spoliation of evidence in some form. As mentioned in a prior post, spoliation is the destruction of evidence by the party in possession of such evidence. In a homeowner-contractor dispute, the evidence often is the home itself or some portion of it. Therefore, if a homeowner makes changes to the builder’s work or hires a new party to come in and repair and/or remove the prior builder’s work, spoliation may come into play as the builder will no longer be able to view the evidence to be used against it. On the flip side, homeowner’s are recommended to permit builders and contractors to inspect the work that the homeowner claims is defective to avoid spoliation issues. When spoliation occurs, the court has a variety of remedies it may provide to the builder including exclusion of evidence, adverse inference jury instructions, or dismissal of the case in severe cases.
Contractual Limitations
Don’t forget to review the contract! Frequently, the contract terms will explicitly define and limit a builder or contractor’s liability. Though certain statutory warranties found in Section 327A may not be waived by contract, a well drafted contract can set forth material terms obligating both parties to performance.
Owner Acceptance of Defective Construction
If an owner accepts work with knowledge of certain defects and signs off on the project, they may be precluded from bringing certain types of claims. However, even if an owner’s acceptance of defective work serves to block a breach of contract claim, they may still bring claims under different legal theories such as negligent construction or breach of the statutory warranties found in Section 327A, which as mentioned above, generally cannot be waived.
This post was created by Christopher Boline, a commercial and real estate attorney at Dudley and Smith, P.A. Mr. Boline has worked with contractors and homeowners in a variety real estate matters. If you have questions about construction law, please contact Mr. Boline at 651-291-1717 or by email at cboline@dudleyandsmith.com. Dudley and Smith, P.A. is a full service law firm with offices in St. Paul, Bloomington, Burnsville, Chanhassen, White Bear Lake, and Woodbury.
The law is continually evolving and Dudley and Smith, P.A.’s blog posts should not be relied upon as legal advice, nor construed as a form of attorney-client relationship. Postings are for informational purposes and are not solicitations, legal advice, or tax advice. A viewer of Dudley and Smith, P.A.’s blog should not rely upon any information in the blog without seeking legal counsel.