O'Meara, Leer, Wagner & Kohl, P.A. News

The Minnesota Supreme Court Scrutinizes the WCCA’s Vacation of a Stipulation for Settlement and Reverses

June 15th, 2017

On June 7, 2017, the Minnesota Supreme Court reversed the Workers’ Compensation Court of Appeals’ (WCCA) vacation of an Award on Stipulation based on an unanticipated substantial change in medical condition.  Hudson v. Trillium Staffing.  The employee sustained an admitted injury to his neck, low back, and in the form of traumatic brain and psychological injuries on April 16, 2014.  The parties entered into a full, final and complete settlement leaving future medical benefits open to the neck and low back in June 2015 (presumably medical benefits for the TBI and psychological injuries were closed).  Prior to settlement the employee had been assigned disputed permanent partial disability ratings to the neck and low back, but the psychological condition had not been rated due to the employee not completing treatment with his treating psychologist.  Following settlement the employee began treatment with a new psychologist who assigned 75% PPD and opined the employee could not work.  In July 2016, the employee filed a Petition to Vacate the Stipulation (pro se) based on this opinion, arguing his medical condition had substantially changed since the time of the award that was clearly not anticipated and could not reasonably have been anticipated at the time of the award.  The WCCA agreed and allowed the vacation due to the “far greater” PPD rating that had been assigned.  On appeal, the employer argued the medical evidence relied on by the WCCA was legally insufficient.  The Supreme Court agreed and held the employee had not satisfied his burden of establishing a substantial change in medical condition.  They felt the WCCA failed to sufficiently scrutinize the factual foundation of Dr. Ghelfi’s opinion.  Upon their review of the records, the Court felt Dr. Ghelfi’s opinion was descriptively flawed because it never indicated what facts formed the basis for her opinion the TBI warranted a PPD rating of 75% and it did not explain how she calculated such a high rating.  The factual support for the rating of the employee requiring “sheltering” and “some supervision of all activities” was also lacking as there was nothing in the record indicating this was needed.  Rather, the record showed the employee had considerable independence in daily activities, lived on his own, cared for his son and managed his own finances and medications.  This demonstrated the employee was capable of caring for himself without supervision of any activities, “let alone all activities.”  The Court therefore concluded Dr. Ghelfi’s PPD rating was manifestly contrary to the facts in the record and the WCCA’s reliance on it was an abuse of discretion in vacating the Stipulation.

What should we take away from this case?  This case represents another case in the Supreme Court’s trend of reversing the WCCA.

Contact the O’Meara Leer Wagner and Kohl Workers Compensation Team for more information or representation.

Minnesota Supreme Court Solidifies Common-Enterprise Doctrine with Ruling in Favor of Third Party

June 8th, 2017

This week, the Minnesota Supreme Court held in Kelly v. Kraemer Construction, Inc., A15-1751, that a general contractor hired to repair two bridges and the subcontractor it hired to assist with the project were engaged in a common enterprise for purposes of the election-of-remedies provision of the Minnesota Workers’ Compensation Act (“MWCA”)—Minn. Stat. § 176.061.  Because the two employers were engaged in a common enterprise, the court determined that the trustee for the next-of-kin of an employee of the general contractor killed during the project was precluded from bringing a negligence action against the subcontractor.

Minn. Stat. § 176.061, subds. 1 & 4 provides that when a worker is injured “under circumstances which create a legal liability for damages on the part of a party other than the employer . . . at the time of the injury,” and the third party carries proper workers’ compensation insurance and was engaged in a “common enterprise” with the employer, the MWCA mandates an election of remedies.  The party seeking recovery “may proceed either at law against [the third] party to recover damages or against the employer for benefits, but not against both.”  Id. at subd. 1.  The supreme court has long applied a three-part test to determine whether a common-enterprise exists:  (1) the employers must be engaged on the same project and (2) their employees must be working together (common activity), (3) in such fashion that they are subject to the same or similar hazards.  But the test has been applied inconsistently by the district courts and court of appeals over the years.

In Kelly, the general contractor hired a subcontractor to perform certain crane work that the general contractor did not have the equipment to perform.  While installing concrete culverts, an employee of the general contractor was electrocuted.  At the time, three other employees of the general contractor were working on the project along with two employees of the subcontractor—one operating the crane and a second oiling the crane, signaling the crane operator, and assisting with rigging the culver sections.

The deceased employee’s family received workers’ compensation benefits.  They then commenced a wrongful-death action against the subcontractor, who moved for summary judgment based on the election-of-remedies provision of the MWCA.  The district court denied the motion, but the court of appeals reversed in a 2-1 decision.  In a 4-2 decision, the supreme court affirmed the court of appeals decision that all three elements of the common-enterprise doctrine were met.

As in most cases, the first element of the doctrine (same project) was not in dispute.  And the supreme court unanimously agreed that the third element was met.  Specifically, the court determined that the two crews were exposed to the same or similar hazards, including the risk of being hit by the load, struck by a piece of culvert if it broke apart, or injured by a failure of the crane cable or boom, as well as the risk of slipping in muddy conditions or being hurt by the bulldozer being used to push the culvert sections into place.

It is the second element of the doctrine—the common activity or interdependence element—that led to the split decision.  With respect to the second element, the majority determined that the two employers’ crews were working together in a common activity because neither could have accomplished the day’s goal of setting the culvert sections without the contemporaneous assistance of the other crew—i.e. their work was interdependent.  Importantly, the court reasoned that although the two crews had distinct functions, those functions were interdependent and required close, contemporaneous coordination.  The dissent, on the other hand, would have limited the doctrine to situations in which two employers put their employees into a common pool to perform the same function or task.

After years of conflicting decisions from the district courts and court of appeals, the supreme court’s decision this week should help to clarify the scope of the common-enterprise doctrine for future cases.  In particular, the decision reaffirms the broad reach of the doctrine, particularly in construction cases.  It is important to note, however, that the doctrine is not without limits.  See, e.g., LeDoux v. M.A. Mortenson Co., 835 N.W.2d 20, 21 (Minn. App. 2013) (“The features of a basic-oversight relationship between a general construction contractor and one of its subcontractors does not create the kind of “common enterprise” under Minnesota Statutes section 176.061, subdivisions 1–4, that bars a negligence action against the general contractor by a subcontractor’s employee who received workers’ compensation benefits for injuries sustained on the construction site.”).  It is also important to note that the existence of a common enterprise does not preclude an employer from seeking subrogation from the negligent third party.  Minn. Stat. § 176.061, subd. 3.

If you have questions regarding the supreme court’s decision or the common-enterprise doctrine in general, please contact Brian McSherry, Lance Meyer, or one of the other attorneys in our Liability Practice Group at (952.831.6544).

Summary of 2017 Amendments to the Minnesota Workers’ Compensation Act

June 5th, 2017

On May 30, 2017, Minnesota Governor Mark Dayton signed legislation making several amendments to the Minnesota Workers’ Compensation Act (MWCA).

The amendments cover diverse aspects of the MWCA, including:

  1. Payment of medical bills, including creating a new requirement that payers and payees, including third party “clearinghouses”, train and designate a contact person for submission and payment of medical bills;
  2. Payment of medical bills under the “fee schedule” based on the Medicare-MS-DRG system and in catastrophic, high-cost injury claims;
  3. Minor changes and updates to service and filing procedures;
  4. A new provision dealing with the impact of the Ekdahl decision; and
  5. New procedures for submitting stipulations for settlement where the parties have settled but are unable to reach agreement with intervenors.

Each amendment has its own effective date.

Payments based on Medicare MS-DRG System – Minn. Stat. § 176.1362, Subd. 1 – Effective May 31, 2017.

This section was revised to require payments based on the Medicare MS-DRG system.  Effective for patients discharged after October 1, 2017, those payments for inpatient services and supplies must be calculated per the PC-Pricer program.  DOLI must post the MS-DRG system on its website or parties are to use the most recent version available on Medicare’s website effective July 1 of the prior year.

Payment for Catastrophic, High-Cost Injuries – Minn. Stat. § 176.1362, Subd. 2 – Effective May 31, 2017.

This section concerns payments for catastrophic or high cost injuries, i.e., hospitalizations the charges for which exceed $175,000.  The revisions clarify that the threshold amount is the amount on the date of discharge.  This section also requires the commissioner to annually adjust the catastrophic threshold amount using data available as of October 1 and publish the update threshold.

Filing and Service and Electronic Filing – Minn. Stat. § § 176.275 and 176.285 – Effective May 31, 2017.

  • The division, department, office, and court of appeals can now refuse to accept any form or document that lacks information required by statute or rule.  Also, they do not need to maintain duplicate forms or documents already filed.
  • When electronically filed documents must be served on a party, both the filed and served documents must contain the same information and be in the format required by the commissioner.
  • Electronically filed document may contain an electronic signature, which is defined by Minn. Stat. § 325L.02, as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”
  • The State of Minnesota may serve documents electronically on a payer (workers’ compensation insurer, self-insured employer, or third-party administrator), rehabilitation provider, or attorney, and on any other party if that party agrees to receive the document in electronic format.  The date of service of an electronically served document is the date the recipient is sent the document or notified that the document is available on a website, whichever occurs first.

 

Forbearance of Amounts Owed to Special Compensation Fund – Minn. Stat. § 176.1292 – Effective May 31, 2017.

In Ekdahl v. Independent School District #213, 851 N.W.2d 874 (Minn. 2014) the Minnesota Supreme Court held the phrase “old age and survivor insurance benefits,” as used in Minn. Stat. § 176.101, subd. 4 was limited to Social Security benefits and did not include public pension retirement benefits.  The Ekdahl decision reversed the common practice of employers and insurers offsetting public pension retirement benefits from permanent total disability benefits once $25,000 was paid in permanent total disability benefits.

Minn. Stat. § 176 .1292, a new amendment to the MWCA, adds language codifying parts of the Ekdahl decision and clarifying the consequences.  The statute prohibits payers from offsetting government retirement benefits, other than Social Security retirement benefits, from PTD benefits.  The bill defines retirement benefits as “retirement annuities, optional annuities received in lieu of retirement benefits, and any other benefit or annuity paid by a government benefit program that is not clearly identified as a disability benefit or disability annuity.”  Payers may still offset old age and survivor Social Security benefits.

If payers offset government retirement benefits from past PTD benefits, the statute requires the payers to recalculate benefits owed without the public retirement offset and pay the employee the underpayment owed.  If the employee is deceased, the PTD underpayment owed, without public retirement offset, is due to the employee’s dependents or legal heirs if there are no dependents.  Payers who timely recalculate and pay PTD may take credit for supplementary benefits and PTD benefits previously paid.

The statute outlines time deadlines in which payers must pay the PTD benefits, depending on the status of the claim (whether benefits are ongoing, whether the employee is deceased, etc.).  The deadlines range from 150 to 270 days following enactment of the amendment.  More than one time frame may apply to a claim. 

Payers are not required to recalculate permanent total disability benefits owed if:

  • The employee died before 1/1/08.
  • The employee’s last PTD benefit was paid before 1/1/2000.
  • The employee’s last PTD benefit would have been paid before 1/1/2000 if the PTD benefit was not reduced by public retirement benefits.
  • There is a full, final and complete Stipulation for Settlement closing out PTD benefits.
  • There is a Stipulation for Settlement or final court decision that explicitly states the employee’s PTD benefits may be reduced by public retirement benefits. This does not apply if the Stipulation for Settlement or final court decision is ambiguous.
  • A final court decision or Stipulation for Settlement that allowed PTD benefits to be reduced by public retirement benefits was vacated after the statute was amended.

Payers that have appropriately recalculated and paid PTD benefits are not required to re-pay supplementary benefits if the Special Compensation Fund over-reimbursed supplementary benefits.

Payers that have appropriately recalculated and paid PTD benefits are entitled to reimbursement of supplementary benefits paid before August 13, 2014, if the Special Compensation Fund denied reimbursement due to the payer’s reduction of PTD benefits by public retirement benefits.

A payer that appropriately recalculated and paid PTD benefits is entitled to a refund from the Special Compensation Fund if the payer re-paid the Special Compensation Fund for an over-reimbursement of supplemental benefits or paid assessments on increased permanent total disability benefits for employees with dates of injury before August 13, 2014.  The Special Compensation Fund must issue a refund within 30 days.  The Special Compensation Fund must also pay interest on any refunds.

Assessments – If a payer timely recalculates and pays PTD under this section, they do not have to pay past or future assessments on the amount of increase or additional PTD or past supplementary benefits recalculated as PTD.

Refunds – Payers that already recalculated and paid recalculated PTD after Ekdahl and then reimbursed the Special Compensation Fund for overpaid supplementary benefits, or paid additional assessments based on the recalculated PTD, may claim a refund from the Special Compensation Fund.  The Fund must issue the refund within 30 days after they receive a properly documented claim for refund with the amount of the refund claimed.  The payer may claim for percent annual interest on its refund claim.

Applicability – The amendments do not prevent employees, dependents or heirs from pursuing additional PTD benefits beyond the recalculated PTD, but the previously paid PTD is not construed as an admission of liability and cannot be used to justify additional claims.  Payers reserve all defenses, including defenses that previous stipulations for settlement allowed the offset of PTD.  However, if the court rules that the payer may reduce PTD by retirement benefits received by the employee, the payer cannot recover any overpayment of recalculated PTD that the claimant already received and the payer cannot take a credit for any overpaid benefits against future benefits.  If the court determines the payer cannot reduce the PTD benefits by retirement benefits received by the employee, the payer may not claim exemption from assessments under this section.

Failure to Comply – There are consequences for failure to comply with the statute, including loss of the relief provisions regarding supplementary benefits and assessments and penalties.

Intervention Claims – Minn. Stat. § 176.521, subd. 2b(a) – Effective August 1, 2017.

The Legislature added a new section to the statute dealing with settlement agreements in cases where the parties have not been able to reach agreements with intervenors.  Under this new provision:

  • The parties may file a partial Stipulation resolving the employee’s claims but reserving the claims of the intervenors to be resolved separately.
  • If an intervenor does not sign the Stipulation, the partial Stipulation must include a statement the parties could not:
  1. Obtain a response from the intervenor on its interest or on an extended offer;
  2. Reach an agreement with the intervenor despite negotiating in good faith; or
  3. Obtain the intervenor’s signature within a reasonable time.
  • The Stipulation must contain detailed case-specific support for these statements.
  • The Stipulation must reserve the intervenor’s interests at hearing and provide that the employee will cooperate at hearing.

(b):  Prior to filing the partial Stipulation a copy of the partial Stipulation must be served on all parties, including the non-signing intervenor, with notification the parties intend to file the partial Stipulation

(c):  Within 10 days of service of the partial Stipulation a non-signing intervenor may serve and file an objection with case specific factual basis that approval will adversely impact the rights of the intervenor

(d):  After expiration of the 10 days any party may file the partial Stipulation

(e)  Unless the compensation judge has reasonable belief approval of the partial Stipulation will adversely impact the rights of the non-signing intervenor, the judge shall immediately issue the award

(f)  If the compensation judge has a reasonable belief approval will adversely impact the rights of the intervenor, the judge shall disapprove the stipulation.

Written Motions for Intervention – Minn. Stat. § 176.361, subd. 2 – Effective August 1, 2017.

In the case of an administrative conference or an expedited hearing, intervenors have 30 days to serve and file their written motions to intervene.

Objections to intervention claims should include detailed objections to any services rendered or payments made by the intervenor which are disputed.

Comment:  This provision codifies court decisions and rules developed by the Office of Administrative Hearings to deal with intervention claims and situations where the parties have not been able to reach agreement with an intervenor(s). The amendment specifically authorizes the Office of Administrative Hearings to use expedited rulemaking procedures to conform its administrator rules with the new statutory amendments to the provision regarding written motions for intervention.

Designated Contact Person and Required Training Related to Submission and Payment of Medical Bills – Minn. Stat. § 176.135, Subd. 9 Effective October 1, 2017.

As of November 1, 2017, a designated contact person, who has been trained to handle submission and payment of medical bills, must be provided to DOLI.  This includes any of the following:

  • Submission
  • Receipt
  • Acceptance
  • Response
  • Adjustment, and
  • Payment of medical bills.

This applies to carriers, TPA’s, Self-Insureds, hospitals and healthcare clearing houses.  If a new person takes over in this role, the organization must notify DOLI within 14 days.  The statute requires DOLI to create and information form with the designated employee’s contact information and post a directory of designated employees on DOLI’s website.

The designated person must complete training provided by DOLI and respond within 30 days of written requests regard submissions or payments of medical bills.

Penalties for failure to comply include:

  • $50 for each day of noncompliance after DOLI has given a 30 day written warning
  • Up to $3,000 for failure to have the designated person complete the training within 90 days of notice of the availability of training
  • Up to $3,000 for failure to respond to a DOLI inquiry about submission or payment of medical bills

DOLI cannot however penalize for this section and under 176.914, Subd. 3 (6) for failure to respond.

 

We are pleased to provide you with this summary.  You may find the text for the amendments,  included in the Session Laws Chapter 94, here.

Please contact any of the attorneys in our Workers’ Compensation Practice Group if you have any questions about these amendments or Minnesota workers’ compensation law.

Minnesota Court of Appeals Rules Immunity Under Recreational Use Statute is Only for Landowners Opening Lands to Community at Large

May 8th, 2017

In an opinion issued this morning, the Minnesota Court of Appeals ruled the immunities afforded to landowners under the recreational use statute (Minn. Stat. 604A.20 et seq.) are only available to those landowners who open their private lands to the public without charge.  The term “public,” according to the court, is akin to the term “community,” and means more than a few family members as was  contended in this case.  Because the legislative purpose of the statute is “to promote the use of privately owned lands and waters by the public for beneficial outdoor recreational purposes,” a landowner who opens its lands to a small number of individuals, but not the “public,” cannot hide behind the immunity shield afforded by the recreational use statute.

Click here to read the full opinion.

More more information or legal representaion contact the O’Meara Leer Wagner & Kohl Liability Team.

Minnesota Supreme Court Affirms WCCA’s Strict Reading of the Statutory Provisions Concerning Rehabilitation Plans and Job Offers

May 5th, 2017

On May 3, 2017, the Minnesota Supreme Court affirmed the Minnesota Workers’ Compensation Court of Appeals’ (WCCA) decision reversing a discontinuance of TTD based on a refusal to accept a job offer from the date-of-injury employer.  The court held that under Minnesota § 176.101, subd. 1 (i) (2016), an offer to return to work with the same employer is not “consistent with” a plan of rehabilitation which states the employee’s vocational goal is to return to work with a different employer in the same industry. Gilbertson v. Williams Dingmann.

Shannon Gilbertson worked as a funeral director for Williams Dingmann, LLC (Dingmann).  Gilbertson generally worked normal business hours, Monday through Friday, but also worked on-call outside of this schedule when needed.  When Gilbertson’s on-call schedule conflicted with her family obligations, and her employer could not accommodate her request to modify her schedule, she submitted a letter of resignation.

On October 13, 2011, approximately two weeks after sending her letter of resignation, Gilbertson suffered a low back injury while working for Dingmann.  The employer accepted responsibility for the injury and paid the employee temporary total disability benefits.

The employee worked with a qualified rehabilitation consultant (QRC), who completed an R-2 rehabilitation plan which checked the option for “[return to work] different employer” as the vocational goal.  The workers’ compensation insurer, the QRC and the employee each signed the Plan.

Dingmann later offered her a position within her restrictions at the same compensation and work schedule as her prior position there.  Gilbertson declined this job offer for the same personal reasons cited in her letter of resignation before her injury.  Dingmann’s insurer filed a Notice of Intention to Discontinue Gilbertson’s temporary total disability (TTD) benefits based on her refusal to accept a suitable job offer and Gilbertson contested the NOID.  Compensation judges presiding over the administrative conference and hearing upheld the discontinuance. The compensation judge in the hearing allowed the discontinuance because, although the employee’s rehabilitation plan specified a return to work with a different employer in the same industry, that goal was based on the employee’s personal interest.  The employee appealed this decision.

The WCCA reversed, concluding Dingmann could not discontinue TTD benefits because its job offer was not “consistent with Gilbertson’s plan of rehabilitation” to return to work with another employer.  Dingmann appealed the WCCA’s decision to the Minnesota Supreme Court, arguing that consistency with the rehabilitation plan requires consideration of the totality of the circumstances not just the box checked on the R-2 Rehabilitation Plan form.

The Minnesota Supreme Court affirmed the WCCA. Justice Hudson, writing for the court, stated that the plain language of Minn. Stat. § 176.101, subd. 1 (i), which provides TTD shall cease if the employee refuses “an offer of work that is consistent with a plan of rehabilitation”, was clear and unambiguous. The Court reasoned that nothing in the rehabilitation plan to which all parties agreed required the employee to accept a job offer from the date-of-injury employer.  The court stated it could not conclude the WCCA erred in holding the employer’s job offer contradicted the employee’s rehabilitation plan. Dingmann argued for a broad interpretation of the rehabilitation statute to require the employee to accept the job they offered. The court, rejecting the broad interpretation, also cautioned that its analysis of the rehabilitation provisions of the workers’ compensation statute should not “suggest that an employee’s personal obligations necessarily be accommodated in the vocational goals listed” on the R-2.

What should we take away from this case?  R-2 Rehabilitation Plans must be read carefully to protect employer and insurer’s future interests.  The court emphasized that in reaching its decision, it was simply enforcing the terms to which the parties agreed.  Here, the parties agreed that the employee would return to a job with a different employer, not the date-of-injury employer by simply checking a box on the basic R-2 form.  The employer, the court reasoned, had an opportunity to object to the terms of the rehabilitation plan, but it did not and is therefore bound by the terms of the agreement.

Please contact O’Meara Leer Wagner & Kohl’s Workers Compensation team for more information or legal representation.

Minnesota Court of Appeals Clarifies Application of Effective Date of January 2015 No-Fault Act Maximum Weekly Benefits Amendments

April 19th, 2017

In an unpublished case decided April 17, 2017, the Minnesota Court of Appeals clarified that individuals entitled to no-fault economic-loss benefits after January 1, 2015 are entitled to the amended maximum of $500 per week rather than the previous maximum of $250 regardless of which version of the statute was in effect when the individual signed their policy. Platz v. Progressive Direct Insurance, 27-CV-16-1500 (Minn. Ct. App. Apr. 17, 2017); Minn. Stat. § 65B.44 subd. 3(a) (2014).

On December 24, 2014, Pamela Sue Platz was injured in an automobile accident and received five months of income-loss benefits under her no-fault insurance policy. See Platz at 1. One week later, on Jan. 1, 2015, an amendment to Minnesota’s No-Fault Automobile Insurance Act became effective, raising the maximum weekly income-loss benefit amount from $250 to $500.  Progressive Direct Insurance, Platz’s insurer, provided her with income-loss benefits of $250 per week.

Platz petitioned for no-fault arbitration, arguing that she was entitled to benefits of $500 per week as of Jan. 1, 2015. The arbitrator disagreed, finding that Platz’s insurance policy is “governed by the law in effect when the policy was issued, and that the amendment to the no-fault act does not apply to claims arising from accidents that occurred before January 1, 2015.” Id. at 2.

In February 2016, Platz brought action in district court seeking to “partially vacate or modify the arbitrator’s award,” arguing that the arbitrator had “erroneously interpreted the no-fault act by ruling that she was not entitled to $500 per week . . . after January 1, 2015.” Id. at 3. The district court, reviewing the issue de novo, agreed with the findings of the arbitrator and denied Platz’s motion. Platz appealed.

The appellate court reversed, relying primarily on Hoben v. City of Minneapolis, 324, N.W.2d 161 (Minn. 1982). In Hoben, the court held that “Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss . . . is incurred. Under the statute economic loss benefits are payable as the loss occurs, not when the injury occurs.” Id. at 163 (citing Minn. Stat. § 65B.54, subd. 1 (1980)).

Applying Hoben, the court concluded that the amended maximum of $500 applied to any income loss benefits Platz was entitled to have paid out after January 1, 2015 and that therefore, the district court had “erred by denying Platz’s motion to partially vacate or modify the arbitrator’s award.”

Minnesota Court of Appeals provides guidance on Minnesota’s Construction Defect Statute of Limitations and MCIOA Six Year Repose Period

April 17th, 2017

Minnesota’s Court of Appeals provides guidance on the interpretation of Minnesota’s Statute of Limitations for construction defect cases and on the Minnesota Common Interest Ownership Act’s (“MCIOA”) six-year statute of repose in the unpublished case Town Center Office Plaza Assoc. Inc. v. Carlson Real Estate Ventures, LLC et al., (Minn. Ct. App. April 17, 2017).  The appellate court made the following decisions germane to construction defect litigation:

  1. Affirmed the district court’s order dismissing the plaintiff’s negligence and breach of contract claims as they were barred by Minnesota’s two-year statute of limitations for actions that arise out of a defective condition to real property improvements as against any person that furnishes the design or materials or performs the supervision or construction of improvements to real property.
  2. Affirmed the district court’s dismissal of the association’s Minnesota Common Interest Ownership Act (“MCIOA”) breach of warranty claims because the claims were time barred by the six-year statute of repose found in Minn. Stat. § 515B.4-115(c).
  3. Reversed the district court’s dismissal of the association’s breach of express-warranty claims against the developer for failure to analyze the claim under the correct statutory subdivision in order to ascertain the date those causes of action accrued.

Background

On June 8, 2004, developer Defendant Carlson Real Estate Company, Inc. contracted with general contractor Defendant The Bainey Group, Inc. to construct building shells for six commercial buildings, each building was designed to house six units (“Project”).  Carlson also created the Town Center Office Plaza Association in 2004 and began to sell the Project’s separate units.

The Project’s unit owners began complaining of water intruding into their units in 2006.  Carlson retained AMBE, Ltd. to inspect the Project.  AMBE conducted water testing in late 2006 and reported that water was intruding into the units due in part to missing caulk in certain areas of the exterior insulation finishing system (EIFS). Bainey made repairs to the Project at AMBE’s and Carlson’s suggestion in May 2007, but the units continued to experience leaks.

The Association retained the engineering firm Encompass, Inc. in 2014 to investigate the cause of the continuing water leaks and Encompass issued a report that identified construction problems that included defects that had been first identified in 2006. The Association filed a Complaint against Carlson and Bainey on January 5, 2015.  The district court dismissed the Association’s claims against Carlson and Bainey on summary judgment and the Association appealed.

  1.         Plaintiff’s negligence and breach of contract claims were time barred by Minn. Stat. Minn. Stat. § 541.051, subd. 1(a)

The appellate court held that the Association first had notice of an actionable injury in 2006 when its units reported water leaks and AMBE investigated the intrusion events and notified it of the defects causing the water intrusion.  The court held that the Association could not rely on representations the water intrusion defects were fixed because at least one unit located in the building reported a leak every year between 2006 and 2014 and 20 of the 36 units that comprised the Association reported leaks between 2006 and 2014.

  1. MCIOA’s six-year statute of repose began to run on the date the last unit closed in 2006

The appellate court held that the evidence the developer introduced that showed that the last unit closed on November 28, 2006 irrefutably provided the last date to bring a claim under MNCIOA was November 28, 2012; thus the Association’s MCIOA claims were time barred.

  1. The Association’s breach of express-warranty claims against Carlson were not time barred

The appellate court held that the district court incorrectly held the breach of express warranty claims against Carlson were time barred pursuant to Minn. Stat. § 541.051, subd. 1(a).  Instead, the district court should have analyzed the claims pursuant to Minn. Stat. § 541.051, subd. 4.  As such, the court of appeals held there was a factual dispute that precluded summary judgment on the breach of the express-warranty claims and remanded the case to district court for trial on the issue of when 33 of the 36 units that comprised the Association had notice of Carlson’s breach of express warranty.

Iowa Joins Growing Number of States to Weigh In on Asbestos-Related Litigation

March 24th, 2017

On March 23, 2017, Iowa Governor Terry Branstad signed into law Iowa Senate File 376 (2017), which stands to significantly impact the future handling of asbestos-related litigation in the state.  The new law first contains a section entitled the “Asbestos Bankruptcy Trust Claims Transparency Act,” which requires Plaintiffs and their attorneys to disclose claims and recoveries from bankruptcy trusts established to compensate people injured from breathing in dust from asbestos-containing products manufactured or sold by now-bankrupt companies.   Failure to properly disclose any claims against these asbestos trusts could force the dismissal of the litigated cases against viable defendants.   Also, the new law contains a section called the “Asbestos and Silica Claims Priorities Act” which requires certain medical disclosures and other proof requirements before pursuing a claim for nonmalignant diseases. Notably, this section also provides for a “two-disease rule”  meaning there are separate applicable statutes of limitations for malignant and non-malignant diseases.  Finally, the law contains a section titled “Successor Corporation Asbestos-Related Liability Fairness Act,” which provides limits on claims against companies that assumed or incurs potential liabilities based upon operation of law, such as through a merger or consolidation.

Iowa joins neighboring South Dakota (SD Senate File 138, passed March 2017) as the latest in a growing number of states to enact some form of legislation aimed at curbing apparent fraud in asbestos litigation.   Prior to 2017, nine other states enacted similar legislation,  namely Georgia (2007);  Ohio and Oklahoma (2013); Wisconsin (2014); West Virginia, Texas, and Arizona (2015); and Tennessee and Utah (2016).  Similar legislation is being introduced in many other states.  Also, several attempts have been made to pass the “Furthering Asbestos Claims Transparency” (FACT) Act at a Federal level.  Presently, H.R.906 is working its way through committees in Washington D.C. Read the new law here.

For questions regarding this legislation or other Asbestos or other Toxic Tort litigation in Iowa, Minnesota, Wisconsin or the Dakotas, please contact OLWK Shareholder Michael M. Skram.

Minnesota Court of Appeals Rejects Employer’s Attempt to Recoup Amounts Paid to Third Parties Due to Employee’s Negligence

March 21st, 2017

On March 20, the Minnesota Court of Appeals published an opinion affirming a district court’s ruling barring an employer from bringing a negligence claim against its employee for amounts paid to indemnify the employee from third-party claims. First Class Valet Services, LLC v. Gleason, A16-1242 (Minn. Ct. App. 2017).

Minnesota Supreme Court Reaffirms WCCA’s Limited Role On Appeal

February 10th, 2017

On February 8 the Minnesota Supreme reversed the Minnesota Workers’ Compensation Court of Appeals decision to award benefits in a head injury claim and held the WCCA (1) erred when it ruled on an issue not raised on appeal; (2) erred when it reversed the compensation’s judge’s determination that there was adequate foundation for a psychologists opinion; and (3) erred when it substituted its view of the evidence for that adopted by the compensation judge. Gianotti vs. vs. Independent School District 152 and RAM Mutual Insurance CoRead more here.