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2003 Minn. App. LEXIS 395, *

2 of 83 DOCUME !S

Stephen P. Hernick, et al., Appellants (CX-02-1424), Respondents (C0-02-14 !), "s. #erhasselt Constr$ction, %nc., &e'endant and hird PartPlainti'', Respondent (CX-02-1424), Appellant (C0-02-14 !), "s. *lson

+rothers &r all, n k a *lson Constr$ction, hird Part &e'endant(CX-02-1424), Respondent (C0-02-14 !).

CX-02-1424, C0-02-14 !

C* R */ APP A S */ %33 S* A

200 inn. App. X%S 56

April !, 200 , /iled

3* %C 7 "*1# !$IS OPI IO %ILL &EU PU&LIS$ED A D MA' O! &E CI!EDEXCEP! AS P(O)IDED &' MI ESO!AS!A!U!ES.

S +S 8 3 H%S *R97 (e ie+ enie -

$e/ni . )e/ a e4 Con /., In ., 2003 Minn.LEXIS 362 7Minn., ne 25, 2003:

PR%*R H%S *R97 C i ago Co n Di /iCo / . ;i4e o. C5011213. $on. (o-e/ <.(an o / .

&%SP*S% %*37 (e e/ e an /e=an e .

C* 3S 7 Da i D. $a==a/g/en, eff/e C.Pa 4 on, $a==a/g/en > Me e/, P.A.,Minneapo4i , M 7fo/ S ep en an S an$e/ni :.

Pa /i . S+eene , oAnn C. !o , Spen e, (i e,S+eene > <e/ne , P.A., S . Pa 4, M 7fo/)e/ a e4 Con / ion:.

E +a/ ;. ?a @e/, ( e4 on > ?a @e/, S . Pa 4,M 5510 B3829 7fo/ O4 on Con / ion:.

: &; S7 Con i e/e an e i e - (an a44,P/e i ing ge, S =a e/, ge, an %/ig ,

ge.

*P%3%*3 +97 %(I<$!

*P%3%*3

3P + %SH & *P%3%*3

<R%;H , ge

On appea4 f/o= ==a/ g=en , S ep enan S an $e/ni a/g e a e i /i o /e//e - o4 ing 71: a e +oB ea/ a e of4i=i a ion fo/ 4ai= -a e on efe i e an

n afe on i ion a/i ing o of a on /a oi=p/o e /ea4 p/ope/ , Minn. S a . 5 1.051, - .17a: 72000:, -a//e ei/ a ion again )e/ a e4Con / ion fo/ -/ea of a e 4e=en ag/ee=en ,in + i )e/ a e4 Con / ion =a e a ne+

p/o=i e o /e=e o efe an 72: "*2#a e e 4e=en ag/ee=en +a in a4i fo/ 4a

of on i e/a ion. In a epa/a e appea4, )e/ a e4Con / ion a44enge e i /i o / F o4 ing

a i 4ai= fo/ in e=ni an on /i- ionagain O4 on Con / ion +a -a//e - Minn.S a . 5 1.051. %e /e e/ e an /e=an .




/AC S

On Ma 10, 1993, S ep en an S an $e/ni7 e $e/ni : an )e/ a e4 Con / ion, In .7)e/ a e4 : en e/e in o a +/i en ag/ee=en fo/

e on / ion of e $e/ni F o=e. )e/ a e4- on /a e O4 on Con / ion 7O4 on: o app4

o o e eG e/io/ of e o=e.

! e pa/ ie 4o e on e on / ion on /aon De e=-e/ 22, 1993. A e i=e of e 4o ing,

e $e/ni no e a n =-e/ of on / ionefe . )e/ a e4 in i a e a a44 of e efe

+o 4 -e /epai/e +i in iG =on af e/ e4o ing. On O o-e/ 10, 199 , e $e/ni en a

4e e/ o )e/ a e4 4i ing e /e=ainingon / ion efi ien ie . A=ong o eefi ien ie +e/e p/o-4e= +i o, /oofing,

ga/age oo/ , an a/io in e/io/ i e= . )e/ a e4in i a e a O4 on +o 4 /epai/ e o

efe . & i/ a44 no ing +a one - ei e/)e/ a e4 o/ "*3# O4 on o /e=e e

on / ion efe . ;/o= De e=-e/ 20, 199 ,/o g an a/ 22, 1996, e $e/ni en a

e/ie of 4e e/ o )e/ a e4 , o=p4aining a-oe /e=aining on / ion p/o-4e= an

)e/ a e4 F fai4 /e o /e=e e=. ;ina44 , on;e-/ a/ 28, 1996, e $e/ni fi4e a o=p4ainagain )e/ a e4 +i e Minne o a Depa/ =enof Co==e/ e 7 e epa/ =en :.

D /ing e /e of 1996 /o g ea/4 1998,e epa/ =en fa i4i a e nego ia ion -e +een)e/ a e4 an e $e/ni . Af e/ e pa/ iei en ifie e efe , )e/ a e4 a/ e e/epai/ . On o e=-e/ 9, 1998, )e/ a e4 an e$e/ni eGe e a e 4e=en ag/ee=en . ! eag/ee=en pe ifi a44 a e a i e of oapp4i a ion, o /a ing an i /e4a ion o

o e =o e=en +i44 i44 /e=ain o -e /e=e ie .C/a ing +i44 -e =oni o/e /o g o i +in e/.A4 o, in e p/ing "of 1999,# an pa an /epai/

o /e 4 ing f/o= o//e i e +o/ one a een / po/ o4 =n an /e onfig /a ion of fa ia

an offi +i44 -e /e=e ie - e on /a o/. ! ea=o n of H 3,000 +i44 -e pa a-4e o e $e/ni* * * an -o M/. an M/ . S ep en $e/niag/ee o o4 a/=4e )e/ a e4 Con / ion"* # Co=pan , In . an a4 o <a/ )e/ a e4

pe/ ona44 fo/ an pa o/ p/e en 4ai= on ei/o=e, * * * eG 4 ing an a o/ o-4iga ion a

fa/ a / /a4 i e +o 4 go.

% i4e e e 4e=en ag/ee=en i no=en ion O4 on, )e/ a e4 a in i a e in ea/4ie/

o== ni a ion a O4 on +o 4 /e /n oo=p4e e e o /epai/ . !o a e, e o

/epai/ a e no -een o=p4e e .

On an a/ 22, 2001, e $e/nio==en e i 4a+ i in i /i o / again

)e/ a e4 , a44eging -/ea of e e 4e=enag/ee=en . )e/ a e4 fi4e a i/ Bpa/ 4ai=again O4 on, ee ing on /i- ion an in e=ni .&o )e/ a e4 an O4 on =o e fo/ ==a/

g=en , a/g ing a e +oB ea/ a e of4i=i a ion , Minn. S a . 5 1.051 72000:, -a//e

e $e/ni F 4ai= . ! e i /i o / g/an e==a/ g=en in fa o/ of )e/ a e4 an

O4 on. ! e $e/ni appea4 e ==a/ g=en in fa o/ of )e/ a e4 an O4 on. In

o/ e/ o p/e e/ e e on /i- ion an in e=nii e again O4 on, )e/ a e4 appea4 e en /of ==a/ g=en in fa o/ of O4 on. ! i o /

on o4i a e e appea4 .

& C%S%*3

On appea4 f/o= ==a/ g=en , "*5# io / a + e e/ e/e a/e an gen ine i e of

=a e/ia4 fa an + e e/ e i /i o / e//e ini app4i a ion of e 4a+.State by Cooper v.

French , 0 .%.2 2, 7Minn. 1990:. ogen ine i e of =a e/ia4 fa eGi J+ e/e e/e o/ a en a a + o4e o 4 no 4ea a /a iona4

/ie/ of fa o fin fo/ e non=o ing pa/ .J DLH, Inc. v. Russ, 5 .%.2 0, 9 7Minn.1996: 7a4 e/a ion in o/igina4: 7K o ing Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 65 U.S.56 , 586, 10 S. C . 13 8, 135 , 89 L. E . 2 5387198 ::. J! e pa/ /e i ing ==a/ g=en= o =o/e an /e on =e/e a e/=en .J Id. a61. A gen ine i e fo/ /ia4 = -e e a-4i e -

- an ia4 e i en e. Id. a 9B60. ! i o / ie+e e i en e in e 4ig =o fa o/a-4e o e

pa/ again + o= ==a/ g=en +ag/an e . Fabio v. ello!o , 50 .%.2 658, 6 17Minn. 1993:. S ==a/ g=en i app/op/ia e+ en a pa/ fai4 o =a e a o+ing ffi ien oe a-4i e eGi en e of an e4e=en e en ia4 o

e pa/ F a e. ersch v. R"nonti # $ssocs., Inc. ,58 .%.2 683, 68 7Minn. App. 1998:, "* #revie% denied 7Minn. De . 15, 1998:.

%.

! e $e/ni a/g e a e i /i o /e//e in on 4 ing a ei/ 4ai= a/e -a//e -



Page 2003 Minn. App. LEXIS 395, *

e +oB ea/ a e of 4i=i a ion , Minn. S a . 5 1.051 72000:, app4i a-4e o on / ion efe .&e a e ei/ 4ai= a/o e o of e -/ea of a

e 4e=en ag/ee=en , e $e/ni a e/ a eiGB ea/ a e of 4i=i a ion fo/ on /a i p e ,

Minn. S a . 5 1.05 72000:, app4ie o ei/ a e.%e ag/ee.

Minn. S a . 5 1.051 app4ie o i p ea/i ing o of efe i e an n afe i=p/o e=en

o /ea4 p/ope/ . Sherbroo& Co. v. E # H Earth!overs, Inc ., 19 .%.2 818, 819 7Minn.App. 1988:, revie% denied 7Minn. Ma/. 1, 1988:.! e a e p/o i e , in pe/ inen pa/ , eG ep + e/e f/a i in o4 e , no a ion - an

pe/ on in on /a , o/ , o/ o e/+i e o /e o e/a=age fo/ an in / o p/ope/ , /ea4 o/

pe/ ona4, o/ fo/ -o i4 in / o/ +/ongf 4 ea ,a/i ing o of e efe i e an n afe on i ion ofan i=p/o e=en o /ea4 p/ope/ , no/ an a ion fo/

on /i- ion o/ in e=ni fo/ a=age aineon a o n "*6# of e in / , a44 -e -/o gagain an pe/ on pe/fo/=ing o/ f /ni ing e

e ign, p4anning, pe/ i ion, =a e/ia4 , o/o- e/ a ion of on / ion o/ on / ion of ei=p/o e=en o /ea4 p/ope/ o/ again e o+ne/of e /ea4 p/ope/ =o/e an +o ea/ af e/

i o e/ of e in / * * * . Minn. S a . 5 1.051, - . 17a:. ! e 4egi 4a i e

p /po e of ena ing e ion 5 1.051 +a oe4i=ina e i again a/ i e , e igne/ anon /a o/ + o a e o=p4e e e +o/ , /ne

e i=p/o e=en o /ea4 p/ope/ o e/ o eo+ne/ , an no 4onge/ a e an in e/e o/ on /o4in i .

Red 'in" Motel Investors v. Red 'in" Fire Dept .,552 .%.2 295, 296 7Minn. App. 199 : 7K o ingSartori v. Harnisch(e"er Corp. , 32 .%.2 8,

5 7Minn. 1988::, revie% denied 7Minn. O . 29,199 :. A o/ ing4 , Minn. S a . 5 1.051 app4ie+ e/e e o+ne/ e e on /a o/ -e a e a

efe i e an n afe on i ion a/o e on e p/ope/ e o neg4igen e o/ -/ea of o=e

on /a a4 n e/ e o/igina4 on / ionon /a .See )reenbrier v. *eller Inv., Inc ., 09

.%.2 519, 523 7Minn. App. 1986: "*8# 7 e ion5 1.051 o e/ Ja ion o n ing in on /a o/ in+a//an , -a e on efe i e +o/ =an ip an

-/o g - an o+ne/ again i a/ i e o/on /a o/.J 7K o a ion o=i e ::.

&e a e e pa/ ie o no i p e a e p/o-4e= +i o /e 4 e in -o efe i ean n afe on i ion , an -e a e Minn. S a . 5 1.051 app4ie o a ion -a e on -/ea of

on /a , e $e/ni F 4ai= +o 4 a e -een p/e 4 e - a +oB ea/ a e of 4i=i a ion a

e e -a e on e o/igina4 on / ionon /a . $o+e e/, i a ion a/o e o of ee 4e=en ag/ee=en en e/e in o - e $e/ni

an )e/ a e4 on o e=-e/ 9, 1998, in + i)e/ a e4 pe ifi a44 p/o=i e o /e o4 e Ji eof o app4i a ion, o /a ing an i/e4a ion o o e =o e=en .J ! i ne+ p/o=i e,a4-ei /e4a e o e o/igina4 on / ion on /a ,+a a on /a o fiG e ag/ee B pon efe/e 4 ing f/o= e o/igina4 on /a o on / e$e/ni F o=e an e $e/ni F i +a ana ion fo/ -/ea of e p/o=i e o fiG o e

efe , no an a ion fo/ a=age a/i ing o eJ efe i e an n afe on i ion.J Un e/ e e

i/ = an e , +e on 4 e "*9# a eapp4i a-4e 4i=i a ion pe/io i iG ea/ n e/Minn. S a . 5 1.05 72000: 7p/e /i-ing 4i=i a ion

o a ion in on /a o/ o e/ o-4iga ion:, no +oea/ a on e=p4a e - Minn. S a . 5 1.051

7p/e /i-ing 4i=i a ion o a ion fo/ a=age/e 4 ing f/o= efe i e an n afe on i ion f/o=i=p/o e=en o /ea4 p/ope/ :. &e a e e4i=i a ion pe/io -egin o / n again a a e ofa ion + en i a / e , in a -/ea BofB on /a a e

e 4i=i a ion pe/io -egin o / n a e i=e ofe -/ea . achert+ v. Hayes Lucas Lu!ber Co.,

201 Minn. 161, 16 , 265 .%. 9 , 96 71936:.)e/ a e4 a44ege 4 -/ea e e e 4e=enag/ee=en in e p/ing of 1999, 4e an +o

ea/ -efo/e e o==en e=en of e a ion inan a/ 2001. Un e/ e iGB ea/ 4i=i a ion pe/io ,

e/efo/e, e 4a+ i +a i=e4 fi4e an==a/ g=en in fa o/ of )e/ a e4 an

O4 on +a e//oneo 4 g/an e .

%%.

$a ing /e o4 e e a eBofB4i=i a ion

i e, +e neG /e ie+ e i /i o / Fe e/=ina ion a e e 4e=en ag/ee=en +ie $e/ni +a in a4i -e a e i 4a e

on i e/a ion. JSe 4e=en ag/ee=en "*10# a/eon /a a4 in na /e.JChal!ers v. *ana%yer , 5

.%.2 695, 696 7Minn. App. 199 :. A on /a= -e ppo/ e - on i e/a ion. aehr v.

-enn /e0 il Corp ., 258 Minn. 533, 538B39,10 .%.2 1, 5 719 0:. ! e e e/=ina ion of+ e e/ ffi ien on i e/a ion n e/4ie an




ag/ee=en /ai e a K e ion of 4a+, + i +e/e ie+ e no o. roo&sban& v. $nderson , 58

.%.2 689, 69 7Minn. App. 1998:, revie%denied 7Minn. an. 26, 1999:. )e/ a e4 a/g e

a e /e4ea e - e $e/ni of an pa o/ p/e en 4ai= again )e/ a e4 i no on i ea eK a e on i e/a ion, -e a e an 4ai= again)e/ a e4 +e/e -a//e - e a e of 4i=i a ion

n e/ Minn. S a . 5 1.051. %e i ag/ee.

JCon i e/a ion /eK i/e e o4 n a/a =p ion of an o-4iga ion - one pa/ on e

on i ion of an a o/ fo/-ea/an e - e o e/.JCady v. Cole!an , 315 .%.2 593, 59 7Minn.1982: 7 i a ion o=i e :.

Minne o a fo44o+ e 4ongB an ing on /a p/in ip4e a a o / +i44 no eGa=ine ea eK a of on i e/a ion a 4ong a o=e ing of

a4 e a pa e -e +een e pa/ ie .

"*11# C # D Inv. v. eaudoin , 3 .%.2 850,853 7Minn.App.1985: 7 citin" Estrada v. Hanson ,215 Minn. 353, 35 , 10 .%.2 223, 225B2719 3::, revie% denied 7Minn. ne 1 , 1985:.Se 4e=en of a i p e an -e on i e/a ion.

Hill!eyer v. 'at+, 15 .%.2 89, 92 7Minn. App.1986:. ! e i p e 4ai= a i e - e of a

e 4e=en = -e a e/ e in goo fai , e en if ii 4 i=a e4 e e/=ine a e 4ai= i noo- e i e4 a4i .C. 1. Du((ey -aper Co. v. Re"er ,588 .%.2 519, 525 7Minn. App. 1999:. % i4e aJ+ o44 -a e4e o/ e/4 nfo n e 4ai= i no

on i e/a ion,J 2ybladh v. -eoples State an& o('arren , 2 6 Minn. 88, 9 n.11, 6 .%.2 92,

98 n.11 7195 :, fo/-ea/an e of a o - f 4 4ai= iffi ien on i e/a ion o ppo/ a on /a .

Charles v. Hill , 2 0 .%.2 561, 565 7Minn.1966:.

! e /e o/ e=on /a e a , a e i=e ofe e 4e=en ag/ee=en , e/e +e/e a n =-e/ of

i p e 4ai= -e +een e pa/ ie . In ei/o=p4ain o e epa/ =en , e $e/ni 4i e

p/o-4e= +i e K a4i of )e/ a e4 F+o/ =an ip, in 4 ing +a//an i e ,non o=p4ian e "*12# +i e - i4 ing o e ,

/ /a4 efe in e o e, an neg4igenin a44a ion of e +a e/4ine a /e 4 e in

a=age o e /ee on e p/ope/ . )e/ a e4 Fa/g =en /e on e p/opo i ion a e$e/ni F J a4i 4ai= J +e/e o4e4 4ai= -a//e

- Minn. S a . 5 1.051. & e ion 5 1.051on4 app4ie o efe i e an n afe on i ion on

e p/ope/ . )riebel v. $ndersen Corp ., 89

.%.2 521, 522 7Minn. 1992:. $e/e, o+e e/,+ e e/ a44 of e e 4e 4ai= a/o e o of

efe i e an n afe on i ion an +e/e -a//e - e ion 5 1.051 a no -een /e o4 e+ en e pa/ ie en e/e e e 4e=en ag/ee=en .Mo/eo e/, a no i=e i )e/ a e4 a e=p o/ai e e a eBofB4i=i a ion efen e /ing e

e 4e=en nego ia ion . On e on /a/ , i ag/eeo e 4e a44 of e i p e i e - pa ing H

3,000 o e $e/ni an pe ifi a44 ag/eeing o/e=e e o efe . On i /e o/ , +e ono on 4 e a a =a e/ of 4a+ a e e 4e=enag/ee=en -e +een )e/ a e4 an e $e/ni4a e on i e/a ion. &e a e e ag/ee=en +a a

e 4e=en of a goo Bfai i p e, +e on 4 ea i +a ppo/ e "*13# - on i e/a ion.1

1 In ie+ of o / o4 ing a a iGB ea/4i=i a ion pe/io go e/n i a ion an

a e e 4e=en ag/ee=en +a noin a4i fo/ 4a of on i e/a ion, +e

e 4ine o on i e/ e $e/ni F a/g =ena )e/ a e4 +a eK i a-4 e oppe

f/o= a e/ ing a a eBofB4i=i a ionefen e.

%%%.

%e neG on i e/ )e/ a e4 F i/ Bpa/4ai= again O4 on fo/ on /i- ion an

in e=ni . In e=ni i an eK i a-4e /e=e fo/

/e i ion. lo!"ren v. Marshall M"!t. Servs., Inc ., 83 .%.2 50 7Minn. App. 1992:.In e=ni a/i e o of a on /a a4 /e4a ion ip,ei e/ eGp/e e o/ i=p4ie - 4a+, + iJ/eK i/e one pa/ o /ei=- / e e o e/en i/e4 .J Id. 7K o ing Hendric&son v. Minn. -o%er# Li"ht Co ., 258 Minn. 3 8, 361, 10 .%.28 3, 8 6 719 0: 7 i a ion o=i e ::.

A 4ai=an =a /e o e/ in e=ni

71: + e/e e one ee ing in e=ni a on4a e/i a i e o/ i a/io 4ia-i4i fo/ a=age

a e - e one o g o -e a/ge " "*1 # #

72: + e/e e one ee ing in e=ni ain //e 4ia-i4i - a ion a e i/e ion, in ein e/e of, an in /e4ian e pon e one o g o

-e a/ge " #

73: + e/e e one ee ing in e=ni ain //e 4ia-i4i -e a e of a -/ea of o+e

o i= - e one o g o -e a/ge " # * * *

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