David Dorow, et al., Appellants, vs. Thomas G. Anderson, et al., Respondents, Charles Moe, et al., Respondents.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-168

 

David Dorow, et al.,

Appellants,

 

vs.

 

Thomas G. Anderson, et al.,

Respondents,

 

Charles Moe, et al.,

Respondents.

 

Filed December 30, 2003

Affirmed

Halbrooks, Judge

 

 

Brown County District Court

File No. C3-99-636

 

 

Steven J. Vatndal, Gislason & Hunter, LLP, 424 North Riverfront Drive, Suite 250, P.O. Box 4157, Mankato, MN 56002-4157 (for appellants)

 

Daniel L. Giles, Stoneberg Giles & Stroup, P.A., 300 O'Connell Street, Marshall, MN 56258-2638 (for respondents Anderson, et al.)

 

James R. Olson, Jared D. Peterson, Berens, Rodenberg & O'Connor, Chtd., 519 Center Street, P.O. Box 428, New Ulm, MN 56073 (for respondents Moe, et al.)

 

 

 

            Considered and decided by Kalitowski, Presiding Judge, Halbrooks, Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            On appeal from summary judgment in this easement dispute, appellants argue that the district court (1) applied the wrong statute of limitations, (2) improperly based its decision on the statements of a deceased predecessor in interest where such testimony was hearsay and contrary to the statute of frauds, and (3) misapplied the doctrine of laches to terminate an interest in real property.  Because we conclude that there are no genuine issues of material fact and the district court did not err in its application of the law, we affirm.

FACTS

            On September 30, 1953, Thomas C. and Anna Anderson entered into an easement agreement with neighbors Carl and Louise Bloemke that was designed to enhance the quality of their land for farming.  The agreement provided for construction of a tile drainage system with a 14-inch tile running across the Anderson property to a point where it became a "forced outlet" on the surface.  The agreement also permitted the parties to add branch lines to the system and granted them a perpetual right to enter and perform repair and maintenance.  On October 14, 1953, the landowners agreed to another drainage easement concerning the same parcel of land with Joseph and Bertha Rothmeier.  In exchange for $500, the Rothmeiers allowed water from the drainage system to flow onto their land.  Thereafter, the drainage system was installed and used as originally designed.  Because the 14-inch outlet periodically got plugged with sand, it had to be cleaned out annually. 

In 1966, respondents Thomas G. and Bonnie Anderson (the Andersons) and Al Anderson and his spouse acquired the property of Thomas C. and Anna Anderson.  Thomas G. and Al Anderson are the sons of Thomas C. and Anna Anderson.  In 1974, due to problems with sand build-up in the drainage system, the Andersons hired Art Bielen to make improvements to the system.  According to Thomas G. Anderson (Anderson), the affected landowners had several meetings to discuss the proposed modifications prior to commencement of the project.  These meetings included Anderson, his brother Al Anderson, Art Bielen, Carl Bloemke, and respondent Charles Moe.  Moe's interest in the discussion stemmed from his desire to outlet into the proposed new tile line.  Anderson testified that he had an oral agreement with Bloemke concerning the modifications and that Bloemke gave his "blessing" so long as Bloemke did not have to pay for the improvements.  Anderson also stated that Bloemke knew of Anderson's intent to allow Moe to outlet into the new tile line.  The district court specifically found that Bloemke was aware of the proposed modifications and agreed to them, so long as he did not have to contribute to the cost of the project.

The Andersons proceeded with the modifications at a cost of approximately $60,000.  The modifications, which were completed in 1974, abandoned the original forced surface outlet and rerouted the 14-inch tile so it drained into a new 22-inch underground tile.  Pursuant to their express agreement, respondents Charles and Kathryn Moe paid the Andersons $4,000 to connect to the new 22-inch tile line.  The district court found that after completion of the project, Bloemke told the Moes that he approved of the modifications and that the drainage to his land had been improved by the new system. Bloemke did not object or complain about the modifications to any of the parties prior to his death in 1984.  

            Following Bloemke's death, appellants David and Darlene Dorow partially inherited and partially purchased the Bloemke property.  Darlene Dorow is Bloemke's daughter.  The Dorows, who have continued to farm the land every year since acquiring it in 1984, noticed improper drainage.  Although the Dorows assert that they did not become aware of the 1974 modifications to the drainage system until 1997, David Dorow admitted that he had indications that the drainage system was "impaired" prior to 1997.

The Dorows commenced this lawsuit on November 18, 1998 24 years after the Andersons made the modifications to the system in 1974 and 14 years after the Dorows became owners of the property.  The Dorows sought crop damages from 1984 to the present, claiming that their damages originated from the 1974 modifications and connections to the drainage tile.  The Dorows also sought an injunction to have the outlet restored to the original specifications in the 1953 easements.  The district court granted respondents' motion for summary judgment and dismissed the Dorows' complaint with prejudice.  This appeal follows.

D E C I S I O N

            On appeal from summary judgment, we must determine whether there are any genuine issues of material fact and whether the district court erred in its application of the law.  Rinn v. Minn. State Agric. Soc'y, 611 N.W.2d 361, 363 (Minn. App. 2000).  The evidence is viewed in the light most favorable to the party against whom summary judgment was granted and any doubts about the existence of a material fact are resolved in that party's favor.  H.B. ex rel. Clark v. Whittemore, 552 N.W.2d 705, 707 (Minn. 1996).  Summary judgment is a "blunt instrument" and should be employed only where it is perfectly clear that no disputed issue of fact is involved and that it is neither desirable nor necessary to inquire into facts which might clarify the application of the law.  Donnay v. Boulware, 275 Minn. 37, 45, 144 N.W.2d 711, 716 (1966). 

The Dorows seek both damages and injunctive relief.  With regard to their damages claim, the district court ruled that respondents were entitled to summary judgment because the statute of limitations in Minn. Stat. § 541.051 (2002) had run.  Section 541.051 provides as follows:

Subdivision 1. (a) . . . no action by any person in contract, tort, or otherwise to recover damages for any injury to property, real or personal, . . . arising out of the defective and unsafe condition of an improvement to real property. . . shall be brought against . . . the owner of the real property more than two years after discovery of the injury . . . nor, in any event shall such a cause of action accrue more than ten years after substantial completion of the construction.  Date of substantial completion shall be determined by the date when construction is sufficiently completed so that the owner or the owner's representative can occupy or use the improvement for the intended purpose.

 

(b) For purposes of paragraph (a), a cause of action accrues upon discovery of the injury . . .

 

            . . . .

 

Subd. 2. Notwithstanding the provisions of subdivision 1, in the case of an action which accrues during the ninth or tenth year after substantial completion of the construction, an action to recover damages may be brought within two years after the date on which the action accrued, but in no event may an action be brought more than 12 years after substantial completion of the construction.  

 

Minn. Stat. § 541.051, subds. 1(a)-(b), 2.  The district court's interpretation of a statute is a question of law, and the reviewing court need not defer to the district court's interpretation.  Driscoll v. Driscoll, 414 N.W.2d 441, 445 (Minn. App. 1987). 

The Dorows assert that Minn. Stat. § 541.051 is inapplicable on two grounds.  First, they argue that the statute applies only to actions seeking recovery of damages, while they are also seeking injunctive relief.  Appellants cite no authority in support of this argument.  The district court analyzed the plain language of the statute, noting that it applies to actions in "contract, tort, or otherwise to recover damages for any injury to property" and concluded that the statute is applicable to appellant's claim for damages.  Minn. Stat. § 541.051, subd. 1(a) (emphasis added).  We agree with the district court's interpretation.

Second, the Dorows assert that Minn. Stat. § 541.051 is inapplicable because the statute applies only to a "defective and unsafe condition" caused by an "improvement" to property.  See id.  The Dorows argue that they are not claiming that the improvements were either defective or unsafe, but rather that they were in violation of the 1953 easements.  Based on this theory, the Dorows argue that the court should have applied the statute of limitations for adverse possession from Minn. Stat. § 541.02 (2002). 

We disagree.  Initially, we note that the Dorows' claims allege a defective and unsafe condition caused by an improvement to real property as required by Minn. Stat. § 541.051, subd. 1(a).  The parties do not dispute that the modifications constitute an "improvement."  And to the extent that the modifications did not drain water as intended, the drainage system is defective.  See Fiveland v. Bollig & Sons, Inc., 436 N.W.2d 478, 480 (Minn. App. 1989) (defining defective as "having a defect or defects; incomplete; faulty" and concluding that an excavation pit was "defective and unsafe" because it lacked guarding and lighting (quotation omitted)), review denied (Minn. Apr. 24, 1989). 

Furthermore, we conclude that the 15-year statute of limitations for adverse possession does not apply to this claim.  See Minn. Stat. § 541.02.  In Hickerson v. Bender, 500 N.W.2d 169 (Minn. App. 1993), the only case cited by appellants for this proposition, this court held that an ingress-egress easement was extinguished by both abandonment and adverse possession where improvements to the land had "materially block[ed] the easement."  Id. at 171-172.  The court recognized that in order to "extinguish an easement by adverse possession, the possessor must prove, by clear and convincing evidence, an exclusive, actual, hostile, open, and continuous possession for the statutory fifteen year period."  Id. at 171.  The court also noted that adverse possession must be "inconsistent with continuance of the easement."  Id. (quotation omitted).

Here, there is no evidence to support the Dorows' claim that their easement rights have been partially extinguished.  As the district court noted, none of the respondents have asserted a claim of adverse possession, and respondents deny any attempt to extinguish the Dorows' rights.  Further, there is no evidence that the Dorows have been disconnected from the tile system or otherwise barred from access.  Because we agree with the district court that "all the facts in the record show Bloemke permitted a revision of his easement rights under the doctrine of part performance," there is no evidence of hostile possession. 

In reaching this conclusion, we disagree with the Dorows' assertion that the testimony of Anderson and Charles Moe concerning Carl Bloemke's acquiescence to the 1974 modifications was inadmissible hearsay.  The admissibility of evidence rests within a district court's sound discretion and will be reversed only for an abuse of that discretion.  Citizens v. Lone Oak Sportsmen's Club, Inc., 624 N.W.2d 796, 807 (Minn. App. 2001).  Although Minn. R. Evid. 802 generally prohibits hearsay, certain exceptions are permitted when the declarant is unavailable as a witness.  Minn. R. Evid. 804(b)(5) provides that an exception may be made if a statement has equivalent circumstantial guarantees of trustworthiness and the district court determines that

(A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence.    

 

Minn. R. Evid. 804(b)(5). 

Here, the district court concluded that Bloemke's statements to Anderson and Moe were admissible under rule 804(b)(5) because they pertained to "material and important facts" and that the evidence was necessary given the "lack of procurable evidence . . . due to the profound delay in prosecution."  The court also determined that the evidence should be admitted in the interests of justice to help "ascertain the truth of the matter."  Because the hearsay exception in rule 804(b)(5) applies, it was not an abuse of discretion for the district court to admit testimony concerning Bloemke's acquiescence to the modifications. 

We also disagree with the Dorows' argument that Bloemke's oral agreement modifying the easement is contrary to the statute of frauds.  While an agreement to convey an interest in land must ordinarily be in writing to satisfy the statute of frauds, In Re Guardianship of Huesman, 354 N.W.2d 860, 862-63 (Minn. App. 1984), a party's acts may constitute part performance sufficient to avoid operation of the statute of frauds under either the "fraud" theory or the "unequivocal reference" theory.  Ehmke v. Hill, 236 Minn. 60, 68-69, 51 N.W.2d 811, 817 (1952).  The doctrine of part performance has been applied where an individual takes possession of property and makes valuable improvements to it.[1]  Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 900 (Minn. 1982).

The district court concluded that the unequivocal reference theory applied, finding that the parties performed acts that make sense only if done in reliance on an oral agreement.  See Burke v. Fine, 236 Minn. 52, 55-56, 51 N.W.2d 818, 820 (1952); Ruble v. Ruble, 234 Minn. 15, 17, 47 N.W.2d 420, 422 (1951); Huesman, 354 N.W.2d at 863.  The district court found that the Andersons relied on the oral agreement with Bloemke when they paid $60,000 for the modification project.  The evidence supports this finding.  It is undisputed that the parties agreed to the easement in 1953 and that any changes to the easement would require the consent of all parties.  Consequently, the Andersons met with the affected landowners prior to commencing subsequent construction.  Both Anderson and Moe testified that Bloemke was present during these meetings and was satisfied with the proposal so long as he did not have to contribute to the cost of the project.  Anderson also stated that Bloemke was aware that the design called for Moe to outlet into the revised system.  Because Bloemke could have made a claim against the Andersons for proceeding without his consent, it is reasonable to conclude that the Andersons would not have invested such a substantial amount of money in the absence of Bloemke's agreement.  Bloemke's acquiescence is further demonstrated by the fact that Bloemke did not object to the new system at any time during the ten years that he continued to own the land following completion of the project.  Therefore, the district court did not err in concluding that Bloemke's oral agreement was valid under the unequivocal reference theory and, therefore, outside the statute of frauds. 

Having concluded that the applicable statute of limitations governing this claim is found in Minn. Stat. § 541.051, we next address whether the statute bars the Dorows' damages claim.  The district court found that substantial completion of the modification to the drainage system occurred in 1974 and, as a result, the ten-year limit under subdivision 1 began to run in 1974.  Because the Dorows acquired the property in 1984 and noticed improper drainage right away, the district court concluded that this discovery permitted an additional two years under subdivision 2.  But because the Dorows did not bring a cause of action until 14 years after they acquired the property, the district court concluded that their claim was time-barred.

We agree.  Under Minn. Stat. § 541.051, the limitations period "begins to run when an actionable injury is discovered, or with due diligence, should have been discovered, regardless of whether the precise nature of the defect causing the injury is known."  Indep. Sch. Dist. No. 775 v. Holm Bros. Plumbing & Heating, Inc., 660 N.W.2d 146, 150 (Minn. App. 2003).  Here, the evidence supports the district court's conclusion that the Dorows discovered (or should have discovered) the defect in 1984.  David Dorow admitted that he had indications prior to 1997 that the drainage system was "impaired."  Dorow testified that he believed that there were drainage issues affecting crop production "every year, even in the driest years."  Dorow also referenced aerial photos "way back to ‘84" indicating crop loss due to drainage issues.  Additionally, Dorow stated that his crops were drowned out in 2001 and that "It's the same areas every year" that are affected.  Dorow also gave conflicting answers about whether he had hired anyone to assess the drainage problem prior to 1997.  Therefore, despite their claim that they did not become aware of the drainage system modifications until 1997, the district court did not err in concluding that the Dorows "discovered" the defect in 1984. 

            Because this discovery occurred in the tenth year after completion of the modifications, the limitations' period was extended for an additional two years under Minn. Stat. § 541.051, subd. 2 (providing that where an action "accrues during the ninth or tenth year after substantial completion of the construction, an action to recover damages may be brought within two years after the date on which the action accrued").  To be timely, the Dorows would have had to initiate their claim by 1986.  But they did not bring their claim until November 1998.  Moreover, Minn. Stat. § 541.051, subd. 2, provides that "in no event may an action be brought more than 12 years after substantial completion of the construction."  Here, the construction was substantially completed in 1974.  Therefore, the district court correctly concluded that the Dorows' damages claim is time-barred under Minn. Stat. § 541.051.

            Finally, we consider whether the district court properly denied the Dorows' request for injunctive relief.  The district court determined that the doctrine of laches precluded the Dorows from obtaining an injunction that would have forced remodification of the drainage system to reflect the 1953 easements.  The Dorows argue that this was error, claiming that (1) the doctrine of laches should not apply to extinguish a real-property interest and (2) they did not delay in acting on known rights, since they initiated suit within one year of discovering that the 1974 modifications were impairing drainage.

            A district court's decision to apply the doctrine of laches is not a decision on the merits.  Melendez v. O'Connor, 654 N.W.2d 114, 117 (Minn. 2002) (reaching merits only after deciding as a preliminary matter whether suit should be dismissed for laches).  Therefore, even at summary judgment, the decision whether to apply laches lies within the district court's discretion and will not be reversed absent an abuse of that discretion.  In re Marriage of Opp, 516 N.W.2d 193, 196 (Minn. App. 1994), review denied (Minn. Aug. 24, 1994).  The question in applying the doctrine of laches is "whether there has been such an unreasonable delay in asserting a known right, resulting in prejudice to others, as would make it inequitable to grant [the requested relief]."  Harr v. City of Edina, 541 N.W.2d 603, 606 (Minn. App. 1996) (quotation omitted).  "Mere delay does not constitute laches, unless the circumstances were such as to make the delay blamable."  Elsen v. State Farmers Mut. Ins. Co., 219 Minn. 315, 321, 17 N.W.2d 652, 656 (1945) (quotation omitted).  A person has knowledge of the right to make a claim when he or she has actual notice of the claim or, in the exercise of proper diligence, ought to have discovered it.  Steenberg v. Kaysen, 229 Minn. 300, 309, 39 N.W.2d 18, 23 (1949).

            Here, the district court concluded that the laches doctrine applied because the record demonstrated "unreasonable delay and prejudice."  The district court based this decision on the following reasoning:

There are no facts in evidence that Bloemke ever complained or asserted a claim against the [respondents] regarding the drainage system.  When Dorow acquired possession in 1984, he claims it never drained properly.  Nevertheless, he did not file any claim until 1998, a period of fourteen years after his acquisition and twenty-four years after the 1974 modification.

 

We agree.  The record contradicts the Dorows' assertion that they did not delay in acting on their rights.  As already noted, the district court properly found that the Dorows first discovered the drainage problems in 1984, but chose not to pursue a claim until 14 years after they acquired the property and 24 years after the modifications took place.  This significant delay renders the Dorows' claim for equitable relief stale.  Consequently, the district court properly denied equitable relief.  See, e.g., Hanson v. Sommers, 105 Minn. 434, 440, 117 N.W. 842, 844 (1908) (concluding that where defendant had been in such possession of a tract for more than 15 years and plaintiff's ancestor for some years had abandoned his claim of title, plaintiff was barred by laches from seeking equitable relief).

The district court also concluded that the Dorows have a remedy at law, finding that "[u]nder the 1953 agreement, the parties may perpetually enter and make the necessary repairs and maintenance to keep the drainage system free flowing."  An injunction should not be granted "except where it is clear that any legal remedy the party may have is inadequate."  A.M.F. Pinspotters, Inc. v. Harkins Bowling, Inc., 260 Minn. 499, 504, 110 N.W.2d 348, 351 (1961).  Because a legal remedy exists, it was not an abuse of discretion for the district court to grant summary judgment to respondents on the Dorows' equitable claim.  

Affirmed.

[1] We recognize previous decisions holding that the doctrine of part performance does not apply to cases involving legal damages.  See, e.g., Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 899-900 (Minn. 1982); Becker v. First Am. State Bank of Redwood Falls, 420 N.W.2d 239, 241 (Minn. App. 1988).