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Allianz Insurance Co. v. PM Services of Eden Prairie

January 18, 2005

ALLIANZ INSURANCE COMPANY, APPELLANT,
v.
PM SERVICES OF EDEN PRAIRIE, INC., A MINNESOTA CORPORATION, D/B/A FACILITECH AND WELSH COMPANIES, LLC, A DELAWARE CORPORATION, RESPONDENT.



Hennepin County District Court File No. PD 03-014411.

Considered and decided by Toussaint, Chief Judge; Schumacher, Judge; and Minge, Judge.

SYLLABUS BY THE COURT

1. Adding a water-purification system to a building's plumbing system is an improvement to real property subject to the two-year statute of limitations contained in Minn. Stat. § 541.051 (2002).

2. The contemporaneous replacement of a pipe fitting and inspection of other fittings on the water-purification systems is ancillary to the installation, constitutes part of the improvement to real property, and is subject to the two-year statute of limitations contained in Minn. Stat. § 541.051.

The opinion of the court was delivered by: Minge, Judge

Affirmed

OPINION

Appellant Allianz Insurance Company challenges summary judgment granted to respondent PM Services of Eden Prairie Inc., d/b/a Facilitech, arguing that the district court erred by applying the two-year limitation period of Minn. Stat. § 541.051 (2002) to its claims against respondent for damages caused by improper installation and repair of water-purification systems. Because the district court did not err by holding that installation and contemporaneous corrective work on the water-purification systems is an improvement to real property subject to the two-year statute of limitations for improvements to real estate, we affirm.

FACTS

In 2000, Buffets, Inc. (Buffets) hired respondent to install Ecolab water-purification systems to filter city water for soft drink and ice machines on each of the four floors of its corporate headquarters. Respondent began installing the water-purification systems on October 6, 2000. As part of the installation, respondent mounted the filter units in the kitchenette areas and plumbed the filters into the main water system through a series of plastic PVC "tee" fittings.

Within a week, the modified plumbing for the purification system on the first floor developed a pinhole leak, Buffets notified respondent of the problem, and on or about October 12, 2000, respondent returned and replaced the plastic "tee" fitting with a metal fitting. Respondent billed Buffets for installation and contemporaneous follow-up work on the purification systems at an hourly rate and submitted a billing invoice, which lists the dates of service for all the work occurring between October 6 and October 12, 2000. The invoice also states that respondent "[i]nstalled water filters on four[] floors for the pop and ice machines," then "[r]epaired a pinhole leak on the filter PVC 'T'" by "replac[ing] and re-assembl[ing] the fitting as needed," and finally "[v]erified operations." Verifying operations generally involves turning the water back on, checking all the systems for leaks, and ensuring that the systems are working properly.

On October 15, 2000, the water-purification systems broke and caused considerable water damage to Buffets' building. A report prepared by appellant's expert on December 28, 2000, stated that the first, second, and third floor water-purification systems developed leaks due to over-tightening of the fittings during installation. The report went on to state that the PVC fittings on the second and third floor were broken and that part of the first-floor fitting was also damaged. Destructive testing of the fittings was conducted in November 2002, and the testing revealed that the PVC "tee" fittings in the basement, second, and third floors were cracked. In opposing respondent's motion for summary judgment, the same expert submitted an affidavit in which he stated that the proximate cause of the water damage resulted from respondent's negligent repair of the filtration system on or about October 12 and not the original installation.

Appellant insured Buffets for the damage resulting from October 15, 2000, leaks, covered Buffets' claims, and based on its subrogation rights filed a complaint on August 13, 2003, alleging that the original installation of the water-purification systems and the repair of the systems was negligent and resulted in the loss. The district court granted summary judgment in favor of respondent. The court concluded that the installation of the water-purification system was an improvement to real property and as such the claims were barred under the two-year statute of limitations of Minn. Stat. § 541.051 (2002). The district court also concluded that to the extent appellant's claims arose from the corrective work, it was part of the installation, and therefore barred by Minn. Stat. § 541.051. Finally, ...


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