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LLC v. City of Maple Plain

Court of Appeals of Minnesota

April 17, 2017

Magnolia 8 Properties, LLC, Respondent,
City of Maple Plain, Appellant.

         Hennepin County District Court File No. 27-CV-15-5903

          Lucas J. Thompson, Jux Law Firm, Minneapolis, Minnesota (for respondent)

          Jason J. Kuboushek, Iverson Reuvers Condon, Bloomington, Minnesota (for appellant)

          Considered and decided by Halbrooks, Presiding Judge; Worke, Judge; and Jesson, Judge.


         The discretionary-acts exception to municipal liability pursuant to Minn. Stat. § 466.03, subd. 6 (2016), is absolute and shields a municipality's planning-level decisions from strict-liability claims.


          HALBROOKS, Judge

         Appellant challenges the district court's denial of its summary-judgment motion, arguing that it is entitled to statutory immunity on all claims. Because respondent challenges two separate instances of governmental conduct and we conclude that only one entitles appellant to statutory immunity, we affirm in part, reverse in part, and remand.


         Respondent Magnolia 8 Properties, LLC (Magnolia), owns a building that contains commercial and residential space on the corner of Main Street and Budd Avenue in appellant City of Maple Plain. In January 2011, a leak from the city's water main beneath Main Street caused substantial flooding in the basement of Magnolia's building that necessitated replacement of four furnaces and a water softener. The city repaired the water-main leak.

         Also in 2011, the city evaluated its street and infrastructure status by reviewing historical construction records, the current condition of the street or infrastructure, and the estimated cost of reconstruction. Based on this information, the city ranked and prioritized projects and estimated when each would be completed. One project included replacement of the water main and sewer infrastructure on Main Street adjacent to Magnolia's building, which the city scheduled to be done in 2014.

         A memorandum from the city administrator to the mayor and city council summarized the evaluation, stating that determining an appropriate "reconstruction schedule is dependent on [the city's] funding and potential identification of new revenue sources" and that the city's "ability to complete projects may be hampered by the availability of infrastructure-dedicated funding." The city did not have infrastructure-dedicated funding in its budget to cover the costs of reconstructing its water main. Consequently, the city adopted a maintenance policy to "promptly respond to leaks and conduct repairs as soon as possible" on the water main beneath Main Street until the reconstruction project could be completed.

         In 2012, the city applied for, and received, a grant to fund a downtown redevelopment project that was intended to attract private investors to help revitalize its downtown area and included "modification of water main and sewer lines under Main Street" near Magnolia's building. The city anticipated that the project would be completed by December 31, 2014, although the grant only required that the project commence no later than December 31, 2015. Despite receiving the grant, the city did not proceed with reconstruction of the water main under Main Street because it had not identified a developer for the project.

         Unrelated to its downtown redevelopment project, the city began repairs on the sewer system under Budd Avenue near Magnolia's building in August 2014. During the sewer reconstruction and repairs, there was another water-main leak near Magnolia's building on September 11, 2014. The city stated that "jarring from the construction caused" the leak. The city discovered and immediately repaired the leak before it caused any damage but did not assess the soil condition or the risk of future damage to the water-main system near Magnolia's building.

         On January 7, 2015, the city was notified of another water leak near Magnolia's building. Three hours after notification, it determined that a crack in the water main under Main Street was the cause. The city immediately secured the leak and repaired it the following day. But that water leak resulted in substantial damage to Magnolia's building, flooding the basement and causing the east foundation wall to partially collapse. The sidewalk adjacent to Magnolia's building also collapsed. By January 26, 2015, the city still had not identified a developer for the downtown redevelopment project.

         Magnolia sued the city, seeking compensatory and punitive damages for nuisance, trespass, strict liability, and negligence associated with damage caused by the January 2015 water leak. The city moved for summary judgment, arguing that (1) it is entitled to statutory immunity; (2) there are no genuine issues of material fact with respect to Magnolia's claims of statutory trespass, common-law trespass, or nuisance, and that it is entitled to judgment as a matter of law; and (3) Magnolia's negligence claims are not actionable under the public-duty doctrine.

         The city supported its motion with an affidavit from the city administrator, along with several exhibits. In the affidavit, the city administrator stated:

In determining whether or not to conduct the reconstruction of the pavement on and infrastructure under Main Street between Delano and Budd Avenues, the City considered the cost of the project and the needs of the surrounding businesses. The City's budget does not allow the City to pay for the reconstruction costs by itself; thus the City needed the assistance of the Livable Communities Grant to pay for the infrastructure. Additionally, the City has not moved forward with the pavement and infrastructure reconstruction because it did not have a Developer or Development Plan in place for the Downtown Redevelopment project. The City did not want to install new pavement or infrastructure until it knew what the needs of the Downtown Redevelopment project were. If the City put in the wrong size or type of infrastructure prior to the development, it might have had to be removed. The City could not afford these additional costs.

         The exhibits attached to the affidavit included a 2011 spreadsheet and memorandum evaluating the city's street and infrastructure status; the city's grant application for funding the downtown redevelopment project, which included a resolution identifying the need for grant funding; and minutes from the city's January 26, 2015 city council meeting. At that meeting, the city administrator reported to the city council "that there are a few interested developers in the site and that staff will meet with some next week to determine what timelines are available and what plans are intended for the site."

         The district court granted the city's motion with respect to Magnolia's statutory- trespass claim but denied the remainder of the city's motion. The district court concluded that the city was not entitled to statutory immunity because its "failure to repair Main Street can be seen as an operational decision, " and it also determined, as "a separate basis to ...

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