The POWER 30: Brenda Sauro and Adina Bergstrom

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But water leakage isn’t limited to stucco houses, and Sauro’s practice grew to include high-rises and multifamily homes, with homeowners associations frequent clients. “McMansions” often leaked, sometimes due to design issues.

Sauro is a partner at Sauro & Bergstrom, located in Oakdale. She and Adina Bergstrom’s practice covers various construction and real estate, roughly divided into defect claims (Sauro) and insurance issues (Bergstrom). But something they have in common is the, to them unreasonable, difficulty of obtaining attorney fee awards.

The warranty statute, Minn. Stat. sec. 327A, does not have a fee-shifting provision if the plaintiff prevails, clearly strongly prejudicial to homeowners. Efforts to change the law were vetoed by Gov. Tim Pawlenty. “That’s the closest we got,” Sauro said.

The other problem with housing defect claims is getting them fixed, Sauro continued. “Finding someone to do the work is hard.”

Homeowners may opt for arbitration. The problem with that, Sauro said, is obtaining judicial review of an arbitration order. Just recently, in Bennet & Koch Construction v. Jones, the court reversed a district court award of fees. The parties’ arbitration agreement called for an attorney fee award, but the arbitrator said there was no “prevailing party” and declined to award fees. The district court ordered fees but the Court of Appeals reversed, saying that the issue of attorney fees was part of the contract, thus subject to arbitration and not subject to de novo review.

Mediation is a valuable and often successful alternative, Sauro said. Two major requirements are enough information to assess the risks in the case, and a good mediator that will put in the time. “We’ve got good ones in town.”

Bergstrom handles insurance issues brought by homeowners or associations after damage to property, including storm or fire damage, and also loss-of-business claims. It’s become contentious, she said. She’s still working on a case from 2017, and new storms continue to come through. Insurers often dispute the causation of the damage, she said.

Challenging appraisal awards is also costly to homeowners and there’s no statutory provision for attorney fees, Bergstrom said. Appraisal awards are brought under the uniform arbitration act, Minn. Stat. 572B, which allowed attorney fee awards. But in Oliver v. State Farm in 2019, the Court of Appeals limited the reach of the arbitration act to appraisal awards. “An appraisal isn’t an arbitration award anymore,” Bergstrom.

“The Legislature needs to take a hard look at attorney fees,” she said. She’d like to see a “marriage” between the arbitration act and the fire insurance statute, Minn. Stat. Ch. 65A.

She also advocates for “more teeth” in the Minn. Stat. 604.18, which allows damages including attorney fees for denial of a claim. It should be expanded to cover delay of claims as well, Bergstrom said. Additionally, the statute requires an amended complaint to recover fees and costs. It also caps damages at $250,000 and fees at $100,000. “These could be significantly improved so there are repercussions for bad faith,” she added.