Court of Appeals revives fire restoration lawsuit

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In Brief:

• Minnesota Court of Appeals reinstated a homeowner’s lawsuit over allegedly defective fire restoration work.
• Court ruled post fire repair work is not automatically an “improvement to real property.”
• Six-year statute of limitations applies instead of Minnesota’s two-year construction limit.
• Case was remanded after district court dismissal was reversed.

Tonita Haire-Cochran hired a restoration company do to construction work after fire damaged her house, but she alleged the repairs were deficient. While the lower court dismissed her lawsuit due to the statute of limitations, the Minnesota Court of Appeals concluded that a longer, six-year statute of limitations was appropriate in her case.

Haire-Cochran’s home suffered extensive fire damage in January 2019. She contracted with 24 Restore Inc. to perform construction work. This included removing damaged materials and restoring the property to like-new condition.

Haire-Cochran moved back in November 2019. She was dissatisfied with the restoration, finding it incomplete and unworkmanlike. Haire-Cochran alleged the basement was untouched, inferior windows caused heating issues, and the kitchen cabinets and countertops differed from what was quoted and were improperly installed. She also claimed the bedroom carpeting was inferior, the kitchen vent was improperly installed, and exterior siding and gutters were unfinished.

Haire-Cochran hired other contractors to complete the repairs and paid them directly. In March 2024, after two years of unsuccessful negotiations, she filed suit alleging breach of contract, promissory estoppel, unjust enrichment, negligence, and breach of the covenant of good faith and fair dealing. 24 Restore raised a statute-of-limitations defense.

One month before trial, 24 Restore moved to dismiss Haire-Cochran’s complaint, arguing it failed to state a claim. It asserted that Minnesota Statutes section 541.051, subdivision 1(a) barred her claims because she filed the action more than two years after sending an initial demand letter. Section 541.051, subdivision 1(a), is a two-year statute of limitations that overrides Minnesota’s general six-year limitations period. It bars claims arising from a defective and unsafe improvement to real property if filed more than two years after the cause of action accrues, absent fraud.

Haire-Cochran opposed the motion, arguing that the statute did not apply because her complaint did not involve an “improvement to real property.” Instead, she contended that a six-year statute of limitations governed her claims.

The district court concludd that the work described constituted an improvement to real property under section 541.051, subdivision 1(a). It reasoned that the complaint alleged 24 Restore made permanent additions to her home through the expenditure of labor and money, and that the work was intended to make the property more useful and enhance its value. The court dismissed the complaint with prejudice.

The question before the Minnesota Court of Appeals was whether Haire-Cochran’s claims arose from a “defective and unsafe condition of an improvement to real property.” It ultimately held that post-fire construction work is not necessarily an improvement to real property.

Reviewing the three factors in the Minnesota Supreme Court Case, Siewert v. Northern States Power Co., the court found that only one of the factors supported a construal that the construction work was an improvement to real rpoperty. The other two factors did not support this construal because there was no indication the project increased the home’s value or usefulness, as it merely restored the property’s prior condition. While 24 Restore argued that like-new conditioned implied improvement, the court found that it only returned the home to its pre-fire state. Therefore, it did not find an improvement to real property.

Additionally, while 24 Restore maintained that the court needed to look at the home’s post-fire condition, the court determined that case law required it to instead compare the property to its pre-fire condition. It did not consider whether the work made the property more useful or valuable than its post-fire condition. The court emphasized how the work was intended to repair fire damage and restore the home to its pre-fire state through cleanup, mitigation, and reconstruction.

“This is not to say that construction work performed on real property following a damaging event like a fire could never be ‘an improvement to real property’ under Minnesota Statutes section 541.051, subdivision 1(a). A homeowner might design a project in a manner that is intended to change the nature or value of the property, in addition to restoring it to a livable condition,” wrote Judge Elizabeth Bentley. “Accordingly, we hold that construction work performed on real property after a fire is not necessarily ‘an improvement to real property’ within the meaning of Minnesota Statutes section 541.051, subdivision 1(a).”

The Court of Appeals reversed the dismissal of Haire-Cochran’s complaint and remanded it for further proceedings.