MN Supreme Court enforces limits on actions against dissolved corporations

Link to decision: Camacho, et al. v. Todd & Leiser Homes

Todd & Leiser Homes (”TLH”) was the general contractor for a home built in 1993. TLH filed a notice of intent to dissolve on April 29, 1997, and its articles of dissolution on May 6, 1999. The Camachos purchased the home in July 1999.

In August 2003, the Camachos discovered signifigant water intrusion, and in September 2003 sued TLH for breach of the statutory warranty.

While the home warranty statute, Minn. Stat. § 327A.02, subd. 1(c) (2004), seems to allow lawsuits to be brought even after ten years against the builder, the corporate dissolution statute states that a voluntarily-dissolved corporation cannot be sued more than two years after its dissolution under Minn. Stat. § 302A.7291, subd. 3(a) (2004).

The Supreme Court decided that the statutes were not in conflict, and that the corporate statuted controlled the time limit. Therefore, the Camachos lose the lawsuit and their ability to recover for the damage to their home.

This case is important primarily because this is the first significant limitation on a homeowner’s right to sue for construction defects. Construction litigation has been growing quickly in recent years, helped along by long statutes of limitation for breach of warranty. This decision may give some builders a way to escape liability, but could also mean some homeowners will be left with no recourse after they discover water intrusion due to construction defects. When repair bills easily run past the tens of thousands, and sometimes into the hundreds of thousands, this is an enormous burden to bear.