• August 4, 2009

Construction defect cases often pose the issue of whether they are beyond the statute of limitation because, often, defects become known gradually over time and the issue is when the plaintiff first knew or should have known about “the injury” (First sighting of a water-stain on a wall? Peeling paint? Small amount of mold? and so on).

Buscher v. Montag Development, et al., a published case decided today by the Minnesota Court of Appeals, falls into this category of cases but is also noteworthy on the subject of law firm sanctions.

Sanctions against attorneys are sought fairly frequently but granted (and affirmed) rarely. Here they were sought, granted, and affirmed, including award of opposing counsel fees, costs, and a $10,000 payment to the Court.

At issue was an expert report that was critical to the issue of when the homeowner first knew or should have known about a mold problem. As such, it was evidence of a dispositive issue (the statute of limitation question). Apparently, the report, though produced, was in a 4,000 page production, was referenced in discovery but not identified as having been generated in 2002, then was the subject of affidavits (not attaching the report) in response to a summary judgment motion, but portrayed in an incomplete if not misleading way, and, finally, the report was not produced to the Court even when ordered produced by the Court in the context of the summary judgment motion.

It came to light later, finally located by defense counsel. The plaintiff’s law firm offered affidavits on the subject; the affidavits were viewed as misleading. Under such circumstances, the Court of Appeals affirmed sanctions under Rule 56.07 and Rule 11 of the Minnesota Rules of Civil Procedure.

For purposes of Rule 11 and Rule 56, neither the trial court nor the Court of Appeals appear to have found it relevant that the report had apparently been produced by the appellant law firm, that defense counsel appear to have had access to the report but simply failed to identify it or appreciate its importance to their summary judgment motion (though sanctions had been sought under Rule 37 for discovery violations and were not granted under that rule).

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