Foley & Mansfield Obtains Summary Judgment for Contractor/Developer

Foley & Mansfield lawyers Doug McIntyre and Dahrim Boulware recently obtained summary judgment on behalf of developer and general contractor Rottlund Homes, Inc. in a case venued in Hennepin County District Court, Metropolitan Lofts HOA v. Kraus-Anderson Corporation and Rottlund Homes, Inc., et al, #27-CV-11-14373 (Sept. 25, 2012). The Metropolitan Lofts  are a condominium development built jointly by Kraus-Anderson and Rottlund in 2004-5.

The homeowners, represented by Hellmuth & Johnson, claimed to have first become aware of water intrusion issues in 2010, and filed suit in February of 2011.  Rottlund ultimately fell in to receivership and closed its operations in November of 2011.  As Rottlund could not satisfy its own self-insured obligations under its GL policy with its insurer,  McIntyre and Boulware moved the Court for summary judgment dismissing  Rottlund under Rule 56 (noting that Rottlund was uncollectible) and for an involuntary dismissal under Rule 41.02(a) (on the basis that the HOA was improperly continuing to prosecute claims against Rottlund despite a prior order establishing the receivership and a stay of litigation).

The Plaintiff HOA argued that the stay order did not prohibit a judgment against Rottlund, and that a warranty coverage provision in Rottlund’s policy was a potential source of recovery for the Plaintiff.   Kraus-Anderson moved the Court for dismissal on the two year statute of limitations, offering evidence of the HOA’s notice of water problems as early as 2007.  Judge Posten agreed with the arguments offered by Foley & Mansfield and Kraus-Anderson’s counsel, dismissing all claims.

The Court accepted the argument that where a builder in receivership cannot satisfy its self-insured retention, the builder is uncollectible, and dismissal is appropriate.  The Court also granted a dismissal to both Rottlund and Kraus-Anderson on the statue of limitations.

The  Metropolitan Lofts decision is significant in several respects.  First, the decision gives defense lawyers representing  insolvent builders legal support for a dismissal where the builder is clearly uncollectible.  Second, the decision will chill (and perhaps eliminate) ongoing litigation pursued by  counsel representing homeowners’ associations or contractors enforcing cross-claims against builders under receivership.  Finally, the Metropolitan Lofts decision provides legal support for insurers denying a duty to indemnify insolvent insureds in situations where their insureds cannot satisfy their self-insured retention obligations.

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