Waters Edge Community Association, Inc., et al., Appellants,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-0950

Waters Edge Community Association, Inc., et al.,
Appellants,

vs.

Pulte Homes of Minnesota, LLC, et al.,
Respondents.

Filed May 8, 2017
Affirmed
Bjorkman, Judge

Washington County District Court
File No. 82-CV-15-5197

Alex M. Nelson, Duncan L. Griffiths, Ross M. Hussey, Benson, Kerrane, Storz & Nelson,
P.C., Bloomington, Minnesota (for appellants)

Douglas J. McIntyre, Wyatt S. Partridge, Foley & Mansfield, PLLP, Minneapolis,
Minnesota (for respondents)

Considered and decided by Peterson, Presiding Judge; Bjorkman, Judge; and
Klaphake, Judge.

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

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U N P U B L I S H E D O P I N I O N
BJORKMAN, Judge
Appellant-homeowners associations challenge the dismissal of their construction -
defect claims against respondent -contractors, arguing the district court erred by
determining that appellants released the claims in an earlier settlement agreement and that
res judicata otherwise bars the claims. We affirm.
FACTS
Appellant Waters Edge Community Association, Inc. is a residential development
in Hugo t hat consists of 892 townhomes. Waters Edge governs and oversees f ive
homeowners associations: Court Homes, Courtyard Homes, Manor Hom es, Patio Homes,
and Village Homes.1 Respondent Pulte Homes of Minnesota, LLC,2 was the developer and
general contractor for the construction of Waters Edge. Construction began in 2004 and
was completed in 2010.
In 2012, homeowners began complaining ab out various construction issues. The
complaints related to “concrete flatwork, driveways, grading, A/C units support, garage
headers and other conditions related to exterior elements of the complex.” Waters Edge
hired Guy Engineering to investigate. Guy Engineering ultimately identified a number of
problems, including tilted air conditioning units, cracking concrete, tilted retaining walls,

1 The five associations are also appellants and are collectively referred to as “Waters Edge.”

2 Pulte Homes of Minnesota Corporat ion, Pulte Group, Inc. , and Does 1 -10 are also
respondents. We refer to them collectively as “Pulte.”

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and shifting patios and sidewalks. Guy Engineering later issued a second report outlining
problems with garage door headers in the Manor Homes.
On October 31, 2012, Waters Edge sued Pulte for negligence, breach of contract,
and breach of express and implied warranties. On February 28, 2014, the parties entered
into two mediated settlement agreements. The first was between Waters Edge, Pulte, and
three of Pulte’s subcontractors. Waters Edge agreed to release “any and all claims asserted
or that could have been asserted” against Pulte “arising from the framing, siding or related
work.” The agreement specified that the released claims include all unknown damages
stemming from claims asserted or claims that could have been asserted relating to the
framing, siding, or related work, “regardless of whether such damages or consequences are
more significant than anticipated or occurred in the future.”
The second settlement agreement was between Waters Edge, Pulte, and two other
subcontractors: Valley Blacktopping and Minnesota Vinyl and Aluminum Systems.
Waters Edge agreed to release all claims against Pulte “arising from or relating to the work
of” the released subcontractors. The released claims again included damages related to any
claim asserted or claim that could have been asserted, regardless of whether the damages
were more significant than anticipated or occurred in the future.
In March 2014, Waters Edge commenced a second lawsuit against Pulte and three
individuals. The 2014 complaint alleges breach of warranty and breach of fiduciary duty,
and requests attorney fees. In August, the parties executed a third settlement agreement in
which they agreed to

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unconditionally mutually release and forever discharge each
other . . . from any and all claims that were made, or could have
been made in the Action3 of whatever kind or nature, including
claims for attorne y’s fees and costs, that are in any way
connected with the errors or omissions in development, design,
construction, materials, equipment, sale or repair of, or
representations relating to the Project or any portion thereof
that were alleged, or could have been alleged in the Action[.]

The parties also agreed that the released claims “include all unknown damages and
consequences on account of or because of any claims asserted or that could have been
asserted in the Actions, regardless of whether such damag es or consequences occur in the
future.” And the settlement agreement defines “Project” to include “ [t]he separate units,
along with all common elements and limited common elements .” On October 23, 2014,
the district court dismissed the second lawsuit with prejudice based on the parties’
stipulation.
In March 2015, homeowners began reporting additional problems to Waters Edge.
The complaints included possible structural movement of townhomes and decks, water
intrusion at deck -to-home junctures, deter iorating garage slabs, and mold on portions of
the siding. Two months later , Waters Edge hired Steve Norwood to inspect the above -
foundation construction of th e townhomes. Norwood observed problems relating to the
decks and fire resistive assemblies, the protective sheets covering the foundation insulation,
the vinyl siding and trim, and the mailbox kiosks.

3 The third settlement agreement defines “Action” to include both the Oc tober 2012 and
March 2014 lawsuits.

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On November 3, 2015, Waters Edge initiated this lawsuit, asserting negligence and
breach-of-warranty claims. The complaint generally alleges construction defects related
to the “buildings and residential units.” The complaint acknowledges the first lawsuit but
states “[n]o construction defect claims that were either brought in the Prior Action, or that
could have been brought in the Prior Action ar e re-alleged in the instant lawsuit.” Pulte
moved to dismiss the lawsuit, arguing that the settlement agreements fully released Waters
Edge’s claims related to the townhome development and, in the alternative, that res judicata
bars this action.4 Following a hearing, the district court granted the motion. The district
court ruled that the release provision s of the third settlement agreement encompass all
aspects of the Waters Edge development. Waters Edge appeals.
D E C I S I O N
On appeal from summary judgment, we review de novo whether there are any
genuine issues of material fact and whether the district court erred in applying the law.
Ruiz v. 1st Fid. Loan Servicing, LLC , 829 N.W.2d 53, 56 (Minn. 2013). We view the
evidence in “the li ght most favorable to the party against whom summary judgment was
granted.” STAR Ctrs., Inc. v. Faegre & Benson, L.L.P. , 644 N.W.2d 72, 76 -77 (Minn.
2002). A genuine issue of material fact exists when there is sufficient evidence that could
lead a rational trier of fact to find for the nonmoving party. DLH, Inc. v. Russ, 566 N.W.2d
60, 69 (Minn. 1997).

4 The district court treated the motion as one for summary judgment because it was required
to consider matters outside the pleadings. See Fabio v. Bellomo , 504 N.W.2d 758, 761
(Minn. 1993) (citing Minn. R. Civ. P. 12.02).

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A settlement agreement is a contract, and we review its language de novo to
determine the intent of the parties. Dykes v. Sukup Mfg. Co. , 781 N.W.2d 578, 581-82
(Minn. 2010). Likewise, a release is a contract that will be enforced if it expresses “the
intent to release, discharge, or relinquish a right, claim, or privilege by a person in whom
the claim exists to a person who seeks to be released.” Curtis v. Altria Grp., 813 N.W.2d
891, 902 (Minn. 2012). Public policy favors the settlement of claims. Minneapolis Star &
Tribune Co. v. Schumacher, 392 N.W.2d 197, 205 (Minn. 1986). Accordingly, “[a] general
release of all claims, known and unknown, wil l be enforced by the court if the intent is
clearly expressed.” Curtis, 813 N.W.2d at 902.
We begin our analysis by considering the release language contained in the three
settlement agreements. The first settlement agreement released “any and all claims
asserted or that could have been asserted” that arise “from the framing, siding or related
work.” The second settlement agreement released all claims related to work performed by
Valley Blacktopping and Minnesota Vinyl and Aluminum Sy stems. That agreement
specifies that Minnesota Vinyl provided “privacy fences, deck railings, fences, and related
services.”
The third settlement agreement contains broader language. This agreement defines
the “Project” as “[t]he separate units, along with all common elements and limited common
elements.” In the “Recitals” portion of the agreement, the parties reference the prior
lawsuits and express their “desire to settle all remaining claims which have been asserted
or which could have been asserted . . . in the Actions with regard to the Project.” To that
end, the parties agreed to

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unconditionally mutually release and forever discharge each
other . . . from any and all claims that were made, or could have
been made in the Action of whatever kind or nature, including
claims for attorney’s fees and costs, that are in any way
connected with the errors or omissions in development, design,
construction, materials, equipment, sale or repair of, or
representations relating to the Project or any portion the reof
that were alleged, or could have been alleged in the Action[.]

Waters Edge and Pulte further agreed that “the Released Claims include all unknown
damages and consequences on account of or because of any claims asserted or that could
have been asserted in the Action.” But this broad release language specifically excludes
“claims as between the [parties] in the Action that . . . relate to or arise from any other
residence, development or project.” (Emphasis added.)
Waters Edge argues that none of the three settlement agreements evince its intent to
release the negligence and warranty claims it asserts in the present action. We disagree.
First, all three lawsuits generally assert that Pulte failed to properly de sign and construct
the Project and failed to properly supervise its subcontractors. The complaints all allege
that Pulte’s failure to do so was negligent, violated provisions of the building code , and
breached express and implied warranties. Waters Edge contends that the claims it released
in connection with the prior lawsuits relate to ground-level “horizontal construction,” while
the claims asserted in this lawsuit relate to “vertical construction,” involving “the buildings
themselves from the ground upward.” But the record defea ts this argument. The first
settlement agreement expressly released claims relating to “framing, siding, or related
work.” The second settlement agreement specifically released claims related to deck
guardrails and privacy fences. These released claims involve above-ground, “vertical

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construction” defects. And analysis of the current complaint demonstrates Waters Edge is
again asserting claims relating to the same general issues, including exterior wall
coverings, vinyl s iding, aluminum trim, deck guardrails, and privacy walls. Moreover,
nothing in the language of the three settlement agreements supports limiting the scope of
their release provisions to “horizontal construction” defects.
Second, the release language in t he third settlem ent agreement is sufficiently
comprehensive and broad to bar the current lawsuit. Contrary to Waters Edge’s contention,
no specific language is required to release unknown claims. Curtis, 813 N.W.2d at 901-02.
Rather, we consider whether “the release is executed under circumstances evincing basic
fairness and both releasor and releasee clearly indicate in the instrument an intent to release
all claims for both known and unknown injury.” Barilla v. Clapshaw, 306 Minn. 437, 440,
237 N.W.2d 830, 832 (1976) (quotations omitted). Both the context in which the parties
entered into the third settlement agreement and the agreement’s language lead us to
conclude that the parties intended Waters Edge to release all claim s—both known and
unknown—related to construction of the townhome development.
As to context, the third settlement agreement followed two lawsuits and two pri or,
claim-specific settlements. The first settlement agreement released only “Claims against
Pulte for damages or liability that arise from the framing, siding or related work . . .
performed by SNG, CCC, or Welle” and stated that Waters Edge “expressly reserves all
other claims that arise from the services of Pulte or any other of their subcontractors.” The
second settlement agreement similarly reserved claims against Pulte for work performed
by unnamed subcontractors. In contrast, the third settlement agreement refers broadly to

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all manner of design and construction claims, notes the prior settlement agreements, and
expresses the parties’ “desire to settle all remaining claims which have been asserted or
which could have been asserted.” The timing of the third settlement agreement —six
months after the fir st two agreements, four years after construction w as completed, and
following two separate lawsuits—also suggests a shared intention to conclude the issues
between the parties once and for all. Waters Edge does not argue that the circumstances
under which this agreement was reached were unfair. To the contrary, the parties agreed
to the settlement terms during a mediation session. And the settlement agreement states
that both Waters Edge and Pulte relied on the advice of their attorneys and “fully
understood and voluntarily accepted” the terms of the agreement.
The language the parties chose to use in connection with the third settlement
agreement further supports the conclusion that the parties intended the agreement to
operate as a general release of all claims. As noted above, Waters Edge agreed to release
“any and all claims that were made, or could have been made . . . that are in any way
connected with the errors or omissions in development, design, construction, materials,
equipment, sale or repair of . . . the Project.” The agreement specifies that the released
claims include “all unknown damages and consequences . . . regardless of whether such
damages or consequences occur in the future.” This reflects the parties’ intent to finally
resolve all claims between them. We are persuaded by Pulte’ s argument that the parties’
express reservation of claims that “instead relate to or arise from any other residence,
development or project” demonstrates that the parties intended to fully and finally resolve
all claims related to the construction of Waters Edge.

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Third, we are convinced that interpreting the third settlement agreement as a general
release of claims related to the construction of Waters Edge does not violate public policy.
Waters Edge argues that the release provisions cannot be read to include unknown injuries
that the parties did not contemplate and that were still within the 10 - to 12-year repose
period under Minn. Stat. § 541.051, subd. 1(a) (2016). Waters Edge cites to several cases
to support this argument. See Barilla , 306 Minn. at 441, 237 N.W.2d at 832; Doud v.
Minneapolis St. Ry. Co., 259 Minn. 341, 347, 107 N.W.2d 521, 525 (1961); Aronovitch v.
Levy, 238 Minn. 237, 246, 56 N.W.2d 570, 576 (1953). But as the supreme court noted in
Barilla, these cases involve parties who were induced into releasing unknown injuries
based on a mutual mistake. 306 Minn. at 441, 237 N.W.2d at 832. The holdings in Doud
and Aronovitch do not disturb the general principle that “if the parties really con tract to
release their claim for unknown injuries, the contract should be enforced.” Id. And Waters
Edge cites no authority to support its assertion that it could not release claims for
construction defects it had yet to discover and for which the statut ory repose period had
not expired. A party may release claims for unknown injuries. Id.
In sum, the circumstances under which the parties entered into and the language
they used in the third settlement agreement persuade us that the parties intended for Waters
Edge to release all of its claims against Pulte relating to the construction of Waters Edge.

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On this record, we conclude that the district court did not err in granting summary judgment
in favor of Pulte.5
Affirmed.

5 Pulte also argues that the current lawsuit is barred by res judicata. Because we conclude
that the settlement agreements bar the current lawsuit, we need not reach this issue.