Thumper Pond Resort, LLC d/b/a Thumper Pond Resort, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1935

Thumper Pond Resort, LLC d/b/a Thumper Pond Resort,
Appellant,

vs.

Stock Building Supply Midwest, LLC, et al., Defendants,

Kaashagen & Sons, Inc. n/k/a BJK Construction, Inc., Third Party Plaintiff,

Badger Midwest Holdings, LLC,
Respondent,

Integrity Mutual Insurance Company, intervenor,
Respondent.

Filed December 9, 2019
Affirmed
Rodenberg, Judge

Otter Tail County District Court
File No. 56-CV-16-3000

Adina R. Bergstrom, Brenda M. Sauro, Da na L. Johansen, Sauro & Bergstrom, PLLC,
Oakdale, Minnesota (for appellant)

Michael D. Sharkey, Tamara L. Novotny, Rachel B. Beauchamp, Cousineau, Van Bergen,
McNee & Malone, P.A., Minnetonka, Minn esota (for respondent Badger Midwest
Holdings, LLC)

George C. Hottinger, Samantha R. Alsadi, Erstad & Riemer, P.A., Minneapolis, Minnesota
(for respondent Integrity Mutual Insurance Company)

Considered and decided by Rodenberg, Presiding Judge; Cleary, Chief Judge; and
Larkin, Judge.

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U N P U B L I S H E D O P I N I O N
RODENBERG, Judge
Appellant Thumper Pond Resort, LLC d/b/ a Thumper Pond Resort appeals from the
district court’s summary judgment in favor of respondent-developer Badger Midwest
Holdings, LLC (Badger) and re spondent-insurer Integrity Mutual Insurance Company
(Integrity), arguing that the district cour t erred by (1) determining that the sole
“occurrence” within the meaning of Integrity’s commercial general liability (CGL) policy
was a roof collapse in 2015 de spite the record containing ev idence that the collapse was
caused by progressive structural damage over a long period of time; (2) determining sua
sponte that Badger owed appe llant no duty of care in to rt; and (3) denying appellant’s
motion to compel discovery and not impos ing spoliation sancti ons on Badger in
considering the summary-judgment motion. We affirm.
FACTS
Appellant owns the Thumper Pond Resort , which includes a waterpark that opened
in July 2006. On April 14, 20 15, after the waterpark had cl osed for the day, the roof
collapsed. No people were injured, but significant property damage occurred.
In September 2016, appellant sued mu ltiple parties includi ng Kaashagen & Sons,
Inc. (KSI), Gorski & Associat es (Gorski), and Badger. A ppellants claimed that those
defendants were responsible for the roof collapse because “the truss system was not
installed properly, the subcontractors were no t supervised properly, and the trusses and
plates were not manufactured properly.” Integrity, which once insured Gorski, intervened.

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At the time the waterpark was constructed, Thumper Pond Inc. (TPI) owned the real
property on which it was built. Despite their similar names, TPI and appellant have no
legal relationship. In 2002, TPI contract ed with Badger to de velop the Thumper Pond
Resort. Badger marketed itself as “a profe ssional Hotel Development Corporation,” but
its principal role in this project was secu ring a hotel franchise. In October 2004, an
assignment and assumption-of-franchise agre ement was signed, releasing Badger from
further responsibilities relating to the Thumper Pond Resort project. Badger performed no
services after October 2004. Badger dissolved in 2016.
During summer 2004, TPI hired and entere d into a constructio n agreement with
KSI, which agreed to be the general contractor on the project. KSI then entered into a sub-
contractor agreement with Gorski to be the rough-framing contractor and one of the parties
responsible for installing the truss system. Gorksi was involved in the waterpark
construction from late 2004 or early 2005. Gorski was insured under a CGL policy issued
by Integrity for the policy period from September 12, 2005, through September 12, 2006.
Appellant was formed in 2009 and acquired ownership of the Thumper Pond Resort
in 2010. Appellant owned the Thumper Pond Resort when the waterpark roof collapsed.
Appellant moved to compel discovery from Badger or for sanctions for spoliation
of evidence. Appellant argued that Badger re fused to provide requested discovery for
almost a year, even though it had notice of imminent litigation before dissolution, and that
appellant was prejudiced as a result. The district court denied the motions.
Both Badger and Integrity moved for summary judgment. Badger argued that it had
no duty in tort related to the waterpark construction and, even if it did have a duty in tort,

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that it did not breach that duty. Integrity argued that it had no duty to indemnify Gorksi in
this action because there was no “occurrenc e” causing property da mage during the CGL
policy period. The district court granted both motions for summary judgment.
This appeal followed.
D E C I S I O N
The district court did not err in granting summary judgment in favor of Integrity
because the sole “occurrence” was the 2015 roof collapse, which was outside the CGL
policy period.

Integrity’s occurrence-based CGL policy issu ed to Gorski provided coverage for
“property damage” caused by an “occurrence” during the policy period. The policy defined
“occurrence” as “an accident, in cluding continuous or repeated exposure to substantially
the same general harmful conditions.”
Appellant argues that the plain language of the CGL policy provided coverage for
the roof collapse because the collapse was the result of progressive damage to the truss
system that resulted from fau lty work by Gorski. Theref ore, appellant argues, the
“occurrence” was a continuing one beginning during the Integrity CGL policy period.
Gorski entered into a subc ontract agreement with KSI on December 31, 2004, to
supply rough-carpentry labor, which included installation of the roof truss system. Gorski
installed the roof truss system, but did not finish all of the work contemplated by the
agreement. The last day of Gorski’s work on the project is not revealed by the record, but
Gorski was replaced by another subcontractor, Comstock Construction Inc. of Minnesota
(Comstock). Before it signed a subcontrac t agreement with KSI, Comstock visited the
waterpark-construction site and took photos showing that the roof trusses were already

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installed. Comstock’s subcontract agreement with KSI was dated February 18, 2005, and
the last of the signatures on the Comstock subcontract agreement was dated March 4, 2005.
Nothing in the record identif ies any waterpark-construction work done by Gorski after
February 2005.
In granting Integrity’s motio n for summary judgment, the district court concluded
that, while appellant presented a genuine dispute of material fact surrounding when the
chain of events leading to the roof collapse commenced, there exists no issue of material
fact for purposes of determining whether c overage existed under Integrity’s occurrence-
based CGL policy. The district court determined that the sole “occurrence” was the 2015
roof collapse.
A grant of summary judgment is reviewed de novo to determine “whether there are
genuine issues of material fact and whether the district court erred in its application of the
law.” Montemayor v. Sebright Prods. Inc. , 898 N.W.2d 623, 628 (Minn. 2017) (citation
omitted). Questions of insurance coverage are questions of law and are therefore reviewed
de novo. Parr v. Gonzalez, 669 N.W.2d 401, 405 (Minn. App. 2003). “General principles
of contract interpretation a pply to insurance policies.” Id. at 406. “In interpreting
insurance contracts, we must ascertain and give effect to the intentions of the parties as
reflected in the terms of the insuring contract.” Jenoff, Inc. v. New Hampshire Ins. Co.,
558 N.W.2d 260, 262 (Minn. 1997). A court mu st not “read an ambiguity into the plain
language of a policy in order to provide coverage.” Farkas v. Hartford Accident & Indem.
Co., 173 N.W.2d 21, 24 (Minn. 1969) (citation omitted).

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Interpretation of the CGL policy issued by Integrity as applied to the question of
whether the policy covers damages arising from the 2015 roof collapse hinges on the
meaning of “occurrence” as used in the policy. In Jenoff, the supreme court explained that
“Minnesota follows the general rule that an ‘occurrence’ within the meaning of an
occurrence policy is not the time when the wrongful act was committed but the time when
the complaining party was actually injured.” 558 N.W.2d at 261. This is consistent with
the supreme court’s decision in Singsaas v. Diedrich , affirming a district court order
“determining that bodily inju ries, occurring after cancellation of a general liability
insurance policy . . . but caused by negligence occurring while the policy was in effect prior
to cancellation, were not cove red by the policy.” 238 N.W. 2d 878, 879 (M inn. 1976).
Singsaas also rejected the argument that a “gradual accident” resulting from a process that
begins during the policy period amounts to an occurrence within the policy period when
the damage-causing incident occurs outside of that period. Id. at 881.
Appellant attempts to distinguish Singsaas, arguing that the damage to the
waterpark roof began when the trusses were installed. But this is the reasoning rejected in
Singsaas. The occurrence causing the claimed pr operty damage of which appellant
complains was the 2015 roof collapse, which ha ppened long after th e end of Integrity’s
policy period.
While the record contains evidence indicating that the claimed faulty installation of
the trusses was a factor in the roof collapse, appellant sued Gorski for damage caused by
the 2015 roof collapse. Appellant argues that there were “occurrences” from the moment
Gorski installed the trusses until the roof collapse. Taken to its logical extreme, this would

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mean that any insurer of Gorski under an occurrence-based policy from the day work
started until the roof collapse in 2015 would be on the risk. On the facts here, the
undisputed end date of Gorski’s work on the project was before the Integrity policy period,
and the roof collapse was almost a decade af ter the end of the policy period. Under the
reasoning of Singsaas, coverage for the 2015 roof collapse on these facts would impose
insurance obligations w ildly beyond the “underw riting intent” of either an insurer or an
insured. See Jenoff, 558 N.W.2d at 262.
Application of Singsaas here avoids frustrating “the underwriting intent of the
insurer” by putting it on the risk of future damage beyond the policy period; occurrence-
based insurance ends at the expiration of the policy. Id. The occurrence-based CGL policy
issued by Integrity to Gorski did not provide for limitless coverage, but rather for things
amounting to an “occurrence” during the policy period. The 2015 roof collapse occurred
nearly ten years after the end of the policy period.
Appellant also argues that the default judgment it ultimately obtained against Gorski
is significant for purposes of ascertaining coverage under the Integrity policy because the
facts underlying that judgment included that the collapse resulted from Gorski’s faulty
work in 2005—before th e inception of the Inte grity policy—that resulted in a process of
structural weakening that cu lminated in the collapse on Ap ril 14, 2015. Those facts
concerning the process by which Gorski’s work resulted in damage say nothing about the
timing of the “occurrence” for purposes of the Integrity CGL policy. That timing question
is one of contract interpretation. Gorski’s faulty workmanship is not at issue in this appeal.
This appeal concerns the point at which there was an “occurrence” for coverage purposes.

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The district court correctly determined that there is no material fact issue concerning
whether there was an occurrence during the Integrity policy period. There was none.
The district court did not abuse its disc retion in denying appe llant’s motions to
compel discovery and to impose spoliation sanctions on Badger.

Appellant argues that the district court abused its discretion in denying its motion to
compel production of documents requested through discovery. Moreover, appellant
alleges that Badger was on notice of the roof collapse and that Badger destroyed files and
corporate records despite a duty to produc e records and respond to written discovery
requests. It also urges the application of the Patton factors. See Patton v. Newmar Corp.,
538 N.W.2d 116, 119 (Minn. 1995) (holding that a court must consider whether evidence
was critical to a claim and the extent of prejudice to the opposing party in deciding whether
to impose spoliation sanctions). Badger counters that the few documents that it has, given
that it dissolved and has not been involved in the Thumper Pond Resort project for over a
decade, were produced during discovery, and that spoliation sanctions are not appropriate
in this circumstance.
A party has a duty to preserve evidence when that party knows or should know that
litigation is reasonably foreseeable. Miller v. Lankow , 801 N.W.2d 120, 127-28 (Minn.
2011). Spoliation of evidence occurs when a party fails to preserve property for another
party’s use as evidence in pending or future litigation. Id. at 127; see also Hoffman v. Ford
Motor Co., 587 N.W.2d 66, 71 (Minn. App. 1998) (d efining spoliation as the destruction
of relevant evidence by a party). District courts have broad authority in deciding whether
to impose sanctions for spoliation. Patton, 538 N.W.2d at 119. One of the factors relevant

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to this analysis is the extent of prejudice to th e party seeking the evidence. Miller, 801
N.W.2d at 132. We review a district court’s decision regarding spoliation sanctions for an
abuse of discretion. Id. at 127.
The district court found that the parties agree that Badger gave appellant the limited
documents that it had at the time discovery was served in this litigation. The record
supports that finding.
Alternatively, appellant argues that the district court ought to have imposed
spoliation sanctions against Ba dger by application of the Patton factors. If spoliation
sanctions had been imposed, that might have impacted the district court’s summary
judgment ruling.
Badger agrees that it disp osed of some documents. A nd the record supports the
district court’s determination that the documents were destroyed before Badger was given
notice of this litigation. There is nothing in the record indicating that any documents were
disposed of because of appellant’s clai m against Badger. Badger’s certified public
accountant advised Badger that organizational documents could be purged after ten years.
The district court determined that ten years was a reasonable and practical retention period.
The district court acknowledged the impact th at the requested documents might have had
on the summary judgment ruling. Having determined 10 years to be a reasonable
document-retention period and that approxima tely 13 years passed since TPI contracted
with Badger, the district court concluded th at even documents kept for the reasonable-
retention period would have been destroyed before Badger was given notice of this
litigation. The district court’s findings and reasoning are supported by the record. Because

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all of the documents in existence were prod uced by Badger during discovery, the district
court acted within its discre tion in denying both appellant’s motion to compel and its
motion for spoliation sanctions.
The district court did not err in granting Badger’s motion for summary judgment.

Appellant contends that it was prejud iced by the district court’s summary
adjudication of its claims against Badger, arguing that it never had the opportunity to brief
the issue of whether Badger owed appellant a duty in tort. Appellant argues that the district
court’s reasoning in ruling on Badger’s summary-judgment motion went beyond the
specific arguments relied on by Badger. Appella nt therefore characterizes the district
court’s action as having been taken sua sponte.
A district court’s grant of summary judg ment is reviewed de novo to determine
“whether there are genuine issues of material fact and whether the district court erred in its
application of the law.” Montemayor, 898 N.W.2d at 628. The record is viewed “in the
light most favorable to the non-moving party.” Senogles v. Carlson, 902 N.W.2d 38, 42
(Minn. 2017) (citation omitted). A fact is mate rial if it “is one of such a nature as will
affect the result or outcome of the case depending on its resolution.” Zappa v. Fahey, 245
N.W.2d 258, 259-60 (Minn. 1976).
The district court has “inherent authority . . . to grant summary judgment sua sponte
without notice to either party where there remains no genuine issue of material fact, one of
the parties deserves judgment as a matter of law, and the absence of a formal motion creates
no prejudice to the party against whom su mmary judgment is entered.” Modern Heating
& Air Conditioning, Inc. v. Loop Belden Porter, 493 N.W.2d 296, 299 (Minn. App. 1992)

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(alteration in original). We therefore consider whether the district court acted sua sponte
in granting Badger’s motion for summary judgment and, if so, whether doing so prejudiced
appellant. See id.
The record does not show that the district court acted sua sponte in deciding the
issue of duty. Badger’s motion for summary judgment clearly argued the issue. The first
paragraph of Badger’s motion stated, “There is zero evidence in the record that Badger . . .
could or did have any duty to [appellant] whatsoever as concerns the roof over the
waterpark or the ensuing collapse of the roof.” On page seven of the motion, Badger argued
the absence of “evidence that Badger had a duty as concerns the waterpark construction
and there is no evidence that Badger breached any duty even if it did have one (which it
did not).” And again on page eight of the motion Badger argued that the facts “do not
establish any duty or breach of duty on the part of Badger as concerns [appellant].” The
issue of duty was plainly before the district court.
Appellant also contends that the district court improperly found that a developer
owes no duty in tort to appellant as a subsequent owner of the waterpark.
The existence of a duty of care is a thre shold question because a defendant cannot
breach a nonexistent duty. Domagala v. Rolland , 805 N.W.2d 14, 22 (Minn. 2011) .
Whether a duty of care exists is a question of law reviewed de novo. Id. Duty is usually a
legal question for the court to decide. Montemayor, 898 N.W.2d at 629. In close cases,
however, duty issues may present a question for the jury.1 Senogles, 902 N.W.2d at 43.

1 Four recent opinions of the Minnesota Supreme Court have identified such a “close case”
concerning a claimed legal duty. See Warren v. Dinter , 926 N.W.2d 370 (Minn. 2019);

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Appellant produced an expert affidavit a sserting the industry-recognized duty of
developers. But we agree with the district court that this did not create a fact issue
concerning the existence of a legal duty in tort. Importantly, appellant has no legal
relationship to TPI, with whom Badger contracted. Badger had no contract with appellant.
Its contract was with TPI. Moreover, Badger’s active involvement e nded in 2004 when
Badger, as the franchisee, and TPI, as the successor franchisee, entered into an assignment
and assumption of franchise agreement.
Accordingly, the question becomes whether a developer, who contracted with a
previous owner of the property, owes a general duty of due care to a party with whom the
developer had no contract—in other words a duty in tort. This is a distinctly legal question
for the court. Badger had neither a contract ual relationship nor an y special relationship
with appellant. If Badger had hired the general contractor for the waterpark, as appellant
claimed in its complaint, such a special relationship may have existed. But it is clear from

Fenrich v. The Blake School , 920 N.W.2d 195 (Minn. 2018); Senogles, 902 N.W.2d 38;
Montemayor, 898 N.W.2d 623. The supr eme court held in each case that a jury question
remained for resolution concer ning duty, but the manner in which the duty question is
properly to be put to the jury for resolution remains unresolved. See SRRT Properties v.
Nova Consulting Group, Inc., No. A19-0523, 2019 WL 5152463, at *10-11 (Minn. App.
Oct. 14, 2019) (Jesson, J., conc urring) (observing that a dist rict court, having determined
that foreseeability was for the jury to decide, should have submitted a special interrogatory
to the jury specifically concer ning the foreseeability question that the district court had
determined was a “close” one). We need not resolve that question here. This case involves
a question of whether a devel oper owes a duty in tort to a successor owner of a property
previously owned by an entity with which the developer had a contract. It does not involve
a hospital-admissions duty in the absence of a physician-patient relationship, as in Warren,
926 N.W.2d at 385-87, a special duty, as in The Blake School, 920 N.W.2d at 201-02, an
obvious danger, as in Senogles, 902 N.W.2d at 47-48, or foreseeability, as in Montemayor,
898 N.W.2d at 629.

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the record that Badger did not hire the general contractor. Instead, the record admits of no
conclusion other than that Badger sugges ted the general contractor to TPI (and not
appellant) which then hired and entered into a construction agreement with the general
contractor. Badger and the general contractor that TPI hired had common owners, but were
distinct and different legal entities. Had Ba dger contracted with appellant, a contractual
duty may have existed. But Badger’s contract was with TPI, not appellant. We agree with
the district court that Badger owed no legal duty to appellant.
Whether a developer might in any future circumstance owe a duty to third parties is
not the issue here. At the time Badger worked for TPI, appellant did not own the property
and did not even exist. The re cord is devoid of any evidence of any duty Badger had to
appellant. The district court did not err in its grant of summary judgment to Badger.
Integrity’s remaining motion to strike is moot.
After appellant filed its reply brief, Integrity moved to strike sections of appellant’s
reply brief on two grounds: (1) misrepresent ation and mischaracterization of Integrity’s
arguments, and (2) that appellant’s reply brief exceeds the proper bounds of a reply brief.
In a special term order, we denied Integr ity’s motion to strike on the ground of
mischaracterization and misrepresentation and deferred ruling on the second ground for
relief. The remaining motion to strike is moot in light of our resolution of this appeal.
Affirmed.