Village Homes of Grandview Square II Association, Respondent,

This opinion will be unpublished and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
A19-1681

Village Homes of Grandview Square II Association,
Respondent,

vs.

R. E. C., Inc. d/b/a Ron Clark Construction, et al.,
Defendants,

and

R. E. C., Inc. d/b/a Ron Clark Construction,
Third-Party Plaintiff,

vs.

Savenok Construction, Inc., et al.,
Third-Party Defendants,

Fox Valley Contractors, LLC, third-party defendant,
Appellant.

Filed August 3, 2020
Affirmed
Smith, Tracy M., Judge

Hennepin County District Court
File No. 27-CV-16-2304

Jon R. Steckler, Lars C. Erickson, Benj amin J. Kirk, The Coleman Law Firm, LLC,
Minneapolis, Minnesota (for respondent)

George C. Hottinger, Samantha R. Alsadi, Erstad & Riemer, P.A., Minneapolis, Minnesota
(for appellant)

2
Considered and decided by Smith, Tracy M., Presiding Judge; Reilly, Judge; and
Florey, Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
Respondent, a condominium homeowners’ a ssociation, obtained a jury verdict
against appellant, an exterior-cladding subcontractor, on claims arising from construction
defects in the stucco system of respondent’s condominium building. In this second appeal
in the case,1 appellant argues that the district court erred (1) by not dismissing respondent’s
claims as untimely under the statute of limit ations, (2) by denying appellant’s motion for
judgment as a matter of law, and (3) by de nying appellant’s motion for a new trial based
on alleged evidentiary and special-verdict -form errors. Because we conclude that
respondent’s claims were not untimely and that appellant’s remaining arguments do not
warrant reversal or a new trial, we affirm.
FACTS
Respondent Village Homes of Grandview Square II Association (Village Homes) is
an association of condominium owners who own units in a building known as Grandview
Square II. Grandview Square II (the building) has 50 units and was built between 2002 and
2005. R.E.C., Inc. (R.E.C.) was the general contractor that managed the construction of the
building. Relevant for this case, R.E.C. subcontracted with appellant Fox Valley

1 Before trial, appellant brought an unsucce ssful interlocutory appe al arguing lack of
personal jurisdiction over it. Village Homes of Grandview Square II Assoc. v. R. E. C. Inc.,
No. A17-1747, 2018 WL 2090576, at *1 (Minn. App. May 7, 2018) (Village Homes I).

3
Contractors, LLC (Fox Valley) to perform the exterior stucco work on the building. R.E.C.
also contracted with Pope Associates, Inc. (Pope) to serve as architect of the building, with
Nordic Insulation, Inc. (Nordic) to provide insulation for the building, and with a number
of other subcontractors to handl e different aspects of the proj ect. Village Homes, R.E.C.,
Pope, and Nordic are Minnesota-based entities. Fox Valley is based in Illinois.
In 2014, Village Homes learned that moistu re problems had been discovered in an
associated property, so it hired a company to investigate its building. An engineer inspected
the building in May 2014 and informed Village Homes’ board of several construction
defects in July 2014. On September 26, 2014, the engineer issued an initial report to Village
Homes’ board, describing areas in the building walls with “elevated moisture content.” The
initial report made recommendations to addre ss the moisture and pr event it from getting
worse. The engineer conducted additional evaluation and issued another report on
December 18, 2015, expanding on the observations and recommendations from his initial
report.
Stucco system and its deficiencies
The engineer described his findings in the subsequent trial as an expert witness for
Village Homes. At issue was the stucco system installed by Fox Valley—specifically, three
components of the stucco system: the control joints, the accent bands, and the weep screed.
Control joints are metal joints placed in side stucco cladding to reduce the amount
of cracking that occurs in panels of stucco when they shift or change size due to temperature
and moisture. Control joints divide up large panels of stucco into smaller pieces and help
accommodate movement by the inflexible, ceme nt-like stucco. Village Homes’ expert

4
explained that the control joints installed in the building had gaps on every outside corner
of the building, which resulted in holes that allowed water to get behind the stucco system.
The expert testified that the building is not a rectangular building and estimated that there
were about 30 of these outside corners on the building.
Accent bands are foam pieces glued onto the stucco façade and covered with a finish
coat to create a visual break or architectural enhancement to a building. Village Homes’
expert testified that the accent bands installed on the side of the building had a top surface
that was relatively flat or, in some cases, angled. He stated that this was a problem because,
when stucco is flat or angled, water tends to pool on it, which results in the stucco breaking
down more quickly. The expert also addressed photographs of the finishing coat failing on
one of the accent bands. He explained that, onc e the finishing coat starts to fail, the
materials behind it tend to be more susceptible to moisture. He testified that, to address the
accent band issue with the building, he recommended removing the finishing coat from the
accent bands and applying a more durable finish coat material.
Lastly, a weep screed is a metal piece installed along the bottom of the wall before
the stucco is applied. It typi cally has holes at th e bottom so that, if water gets behind the
stucco, the water can drain out through the weep sc reed. Village Homes’ expert testified
that building codes require that weep screeds be installed at least two inches above paved
areas. He further testified that the weep screeds used in the building were installed “below
the level of the pavers,” causing moisture to accumulate and leading to the weep screeds
corroding. He stated that he thought that the accumulated water was also getting through
the waterproofing membrane, which was intende d to protect the wood en structure of the

5
building from moisture, by following pathways created by the nails attaching the weep
screed to the building.
Procedural history
On February 22, 2016, Villa ge Homes sued general contractor R.E.C. for
construction defects in the building and the resulting damage. On June 9, 2016, R.E.C.
initiated third-party actions against 11 subcontractors, including Fox Valley. R.E.C. filed
an affidavit of service, stating that Fox Valley had been served on June 10 with a copy of
the third-party complaint by personal delivery to a paralegal, L.S. The affidavit states that
the delivery was made to the office address of Fox Valley’s authorized agent, and a later
affidavit by R.E.C.’s server st ated that the parale gal informed the se rver that she was
authorized to accept service fo r Fox Valley. A lawyer at the address was Fox Valley’s
authorized agent.
After R.E.C. filed its third-party actions, Village Homes amended its complaint on
June 30, adding a new claim against R.E.C. and asserting all of its claims directly against
the subcontractors. Village Homes filed an a ffidavit stating that it served its amended
complaint on Fox Valley by mailing it to the sa me address to which R.E.C.’s server had
delivered its third-party summons and complaint.
Fox Valley claims that the case came to its attention based on a letter sent to its
insurance company, though Fox Valley does not indicate when that occurred. An affidavit
in the record shows that, even if Fox Valley did not receive actual notice when the paralegal
received the complaint, Fox Valley’s president received a tender letter from R.E.C. with a
copy of Village Homes’ complaint on June 13, 2016.

6
Fox Valley made no appearance in the lawsu it in the district court until almost a
year later when, on May 26, 2017, it filed its answer to R.E.C.’s third-party complaint. Its
answer asserted that R.E.C. had failed to provide sufficient service of process. On
August 31, Fox Valley moved for summary judgme nt on all claims against it in R.E.C.’s
third-party complaint and in Village Homes’ amended compla int, arguing that there was
no evidence that it performed its work negligently and that R.E.C.’s indemnification claim
failed as a matter of law. In an October 2 order, the district court denied Fox Valley’s
motion as untimely under the scheduling order in the case.
On October 20, Fox Valley file d a motion in limine, arguing that the district court
should exclude from trial any evidence against it because of inadequate service of process
resulting in a lack of juri sdiction. Village Homes res ponded with a request for a
determination of jurisdiction. On October 26, Fox Valley then moved for dismissal of the
case based on ineffective service of process. Fox Valley also argued that the statute of
limitations and statute of repose barred Village Homes’ claims and th at the claims were
also barred based Village Homes’ settlement with the other parties.
In an order filed on November 1, the district court de nied Fox Valley’s motion to
dismiss, in part because it concluded that Fox Valley had su bmitted to its jurisdiction by
participating in the litigation. On November 3, Fox Valley appealed that order. On
November 7, the district court ruled on V illage Homes’ motion for a determination of
jurisdiction, concluding that Fox Valley had been served with process, effective June 10,
2016, and had waived any objec tions as to service by participating in the litigation. The
district court then entered judgment the following day and stayed proceedings pending Fox

7
Valley’s appeal. While the appeal was pending, Village Homes finalized settlements with
R.E.C. and the subcontractors other than Fox Valley, and all claims by and against R.E.C.
and those subcontractors were dismissed with prejudice.
On appeal, this court affirmed the district court’s determination that Fox Valley had
submitted to the district court’s jurisdicti on by moving for summary judgment on bases
other than lack of jurisdiction. Village Homes I, 2018 WL 2090576, at *2. Although Fox
Valley also raised the other arguments that it had made in its summary-judgment motion,
we declined to reach those arguments becau se they were outside the scope of the
interlocutory appeal. Id. at *3.
On remand, Fox Valley again moved for summary judgment. It argued that, even if
it waived its jurisdictional defense, the distri ct court did not acquire jurisdiction until the
date of its waiver and that, by that time, the claims had become time barred. The district
court denied Fox Valley’s motion, electing not to disturb the November 7 order’s
determination that Fox Valley had been served on June 10, 2016, which was undisputedly
within the statute of limitations. The district court also concluded that, even if service was
defective, Village Homes’ amended complain t related back to its timely original
complaint.2

2 Fox Valley appealed this d ecision, along with the November 7 order, but this court
dismissed the appeal, determining that Village Homes I resolved the jurisdictional question
and that the order denying summary judgment was not appealable. Village Homes of
Grandview Square II Assoc. v. Fox Valley Contractors, LLC, No. A18-1753 (Minn. App.
Dec. 4, 2018) (order).

8
A six-day jury trial took place between Fe bruary 26 and March 5, 2019. The jury,
through a special-verdict form , found that Fox Valley had be en negligent in its work
performance and that Fox Valley breached its contract with R.E.C. The jury determined
that the negligence and breach of contr act had caused damages in the amount of
$846,652.01 to Village Homes. The district court determin ed that there was $230,103.78
of preverdict interest, pursuant to Minn. St at. § 549.09 (2018), and entered a judgment of
$1,076,755.79 for Village Homes. Fox Valley moved for judgment as a matter of law and
for a new trial, which the district court denied.
This appeal follows.
D E C I S I O N
I. Village Homes’ claims were not time barred.

Fox Valley argues that the district court erred by denying it summary judgment on
the ground that Village Homes’ claims were barred by the statute of limitations. Fox Valley
contends that, even though it forfeited its in effective-service-of-process argument as a
jurisdictional defense, the effectiveness of servi ce is still relevant to determining the
commencement date of the action for purposes of its statute-of-limitations defense, and the
commencement date, it contends, was outside the limitations period.
A district court “shall grant summary judgment if the movant shows that there is no
genuine issue as to any material fact and the movant is entitled to judgment as a matter of
law.” Minn. R. Civ. P. 56.01. Appellate courts apply a de novo standard of review to a
district court’s legal conclusions on summary judgment and view the evidence in the light
most favorable to the nonmoving party. RAM Mut. Ins. Co. v. Rohde , 820 N.W.2d 1, 6

9
(Minn. 2012). An appellate court will affirm summary judgment if it can be sustained on
any ground. Doe v. Archdiocese of St. Paul, 817 N.W.2d 150, 163 (Minn. 2012). Appellate
courts review “construction and application of the Minnesota Rules of Civil Procedure de
novo.” Melillo v. Heitland, 880 N.W.2d 862, 864 (Minn. 2016) (quotation omitted).
Under Minnesota law, except when fraud is involved, a party may not bring a cause
of action arising out of the construction of an improvement to real property more than two
years after the cause of action accrues. Minn. Stat. § 541.051, subd. 1(a) (2018). Barring
some exceptions with respect to ongoing construction projec ts, a cause of action accrues
upon the discovery of the injury. Id., subd. 1(c) (2018). 3 The commencement date of the
action determines whether an action is barred by the statute of limitations. See Cox v. Mid-
Minn. Mut. Ins. Co. , 909 N.W.2d 540, 546-47 (Minn. 2018) (concluding that a party’s
action commenced upon personal service of process by the sheriff, but that that conclusion
“may be cold comfort,” as th e commencement was after the date that the district court
determined that the statute of limitations expired).
Village Homes does not dispute that its ca use of action accrued, at the earliest, in
July 2014 and that the statute of limitations therefore expired, at the earliest, in July 2016.
Thus, if Village Homes commenced its acti on before July 2016, it was timely. The
following dates are relevant. On February 22, 2016, Villa ge Homes commenced this

3 Fox Valley unsuccessfully asserted both a statute-of-limitations and a statute-of-repose
defense in the district court. Under the relevant statute of repose, no cause of action for an
injury arising out of the construction of an improvement to real property shall accrue more
than ten years after “substan tial completion of the construc tion.” Minn. Stat. § 541.051,
subd. 1(a). On appeal, Fox Valley argues only its statute-of-limitations—and not its statute-
of-repose—defense.

10
litigation by a complaint agains t the general contractor, R.E. C. Thereafter, on June 10,
2016, R.E.C. initiated a third-party action ag ainst Fox Valley by personally serving a
summons and third-party complaint on a paralegal at the address of Fox Valley’s registered
agent. On June 30, 2016, Village Homes, pur suant to a stipulation with R.E.C., amended
its complaint—adding claims against Fox Valley—and mailed the amended complaint and
stipulation to Fox Valley via certified mail. Almost a year later, on May 26, 2017, Fox
Valley answered the amended complaint, a sserting a service-of-process/jurisdictional
defense. On August 31, 2017, Fox Valley moved for summary judgment but failed to assert
its jurisdictional defense, thus waiving it.
Thereafter, the district court determin ed that the action against Fox Valley
commenced on June 10, 2016—the date of R. E.C.’s service of its third-party complaint
against Fox Valley—and that Village Homes’ claims were thus timely.
Relevant here, a civil action is commenc ed against a defend ant (1) “when the
summons is served upon that defendant” or (2) “at the date of signing of a waiver of service
pursuant to Rule 4.05.” Minn. R. Civ. P. 3. 01. The rules of civil procedure specify how a
party may personally serve a summons on a domestic or foreign corporation. See Minn. R.
Civ. P. 4.03. The rules also specify how a party may request, via first-class mail or other
reliable means, that the defendant waive service of a summons. See Minn. R. Civ. P. 4.05.
A party may serve other pleadings and docume nts “by delivering a copy to the [party’s]
attorney or party; by mailing a copy to the [par ty’s] attorney or party at the attorney’s or
party’s last known address; or, if no addr ess is known, by leaving it with the court
administrator.” Minn. R. Civ. P. 5.02(a).

11
In the context of third-party practice, a third-party plaintiff may “serve a summons
and complaint on a nonparty who is or may be liable to it for all or part of the claim against
it.” Minn. R. Civ. P. 14.01. If a third-party defendant is brou ght into the action, “[t]he
plaintiff may assert against the third-part y defendant any claim arising out of the
transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-
party plaintiff.” Minn. R. Civ. P. 14.03.
Fox Valley contends that R.E.C.’s attempted personal service of the summons and
third-party complaint was deficient and that Village Homes’ later service by mail did not
independently effect service. Fox Valley argues the action cannot be determined to have
commenced any earlier than the date that Fox Valley waived its service-of-process
defense—specifically, when it moved for su mmary judgment on August 31, 2017, well
outside the statute of limitations. Addressing Village Homes’ service first, we observe that
rule 14 did not require Village Homes to serve a summons on Fox Valley as a third-party
defendant. Under rule 14, it is the third-party plaintiff—R.E. C. in this case—that had to
serve the summons on Fox Valley. Minn. R. Civ. P. 14.01. Rule 14 permitted Village
Homes to assert claims agains t the third-party plaintiff “ari sing out of the transaction or
occurrence that is the subject matter of ” Village Homes’ claim against R.E.C. See Minn.
R. Civ. P. 14.03. Because Fox Valley was already in th e litigation as a third-party
defendant, Village Homes only had to serv e Fox Valley its amended pleading under rule
5.02, which it complied with by mailing the amended compla int to the address of Fox
Valley’s authorized agent.

12
But, as noted, Fox Valley ar gues that R.E.C.’s service was defective and therefore
did not commence Village Homes’ action. With respect to when V illage Homes’ action
against Fox Valley commenced, rules 3.01 and 14 do not specify when a plaintiff’s action
commences against a third-part y defendant when the plainti ff brings claims against the
third-party defendant under ru le 14.03. Here, Village Home s timely served its amended
complaint by mail on June 30. Fox Valley cite s no authority for the proposition that a
plaintiff’s timely and properly served am ended complaint should fail on statute-of-
limitations grounds based on an independent third-party plain tiff’s failure to effectively
serve a third-party defendant—particularly when the third-party defendant has waived the
jurisdictional defense of ineffective service.
Fox Valley claims support in MW Ag, Inc. v. New Hampshire Ins. Co. , 107 F.3d
644, 647 (8th Cir. 1997). There, the Eighth Circuit concluded that, under Minnesota law,
when a summons was never properly served on a defendant but the defendant waived the
insufficient-service-of-process defense, the suit was commenced against the defendant for
statute-of-limitations purposes on the date of the acts that constituted the waiver. MW Ag,
107 F.3d at 647. Fox Valley ar gues that, consistent with MW Ag, no action commenced
against it until Fox Valley waived its service-of-process defense in August 2017—beyond
the limitations period.
We are not persuaded. The Eighth Circuit’s MW Ag decision is not binding on this
court but in any event is distinguishable. In MW Ag, the commencement of plaintiff’s action
depended on the plaintiff’s own attempt to serve a summons on the defendant. Id. at 646.
The commencement date of the plaintiff’s ac tion was deemed to be the date that the

13
defendant waived its challenge to th e plaintiff’s ineffective service. Id. at 647. Thus, the
plaintiff did not get the benefit of its ow n ineffective service until the date of the
defendant’s waiver. Here, in contrast, the plaintiff, Village Homes, was not responsible for
the initial service of the third- party complaint, and, in fa ct, Village Homes thereafter
properly served Fox Valley with its amended complaint via mail pursuant to rule 5.02. The
different responsibilities for service due to the multi-party nature of this case distinguishes
this case from MW Ag. Moreover, the record suggests that Fox Valley had actual notice of
the action against it, and F ox Valley does not argue that it was prejudiced by Village
Homes’ reliance on R.E.C.’s service of summons.
We need not evaluate the e ffectiveness of R.E.C.’s serv ice to decide that Village
Homes’ claims are timely when Fox Valley waived its servic e-of-process defense as to
R.E.C.’s attempted service of the third-pa rty complaint on June 10, 2016, and Village
Homes timely served its amended complaint ag ainst the third-party defendant by mail on
June 30, 2016. And, because both dates were within the statute of limitations, we need not
decide on which of the two June dates the action commenced. The district court did not err
by rejecting Fox Valley’s argument that Village Homes’ claims were time barred.
II. The district court did no t err by denying Fox Valley’s motion for judgment as
a matter of law.

Fox Valley raised a number of arguments after trial in its motion for judgment as a
matter of law that it now reasserts on appeal. First, Fox Valley contends that it owed Village
Homes no legal duty in tort or contract and thus cannot be held liable under a theory of
negligence or breach of contract. Second, it ar gues that it cannot be held liable when it

14
followed R.E.C.’s building plan s. Lastly, it argues that the damages award includes the
cost of a replacement stucco system, which was an economic harm for which Village
Homes could not recover in tort. Appellate courts review a district court’s decision to deny
a motion for judgment as a matter of law de novo, viewing the evidence in the light most
favorable to the nonmoving party. In re Estate of Butler , 803 N.W.2d 393, 399 (Minn.
2011).
A. Duty in tort and contract

We begin with Fox Valley’s argument that it had no legal duty to Village Homes in
tort or contract.
1. Negligence claim

The tort for which the jury found Fox Valley liable is negligence. Negligence claims
are comprised of a duty owed by the defendant to the injured party, a breach of that duty,
an injury, and a causal link between the breach and the injury. Foss v. Kincade, 766 N.W.2d
317, 320 (Minn. 2009). “In the absence of a legal duty, the neglig ence claim fails.”
Gilbertson v. Leininger, 599 N.W.2d 127, 130 (Minn. 1999). The existence of duty of care
is a question of law, which appe llate courts review de novo. Domagala v. Rolland , 805
N.W.2d 14, 22 (Minn. 2011).
Fox Valley argues that it “acted only becaus e of its subcontract with R.E.C.” and,
thus, “even if Fox Valley breached its contractual duty to R.E.C., . . . it has no responsibility
in tort to [Village Homes].” But “Minnesota law holds that a c ontractor has a duty,
independent of the contract itself, to erect a building in a reasonably good and workmanlike
manner.” Arden Hills N. Homes Ass’n v. Pemtom, Inc., 475 N.W.2d 495, 499-500 (Minn.

15
App. 1991) (rejecting developer’s argument that it had no duty outside of contractual duties
“to construct townhouses in a workmanlike manner”), aff’d mem., 505 N.W.2d 50 (Minn.
1993).
Fox Valley contends, however, that this principle does not apply here because, at
the time of construction, R.E.C., and not Village Homes, was the owner and any duty that
Fox Valley owed was owed to R.E.C., not Village Homes. Fox Valley bases this argument
on the fact that, in the cases relied on by Village Homes, Brasch v. Wesolowsky , 138
N.W.2d 619 (Minn. 1965), and Arden Hills N. Homes Ass’n, the negligence cause of action
was brought by the owner of the defective buildings.4
But Fox Valley does not address another case highlighted by Village Homes, Julian
Johnson Constr. Corp. v. Parranto, 352 N.W.2d 808 (Minn. App. 1984). In Parranto, this
court affirmed the recovery by a third-party beneficiary in connection with a negligence
claim. 352 N.W.2d at 810-11. There, a township hired a contractor to excavate some land
in preparation for a development project. Id. at 809-10. We affirmed the district court’s

4 For completeness, we note that Fox Valley relies heavily on D & A Dev. Co. v. Butler ,
357 N.W.2d 156 (Minn. App. 1984), and Glorvigen v. Cirrus Design Corp., 816 N.W.2d
572 (Minn. 2012). But these cases are distinguishable. In D & A Dev. Co. , we concluded
that a party could not sue a subcontractor in tort for failing to deliver plans on time because
the duty to deliver the plans arose in contract. 357 N.W.2d at 158-59. But the duty described
in Arden Hills N. Homes Ass’n to construct buildings in a “reasonably good and
workmanlike manner” was not implicated in D & A Dev. Co. by the failure to deliver plans
in a timely manner; instead, the due date of the plans was a specific contractual obligation.
With respect to Glorvigen, Fox Valley points out how the supreme court noted that “when
a contract provides the only source of duties be tween the parties, Minnesota law does not
permit the breach of those duties to support a cause of action in negligence.” 816 N.W.2d
at 584 (quotation omitted). But here, Arden Hills N. Homes Ass’n shows that contract was
not the only source of duties between the parties.

16
award of damages to a third-party developer on the developer’s coun terclaim against the
contractor for negligence. Id. at 810-11. This court conclu ded that there was sufficient
evidence to establish that (1) the contractor was negligent and (2) the developer was a third-
party beneficiary of the contract between th e township and the contractor, despite the
developer not being named in the contract. Id.
Under Parranto, Fox Valley had a duty to perform its work in a “reasonably good
and workmanlike manner” for any intended th ird-party beneficiaries to the contract
between R.E.C. and Fox Valley. Whether the evidence established that Village Homes was
an intended third-party beneficiary is discussed next.
2. Contract claim

Fox Valley argues that Village Homes was not entitled to recover from it on breach-
of-contract grounds because Fox Valley’s contract was between it and R.E.C. Fox Valley
contends that, despite the district court’s conclusion to the contrary, Village Homes was
not an intended third-party beneficiary of th e contract. Under the th ird-party-beneficiary
doctrine, a third party may recover on a contract to which it is not a party if it can show
that it is an intended beneficiary under either the intent-to-benefit or the duty-owed test.
Cretex Cos. v. Constr. Leaders, Inc., 342 N.W.2d 135, 139 (Minn. 1984). Under the intent-
to-benefit test, “the contract must express some intent by the partie s to benefit the third
party through contractual performance.” Id. at 138. Under the duty-owed test, “the
promisor’s performance under the contract must discharge a duty otherwise owed the third
party by the promisee.” Id.

17
The district court concluded that R.E.C. had a duty to the unit purchasers to “deliver
a building free from defective materials and constructed in accordance with applicable law,
according to sound engineering and construction standards, and in a workmanlike manner,”
pursuant to Minn. Stat. § 515B.4-113 (2018). According to the district court, R.E.C.
contracted with Fox Valley to construct the building’s stucco exterior, “a critical
component of the fini shed building,” and so Fox Valle y was discharging a portion of
R.E.C.’s duty to the unit purchasers. Thus, under the du ty-owed test, Village Homes, as
the association of unit purchasers, was a third-party intended beneficiary of R.E.C. and Fox
Valley’s contract.
Fox Valley contends, however, that, because Village Homes could have enforced
its claim against R.E.C., Village Homes can not bring claims against Fox Valley. Fox
Valley asserts that Cretex stands for the proposition that third-party beneficiaries claiming
entitlement to a promise for their benefit “may enforce that promise only in the event they
otherwise would be unable to seek its enforcement.” Its argument is unpersuasive. Cretex
discusses how a third-party beneficiary can be established through either the duty-owed or
the intent-to-benefit test and concludes that neither test was met in that case. 342 N.W.2d
at 139. Cretex did not hold that a third-party benefi ciary’s claim was barred because an
alternative enforcement remedy was available.
Fox Valley also argues that the district court could not assess whether Village
Homes was a third-party beneficiary because the contract between R.E.C. and Fox Valley
was never entered into evidence. Fox Valley po ints to language in a precursor case to
Cretex, which states, “A duty or liability to guarantee or to warrant performance to another

18
party to a construction contract must be found in the express provisions of the contract and
cannot arise solely by implication.” Buchman Plumbing Co. v. Regents of the Univ. of
Minn., 215 N.W.2d 479, 481 (Minn. 1974). But that principle was applied in the context
of analyzing an alleged breach of contract between two contracting parties, id. at 486-87;
it was not relevant to a separate issue in the case involving an alleged third-party-
beneficiary claim under a contract with another party. See id. at 484.
Certainly, the language of a contract is relevant to whether that contract is intended
to benefit or satisfy a duty owed to another party. See Cretex, 342 N.W.2d at 139 (analyzing
contractual terms to assess whether a beneficiary was intended or incidental). But a written
contract is not the only means of reaching that conclusion. E.g. Parranto, 352 N.W.2d at
811 (discussing the facts that supported the district court’s determination that a developer
was an intended third-pa rty beneficiary, despite the cont ract lacking language explicitly
stating that it was intended to benefit a third party). Fox Valley points to no evidence that
the district court’s determination that V illage Homes was an in tended third-party
beneficiary was incorrect, other than its asse rtion that it was not the case and that the
contract was necessary in order to determine otherwise.
Fox Valley next suggests that the district court incorrectly imposed on it the duties
created by Chapter 515B. But the district court’s order makes it clear that R.E.C. bore the
responsibilities of Chapter 515B. The district c ourt explained that R.E.C. contracted with
Fox Valley to perform a portion of those dutie s, thus satisfying the requirements of the
duty-owed test. Fox Valley claims that, for V illage Homes to be a third-party beneficiary
under the duty-owed test, “the performance under scrutiny must be the same.” But nothing

19
in the duty-owed test su ggests that the duty owed cannot be a portion of a larger set of
duties.
Finally, Fox Valley implies that the district court allowed Village Homes to recover
twice by different theories of liability. But it points to nothing in the record that indicates
that the district court permitted Village Homes to recover duplicative damages.
In sum, we conclude that the district c ourt correctly determined that Fox Valley
owed a duty, in both contract and tort, to Village Homes as an intended third-party
beneficiary.
B. Adherence to architectural plans

Fox Valley argues that it is entitled to judgment as a matter of law because there is
no evidence that it deviated from Pope’s architectural plans.
“[I]f [a] contractor is bound to build according to plans and specifications prepared
by the owner, the contractor will not be responsible for the consequences of defects in the
plans and specifications.” United States v. Spearin , 248 U.S. 132, 136, 39 S. Ct. 59, 61
(1918); see also Friederick v. Redwood County, 190 N.W. 801, 803 (Minn. 1922) (noting
that a contractor was not requ ired to go beyond the plans a nd specifications in digging a
ditch).
Despite this general rule, there are severa l factors distinguishi ng this case from
Spearin. First, in Spearin, the owner—the U.S. government—assumed the risk of defective
plans. See 248 U.S. at 135-36, 39 S. Ct. at 60-61. Here, while R.E.C.—the owner at the
time—“provided the plans,” the plans came from Pope; it was not necessarily the case that
R.E.C. assumed the risk of defective plans. But even if R.E.C. did assume the risk of

20
defective plans, the jury considered whether Pope, as the architect, was responsible for the
damage to the building and still assigned most of the fault to Fox Valley.
Second, Village Homes was not the design er of the plans or the owner of the
building; instead, it was a third-party beneficiary. Spearin does not indicate that it protects
subcontractors against all parties with respect to all possible liability related to their work
so long as they follow provided plans. Instead, Spearin was a recognition of the allocation
of the risk of deficient plans to the party who provided plans.
Finally, while Fox Valley claims that there is insufficient evidence to show that it
did not follow the plans, the record shows otherwise. Village Homes’ expert testified that
Fox Valley had not done its work in a “workmanlike” manner. Even if a contractor follows
the plans, the contractor remains liable for “defects resulting from improper workmanship
or other fault on his part.” Friederick, 190 N.W. at 802. Fox Va lley contends that it is
unrefuted that it was in “full compliance with the architectural plans and specifications,”
but the special-verdict form specifically f ound Fox Valley more at fault than the plan
designers. Given the expert testimony and a standard of the review in which the evidence
is viewed in the light most favorable to Village Homes, the evidence supports the
determination that the issues arose from Fox Valley’s improper workmanship, not defects
in the plans. The district court did not err by rejecting Fox Valley’s Spearin argument.
C. Replacement stucco system

Fox Valley argues that the district court incorrectly permitted Village Homes to
recover the cost of a replacement stucco system. Fox Valley characterizes the replacement
stucco system as an economic loss that is not recoverable in tort, citing Ptacek v. Earthsoils,

21
Inc., 844 N.W.2d 535, 538 (Minn. App. 2014). But, as the district court explained, Ptacek
states that Minnesota’s statutory econom ic-loss doctrine precludes the common-law
doctrine and does not bar tort recovery except in the case of certain product-defect and
common-law misrepresentation tort claims. 844 N.W.2d at 538-39 (discussing Minn. Stat.
§ 614.101 (2012)). Village Home s’ negligence claim was neither a product-defect claim
nor a misrepresentation claim. So the ec onomic-loss doctrine does not apply here. 5
Furthermore, the jury also found Fox Valley to be in breach of contract; Fox Valley does
not explain why, even if the damages were barred on a negligence theory, the district court
could not impose the damages as a remedy for the breach of contract. The district court did
not err by rejecting Fox Valley’s economic-loss argument.
III. Fox Valley’s alleged trial error s do not warrant a new trial.

Fox Valley contends that tria l errors by the district court warrant a new trial. The
alleged errors are a combinatio n of evidentiary errors and challenges to the verdict form.
Evidentiary determinations “rest[] within the broad discretion of the [district] court and its
ruling will not be disturbed unless it is based on an erroneous view of the law or constitutes
an abuse of discretion.” Kroning v. State Farm Auto. Ins. Co. , 567 N.W.2d 42, 45-46
(Minn. 1997) (quotation omitted). “In the absenc e of some indication that the [district]
court exercised its discretion arbitrarily, capr iciously, or contrary to legal usage, the
appellate court is bound by the result.” Id. at 46. District courts also have broad discretion

5 Fox Valley appears to have argued to the dist rict court that the stucco system amounted
to a sale of goods and thus the doctrine would apply, but it has not renewed that argument
on appeal.

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in drafting special-verdict questions. Russell v. Johnson, 608 N.W.2d 895, 898 (Minn. App.
2000), review denied (Minn. June 27, 2000). Absent an abuse of discretion, appellate courts
will not reverse a district court’s decision on a special-verdict form. See Kronebusch v.
MVBA Harvestore Sys., 488 N.W.2d 490, 496 (Minn. App. 1992), review denied (Minn.
Oct. 20, 1992).
A. Adding other parties to the special verdict form

Fox Valley argues that the district court abused its discretion by refusing to submit
to the jury the issue of the negligence of Nordic (the insulation contractor) or R.E.C. Fox
Valley claims that Village Homes’ expert te stified that Nordic fa iled to install vapor
barriers with the building’s in sulation, which was a viola tion of Minnesota codes and
resulted in the exterior stucco cladding needing to be removed. It also claims that R.E.C.
was responsible for the plans and specifications, and thus should have been included in the
verdict form as well.
“If there is evidence of co nduct which, if believed by the jury, would constitute
negligence or fault on the part of the person inquired about, the fault or negligence of that
party should be submitted to the jury.” Frey v. Snelgrove , 269 N.W.2d 918, 923 (Minn.
1978) (quotation omitted).
With respect to Nordic, th e district court noted that there was no evidence linking
Nordic’s defective installation of the insula tion system to the dama ges sought by Village
Homes. Fox Valley overstates the expert’s te stimony. Fox Valley claims that the expert
“admit[ted] that he had recommended the rem oval and replacement of every square inch
of stucco cladding because of the defects he found in the insulation system.” But the expert

23
only agreed that his report stated that a la ck of vapor barriers along the floor line was a
building code violation and resulted in condensation within the wall assembly. He did not
link this lack of a vapor barrier to his recommendation for the removal of all of the existing
stucco cladding in the manner that Fox Valley claims.
While there was evidence that Nordic did not properly install vapor barriers, as
claimed by Fox Valley, Village Homes’ expert testified that the sections of wall with stucco
affected by the vapor barrier issues were separate from the sections on which Village
Homes was basing its claims. The district court concluded that there was no evidence
contradicting this point, and, on appeal, Fox Valley only appears to identify testimony that
it elicited during cross-examination that there were sections—as in, other sections—of wall
identified in the expert’s report that were a ffected by the improper vapor barrier issues.
Given that Fox Valley identifies no evidence suggesting that Village Homes’ expert failed
to correctly isolate which sections of wall w ith stucco were damaged as a result of Fox
Valley’s work, it was not an abuse of discretion to exclude Nordic from the verdict form.
The district court also explained that, while there was testimony about R.E.C.’s role
in managing the project as a general cont ractor, there was no evidence showing that
R.E.C.’s management resulted in the damage to Village Homes’ property. Fox Valley
identifies no contrary evidence on appeal, beyond its assertion that R.E.C. has the ultimate
responsibility. It also claims that R.E.C. not being on the verdict form limited its ability to
argue that it was simply following R.E.C.’s pl ans and specifications. But Pope, the party
that produced the plans, was on the special verdict form, so nothing prevented Fox Valley

24
from making its argument that the plans were th e issue, not its installation. It was not an
abuse of discretion to not include R.E.C. on the special verdict form.
B. Evidence of settlements

Fox Valley contends that the district c ourt erred by excluding evidence of Village
Homes’ settlement with R.E.C. and the other subcontractors. Evidence of a settlement is
admissible when “it is offered for a purpose such as proving bias or prejudice of a witness.”
Frey, 269 N.W.2d at 923. But it is “within the [district] c ourt’s discretion to determine
whether to admit the actual agreement into evidence, or the details thereof.” Id.
Fox Valley claims that, under Bunce v. A.P.I., Inc. , 696 N.W.2d 85 2, 857 (Minn.
App. 2005), it was free to try to shift as much of the negligen ce blame onto the settling
parties as it could. As a threshold matter, this argument seems to go to why the other parties
should have been on th e verdict form, not to why the se ttlement agreement was relevant.
But even so, while Fox Valley was free to try to shift blame onto the other defendants under
Bunce, Fox Valley still needed to offer relevant evidence in support of its effort.
Under Frey, the settlement could be admissible to show bias or prejudice, but Fox
Valley identifies no witness that it could have impeached with the settlement agreements.
The district court noted that most of Villa ge Homes’ evidence related to Fox Valley’s
liability came in through an expert who “had nothing to gain or lose personally by shifting
blame between settling defendan ts and non-settling defendants.” Fox Valley offers no
explanation for how the settlement showed that the expert witness was biased, beyond the
general argument that an expert is biased in favor of his client, which is not enough to
establish bias. Cf. In re Buckmaster, 755 N.W.2d 570, 582 (Minn. App. 2008) (explaining

25
that an agreement for corrective action could not be used for impeachment purposes if it
did not provide a witness any “additional incentive to provide false testimony”).
Fox Valley claims that the expert modified his repair estimates after Village Homes
settled with the other parties. But the relevant impeachment evidence to that point would
be the changing repair estimates, not the se ttlement agreements themselves. Fox Valley
was permitted to cross-examine Village Homes’ expert on that point.
The district court permitted Fox Valley to make its case that the settling defendants
were to blame for the damage to Village Homes’ building; th e fact that, as noted above,
Fox Valley failed to present evidence showing that parties other than Pope were negligent
means that presenting the settle ment would have only invited the jury to speculate that
other parties might be to blame. The district court did not abuse its discretion by excluding
the evidence of Village Homes’ settlement with other parties.
C. Exclusion of rebuttal testimony

Finally, Fox Valley contends that the dist rict court improperly suppressed rebuttal
testimony from its expert witness. Fox Valley’s counsel informed the district court that its
expert witness was going to testify on Village Homes’ control-joint claims and the district
court prevented it because the expert’s report did not set forth those opinions. Fox Valley
argues the content of their expe rt’s suppressed testimony did not have to be in his report
because it was rebuttal testimony, which is inte nded to counter “new unforeseen facts”
brought out in the other side’s case. Fox Va lley also complains that a “double standard”
was applied because Village Homes’ expert testified on details related to the control joints
that did not appear in his report.

26
“If a party fails to provide information or identify a witness as required by Rule
26.01 or.05, the party is not allowed to use that information or witness to supply evidence
. . . at a trial, unless the failure was substantially justified or is harmless.” Minn. R. Civ. P.
37.03(a).
The district court determined that Fox Valley had not disclosed its expert’s opinion
on the control joints, despite having had V illage Homes’ expert opinion since September
2017, over a year before the tr ial. It also noted that Fox Valley declined to inspect the
building during that time. It concluded that, while a continuance may be appropriate in
some cases to address a failure to disclose an expert opinion, it was not appropriate here,
when multiple continuances had delayed the trial, the trial had already begun, and Village
Homes would face additional expense due to the delay. The district c ourt also noted that
rebuttal evidence is offered to refute unexpected evidence and, in this case, Fox Valley had
notice from the September 2017 report that Village Homes inte nded to testify on control
joints.
Fox Valley cites to nothing in the record that shows that it disclosed, in its expert
reports, the information that it wanted to presen t at trial. It claims that there was a double
standard but, again, cites to nothing in th e record contradicting the district court’s
determination that Village Homes disclosed th e relevant information about its expert’s
opinions. And, based on our examination of the record, Fox Valley’s expert was allowed

27
to offer a rebuttal—he simply was not allowe d to testify on a new, undisclosed opinion
regarding the control joints.6 We conclude that there was no abuse of discretion.
Affirmed.

6 Fox Valley’s expert planned to testify that the control joints were installed per the plans
and that the moisture intrusion was not caused by the control joints.