Kalahari Development, LLC v. Iconica, Inc.

2012 WI App 34, 811 N.W.2d 825, 340 Wis. 2d 454, 2012 WL 569368, 2012 Wisc. App. LEXIS 155
CourtCourt of Appeals of Wisconsin
DecidedFebruary 23, 2012
DocketNo. 2011AP643
StatusPublished
Cited by5 cases

This text of 2012 WI App 34 (Kalahari Development, LLC v. Iconica, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kalahari Development, LLC v. Iconica, Inc., 2012 WI App 34, 811 N.W.2d 825, 340 Wis. 2d 454, 2012 WL 569368, 2012 Wisc. App. LEXIS 155 (Wis. Ct. App. 2012).

Opinion

LUNDSTEN, P.J.

¶ 1. Iconica, Inc., designed and built a water park resort and conference center for Kalahari Development, LLC. Years after the project was completed, Kalahari discovered moisture damage in the walls. Kalahari brought claims for breach of contract and professional negligence against Iconica, alleging that the damage was caused by a defectively designed and installed vapor barrier. Iconica moved for summary judgment and the circuit court granted the motion. The court concluded that the contract claim was time-barred by the six-year statute of limitations applicable to contract claims. In doing so, the court rejected Kalahari's argument that its contract claim was still viable under Wis. Stat. § 893.89,1 a general ten-year statute of repose covering lawsuits involving improvements to property. As to the negligence claim, the court concluded that the claim was barred by the economic loss doctrine. We affirm the circuit court.

Background

¶ 2. On May 11, 1999, Kalahari and Iconica entered into a design-build contract for the design and construction of "Kalahari Resort & Conference Center," [457]*457which was to include an indoor water park, hotel units and lobby, and a restaurant. The final contract price was approximately $26,200,000. In connection with the construction project, the contract also stated that Iconica would provide certain services, including architectural, engineering, and other construction services. The project was substantially complete as of May 4, 2000.

¶ 3. Beginning in May 2008, Kalahari noticed surface stains on the water park building's wall and, subsequently, discovered moisture damage to the walls. On April 23, 2010, almost ten years after the project was substantially complete, Kalahari filed suit against Iconica and its insurer, Lexington Insurance Company. Kalahari alleged that Iconica "defectively designed and/or defectively installed the vapor barriers in the walls ... causing the moisture damage," leading Kalahari to incur "significant costs to inspect and repair the walls." The complaint stated two claims: one for breach of contract and one for professional negligence related to Iconica's performance of architectural and construction services under the contract.

¶ 4. The circuit court dismissed both claims on summary judgment. Kalahari appeals.

Discussion

I. Whether Kalahari's Contract Claim Is Time-Barred,

¶ 5. The propriety of the circuit court's decision to dismiss Kalahari's contract claim turns on the proper interpretation of Wis. Stat. § 893.89. The applicable principles of statutory construction were aptly summarized in State v. Carey, 2004 WI App 83, 272 Wis. 2d 697, 679 N.W.2d 910:

Statutory construction is a question of law that we review de novo. "When interpreting a statute, our [458]*458purpose is to discern legislative intent. To this end, we look first to the language of the statute as the best indication of legislative intent. Additionally, we may examine the statute's context and history." Further, we will reject a literal reading of a statute that would lead to an absurd or unreasonable result that does not reflect the legislature's intent. In interpreting a statute, we are to presume that "the legislature intends for a statute to be interpreted in a manner that advances the purposes of the statute."

Id., % 8 (citations omitted).

¶ 6. Generally speaking, Wis. Stat. § 893.89 provides that persons involved in improvements to real property may not be sued more than ten years after substantial completion of a project.2 Although § 893.89 [459]*459imposes a ten-year time limit on such lawsuits, the statute does not extend the time for bringing lawsuits that are otherwise time-barred by statutes of limitations. Stated differently, § 893.89 is not a statute of limitations applicable to all causes of action relating to improvements to real property. Instead, § 893.89 is a sort of catch-all provision that imposes a time limit on many lawsuits relating to property improvements that [460]*460are not otherwise time-barred within ten years after substantial completion. As our supreme court explained, § 893.89 is "a statute of repose," and its purpose is "to provide protection from long-term liability for those involved in the improvement to real property." See Kohn v. Darlington Cmty. Schs., 2005 WI 99, ¶¶ 13, 62, 283 Wis. 2d 1, 698 N.W.2d 794.

¶ 7. The structure of, and some of the wording in, Wis. Stat. § 893.89 make it difficult to follow. Accordingly, clarity will be served if we first provide our interpretation of the statute, focusing on its application to contract actions against persons involved in real property improvements, and then address Kalahari's arguments disputing our interpretation.3

¶ 8. We begin with the heart of Wis. Stat. § 893.89, its ten-year limitation period. Section 893.89(2) provides that "no cause of action .. . may be commenced . . . against any person involved in the improvement to real property after the end of the exposure period." This is a ten-year time limit because "exposure period" is defined as "the 10 years immediately following the date of substantial completion of the improvement to real property." Wis. Stat. § 893.89(1).

¶ 9. If the reader stopped with Wis. Stat. § 893.89(1) and (2), he or she might conclude that this ten-year limit has broad application and, for example, effectively gives a building owner ten years after substantial completion of his or her building to discover a problem and bring suit against a builder or designer. But the next subsection, § 893.89(3), directs that, if a cause of action is time-barred by a statute of limitations [461]*461before it would be barred under § 893.89, then that statute of limitations applies. Subsection (3) (a) provides, in part:

[I]f a person sustains damages ... and the statute of limitations applicable to the damages bars commencement of the cause of action before the end of [§ 893.89's ten-year] exposure period, the statute of limitations applicable to the damages applies.

Thus, subsection (3) (a) tells litigants and courts to determine whether the damages sought are based on a cause of action that is controlled by a statute of limitations and, if so, determine whether that statute acts to bar the claim prior to the time it would be barred by § 893.89.4

¶ 10. Turning to the facts here, Kalahari sought contract damages resulting from an "improvement to real property." Therefore, at a minimum, Kalahari was required to bring its contract action within Wis.

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Bluebook (online)
2012 WI App 34, 811 N.W.2d 825, 340 Wis. 2d 454, 2012 WL 569368, 2012 Wisc. App. LEXIS 155, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kalahari-development-llc-v-iconica-inc-wisctapp-2012.