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Alert: Minnesota Supreme Court Pivots in New Decision Interpreting Applicability of Statute of Repose Defense

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June 1, 2018

On May 9, 2018, in a significant decision for manufacturers, the Minnesota Supreme Court ruled that the state's 10-year statute of repose does not bar claims that involve machinery installed upon real property. See Minn. Stat. § 541.051, subd. 1(e). The decision will likely have far-reaching implications for product-liability litigation involving equipment claims.

In Great Northern Insurance Company v. Honeywell International Inc. et al., after a home fire, Great Northern asserted various product-liability, negligence, and warranty claims against manufacturer McMillan Electric Company, which manufactured the motor in a home heat-recovery ventilator that caused the blaze. The district court granted summary judgment to McMillan, concluding that the state's 10-year statute of repose barred the claims relating to the improvement of real property.  The court of appeals reversed, holding that the "equipment or machinery" exception to the statute of repose applied, and the claims were not barred by the statute of repose.

The Minnesota Supreme Court agreed with the court of appeals. It held that the motor contained within the home ventilator was "machinery" as that term is ordinarily defined. Consequently, it was excepted by Minn. Stat. § 541.051, subd. 1(e). As a result, even though the home fire occurred 16 years after the ventilator's original installation, claims against the motor manufacturer were not barred by the 10-year statute of repose and could proceed.

In so holding, the supreme court rejected previous applications of the statute of repose by the court of appeals or federal courts, where "equipment or machinery" was evaluated as to whether it assisted in some activity or particular use of the building. Instead, the court adhered to the statute's plain language, which the court concluded "requires us to consider the material's nature and function, not its degree of integration into a structure." (Emphasis added).

Accordingly, this decision represents a difficult hurdle for manufacturers to surmount in products-liability litigation, as the statute of repose defense may no longer serve as a viable defense. Even more so now, the outcome will likely depend on the particular facts of the case.