Dismantling the Defense of Finger Pointing
April 30, 2014
In a construction defect lawsuit brought by a homeowner or HOA, it is a common defense of the real estate developer, general contractor, and subcontractors involved in the claim to each blame the other defendants in the case for the construction deficiencies that exist. “He did it.” Ultimately, if the case proceeds to trial, the fact finder (usually a jury) is asked to apportion fault amongst the parties—that is, to allocate the damages amongst the various parties.
For example, a jury might decide that:
The developer is 20% at fault for the construction defects;
The general contractor is 60% at fault;
Subcontractor #1 bears 10% of the fault; and
Subcontractor #2 is 10% at fault for the construction problems
In some states outside of Minnesota, this kind of fault allocation can frustrate a homeowner’s collection efforts. Many times the portion of damages that the jury has allocated to an insolvent, bankrupt, no longer existent, or uninsured defendant is ultimately not collectable. Luckily for Minnesota homeowners and homeowner associations though, a powerful statute protects property owners in these circumstances, allowing a judge to make certain defendants jointly responsible for damages that were not originally allocated to them, AND permits a judge to reallocate any portions of the damages that turn out to have been apportioned to an insolvent or uninsured defendant.
Minnesota statute permits that:
“…the following persons are jointly and severally liable for the whole award:
(1) a person whose fault is greater than 50 percent;
(2) two or more persons who act in a common scheme or plan that results in injury;”
Minn. Stat. 604.02(1).
Also, “the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectible from that party and shall reallocate any uncollectible amount amount the other parties . . .”
Minn. Stat. 604.02(2).
So under the hypothetical example above, the general contractor that was found by the jury to be 60% at fault (more than 50% at fault), can be held liable for 100% of the plaintiff’s damages. Also, a strong argument can be made that the developer, general contractor, and all of the subcontractors acted jointly, in a “common scheme or plan” to build the home(s), and are all jointly liable for all of the plaintiff’s damages. Finally, even after exhausting those two mechanisms for imposing joint liability for the construction defect damages, a plaintiff property owner can then go back to the court one more time if some or all of the allocated award is demonstrated to be uncollectable because of the insolvency of the defendant, lack of insurance proceeds, or for some other reason.
The multiple opportunities provided by Minn. Stat. 604.02 for imposing joint liability on the various defendants in a construction defect case are powerful tools for property owners. The threat of joint liability often allows homeowners, HOAs, and other claimants to get around, and render moot, much of the finger pointing amongst defendants that often occurs in a construction defect case.