Statute of Limitations Minn. Stat. §541.05, Subd. 1 does not begin to run until damages accrue; when damages accrue just got fuzzier.

Hansen v. U.S. Bank as Special Administrator and Personal Representative of the Estate of Robert J. Hansen, A17-1608, Filed September 25, 2019, __ N.W.2d __, (Minn. 2019); reversing the Court of Appeals (and District Court) decision filed July 2, 2018. Seller (and his brother) was to sell property to the City in 2009. The City was to provide Seller a 5 year forecast (compiled by a CPA or other independent financial consultant) projecting revenue that will be able to pay the City’s debt service to purchase the property. Seller died November, 2009 and the Court appointed U.S. Bank as special administrator of the estate. The purchase agreement was amended in April, 2010. No projections were presented to the seller and the closing on the sale took place in April, 2010. The special administration was closed and the estate opened. The City financing went under and by August, 2012, payments on the note to seller stopped. The heirs sued the bank in January, 2017 alleging breach of fiduciary duty. At issue is when the statute of limitations started to run. The Court of Appeals (and the dissent in the Supreme Court) found, applying the Antone v. Mirviss, 720 N.W.2d 331 (Minn. 2006) case, that “some damage” accrued when the sale closed in 2010 because they lost their right to the projections or to re-negotiate the contract. At that point the requirement of the City to give projections ended and the sale was complete. The contract became fixed. The suit against the bank was initiated more than 6 years after the close on the sale so the statute of limitations under Minn. Stat. §541.05, Subd. 1 had run on the case. But the Supreme Court found that the loss of legal right was mere speculation when the sale closed. Some damage accrues when a legal right is lost or when there is a compensable injury. They thought the legal right at issue was to sell the property, not to sell the property at a good price. The good price was a compensable matter that falls under the compensable damage argument. The Supreme Court found that damages only started to accrue when the payments stopped in 2012. Since the Supreme Court found the legal right to be mere speculation they looked to the compensable damage analysis and found that damages accrued when payments stopped on the note, not when the sale was completed.

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