This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA

IN COURT OF APPEALS

A14-1524

Second Chance Investments, LLC, 

Appellant, 

vs. 

Sabri Properties, LLC, et al., 

Respondents, 

Puentes Exteriors, LLC, et al., 

Defendants.

Filed May 26, 2015

Affirmed

Peterson, Judge

Hennepin County District Court

File No. 27-CV-10-20858

Paul A. Sortland, Sortland Law Office, PLLC, Minneapolis, Minnesota (for appellant)

Joseph F. Lulic, Hanson, Lulic & Krall, Minneapolis, Minnesota (for respondents)

Considered and decided by Connolly, Presiding Judge; Peterson, Judge; and 

Harten, Judge.

*

 

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to 

Minn. Const. art. VI, § 10.
2

U N P U B L I S H E D O P I N I O N

PETERSON, Judge

In this appeal from a summary judgment, appellant argues that the district court 

erred in concluding that (1) appellant’s breach-of-contract claims against respondents 

were barred by the doctrine of merger; (2) appellant’s negligence claim failed because 

respondents owed no duty to appellant; (3) appellant could not bring a breach-of-expresswarranty claim based on the sale of a home; (4) appellant’s claim of breach of an implied 

warranty of fitness for an intended purpose failed because there was no contract between 

appellant and respondents; and (5) the warranty under Minn. Stat. § 327A.02, subd. 1 

(2014), which protects home buyers, does not apply to this case. We affirm.

FACTS

Respondent Sabri Properties, LLC (Sabri Properties) is a property-development, 

restoration, and general-construction-services business. Respondent Basim Sabri (Sabri) 

is the sole shareholder of Sabri Properties. Respondent Rochelle Barrett is the office 

manager for Sabri Properties. All three respondents were involved in the construction of 

a home on property that Barrett owned. Construction began in the spring of 2004 and 

took about a year and a half to complete. The certificate of occupancy for the home was

issued on September 27, 2005.

In early September 2005, Barrett and appellant Second Chance, LLC, executed a 

purchase agreement for Second Chance to buy the property. By warranty deed executed 

September 26, 2005, Barrett, acting on behalf of herself and as attorney-in-fact for Sabri,

conveyed the property to Second Chance. Second Chance is a property-development 
3

business, and Terrence J. Magill, Second Chance’s owner, testified in a deposition that 

Second Chance bought the property “to turn it for a profit.”

In April 2008, the house sustained water damage from a toilet leak that caused 

flooding inside the house. When the water damage was being repaired, several unrelated 

defects were discovered, and Second Chance hired a professional engineer who worked 

for Advanced Consulting and Inspection (ACI), to inspect the house. ACI prepared a 

report that identified numerous construction defects and building-code violations that 

resulted in water intrusion and structural damage occurring progressively since the house 

was constructed. An estimate prepared by Northland Construction Group, LLC stated 

that it would cost $741,149.36 to repair the moisture-intrusion damage.

In November 2008, the house was nearly destroyed by fire. In January 2010, 

Second Chance sold the property to Hearthside Properties, LLC, and the house was later 

demolished. The sale agreement expressly reserved to Second Chance the right to pursue 

its construction-defect claims.

In June 2009, before selling the property, Second Chance brought this action 

against respondents alleging claims of breach of contract, negligence, breach of express 

warranty, breach of implied warranty of fitness for intended purpose, and breach of 

statutory warranty under Minn. Stat. ch. 327A.1 The district court granted summary 

judgment for respondents. This appeal followed.

 

1 Other claims asserted by Second Chance are not at issue on appeal.
4

D E C I S I O N

Summary judgment is appropriate when the record shows “that there is no genuine 

issue as to any material fact and that either party is entitled to a judgment as a matter of 

law.” Minn. R. Civ. P. 56.03. We review the district court’s grant of summary judgment 

de novo, to determine whether there are genuine issues of material fact and whether the 

district court erred in applying the law. Mattson Ridge, LLC v. Clear Rock Title, LLP, 

824 N.W.2d 622, 627 (Minn. 2012). “We view the evidence in the light most favorable 

to the party against whom summary judgment was granted.” STAR Ctrs. v. Faegre & 

Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn. 2002).

I.

Second Chance’s breach-of-contract claims against Barrett and Sabri are based on 

the alleged falsity of warranties and representations in the purchase agreement. “The 

merger doctrine generally precludes parties from asserting their rights under a purchase

agreement after the deed has been executed and delivered.” Bruggeman v. Jerry’s 

Enters., Inc., 591 N.W.2d 705, 708 (Minn. 1999). The merger doctrine creates a 

presumption of merger, which can be overcome by sufficient evidence to the contrary, 

such as a survival clause. Id. at 710. The presumption of merger does not apply to 

conditions subsequent. Id. at 711. Merger does not apply when there is fraud. JEM 

Acres, LLC v. Bruno, 764 N.W.2d 77, 83 (Minn. App. 2009).

The purchase agreement states:

SELLER WARRANTS THAT CENTRAL AIRCONDITIONING, HEATING, PLUMBING AND WIRING 

SYSTEMS USED AND LOCATED ON SAID PROPERTY 
5

SHALL BE IN WORKING ORDER ON DATE OF 

CLOSING, EXCEPT AS NOTED IN THIS 

AGREEMENT. . . .

BUYER ACKNOWLEDGES THAT NO ORAL 

REPRESENTATIONS HAVE BEEN MADE REGARDING 

POSSIBLE PROBLEMS OF WATER IN BASEMENT OR 

DAMAGE CAUSED BY WATER OR ICE BUILDUP ON 

ROOF OF THE PROPERTY, AND BUYER RELIES 

SOLELY IN THAT REGARD ON THE FOLLOWING 

STATEMENT BY SELLER:

SELLER ___ HAS _X_ HAS NOT HAD A WET 

BASEMENT AND ___ HAS _X_ HAS NOT HAD ROOF, 

WALL OR CEILING DAMAGE CAUSED BY WATER OR 

ICE BUILDUP. BUYER ___ HAS _X_ HAS NOT 

RECEIVED A SELLER’S PROPERTY DISCLOSURE

STATEMENT OR A SELLER’S DISCLOSURE ELECTION 

FORM. BUYER HAS RECEIVED THE INSPECTION 

REPORTS, IF REQUIRED BY MUNICIPALITY. 

Second Chance argues that the merger doctrine does not apply because the 

warranties were not something contemplated to be performed at closing. A condition 

subsequent is a promise that by its nature is not performable until sometime after closing. 

Bruggeman, 591 N.W.2d at 709. But the statements made in the purchase agreement 

relate to the condition of the home as of and before the closing date and do not say 

anything about the condition of the home after closing. Therefore, the conditionsubsequent exception to the merger doctrine does not apply.

Second Chance also relies on the fraud exception to the merger doctrine. An 

element of fraud is “a false representation by a party of a past or existing material fact.” 

JEM Acres, 764 N.W.2d at 83. The evidence presented by Second Chance is insufficient 

to create a fact issue as to a false representation. There is no evidence that the 
6

mechanical systems were not working as of the closing date. Although the ACI report 

identified construction defects and stated that water intrusion and structural damage had 

occurred progressively since construction, the house was sold to Second Chance shortly 

after construction was completed, and the report does not indicate that any damage from 

water intrusion had occurred as of the closing date. To withstand a summary-judgment 

motion, a party must present specific facts showing the existence of a genuine issue for 

trial, and speculation is insufficient. Nicollet Restoration, Inc. v. City of St. Paul, 533 

N.W.2d 845, 848 (Minn. 1995).

Finally, Second Chance cites a treatise stating that “[c]ovenants of warranty as to 

quality and improvements are collateral to the conveyance and are not merged into nor 

satisfied by the deed.” 11 Thompson on Real Property § 96.11(e) (David A. Thomas ed.,

2nd ed. 2002). Our supreme court, however, has declined to adopt a collateral-agreement 

exception to the merger doctrine. Bruggeman, 591 N.W.2d at 710.

The district court properly concluded that, as a matter of law, Second Chance’s 

breach-of-contract claims were barred by merger.

II.

A defendant in a negligence suit is entitled to summary 

judgment when the record reflects a complete lack of proof 

on any of the four essential elements of the negligence claim: 

(1) the existence of a duty of care, (2) a breach of that duty, 

(3) an injury, and (4) the breach of the duty being the 

proximate cause of the injury.
7

Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn. 2001). The existence of 

a duty of care is a question of law, which this court reviews de novo. Domagala v. 

Rolland, 805 N.W.2d 14, 22 (Minn. 2011).

“[A] contractor 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, 500 (Minn. App. 1991), aff’d as modified, 505 N.W.2d 50 (Minn. 

1993). The duty is owed to the contractee. Brasch v. Wesolowsky, 272 Minn. 112, 117, 

138 N.W.2d 619, 623 (1965).

Because there was no contract between Second Chance and respondents to build 

the home, Second Chance is not the contractee and, as a matter of law, respondents did 

not owe Second Chance a duty to build the home in a reasonably good and workmanlike 

manner. The district court properly granted summary judgment to respondents on 

Second Chance’s negligence claim.

III.

To establish a breach-of-warranty claim, a plaintiff must show the existence of a 

warranty, a breach of that warranty agreement, and a causal connection between that 

breach and damages incurred. Peterson v. Bendix Home Sys., Inc., 318 N.W.2d 50, 52-53 

(Minn. 1982).

Although the basis of Second Chance’s express-warranty claim is unclear, it 

appears to be that “Sabri represented to [Second Chance] that the house was the product 

of high quality workmanship and materials, and that its value was, indeed, $1.9 Million.” 

The only evidence Second Chance cites to support this claim is exhibit one admitted 
8

during Magill’s deposition, which is the purchase agreement. But the purchase 

agreement does not warrant that the house was the product of high quality workmanship 

and materials or that its value was $1.9 million. 

If Second Chance’s claim is that Sabri made oral representations to that effect, the 

oral representations were superseded by the purchase agreement, which contains an 

integration clause that makes the written agreement the parties’ complete agreement. The 

integration rule provides that

where parties have reduced their contract to writing, the 

contract may not be proved by prior or contemporaneous 

utterances or writings and that these are entirely immaterial 

for the purpose of determining what the terms of the contract 

are. By making the writing the only depository and memorial 

of the contract, what was said during the negotiations therefor 

or at the time of its execution must be understood to be 

superseded by the writing, and so much of what was thus said 

as is not carried forward into the writing must be deemed to 

have been waived or abandoned. The rule is not one of 

evidence, but of substantive law – the writing is the contract, 

not merely the evidence thereof. Antecedent and 

contemporaneous utterances are excluded, not because they 

are lacking in evidentiary value, but because the law for 

substantive reasons declares that such matters shall not be 

shown. 

Lehman v. Stout, 261 Minn. 384, 390, 112 N.W.2d 640, 644 (1961) (quotation omitted).

Second Chance has not identified any evidence in the record that shows that 

respondents expressly warranted that the house was the product of high quality 

workmanship and materials and that its value was $1.9 million. We note that just before 

exhibit one was introduced, Magill testified that he did not talk to Sabri or Barrett about 
9

the property. But even if there were oral statements of warranty, under the doctrine of 

integration, the district court properly granted summary judgment for respondents.

IV.

Citing Robertson Lumber Co. v. Stephen Farmers Coop. Elevator Co., 274 Minn. 

17, 24, 143 N.W.2d 622, 626 (1966), Second Chance argues that “Minnesota recognizes 

an implied warranty of fitness in the sale of land and buildings.” Second Chance’s 

argument misconstrues Robertson Lumber, which states:

This we believe to be an appropriate case for extending to 

construction contracts the doctrine of implied warranty of 

fitness for the purpose, under circumstances where (1) the 

contractor holds himself out, expressly or by implication, as 

competent to undertake the contract; and the owner (2) has no 

particular expertise in the kind of work contemplated; 

(3) furnishes no plans, design, specifications, details, or 

blueprints; and (4) tacitly or specifically indicates his reliance 

on the experience and skill of the contractor, after making 

known to him the specific purposes for which the building is 

intended.

274 Minn. at 24, 143 N.W.2d at 626. 

Second Chance did not have a construction contract with respondents; it had a 

contract to purchase real estate. And Second Chance does not explain how the four 

circumstances for applying the doctrine of implied warranty are met in this case where, 

under Second Chance’s theory, respondents were both contractor and owner. The district 

court properly granted summary judgment for respondents on Second Chance’s breachof-implied-warranty claim.
10

V.

Minn. Stat. § 327A.02, subd. 1 (2014), sets forth warranties that apply to a 

dwelling for specified periods “from and after the warranty date.”

“Warranty date” means the date from and after which 

the statutory warranties provided in section 327A.02 shall be 

effective, and is the earliest of:

(a) the date of the initial vendee’s first 

occupancy of the dwelling; or

(b) the date on which the initial vendee takes 

legal or equitable title in the dwelling.

Minn. Stat. § 327A.01, subd. 8 (2014). “‘Initial vendee’ means a person who first 

contracts to purchase a dwelling from a vendor for the purpose of habitation and not for 

resale in the ordinary course of trade.” Id., subd. 4 (2014).

Although Second Chance was the first party to contract to purchase the home, it 

was not an initial vendee because it purchased the home “to turn it for a profit” and not 

for the purpose of habitation. Without an initial vendee, the requirements of section 

327A.01, subds. 4, 8(a)-(b), could not be met, and the statutory warranty never became 

effective. Accordingly, the district court properly granted summary judgment for 

respondents on Second Chance’s statutory warranty claim.

Affirmed.