In an unusual case, the Minnesota Supreme Court will rule on whether general contractor John Arkell, president of Carriage Homes, will go to jail for violating the state's building code on the Southwinds project, a 38-unit condo development in Austin, Minn., near the Iowa border.
Minnesota's highest court will hear the case because it's the first time in state history that a builder faces jail time for a building code violation without the prosecution having to prove intent.
At least three units in the Southwinds complex had pools of water forming on the driveways and in the garages following heavy rainstorms. The city's building inspector determined the pooling was a violation of code, because the elevation was roughly 1 foot lower than the original plans specified.
Following a trial before a county court judge in Mower County District Court in spring 2002, Arkell was found guilty of a criminal misdemeanor and sentenced to a 90-day jail term and a $1,000 fine. Eighty days of the jail sentence were suspended pending payment of $238,565 to Southwinds residents, which still may be ordered to be paid if the case is not overturned. Arkell lost on appeal and filed with the state Supreme Court, which will hear oral arguments this fall.
"We don't condone criminal behavior," says Remi Stone, public policy director with the Builders Association of the Twin Cities (BATC), which filed a brief supporting Arkell with the Builders Association of Minnesota (BAM). "But since this case sets significant precedent, we needed to ask the court to rethink the lower court rulings."
Charles "C.J." Schoenwetter, legal counsel for BATC and BAM, says that the case is now much less about Arkell and more a matter of case law that can be used against builders.
"No builder sets out to violate the building code," Schoenwetter says. "The trade groups need to step in and try to control the destiny of the membership."
The county trial court and appeals court ruled that the building code is a public welfare statute, which means the public is at risk once a home is built. The judges ruled that violators of a public welfare statute can be held personally liable without requiring the prosecutor to prove intent. This is unusual because prosecutors must prove intent in most criminal cases.
In an additional wrinkle, the judges also ruled that Arkell could be held criminally liable under the responsible corporate officer doctrine, which holds that top managers at companies should be held accountable for allowing a violation to take place, or if they don't take prompt steps to correct a problem once they are made aware of it.
Schoenwetter says builders are very concerned because the court bypassed the corporate entity and held Arkell personally responsible.
Carriage Homes was charged with three violations: incorrect installation of roof underlayment, incorrect installation of roof decking, and inadequate storm-water drainage. The company pleaded guilty to the third count, and the other two charges were dismissed. However, by applying the responsible corporate officer doctrine, the government prosecuted Arkell personally and found him liable for the same violation that the company had pleaded guilty to.
"The responsible corporate officer doctrine has never been applied by any court in the context of a building code violation," says Schoenwetter.
Typically, disputes over code violations are handled by the builder and building inspector. If a case can't be resolved, most towns have appeals boards, or sometimes homeowners sue a builder in civil court.
In the Arkell case, the government prosecuted in criminal court and sought restitution for the residents after the building inspector sent seven letters to Arkell asking him to correct the violations. Arkell says he passed the letters on to subcontractors, who did not fix the violations. The builder maintains he's a general contractor and depends on his subs, so he should not be held criminally liable for faulty subcontractor work.
Arkell Case Chronology
How did a simple building code case make it to the state Supreme Court?
* May, 2001: City of Austin, Minn., files complaint against Arkell
* February, 2002: Trial in Mower County District Court
* March, 2002: Two lesser charges dismissed; Judge finds Arkell guilty of providing inadequate storm drainage
* May, 2002: Arkell sentenced to 90 days in jail and $1,000 fine; 80 days stayed pending $238,565 restitution payment to residents
* March, 2003: Court of Appeals upholds county court opinion
* May 2003: Minnesota Supreme Court agrees to hear Arkell case
* July 2003: Briefs supporting Arkell filed by Builders Association of Minnesota and Builders Association of the Twin Cities
* Fall 2003: Oral arguments will begin in Supreme Court case
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