Friday, January 4, 2013

Second hand Purchaser Asserting Claim of Breach of the Implied Warranty of Habitability

Conway v. The Cutler Group, Inc., 2012 Pa. Super 242, 2012 Pa. Super. LEXIS 3480 (2012)
Frank Kosir, Jr., Esquire
This matter addressed the issue of whether a second hand purchaser of a residential structure can assert a claim against the builder of that structure for breach of the implied warranty of habitability. 
In 2003, the Cutler Group, Inc. (“Builder”) constructed a home (“Home”) in Jamison Township, Bucks County, Pennsylvania for David and Holly Fields (“Fields”).  The Fields resided in the Home for approximately three (3) years, then sold it to Michael and Deborah Conway (“Conways”) in June of 2006.  In 2008, the Conways began to notice certain water infiltration issues with the Home, and retained the services of an engineer to determine the cause of the infiltration.  The engineer performed a thorough inspection of the Home, found that the infiltration was the result of numerous construction defects including, inter alia, a lack of expansion or control joints, insufficiently sealed expansion joints, and improperly installed stucco, and concluded that the best long term solution to the issue would be to strip and replace the entire exterior of the Home.
Following their receipt of the engineer’s report, the Conways commenced a civil action against the Builder in the Bucks County Court of Common Pleas by filing a one-count Complaint sounding in breach of the implied warranty of habitability, In response, the Builder filed Preliminary Objections asserting that, as the implied warranty of habitability extends only from the builder to the initial arms length purchaser, the Conways could not assert a cause of action against the Builder.  The Builder further asserted that, even if the Conways could bring a suit under the implied warranty of habitability, their complaint failed to plead that any of the alleged defects rendered the Home unfit to reside in.  After oral argument, the trial court issued an order sustaining the Builder’s Preliminary Objections, and dismissing the Conways’ Complaint with prejudice.
On appeal, our Superior Court reversed.  In a issuing its ruling, the court pointed out that Pennsylvania appellate courts have never before been asked to rule on the issue of whether the implied warranty of habitability extends to second hand purchasers of a residential structure.  As such, the court looked to the purpose of the implied warranty of habitability and noted that such purpose was grounded not in contract, but in public policy, and was designed to assure that home purchasers were protected from unscrupulous building practices.  Specifically, as a home builder is viewed as having the expertise necessary to construct a residential dwelling, a party that purchases a newly constructed home from that builder justifiably relies on the builder’s skills and expertise to produce a home that is suitable for habitation.  Similarly, a subsequent purchaser of that home also relies upon that Builder’s skills and expertise as, due to its lack of construction knowledge, the initial purchaser is in no position to warrant the suitability of the home for habitation. In effect, in conveying title to the initial purchaser, the builder is certifying that the home will be suitable for habitation, regardless of the number of times that title is transferred and, given the fact that the implied warranty of habitability addresses defects that are not readily apparent to a purchaser through an inspection of the home, public policy requires that the protections of the warranty also inure to the benefit of subsequent purchasers.  The court further noted that its opinion would not result in endless liability for builders as, even though the protections of the implied warranty of habitability pass to subsequent purchasers, any such purchasers asserting claims still have the burden of establishing the existence of a latent defect, and all such claims must still satisfy the statue of repose (42 P.S. §5536(a)) which requires that such claims be brought within twelve (12) years of the completion of construction.

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