Opinion
No. 54574-4-I
Filed: August 8, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 03-2-24958-1. Judgment or order under review. Date filed: 06/18/2004. Judge signing: Hon. Steven C Gonzalez.
Counsel for Appellant(s), Sanford R. Levy, Levy Von Beck Associates PS, 600 University St Ste 3300, Seattle, WA 98101-1129.
David M Von Beck, Levy Associates PS, 600 University St Ste 3300, Seattle, WA 98101-1129.
Counsel for Respondent(s), Ray P. Cox, Forsberg Umlauf PS, 900 4th Ave Ste 1700, Seattle, WA 98164-1039
Alfred E Donohue, Forsberg Umlauf, 900 4th Ave Ste 1700, Seattle, WA 98164-1050.
Devon P. Groves, Attorney at Law, 1913 Tweed Pl, Anacortes, WA 98221.
John Patrick Hayes, Attorney at Law, 900 4th Ave Ste 1700, Seattle, WA 98164-1050.
In this case, purchasers of an almost new house advance several theories of recovery against the builder for damages due to defects in the structure. We are constrained to conclude these subsequent purchasers have no available cause of action. We therefore affirm summary judgment of dismissal.
BACKGROUND
In 1995, Residential Development Ltd. (RDL) built a single family residence on Mercer Island. Gary Kincaid, the owner of RDL, was present during construction. RDL sold the house to the Ehlos, who lived in the house for two years.
In the summer of 1998, John and Suzanne Hansen looked at the house to purchase. They had the house inspected. The inspector noted a small defect with the exterior insulation and finish system (EIFS), but observed no major problems with the EIFS installation. The Hansens' realtor introduced them to Gary Kincaid, and the Hansens allege Kincaid assured them he stood behind the home and would be there to fix any problems. The Hansens bought the house.
By the end of 1998, water was intruding into the house. The Hansens called Kincaid, who repeatedly attempted to fix the problems. He variously ascribed the leaks to faulty caulking, ventilation, windows and/or roof. Although Kincaid made repairs and the Hansens replaced the roof, the leaks continued. Eventually, in the fall of 2001, part of the kitchen ceiling collapsed.
The Hansens hired Exterior Research and Design (ERD) to investigate. By opening up the walls and the areas around the windows, ERD discovered that the EIFS had been improperly installed in violation of the manufacturer's requirements. Defects included foam board installed over voids, missing sealant joints, missing backwrapping at transitions, and missing reinforcing mesh. These defects resulted in water intrusion and consequent structural decay requiring reframing and other major repairs costing over $200,000.
The Hansens filed suit against RDL in May 2003, claiming negligent construction, breach of the implied warranty of habitability, and negligent misrepresentation. Kincaid testified in deposition that when he responded to the Hansens' second request for repairs to be done, he thought `it was either an EIFS or a window problem.' Clerk's Papers at 335. The Hansens contend Kincaid never mentioned any EIFS problem. The trial court subsequently granted RDL's motion for summary judgment and dismissed all claims. We apply the usual standard of review.
An order of summary judgment is reviewed de novo. The court engages in the same inquiry as the trial court and views the facts and the reasonable inferences from those facts in the light most favorable to the nonmoving party. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate where `there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.' CR 56(c).
ANALYSIS
Implied Warranty of Habitability. The doctrine of implied warranty of habitability protects the first occupants of residential property against the risk of fundamental defects in the structure of a home. Stuart v. Coldwell Banker Commercial Group, Inc. 109 Wn.2d 406, 416, 745 P.2d 1284 (1987). RDL argues that because the implied warranty applies only to first occupants, the Hansens have no cause of action under the warranty. The Hansens concede that no Washington court has extended the protections of the implied warranty of habitability to a subsequent purchaser. They nevertheless ask that we `fashion a remedy' to include subsequent purchasers in the implied warranty. Appellant's Brief at 37.
Washington adopted the implied warranty of habitability in House v. Thornton, 76 Wn.2d 428, 436, 457 P.2d 199 (1969). There, a builder-vendor constructed a house on an unstable site, resulting in severe deterioration of the foundation. The court held the builder liable, defining the new implied warranty rule as follows:
We apprehend it to be the rule that, when a vendor-builder sells a new house to its first intended occupant, he impliedly warrants that the foundations supporting it are firm and secure and that the house is structurally safe for the buyer's intended purpose of living in it. Current literature on the subject overwhelmingly supports this idea of an implied warranty of fitness in the sale of new houses.
Id. (emphasis added).
Subsequent cases have restated the rule that the warranty extends only to the first purchaser/occupant. In Klos v. Gockel, 87 Wn.2d 567, 554 P.2d 1349 (1976), the builder lived in the house for a year before selling it to the plaintiffs, who then sued under the warranty of habitability for damage from a mud slide. In holding the damage insufficient to invoke the warranty, the court noted that `for purposes of warranty liability, the house purchased must be a `new house.'' Id. at 571.
In Gay v. Cornwall, 6 Wn. App. 595, 598, 494 P.2d 1371 (1972), the implied warranty applied because although plaintiffs were the third owners, they were the first occupants of the house. See also Stuart,109 Wn.2d at 423 (Callow, J., concurring) (the implied warranty of habitability `protects only the first intended occupants').
The Hansens assert that courts in other states are `nearly unanimous' in extending the warranty to subsequent owners, and that many states have done so by statute. They amply illustrate the logical inconsistencies in limiting the warranty to first purchasers, and point out that condominium warranties are not so limited. See RCW 64.34.445(6). They argue that because a cause of action for negligent construction is unavailable in Washington, homeowners are left entirely without a remedy for latent structural defects unless the implied warranty applies, because the very nature of latent defects prevents contractual allocation of the risk at the time of the subsequent purchase. These are powerful arguments.
Appellant's Br. at 34. The Hansens' brief includes a chart describing the statutes and case law in the 50 states. See also id., app. B (citing Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427, 430 (1984) (`[t]he purpose of a warranty is to protect innocent purchasers and hold builders accountable for their work . . . any reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally deserving of recovery is incomprehensible'); Redarowicz v. Ohlendorf, 92 Ill.2d 171, 441 N.E.2d 324, 330 (1976) (`The compelling public policies underlying the implied warranty of habitability should not be frustrated because of the short intervening ownership of the first purchaser.'); Terlinde v. Neely, 275 S.C. 395, 271 S.E.2d 768, 769 (1980) (`Common experience teaches that latent defects in a house will not manifest themselves for a considerable period of time, likely . . . after the original purchaser has sold the property to a subsequent unsuspecting buyer.')). See also Blagg v. Fred Hunt Co., Inc., 272 Ark. 185, 612 S.W.2d 321 (1981); Tusch Enterprises v. Coffin, 113 Idaho 37, 51, 740 P.2d 1022 (1987); Keyes v. Guy Bailey Homes, Inc., 439 So.2d 670 (Miss. 1983); Lempke v. Dagenais, 130 N.H. 782, 547 A.2d 290 (1988); Hermes v. Staiano, 181 N.J.Super. 424, 437 A.2d 925 (1981); Elden v. Simmons, 631 P.2d 739 (Okla. 1981); Nichols v. R.R. Beaufort Associates, Inc., 727 A.2d 174 (R.I. 1999); Sewell v. Gregory, 179 W.Va 585, 371 S.E.2d 82 (1988); Moxley v. Laramie Builders, Inc., 600 P.2d 733 (Wyo. 1979).
Similar arguments have not, however, persuaded our high court. In Frickel v. Sunnyside Enterprises, Inc., 106 Wn.2d 714, 725 P.2d 422 (1986), several justices lamented the fact that Washington's implied warranty applies only to original purchaser/occupants. In a comprehensive dissent urging extension of the warranty, Justices Pearson, Dore and Callow noted that insulating builders from liability on the grounds that damage may be caused by intervening tenants was `unsupportable' where the defects were latent, and that an extension of the warranty to subsequent purchasers would not involve unlimited liability for the builders, because the warranty would only apply for the statutory six-year statute of repose, RCW 4.16.310. Id. at 729-30 (Pearson, J., dissenting).
The dissenters described the limitations on the warranty as `requirements which make little or no sense, and lead to unconscionable results.' Id. at 734. They believed the court `should modify the existing warranty of habitability and apply it to serious structural defects existing in any residential structure constructed by a professional builder, regardless of whether the buyer is the first or subsequent occupant.' Id. The majority's rejection of this entreaty was clear when the court decided Stuart the following year. The court cited Frickel as support for its observation that `[t]his court has not been anxious to extend the implied warranty of habitability beyond its present boundaries.' Stuart, 109 Wn.2d at 416. Refusing to recognize a cause of action for negligent construction, the court stated:
Imposition of tort liability upon the builder-vendors would require them to become the guarantors of the complete satisfaction of future purchasers. A builder-vendor could contract to limit liability for defects with the original purchaser and then find themselves liable for the same defects to a future purchaser with whom they had absolutely no contact.
Stuart, 109 Wn.2d at 421.
A home is often the most important and costly purchase a family makes in a lifetime. We believe the Hansens' arguments have considerable merit. Under current precedent, however, the trial court correctly ruled that the implied warranty of habitability does not apply to subsequent purchasers such as the Hansens.
Intentional Violation of the Building Code. Conceding that Washington does not recognize a cause of action for negligent construction, the Hansens assert that RDL's violation of the building codes constituted an intentional tort. They rely on the Restatement (Second) of Torts, which provides:
One who intentionally causes injury to another is subject to liability to the other for that injury, if his conduct is generally culpable and not justifiable under the circumstances. This liability may be imposed although the actor's conduct does not come within a traditional category of tort liability.
Restatement (Second) of Torts sec. 870 (1979).
No Washington court has adopted section 870 in any context, and as stated above, the Washington Supreme Court has firmly rejected new theories of tort liability for builder-vendors. Stuart, 109 Wn.2d at 421. Mindful of Washington's conservative approach to expanding tort liability in the construction industry, we decline the Hansens' invitation to recognize a cause of action in tort for intentional violation of the building codes. Negligent Misrepresentation. The Hansens' argument is that Kincaid knew (or should have known) the cause of the leaks was the faulty EIFS, but did not so inform the Hansens, thus delaying proper repairs and increasing their damages. The Hansens confirmed at oral argument in this court that their claim is founded on RDL's alleged intentional or negligent omissions. The Hansens rely on section 552 the Restatement (Second) of Torts, which provides:
The Hansens' response to RDL's summary judgment motion stated: When [Kincaid] came out to investigate the leaks around the windows, he knew before reaching the house that . . . there was nothing to prevent the water from damaging the bare wood sheathing. Still, he said nothing to the plaintiffs. . . . When he came back a year later to repair the same area, he should have said something to the plaintiffs about the possibility that the house wasn't built correctly in the first place. Instead he chose to say nothing.
Clerk's Papers at 306-07.
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Restatement (Second) of Torts sec. 552 (1977) (emphasis added).
Section 552 applies where a party supplies false information, but the Hansens do not allege Kincaid supplied false information. Rather, they seek to extend section 552 to encompass a cause of action resting on an intentional or negligent omission.
This implies a duty to disclose. Section 551 of the Restatement (Second) of Torts sets out the elements of a cause of action for breach of the duty to disclose. The Hansens do not contend, however, that Kincaid had a duty to disclose under section 551, and no Washington case has held that an omission can constitute a misrepresentation under section 552. The only pertinent Washington case is to the contrary. In Trimble v. Washington State University, 140 Wn.2d 88, 97-98, 993 P.2d 259 (2000), the Supreme Court held that failure to inform a party of potential disadvantages to a contract does not create a cause of action for negligent misrepresentation. Other courts have considered whether section 552 extends to negligent omissions, with varying results. But the parties offer no briefing on those cases to assist our analysis, and we therefore decline to carry the inquiry further.
(1) One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,
. . . .
(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading. Restatement (Second) of Torts sec. 551 (1977) (emphasis added) (adopted in Colonial Imports, Inc., v. Carlton Northwest Inc.,121 Wn.2d 726, 731, 853 P.2d 913 (1993)).
See, e.g., Breeden v. Richmond Community College, 171 F.R.D. 189, 202 (N.C. 1997) (section 552 does not encompass misrepresentation by omission); but see Aliberti, LaRochelle Hodson Engineering Corp., Inc. v. F.D.I.C., 844 F. Supp. 832, 843-44 (Me. 1994) (section 552 `draw[s] omissions as well as misstatements within the scope of its basis for general liability').
Because they allege no false statement, the Hansens' claim for negligent misrepresentation under section 552 must fail.
Affirmed.
GROSSE and BAKER, JJ., Concur.