Opinion
No. 25871-4-II.
Filed: October 26, 2001. UNPUBLISHED OPINION
Appeal from Superior Court of Clark County, No. 99-2-04405-7, Hon. James E. Rulli, March 31, 2000, Judgment or order under review.
Counsel for Appellant(s), Douglas C. Elcock, Grant Elcock, 1014 Franklin St Ste 216, Vancouver, WA 98660.
Counsel for Respondent(s), John P. Hayes, Forsberg Umlauf PS, 900 4th Ave Ste 1700, Seattle, WA 98164-1039.
Deborah S. Balint, Forsburg Umlauf, 900 4th Ave Ste 1700, Seattle, WA 98164.
Randy and Susan Norris appeal the dismissal on summary judgment of their breach of warranty, breach of contract, negligent misrepresentation, and negligent repair claims against their contractor, Church Company, Inc. The economic loss rule precludes their negligence claims but the Norrises have raised an issue of material fact as to a contractual provision limiting their warranty rights. There also is an issue of fact as to one of their contract claims. Thus, we affirm in part, reverse in part, and remand for further proceedings.
FACTS
As this is an appeal from a summary judgment order, we present the facts in the light most favorable to the nonmoving party. Schaaf v. Highfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995).
Randy and Susan Norris contracted with Church for the construction of their home. The contract contained 17 separately titled provisions, all in the same size print, including the following:
1. AGREEMENT: Contractor agrees to construct for Randy Sue Norris . . . a residential building in accordance with plans and specifications set forth in Exhibit {sic} `A' `B', as incorporated herein by reference thereto. Said construction shall be strictly in accordance with said plans and specifications, and shall not be varied except by means of written change orders as hereinafter specifically provided.
Exhibit B is a `Home Details' list that itemizes certain materials, finishes, and allowances. Exhibit A is not in the record.
. . . .
3. Performance of Work: . . . All work performed will be in accordance with the State of Washington Uniform Building Code as adopted and amended by the Uniform Building Code of Clark County. . . .
. . . .
14. Contractor's Warranties: The Contractor's warranties are limited to one (1) year from the date of completion on workmanship and materials. Appliance warranties or other warranties furnished by a manufacturer shall inure to the benefit of the Owner in accordance with the term {sic} of such warranties.
Clerk's Papers (CP) at 38-39, 43.
The Norrises acknowledged that they negotiated changes to provisions 1 and 9, but they assert that they did not discuss or negotiate provision 14. Nor did Church provide the Norrises with any information explaining the warranty limitations.
Provision 9 discusses construction allowances and materials.
Church completed the home in June 1994. Subsequently, the Norrises provided Church with `punchlists' dated August 4, 1994; February 13, 1995; and June 13, 1995, listing the following defects: (1) rusted screws on the kitchen gutter; (2) rusted hinges and door handles in the outside areas; (3) leaking gutters; (4) problems with the Dryvit siding on the garage; (5) cracking and peeling Dryvit around the living room chimney; (6) nails popping out of the ceiling and cracking Sheetrock in the upstairs `bonus room'; (7) water leaks near the window in the family room; and (8) water leaks near the windows in some of the bedrooms. Apparently, the Norrises also provided Church with an additional undated list itemizing several additional problems with the Dryvit siding including loose areas, holes, and cracks.
Church alleges that it completed construction in June 1994 and refers to a certificate of occupancy dated June 10, 1994. Although it is unclear whether this certificate is for the Norisses' residence, we view the facts in the light most favorable to the Norrises and presume that the June 1994 completion date is correct.
Dryvit is a synthetic stucco exterior finish.
At some point before the end of the one-year period, Church examined the `water problems' and informed the Norrises that proper roof maintenance would resolve the problems. Church also sent the roofing contractor to replace some of the roofing tiles.
The record does not reveal the actual dates of Church's or the roofer's visits, but in its brief, Church admits that these things occurred `during the one-year warranty period.' Respondent's Reply Brief at 3.
In February 1998, the Norrises noticed that the front doors were warping and reported this problem to Church. Church told the Norrises to contact the subcontractor who had installed the doors. The subcontractor inspected the entrance and shaved down the bottoms of the doors so they would shut properly.
At about the same time, Church inspected the entrance area but `could not locate the source of the water penetration.' CP at 131. It indicated that the problem `could be from improper roof installation, window application or improper dryvit {sic} siding application.' CP at 131. Nonetheless, Church caulked some of the windows and now claims that it was acting `under a separate agreement{,}' supporting this claim with an invoice dated February 28, 1998. Respondent's Reply Brief at 4.
In May 1998, Church reinspected the front entryway and opened the walls, exposing substantial dry rot damage. But Church stated that it would not be responsible for the repairs.
Independent inspectors from Dryvit Systems, Inc.; Miller Tile Roofing; Western Architectural Construction Consultants; and BMPG Engineering attributed the water penetration problems and subsequent damage to misapplication of the Dryvit siding, improper roof design and construction, lack of roof vents, an incomplete vapor barrier in the crawl space, and improper sealing of the doors and windows. The Miller Tile Roofing inspector concluded that the roofing contractors may have contributed to the moisture damage by cutting through the roofing felt when they installed the roof valleys. This inspector also concluded that there should have been a different type of roof valley because the home was located under trees.
The BMPG Engineering structural engineer discovered that the contractor had violated the Uniform Building Code (UBC) by failing to install the roof vents required by the plans. He opined that the resulting `lack of circulation may be exacerbating the damage caused by the incorrect application of the dryvit {sic} siding and the improperly constructed roof.' CP at 121. The engineer also discovered that the vapor barrier under the house was incomplete.
Citing to the contract, which requires construction in strict accordance to the plans and specifications, the Norrises assert that the vapor barrier was `to be placed in the crawl space underneath the entire residence.' Appellant's Brief at 19. The record does not support this assertion nor show whether the vapor barrier placement was inconsistent with the plans or violated the UBC.
In November 1999, the Norrises sued Church, alleging breach of contract and breach of warranty. They later amended their claim to include claims for negligent repair and negligent misrepresentation.
The trial court granted Church's motion for summary judgment dismissal of the contract, warranty, and negligence claims and ruled that there was no just cause for delay under CR 54(b). The Norrises appeal.
DISCUSSION I. Standard of Review
We review a summary judgment order de novo, viewing the evidence and all reasonable inferences from the evidence in the light most favorable to the nonmoving party. Schaaf v. Highfield, 127 Wn.2d 17, 21, 896 P.2d 665 (1995). As the moving party, Church `bears the initial burden of demonstrating an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law.' Schaaf, 127 Wn.2d at 21. The Norrises then `must set forth specific facts evidencing a genuine issue of material fact for trial.' Schaaf, 127 Wn.2d at 21.
II. Breach of Warranty Claims
The Norrises challenge provision 14, arguing that the parties' failure to explicitly negotiate it and the contract's failure to set it forth with particularity make it invalid. Church asserts that the provision sets forth a one-year limitation on warranty claims or actions and that, because the Norrises filed this action more than one year after the home's completion, the provision bars the Norrises' claim.
A. Time Limitation on Warranty Actions
Because the law generally disfavors warranty disclaimers, they are ineffectual unless the parties explicitly negotiate them and set them forth with particularity. Berg v. Stromme, 79 Wn.2d 184, 196, 484 P.2d 380 (1971); Rottinghaus v. Howell, 35 Wn. App. 99, 103, 666 P.2d 899 (1983). By contrast, unambiguous contractual time limits on actions are enforceable if they are not unconscionable, do not violate statute or public policy, and allow the plaintiff a reasonable period of time to ascertain and investigate the claim and prepare for the controversy. Syrett v. Reisner McEwin Assocs., 107 Wn. App. 524, 527-30, 24 P.3d 1070 (2001); Southcenter View Condo. Owners' Ass'n v. Condo. Builders, Inc., 47 Wn. App. 767, 771, 736 P.2d 1075 (1986); Yakima Asphalt Paving Co. v. Wash. State Dep't of Transp., 45 Wn. App. 663, 665-66, 726 P.2d 1021 (1986); Ashburn v. Safeco Ins. Co. of Am., 42 Wn. App. 692, 695, 713 P.2d 742 (1986). If these conditions are met, the negotiation and particularity requirements do not apply.
Church asserts that provision 14 was a claim or action limitation similar to that in Southcenter. We disagree.
The time limitation provision in Southcenter clearly stated that it was a limitation on any action brought after a one-year period:
`Purchaser acknowledges that no action may be commenced or maintained by Purchaser as to any claim, known or unknown, based upon negligence or warranty, express or implied, against Seller more than one year after the date of issuance of the condominium's Certificate of Occupancy as to the common and limited common areas or the date of closing and recording of the deed to Purchaser's unit, whichever event shall first occur.'
47 Wn. App. at 769 (emphasis added).
But there is no language in provision 14 indicating Church's intent to limit the time for bringing a warranty action. And there is no evidence that Church discussed such a limitation with the Norrises during contract negotiations. Assuming that Church had an unexpressed subjective intent to limit the time in which the Norrises could bring a warranty action, this intent did not bind the Norrises.
B. Notice Provision
The Norrises appear to concede that provision 14 was a notice provision:
Our understanding of this section was that we would have one year to notify Mr. Church of any problems we observed with the home. If we notified Mr. Church of any problems within that one year period, Church Company would be obligated to personally come back and effectuate repairs. In the event we notified Mr. Church after the one year period but before the warranty period had lapsed, it was our understanding that Church Company would not have to personally perform the work but would be responsible for the reasonable costs of any repairs made.
CP at 130. In contrast to warranty disclaimers, which are invalid if not negotiated and stated with particularity, we find no similar authority regarding notice provisions. See Berg, 79 Wn.2d at 196; Griffith v. Centex Real Estate Corp., 93 Wn. App. 202, 969 P.2d 486, (1998); Rottinghaus, 35 Wn. App. at 103.
Nonetheless, we conclude that the trial court erred in dismissing the breach of warranty claim on summary judgment because there is an issue of material fact as to the meaning of provision 14. The provision has at least two reasonable interpretations: it may require notice of any defect within one year or it may merely require that the defect become apparent within one year. To determine the correct interpretation, the court must examine the objective manifestations of the parties' intent. Martinez v. Kitsap Pub. Servs., Inc., 94 Wn. App. 935, 943, 974 P.2d 1261 (1999). See also Berg v. Hudesman, 115 Wn.2d 657, 667-68, 801 P.2d 222 (1990) (the interpretation of an integrated contract is a question of fact if the determination depends on the credibility of extrinsic evidence or on a choice among reasonable inferences, otherwise it is a question of law). Thus, we remand this claim to the trial court.
If the provision only required notice, the Norrises presented sufficient facts to indicate that Church was on notice of potential moisture and siding problems within the one year allowed. See Christensen v. Hoskins, 65 Wn.2d 417, 418-19, 397 P.2d 830 (1964) (written notice from homeowner generally describing the problem observed is sufficient to put the builder on notice of a warranty claim).
III. Breach of Contract
The Norrises next argue that the trial court erred when it dismissed their breach of contract claims because (1) the warranty limitation did not preclude them from pursuing these claims, and (2) they presented evidence sufficient to create a question of fact as to whether Church complied with the contract requirement that the home be constructed in strict accordance with the plans and specifications and in compliance with the UBC. They are partially correct.
Generally, a plaintiff in a contract action must prove (1) that a valid contract between the parties exists, (2) breach, and (3) resulting damage. Northwest Indep. Forest Mfrs. v. Dep't of Labor Indus., 78 Wn. App. 707, 712, 899 P.2d 6 (1995). Church does not assert that the contract was invalid or that it contained any limits on the Norrises' rights to bring a contract claim; nor does it cite any authority that would preclude the Norrises from bringing claims under both contract and warranty.
The contract required Church to construct the home `in accordance with said plans and specifications' and stated that `{s}aid construction shall be strictly in accordance with said plans and specifications, and shall not be varied except by means of written change orders. . . .' CP at 38. The contract also provided that `{a}ll work performed will be in accordance with the State of Washington Uniform Building Code as adopted and amended by the Uniform Building Code of Clark County.' CP at 39.
The Norrises asserted that Church breached the strict compliance provision by (1) failing to install a vapor barrier over the entire crawl space; (2) failing to install the Dryvit siding in accordance with the manufacturer's installation instructions; and (3) failing to use the proper type of roof valley. But the Norrises failed to present evidence that these deficiencies violated the UBC or were inconsistent with the plans and specifications. Thus, summary judgment on these claims was appropriate.
The Norrises have, however, presented evidence showing that Church failed to install the air vents that the plans and specifications and the UBC require. They also have presented evidence showing that the resulting lack of ventilation may have contributed to the moisture that led to the dry rot problems. Thus, the trial court erred when it dismissed this contract claim.
Further, Church cannot avoid contract liability by claiming subcontractor error:
In the absence of a provision that he may subcontract the work and that the owner will look only to the subcontractor for compensation for damage if the work is not properly done, there is an implied undertaking on the part of the contractor to see that the work is performed with due care.
White Pass Co. v. St. John, 71 Wn.2d 156, 161, 427 P.2d 398 (1967). The contract contains no provision requiring the Norrises to look anywhere but to Church for cure or compensation for a subcontractor's defective work. See White Pass, 71 Wn.2d at 162. Thus, the trial court erred in dismissing the Norrises' claim that Church breached the contract by failing to properly install air vents.
IV. Negligence Claims
Finally, Church correctly asserts that the economic loss rule bars the Norrises' negligence claims.
Although Washington courts recognize the tort of negligent misrepresentation, the economic loss rule may bar such claims. Griffith, 93 Wn. App. at 212-13. Under the economic loss rule, when a defective product damages itself and the only loss is the value of the product that was bargained for in the contract, the plaintiff is limited to bringing claims under the terms of the contract:
Under the economic loss rule, defects in materials evidenced by deterioration are characterized as economic losses, for which claims sounding in tort are barred; defects causing physical injury or harm to other objects are not characterized as economic losses, and actions for such damage are not barred by the rule.
Griffith, 93 Wn. App. at 213. See also Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist No. 1, 124 Wn.2d 816, 821-23, 826-27, 881 P.2d 986 (1994). The rule, thereby, preserves the boundary between contract and tort law. See Berschauer/Phillips, 124 Wn.2d at 826-27; Griffith, 93 Wn. App. at 211-13.
The Norrises bargained for a certain quality home and the contract allocated the risk that the finished home would not be of the bargained for quality. Taking the facts in the light most favorable to the Norrises, they did not receive the benefit of their bargain. But they have not alleged harm to any person or to any property beyond the home itself. See Griffith, 93 Wn. App. at 213. Their damages were purely economic and they must bring their claims under contract and warranty law rather than as a tort action. Thus, the trial court did not err when it dismissed these claims.
Although the cases that Church cites in support of applying of the economic loss rule happen to deal with misrepresentations made by builder/vendors to purchasers, the underlying purpose of the rule, to protect the boundary between contract and tort law, does not support limiting its application to a particular category of parties. See Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 799 P.2d 250 (1990); Griffith, 93 Wn. App. at 206-208.
Accordingly, we remand the claims for breach of warranty to the trial court to (a) interpret the `limited to one year' language of provision 14; and (b) resolve any and all viable claims under that interpretation. We also remand the breach of contract claim related to the failure to install the roof vents. We affirm the trial court's dismissal of the tort claims and the remaining contract claims.
V. Attorney Fees
Both parties request attorney fees on appeal pursuant to RAP 18.1 and the terms of the contract.
The contract contained the following attorney fee provision: `16. Attorney's Fees: The parties agree that if provisions of the Agreement must be enforced by way of court action, the prevailing party therein shall be entitled to reimbursement from the losing party for all costs, including a reasonable attorneys' fee associated with said court action, either on the trial court level or in any appellate proceeding associated therewith.' CP at 43.
As we remand the warranty claims and some of the contract claims, the determination of the prevailing party must await trial court action. Attorney fees are not appropriate at this time.
Affirmed in part, reversed in part, and remanded.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
We Concur: HOUGHTON, J., HUNT, A.C.J.