Tusch Enterprises v. Coffin

• Decision Date: 02 July 1987
• Docket Number: No. 16380,16380
• Citation: 113 Idaho 37,740 P.2d 1022
• Court: Idaho Supreme Court
• Parties: , 56 USLW 2035 TUSCH ENTERPRISES, a partnership consisting of Earl F. and Marianne Tusch, husband and wife; Carl W. Tusch, Sr. and E. Norene Tusch, husband and wife; Carl W. Tusch, Jr. a single person, Plaintiffs-Counterdefendants Appellants, v. Rex T. COFFIN, Defendant-Cross Claimant, Cross Defendant-Respondent, and Robert Vander Boegh and Elizabeth Vander Boegh, husband and wife, Cross Defendants-Counter-claimants, Cross-claimants-Respondents.

Page 1022

740 P.2d 1022

113 Idaho 37, 56 USLW 2035

TUSCH ENTERPRISES, a partnership consisting of Earl F. and Marianne Tusch, husband and wife; Carl W. Tusch, Sr. and E. Norene Tusch, husband and wife; Carl W. Tusch, Jr. a single person, Plaintiffs-Counterdefendants Appellants, v. Rex T. COFFIN, Defendant-Cross Claimant, Cross Defendant-Respondent, and Robert Vander Boegh and Elizabeth Vander Boegh, husband and wife, Cross Defendants-Counter-claimants, Cross-claimants-Respondents.

No. 16380.

Supreme Court of Idaho.

July 2, 1987.

[113 Idaho 38] Robert O. Eldredge of Lyon & Jorgensen, Pocatello, for Tusch enterprises.

George A. Southworth of Herzog & Roche, Pocatello, for Coffin.

Gaylen L. Box of McDermott, Zollinger, Box & Olley, Pocatello, for Vander Boeghs.

DONALDSON, Justice.

Tusch Enterprises appeals from an order of the district court granting summary judgment in favor of Robert and Elizabeth Vander Boegh, husband and wife, and Rex T. Coffin. Tusch Enterprises brought this action after discovering that residential duplexes it had recently purchased suffered from major structural infirmities. The complaint advanced the following theories of recovery: (1) negligence, (2) misrepresentation, (3) express warranty, and (4) implied warranty of habitability. We reverse the entry of summary judgment as to the misrepresentation and implied warranty of habitability counts.

I Facts

We present the facts in the light most favorable to Tusch Enterprises. Robert Vander Boegh, a man with considerable experience in the road construction business, and his wife owned land in Pocatello, Idaho, and decided to build three duplexes. The rolling foothill upon which the duplexes were to be built was levelled for construction by Bengal Construction. The Vander Boeghs then contracted with Rex Coffin, a building contractor, to erect the duplexes. Pursuant to their agreement, Coffin was to prepare plans for the duplexes, secure all the necessary building permits, and build the structures. The site preparation and the outside work, such as gutters, lawns, curbs, and grading, were

[113 Idaho 39] left to Robert Vander Boegh to do, or to contract out

Coffin began working on the site in the fall of 1975. In his deposition, he describes some difficulties he encountered in securing a permit:

"Q. Did you have questions in your mind at that time whether or not it was a suitable site for constructing duplexes on?

"A. When I talked to the city, they were quite reluctant, I'll say, they seemed to have a grudge against Bob [Vander Boegh]. And so I talked to Bob and asked him about it, and I said, 'Are we looking at any fill?' And he said, 'No, this is all cut.' And I took the message back to them, because it was all cut out of the mountainside there. And I discussed that with Mr. Mason and those fellows, and after quite a hassle we got the permit."

Throughout his deposition, Coffin testifies that Robert Vander Boegh told him the site had been cut from the mountain, and that no fill dirt had been used. The presence of fill dirt is significant because it tends to compact more and is thus more likely to cause foundations to settle and crack. During construction, Coffin became concerned enough about the "softness" of the soil where the south duplex was to be built that he asked a building inspector to investigate. Coffin testifies that the softness was brought to Vander Boegh's attention:

"A. ... And what brought it up was there was a little indication of a little softness there, and so we started digging to make sure that there was not anything that would indicate fill or anything like that....

"Q. You mentioned a conversation with Bob [Vander Boegh] regarding this problem. What was that?

"A. Well, when we dug down, Bob and I talked it over, and I showed him where we were. We talked it over as owner and contractor and we decided that this would be. And I wanted his professional opinion, too, on it.

"Q. Now, what exactly was the content of the conversation?

"A. Well, we were just looking the job over and passing the time of day and I told him about this little area there that I had to question. And I went way beyond the ordinary to make sure that it was proper and right."

Robert Vander Boegh testifies in his deposition as to his version of the conversation regarding soft soil at the south duplex site:

"A. Yes. On one weekend Rex had called me up and wanted me to meet--I lived right next door, and if I remember correctly he had the footings constructed for the two duplexes. Now, on the third one in question, [the south unit,] he had that all excavated and on the far end that settled he was down, I'd say, two feet further than he normally would have had to go, and he said it looked to him like there was some question if he was down to original ground, and I agreed with him, that it didn't look original to me. And this is hard to tell. So I told Rex to do whatever he had to do to get the footings down, and he volunteered that he would dig it by hand just as far as he had to go to put that footing in.

"Q. As I understand what you are saying, that you indicated to him it does look like there is fill, do what you have to do to take care of it?

"A. That's correct."

In early 1976, after the duplexes were completed, the Vander Boeghs began renting out the duplex apartments. Later, they listed the properties for sale with a realtor. Marianne Tusch learned of the listing at the agency where she worked as a real estate agent. She and a number of her relatives were interested in purchasing the duplexes as investment property. They formed a partnership, Tusch Enterprises, for that purpose.

[113 Idaho 40] On June 7, 1978, Tusch Enterprises offered to purchase the duplexes for $125,000. The offer was rejected. During this time period, Marianne Tusch met with Robert Vander Boegh and his realtor. In her deposition, Marianne Tusch testifies that Vander Boegh informed her he worked for a construction company, had access to site preparation equipment, and had participated in the site preparation. She also testifies that Vander Boegh stated the buildings were of "good quality construction." By affidavit, she asserts that she relied upon these representations. On June 15, 1978, a second offer of about $140,000 was communicated to the Vander Boeghs. Vander Boegh told Marianne Tusch that he would either accept the second offer or take the property off the market. He chose the latter.

Sometime later, the duplexes were re-listed. Tusch Enterprises became aware of this, and on March 27, 1979, submitted an offer of $140,000. The Vander Boeghs accepted this third offer, though it was substantially the same as the one they had rejected only nine months earlier.

Prior to purchasing the units, Tusch Enterprises had inspected them and noticed no major defects. However, about one month after purchasing the duplexes, Tusch Enterprises discovered from a tenant that the south unit was having problems. The walls had begun cracking around the windows and many of the doors would not close properly. Further investigation revealed that the foundation was cracking. Geotechnical and construction experts have submitted affidavits and testified by deposition of their opinion that the foundation had been partially constructed on fill dirt, which had compacted causing the foundation to settle and crack. They are of the opinion that the foundation was improperly constructed given the fill dirt conditions.

Marianne Tusch testifies in her deposition that she was not told of the fill dirt conditions, or of the possible problems with the foundation. She further testifies that one of the cracks in the south unit appeared to have been filled in, or patched, with cement. After discovering the problems with the foundation, Tusch Enterprises learned from the Vander Boeghs that Coffin had actually constructed the duplexes and attempted, without success, to discuss the problems with Coffin. Tusch Enterprises expended a great deal of money remedying the problems. The structural defects have caused damage to the duplexes themselves and to the parking lot, and have caused losses in rental income, but Tusch Enterprises has suffered no personal injuries and has suffered no damage to property other than that which was the subject of the duplex sales transaction.

Suit was filed against the Vander Boeghs and Coffin to seek compensation for these structural defects. Tusch Enterprises alleged negligence, misrepresentation, express warranty, and implied warranty and prayed for damages for loss of rental value and costs of repair. The case was before a number of district judges at different stages, and eventually summary judgment was entered against Tusch Enterprises as to all four theories of recovery.

Before addressing those decisions, we recall the standard by which motions for summary judgment are reviewed. It is our task to review the record before the court below, including the pleadings, depositions, admissions, and affidavits, if any, and to determine de novo whether, after construing the facts in the light most favorable to the nonmoving party, there exist any genuine issues of material fact and whether the successful movant below is entitled to judgment as a matter of law. Pincock v. Pocatello Gold & Copper Mining Co., Inc., 100 Idaho 325, 597 P.2d 211 (1979). See also, I.R.C.P. 56(c).

II Negligence

Tusch Enterprises alleges negligence on the part of the Vander Boeghs and Coffin in the design and construction of the duplexes. However, the only damages it alleges are lost rental income and property damage to the duplexes and the parking lot. These losses are economic:

[113 Idaho 41] "Economic loss includes costs of repair and replacement of defective property which is the subject of the transaction, as well as commercial loss for inadequate value and consequent loss of profits or use." Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 97 Idaho 348, 351, 544 P.2d 306,...