ABC Builders, Inc. v. Phillips

Decision Date13 August 1981
Docket NumberNos. 5468,s. 5468
Citation632 P.2d 925
PartiesABC BUILDERS, INC., a Corporation, Appellant (Defendant), The City of Sheridan, Wyoming, a Municipal Corporation (Defendant), v. William H. PHILLIPS and Cynthia Phillips, Appellees (Plaintiffs). William H. PHILLIPS and Cynthia Phillips, Appellants (Plaintiffs), v. ABC BUILDERS, INC., a Corporation, and The City of Sheridan, Wyoming, a Municipal Corporation, Appellees (Defendants). The City of Sheridan, Wyoming, a Municipal Corporation, Appellant (Defendant), ABC BUILDERS, INC., a Corporation (Defendant), v. William H. PHILLIPS and Cynthia Phillips, Appellees (Plaintiffs). ABC BUILDERS, INC., a Corporation, Appellant (Defendant and Third-Party Plaintiff), v. Kenneth R. KASTER and Virginia R. Kaster, husband and wife, Appellees (Third-Party Defendants). The CITY OF SHERIDAN, Wyoming, a Municipal Corporation, Gary N. Benson and Betty Ann Benson, husband and wife (Third-Party Defendants), v. William H. PHILLIPS and Cynthia Phillips (Plaintiffs). to 5470, 5484.
CourtWyoming Supreme Court

Stuart S. Healy, Kennedy, Connor & Healy, Sheridan, signed the briefs and appeared in oral argument on behalf of ABC Builders, Inc.

Harry F. Schwartz, Sheridan, signed the brief and appeared in oral argument on behalf of the City of Sheridan.

George S. Andrews, Andrews, Andrews & Riske, P.C., Cheyenne, signed the brief on behalf of amici curiae, the Sheridan County Board of Realtors and the Wyoming Board of Realtors, in support of the position of ABC Builders, Inc.

Michael K. Shoumaker, Badley, Rasmussen & Shoumaker, Sheridan, signed the briefs and appeared in oral argument on behalf of the Phillipses.

Jeffrey J. Gonda, Sheridan, signed the brief on behalf of the Kasters.

Before ROSE, C. J., and RAPER, THOMAS, ROONEY and BROWN, JJ.

RAPER, Justice.

The liability of vendors of new and used residential property for damages arising out of the dangers of building site location will be the primary subject of this opinion. These appeals arise from a jury verdict holding a developer-builder-vendor and a city negligent and thus liable for damage to a house resulting from a landslide. We will address four major issues: 1) the effect of the district court's dismissal of an intermediate owner whose conduct may have contributed to the damages, between the builder-vendor and ultimate owner damaged by the landslide; 2) whether a builder-vendor can be liable by reason of negligence in selecting the site upon which to build a home for sale; 3) from what point in time the statute of limitations starts to run when a suit is maintained based upon negligent site selection; and 4) if sufficient evidence was presented to establish municipal liability for contribution to the ultimate loss to the final owner because of a failure to maintain a drainage ditch.

We will affirm.

I

This case concerns the rise and fall of a house located in Sheridan. On November 14, 1968, ABC Builders, Inc. (ABC) obtained from the City of Sheridan (City) a building permit for the construction of a residence at 40 Kelly Drive in a subdivision known as Sheltered Acres. The particular lot picked for the new home was situated at the toe of a hillside. Some excavation work was necessary to fit the two-story house into the hill. The final result was a residence with the front of the first floor facing east at street level, while at the back of the house the same floor was subterranean.

On August 24, 1969, the house was sold by ABC to Kenneth and Virginia Kaster (Kasters). During the time the Kasters owned the home, they added a patio to the rear of the second floor which was all above ground. This addition included a roof and an attached storage shed. The earth taken to level the ground for the patio was used in leveling out the south side of the lot so that a driveway could be installed. Mr. Kaster also added a four-inch perforated drain pipe from a downspout off the patio roof which drained into an adjacent lot which the Kasters had also purchased from ABC. We will later discuss this drain as it relates to the liability of the vendor in the sale of a used residence.

In August of 1971 the Kasters conveyed the property to Gary and Betty Benson (Bensons). 1 The Bensons made no alterations to the structure. They sold and transferred the home to William and Cynthia Phillips (appellees), in June, 1977. Up until May, 1978, the only complaint voiced about the house was that during the last year that the Bensons owned it, there was some minor seepage of water from the back wall of the first floor identified as being caused by a defective sump pump. At the time of sale by the Bensons to appellees, the Bensons replaced water-stained carpet which had resulted; but then in May of 1978 heavy rains began falling.

The National Weather Service office at the Sheridan County airport officially recorded 6.80 inches of rain for the month of May, 1978. This was 4.35 inches above the average amount of rain for the month. The daily breakdown shows that most of the rain fell during two wet spells. The first one began May 3 and lasted through May 11. With almost daily rainfall, 2.23 inches of precipitation was recorded during that period. The rain then abated until May 16, when during the ensuing four-day period, another 3.78 inches of rain was recorded.

The appellees first observed water leaking into the first-floor bathroom on May 7. The next day, some slight displacement of the home's foundation was noticed. With the rain continuing to fall, the Phillipses left the home on May 9 when they realized the hillside behind them was sliding down and pushing against the house. However, Mr. Phillips returned the next week during the short respite between the rainy periods. Efforts were made to save the residence by digging trenches around its foundation. But, this proved useless with the return to wet weather on May 16. All that the Phillipses could do was to find a house mover who saved the top floor, subsequently moved elsewhere and used in the construction of a new residence.

The following illustration may clarify how the slippage of the hillside destroyed the house:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

On September 19, 1979, the appellees as plaintiffs filed an action against ABC on both warranty and negligence theories. When the district court dismissed the case claiming the statute of limitations had run, the Phillipses appealed. In that appeal this court reversed and remanded, holding the then applicable statute of limitations unconstitutional. Phillips v. ABC Builders, Inc., Wyo., 611 P.2d 821 (1980).

Back in district court, ABC impleaded the City, the Kasters, and the Bensons. However, the district court, before trial, granted the Kasters and the Bensons summary judgments and dismissed them from the case. As we reach the issues related to these developments, we will set out other pertinent facts.

The case proceeded to trial on September 18, 1980. It was submitted to the jury only on the negligence claim. On the verdict form the jury was allowed to apportion negligence among ABC, the City of Sheridan, the appellees, and the Kasters. It divided up the negligence:

                "ABC Builders, Inc.,   80     %
                                      ------
                "City of Sheridan      15     %
                                      ------
                "William H. Phillips
                and Cynthia Phillips    5     %
                                      ------
                "Kenneth Kaster and
                Virginia R. Kaster      0     %
                                      ------
                                      100     %"
                

The jury further found that the appellees had sustained damages totaling $40,000. Accordingly, judgment was entered and the various appeals here involved ensued.

II

The first issue we consider concerns the district court's dismissal of the Kasters from the case. The Kasters moved for summary judgment based on the pleadings and depositions taken. ABC filed a responsive affidavit of one of its principal owners setting out generally that at the time the home was built, the ground was stable and the lot contoured for proper drainage. He observed the removal of soil, the addition of a patio, and roof drainage into the ground. He also observed above the home, about 200 feet west, a ditch built and maintained by the City which was clogged by roofing paper, milk cartons, cement stacks, weeds, sticks and other debris, causing the water to accumulate above the appellees' property. The affidavit of a licensed engineer was also furnished by ABC which concluded that the ground failure which caused the collapse of appellees' home was created by the City's drainage ditch and by the Kasters adding more water to the soil by the drainage from the west roof of the house and patio into the ground through a drain pipe which received the water from a downspout added as a part of the patio.

Mr. Kaster's deposition was to the effect that while there was an escarpment 2 upon the hill, it gave him no concern. He was content with the soundness of the house itself and never noticed it had any structural problems, never had any water leakage into the lower section nor any cracking or displacement of the foundation. Before putting in the patio and drainage tile, there was a low spot at the rear of his lot in which water would accumulate. He was very much satisfied with the house and never had any water or other problems. The Kasters sold the house to the Bensons, unaware of any difficulties about which a warning should issue to the Bensons.

At the close of the hearing on the motions for summary judgments, the trial judge granted summary judgment in favor of the Kasters, with the following comments:

"Now, in regard to the summary judgment filed on behalf of the Kasters. I think there are a lot of interesting points and questions; and certainly Mr. Healy has done a good job in presenting his viewpoint of why they should remain in this suit, but the Court is unable to come up with any theory of liability on their part to any of the parties here under the existing...

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