Aronsohn v. Mandara

Citation98 N.J. 92,484 A.2d 675
Parties, 53 USLW 2325 Richard F. ARONSOHN and Deborah Aronsohn, Plaintiffs-Appellants, v. Salvatore MANDARA and William S. Mandara Masonry Corporation, Defendants-Respondents.
Decision Date12 December 1984
CourtUnited States State Supreme Court (New Jersey)

Seymour Chase, Hackensack, argued the cause for plaintiffs-appellants (Chase & Chase, attorneys; Seymour Chase, Anthony N. Gallina and James P. Gagel, Hackensack, on the briefs).

Frank G. Alster, Hackensack, argued the cause for defendants-respondents.

The opinion of the Court was delivered by

SCHREIBER, J.

Edward Kawash and Theresa A. Kawash, who owned a home at 479 Weymouth Drive, Wyckoff, New Jersey, decided to add a patio to the rear of their house. They entered into a contract with the Mandara Masonry Corporation (Corporation) 1 for the construction of that patio at a cost of $5,000. The Corporation was owned by William S. Mandara, who constructed the addition with his father, Salvatore Mandara, and three other employees. According to the complaint, the patio was constructed in 1974.

Plaintiffs, Richard F. Aronsohn and Deborah Aronsohn, purchased the home from Mr. and Mrs. Kawash in August 1975. The purchase agreement provided that the contract was subject to "a satisfactory engineering inspection," that the agreement was made "upon the knowledge of the parties as to the value of * * * whatever buildings are upon the [land] and not on any representations made as to character or quality," and that "no representations have been made by any of the parties * * * except as set forth herein."

In 1978, plaintiffs noticed that the patio was beginning to separate from the wall of the house; that some of the slate slabs that formed the patio floor were beginning to rise; and that the outside patio wall was beginning to buckle. Plaintiffs then commenced this action against the defendant Corporation and Salvatore Mandara alleging strict liability, negligence, and breaches of express and implied warranties.

At the trial plaintiffs introduced evidence establishing the aforementioned facts and also produced as their expert a building contractor who had made visual inspections of the patio. The patio floor consisted of slate slabs resting on concrete, which had been poured over a dirt foundation. The patio extended along the entire rear of the house, and since the land sloped sharply down away from the house, it had been necessary to build up the ground. The patio was surrounded by a cinder-block wall with brick facing.

The expert's ultimate conclusion was that the construction was improper, in part because the ground supporting the patio had not been adequately compacted. The expert asserted that because the dirt had been improperly compacted, it had pushed out the wall. He also testified that the penetration of water beneath the slabs had contributed to the problem. The water was unable to escape, according to him, because no weepholes had been provided to permit drainage. He estimated that it would cost $16,000 to remove the existing patio and install a new one.

Salvatore Mandara testified on behalf of defendants. He explained how the patio had been built and stated that the construction method accorded with industry standards. He also stated that the patio could have been built in another fashion, but that cost had been a factor for Mr. and Mrs. Kawash. In his opinion the problem was due to the owners' failure to patch up cracks as they appeared; had they done so, he said, water would not have seeped beneath the slabs into the ground, causing the slabs to rise and the wall to buckle.

The trial court granted defendants' motion to dismiss. 2 It found that plaintiffs' claim on express warranty was flawed because defendants' contract to construct the patio had been with Edward and Theresa Kawash and not the plaintiffs. It ruled that the negligence claim was also defective, reasoning that it was really a suit on the contract as well, since plaintiffs were seeking economic loss, rather than personal injury or property damage. The trial court also held that no implied warranty of habitability or strict liability applied because the philosophy of the law with respect to mass producers of goods or homes was inapplicable to a situation like this one, which involved a service contract.

The Appellate Division affirmed. It agreed that recovery for economic loss on a negligence theory was inappropriate. It also found that neither express nor implied warranty was justified since there was no privity of contract, though it disagreed with the trial court that this was a service contract. Lastly, the Appellate Division agreed that the concept of strict liability was inappropriate under these circumstances.

We granted plaintiffs' petition for certification. 95 N.J. 202, 470 A.2d 422 (1983).

I

Plaintiffs are seeking the benefit of the bargain they made in their agreement to purchase the home. That benefit is based on the previous owners' contract with defendants to construct the patio. This case does not involve sale and distribution of personal property; nor does it involve personal injury or property damage arising out of a traumatic event.

Analysis must start with the agreement defendants made with the Kawashes since that contract, presumably oral, would set forth the nature and scope of the contractor's duties. The repair agreement could describe, among other things, the grade and quality of materials to be used, the manner of installation, and the extent and nature of a warranty. The record does not disclose whether the Kawashes discussed these items with the contractor, although the contractor testified that his method of construction and choice of materials were influenced by the price of the job.

When, as in this case, there is no express contractual provision concerning workmanship, the law implies a covenant that the contract will be performed in a reasonably good and workmanlike manner. The agreement between defendant and the Kawashes concerning the building of the patio thus contained an implied promise by defendant to construct the patio in a workmanlike fashion. See Minemount Realty Co. v. Ballentine, 111 N.J.Eq. 398, 399, 162 A. 594 (E. &. A. 1932) ("Where a party contracts to build a building for a specified purpose, the law reads into the contract a stipulation that the building shall be erected in a reasonably good and workmanlike manner and when completed shall be reasonably fit for the intended purpose."); Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 91, 207 A.2d 314 (1965) (home buyer relies on mass housing developer's "implied representation that the house will be erected in a reasonably workmanlike manner"). If the Kawashes, while they still owned the property, had discovered that the patio had been negligently built, defendants would have been liable to them for damage to the property flowing from a breach of that implied promise of reasonable workmanship. The question in this case is whether the contractor should be immunized from his contractual obligation to have performed his work in a workmanlike, non-negligent manner simply because the original owner or buyer transferred the property to a successor. We think not, at least in the absence of a nonassignability clause in the contract. 3

Ordinarily, rights for breach of contract are assignable. There would certainly be no problem with enforcing such an assignment if the contract between the contractor and the homeowner contained an express provision authorizing assignment to a successor owner of the homeowner's rights against the contractor. See Restatement (Second) of the Law of Contracts § 317 (1981). If the contract contains no prohibition on assignment, such rights may be assigned in the absence of any public policy reason to the contrary. See 4 A. Corbin, On Contracts § 857, at 410; § 872, at 485-86; § 873, at 494 (1951). Here, there has been no proof of any provision in the Kawashes' contract with defendant prohibiting assignment of the Kawashes' contractual rights, and there are no compelling policy reasons justifying a bar to the assignment of those rights.

Moreover, one can infer from the circumstances that the Kawashes did in fact assign those rights to plaintiffs. Once they sold their house to plaintiffs, the Kawashes no longer had any interest in retaining for themselves the right to have had their patio built in a non-negligent manner. Rather, it is reasonable to infer that they transferred any such claim to plaintiffs. The transfer or conveyance of their property is indicative of their intent to assign to the buyers their right of action to enforce promises made with respect to that property. See 3 H. Tiffany, Real Property § 849, at 444 (3d ed. 1939). Defendants' contention that the provision in the purchase agreement that "[t]his contract contains the entire agreement of the parties" impliedly negates any assignment of the contract between defendants and the Kawashes misses the point. The implied covenants and terms of a contract are as effective components of the agreement as those expressed.

Of course, the sales contract between the Kawashes and plaintiffs could conceivably have limited any claim by plaintiffs against the contractor. For example, if the purchase agreement referred expressly to certain limitations in the contractor's contract with the Kawashes concerning the extent and nature of the contractor's warranty, plaintiffs might equitably be bound by those restrictions. In addition, if the purchaser were aware of a defective condition after making a reasonable inspection of the home, he presumably would have fixed the price of the house with that condition in mind. Here, the contract provided that plaintiffs had the right to make "a satisfactory engineering inspection" and to cancel the contract if the report were unsatisfactory. Thus, if any defective condition were readily apparent or discoverable upon a reasonable inspection...

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