Burbo v. Harley C. Douglass, Inc.

• Decision Date: 08 February 2005
• Docket Number: No. 22720-1-III.,22720-1-III.
• Citation: 106 P.3d 258,125 Wash.App. 684
• Court: Washington Court of Appeals
• Parties: James BURBO, Appellant, v. HARLEY C. DOUGLASS, INC., Respondent.

106 P.3d 258

125 Wash.App. 684

James BURBO, Appellant, v. HARLEY C. DOUGLASS, INC., Respondent.

No. 22720-1-III.

Court of Appeals of Washington, Division 3, Panel Eight.

February 8, 2005.

Michelle Kay Wolkey, Michelle Kay Wolkey PS, Spokane, WA, for Appellant.

Joseph Steve Jolley, Attorney at Law, Spokane Valley, WA, for Respondent.

SWEENEY, A.C.J.

The court dismissed this suit by an owner occupier of a new home against his builder seller on summary judgment. The case raises two essential questions. The first is whether a breach of a builder's implied warranty of habitability requires defects which make the house literally unlivable. We conclude that it does not. The second question is whether the owner here made a sufficient showing that the builder knew of and concealed defects to support his cause of action for fraudulent concealment and violation of the Consumer Protection Act. We find triable issues of fact on this issue. We therefore reverse the summary dismissal of the owner's complaint.

FACTS

James Burbo bought a newly constructed home from builder, Harley C. Douglass, Inc. (Douglass) on June 6, 2001. Both Douglass and its construction superintendent, Lyle Brown, visited the building site frequently during construction. Douglass and Mr. Brown also have extensive knowledge and experience of proper construction practices and the Uniform Building Code. The home passed the Spokane County Building Department inspection. The purchase price was $134,000.

As a condition of closing the sale, Douglass required Mr. Burbo to sign a contractor's limited warranty agreement. Mr. Burbo knew that the limited warranty disclaimed implied warranties.

In July 2001, Mr. Burbo noticed a crack in the foundation, wide enough to see daylight through. Douglass caulked the surface of the crack above ground level inside and out, but not the middle. In November, cracks appeared in a concrete driveway. Douglass refused to repair these. In December, problems with the roof appeared. Water began leaking into the living room over the fireplace. The water damaged walls, floor, carpet, and personal property. Douglass applied a temporary fix to the roof, but assured Mr. Burbo it was long term. Snow came in through a defective seal around a bathroom skylight. And the front door did not fit.

Mr. Burbo's engineering experts discovered that the felt underlay required by the building code between the roof and the shingles was either of insufficient weight, improperly applied, or nonexistent. These experts found other building code violations, including a structural column supporting the upper floor that was not seated in its footing. This resulted in major cracks in the garage floor and would inevitably cause cracking upstairs.

Mr. Burbo complained. Douglass ordered some repairs by outside contractors. These were satisfactory. Other repairs were done by Douglass employees. The quality of these repairs was unacceptable to Mr. Burbo and prompted this suit. The problems with the roof, garage floor, support column, and driveway were not corrected. The replacement front door fit worse than the old one, and the molding around the door and jamb was damaged. Douglass bolted together two beams to support the deck, and one of the beams split.

Mr. Burbo sued. He alleged breach of the implied warranty of habitability, fraudulent concealment, and violation of the Consumer Protection Act. Douglass moved for summary judgment. It characterized the defects as poor workmanship and the code violations as minor and, therefore, not sufficient to trigger the implied warranty of habitability.

Lori Rayburn works for the company that repaired Mr. Burbo's water damage. She listed problems with the roof. She described Douglass's repair job as a "short term mask for the real problem," and said all the work had to be redone. Clerk's Paper's (CP) at 157, 154. Construction expert John D. Cuddy testified that the Uniform Building Code standards were the "minimum requirements for habitable construction." CP at 136. And code non-compliance "will, over time, compromise the structural integrity and the long term safety of this home." CP at 137.

The court summarily dismissed Mr. Burbo's complaint. The court expressed reservations about the disclaimer of the implied warranty of habitability in Douglass's limited warranty agreement, noting that it was neither conspicuous nor negotiated. The court also found disputed facts as to whether Douglass was given sufficient opportunity to repair the defects. Report of Proceedings (RP) at 4. But the court ultimately concluded that the defects were beyond the scope of an implied warranty because the home was not totally unfit for habitation. The court also ruled that the undisputed facts did not establish the required intent element of fraudulent concealment. And the court rejected the Consumer Protection Act claim because there was no showing that the conduct had the capacity to deceive other consumers. It also concluded that the attorney fee clause of the purchase and sale agreement entitled Douglass to fees as the prevailing party.

DISCUSSION

SCOPE OF THE IMPLIED WARRANTY OF HABITABILITY

Mr. Burbo argues that a builder's implied warranty of habitability provides a remedy when building code violations make a home unfit to live in without substantial repairs. He contends that the first owner/occupier should not have to show that the house is falling down to assert its protection. Douglass responds that it effectively disclaimed any implied warranties by its limited warranty agreement. And in any event, Douglass argues, Mr. Burbo constructively waived the right to any remedy because he refused to allow Douglass to continue to attempt repairs.

We review a summary judgment de novo. Lybbert v. Grant County, 141 Wash.2d 29, 34, 1 P.3d 1124 (2000). We review the affidavits, facts, and record on file for any genuine dispute of material fact. Dep't of Labor & Indus. v. Kaiser Aluminum & Chem. Corp., 111 Wash.App. 771, 778, 48 P.3d 324 (2002). We engage in the same inquiry as the trial court. We review questions of law de novo, and accept the facts and all reasonable inferences from those facts in the light most favorable to the nonmoving party. Williamson, Inc. v. Calibre Homes, Inc., 147 Wash.2d 394, 398, 54 P.3d 1186 (2002).

Motion to Strike

As a preliminary matter, Douglass moves in its opening brief to strike "inadmissible" evidence from the record on appeal. But it made no attempt to exclude this evidence in the trial court. And we consider the evidence or issues presented to the trial court. RAP 9.12. We will entertain a motion to strike portions of briefs that do not comply with the Rules of Appellate Procedure, but not facts. Lewis v. City of Mercer Island, 63 Wash.App. 29, 31-32, 817 P.2d 408 (1991). The trial judge designates in the summary judgment order the documents and evidence he or she considered. Additional evidence that was before the trial court but not designated in the order may be made part of the appellate record by supplemental order of the trial court or by stipulation of counsel. RAP 9.12. But the rules do not accommodate original evidentiary rulings here in the Court of Appeals.

Douglass is correct that, on a motion for summary judgment, the trial court should consider only evidence that will be admissible at trial. King County Fire Prot. Dist. No. 16 v. Hous. Auth. of King County, 123 Wash.2d 819, 826, 872 P.2d 516 (1994). But arguments to exclude evidence must be addressed to the trial court. We review evidentiary matters solely for manifest abuse of discretion. State v. Bourgeois, 133 Wash.2d 389, 399, 945 P.2d 1120 (1997). And we presume that the judge knows the law and disregards improper evidence. As a matter of course, we consider only those factual allegations that are supported by the record. Lewis, 63 Wash.App. at 32, 817 P.2d 408.

We therefore deny the motion to strike.

Disclaimer and Waiver

Mr. Burbo signed a one-year limited warranty agreement. It included language whereby the seller disclaimed any implied warranties, including habitability.

The implied warranty of habitability arises by implication from the sale transaction itself. And it is, therefore, independent of the terms of the sales contract. Stuart v. Coldwell Banker Commercial Group, Inc., 109 Wash.2d 406, 417, 745 P.2d 1284 (1987). Disclaimers are not favored in the law. Olmsted v. Mulder, 72 Wash.App. 169, 176, 863 P.2d 1355 (1993). A seller's disclaimer of the implied warranty must be (1) conspicuous, (2) known to the buyer, and (3) specifically bargained for. Id. at 176-77, 863 P.2d 1355 (citing Lyall v. DeYoung, 42 Wash.App. 252, 257, 711 P.2d 356 (1985)). In an action on the implied warranty, the seller must prove these elements. Lyall, 42 Wash.App. at 257, 711 P.2d 356.

The disclaimer language here is not conspicuous. It is in the same small print as the rest of the agreement. And the disclaimer was not negotiated. It was a take-it-or-leave-it "deal breaker." CP at 15. Mr. Burbo said he saw the disclaimer. But it is, at least, debatable on this record whether he understood its implications.

Douglass also asserts that the buyer waived the implied warranty of habitability by not permitting Douglass to repair the defects. This waiver defense is based on the limited warranty provision that the sole remedy for any defects is repair by the seller. But the implied warranty of habitability does not restrict the buyer's remedy to repairs. An action on an implied warranty of habitability sounds in contract. Therefore, the court may grant the compensatory damages sought by Mr. Burbo in his complaint. See, e.g., Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 124 Wash.2d 816, 881 P.2d 986 (1994)

.

We conclude, then, as a matter of law, that Douglass's attempts to disclaim the implied warranty of habitability were ineffective. And Mr. Burbo did not waive his remedies under the implied warranty of...