Coker v. Siler

• Decision Date: 03 May 2013
• Docket Number: No. 107,696.,107,696.
• Parties: Gregory COKER, Appellant, v. Michael D. SILER, Defendant, and J.M.C. Construction, Inc., and John M. Chaney, Appellees.
• Court: Kansas Court of Appeals

48 Kan.App.2d 910

304 P.3d 689

Gregory COKER, Appellant,

v.Michael D. SILER, Defendant,andJ.M.C. Construction, Inc., and John M. Chaney, Appellees.

No. 107,696.

Court of Appeals of Kansas.

May 3, 2013.

Syllabus by the Court

1. Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together

with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.

2. The economic loss doctrine is a judicially created rule that governs the ability of a plaintiff to bring a tort action when the only damages claimed by such plaintiff are economic losses.

3. Although the economic loss doctrine does not preclude a plaintiff from seeking economic damages for negligently performed residential construction services, such a tort claim will survive only if the plaintiff can establish that the construction worker owed the plaintiff a duty imposed by law, independent of the underlying construction contract.

4. The existence of a legal duty is a question of law over which this court exercises unlimited review.

5. An implied warranty is one arising by operation of law and not by express agreement of the parties, the rationale being to protect a party from loss in circumstances where the contract fails to expressly state the prevailing standard of care.

6. Implied warranties of workmanlike performance exist only when the parties have negotiated an underlying agreement for consideration and the agreement does not expressly state that the performance will be carried out under the prevailing standard of care for the industry.

7. A construction contractor is liable for any injury to a third party, personal or economic, resulting from work negligently performed even though the injury occurs after completion of the work and its acceptance by the owner, when such injury is reasonably certain to occur if the work is negligently done.

Todd B. Butler and Stephanie B. Poyer, of Butler & Associates, P.A., of Topeka, for appellant.

Thomas H. Johnson, of Petefish, Immel, Heeb & Hird, LLP, of Lawrence, for appellees.

Before McANANY, P.J., BUSER and STANDRIDGE, JJ.

STANDRIDGE, J.

After Gregory Coker's new home was damaged, he filed a lawsuit for breach of express warranty against the company that sold him the house and for negligence against John M. Chaney, the plumber whose act caused the damage. The district court ultimately dismissed Coker's claim of negligence against Chaney based on the economic loss doctrine, which—as it existed under Kansas law at the time—prevented a homeowner from bringing a tort action under circumstances governed by contract. But a subsequent Kansas Supreme Court ruling has refused to extend the economic loss doctrine to homeowner claims against construction contractors. Thus, we must reverse the district court's decision and remand the case so that Coker may go forward with his tort claim against Chaney.

Facts

In August 2006, J.M.C. Construction (J.M.C.) purchased a partially built house from Michael D. Siler. At the end of that month, Chaney, president of J.M.C., personally installed the main water line into the residence.

In July 2007, Coker purchased the house from J.M.C. The contract for sale included a 1–year express warranty provision, which stated:

“Seller agrees to warrant the improvements on the property for defects in materials and workmanship for a period of one year from the date of possession and agrees to pass on to Buyer all warranties provided on mechanical equipment installed on the property.”

Coker took possession of the residence in September 2007.

In April 2008, Coker received a higher-than-average water bill but attributed it to watering the lawn during that time. However, in May 2008, he received another high water bill. Finding no evidence of a leak above the ground, Coker contacted J.M.C. On May 9, 2008, Chaney came to the home along with R.D. Johnson Excavation and dug up the water line. They discovered that the main water line had separated from a coupling, creating a 1/4– to 3/8–inch gap through which water was escaping. An engineer hired by Coker determined that the water went underneath the foundation slab of the home and caused heaving, which resulted in cracks in the walls and uneven doors.

Coker sued Siler, J.M.C., and Chaney (defendants) for negligence, breach of implied warranty, and strict liability. He also claimed breach of express warranty against J.M.C. and Chaney. Coker asserted $79,697.56 in damages.

J.M.C. and Chaney filed a motion for summary judgment, which the district court granted in part. The district court denied the defendants' motion for summary judgment on the breach of express warranty claim based on the fact that Coker offered evidence through an expert's testimony sufficient to support his position that the cause of the leak was within the defendants' exclusive control. The district court dismissed Coker's negligence, strict liability, and breach of implied warranty claims against J.M.C. and Chaney because they were barred under the economic loss doctrine.

Upon the defendants' motion for clarification, the district court thereafter dismissed Coker's breach of express warranty claim against Chaney based on a lack of evidence in the record to support contractual privity between Coker and Chaney in his individual capacity. The district court also denied Coker's motion to reconsider its order dismissing his claims of negligence, strict liability, and breach of implied warranty against Chaney.

On December 5, 2011, Coker accepted an offer of judgment on the breach of express warranty claim from J.M.C. in the amount of $40,000. The district court entered a final journal entry of judgment on January 25, 2012, and also dismissed the claims against Siler with prejudice upon Coker's oral motion.

Analysis

Coker claims the district court erred by granting summary judgment against him on the negligence and implied warranty claims he brought against Chaney. Specifically, Coker challenges the district court's decision finding that the economic loss doctrine barred his negligence and implied warranty claims against Chaney. Specifically, Coker argues the district court's decision was based on Prendiville v. Contemporary Homes, Inc., 32 Kan.App.2d 435, 83 P.3d 1257,rev. denied 278 Kan. 847 (2004), which—although good law at the time the court issued its opinion—subsequently was overruled by the Kansas Supreme Court in David v. Hett, 293 Kan. 679, 699, 270 P.3d 1102 (2011).

We review a district court's decision to grant or deny a motion for summary judgment as follows:

“ ‘Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.’ [Citationsomitted.]” Scott v. Hughes, 294 Kan. 403, 411, 275 P.3d 890 (2012).

1. Applicability of the Economic Loss Doctrine

The economic loss doctrine is a judicially created rule that governs the ability of a plaintiff to bring a tort action when the only damages claimed by such plaintiff are economic losses. See David, 293 Kan. at 683, 687–88, 270 P.3d 1102. The doctrine was an attempt to prevent contract law from dissolving into tort law by drawing a distinction between commercial transactions, where contract law protects economic expectations, and consumer transactions, where tort law remedies physical injuries to individual consumers. See 293 Kan. at 686, 692, 698, 270 P.3d 1102. The doctrine originated in product liability law to prevent the purchaser of a defective product from suing in tort when the damages claimed were purely economic in nature, such as the cost to repair or replace the defective product. To recover in tort, the doctrine required the purchaser to demonstrate more than the product's failure to meet economic expectations; the purchaser had to demonstrate some harm above and beyond a broken contractual promise. See Koss Construction v. Caterpillar, Inc., 25 Kan.App.2d 200, 205, 960 P.2d 255,rev. denied 265 Kan. 885 (1998).

Our Court of Appeals first adopted the economic loss doctrine in a commercial product liability case in Koss Construction, 25 Kan.App.2d at 205, 960 P.2d 255. Six years later, our court expanded the scope of the doctrine by applying it to cases relating to residential home construction. Prendiville, 32 Kan.App.2d at 445–46, 83 P.3d 1257. In Prendiville, a homeowner contracted with the defendants to build a house and signed a 1–year new home warranty. More than 4 years later, the plaintiff noticed water infiltration through the stucco siding and sued the siding company,...