Conway v. Cutler Grp., Inc.

• Decision Date: 05 November 2012
• Citation: 2012 PA Super 242,57 A.3d 155
• Parties: Michael and Deborah CONWAY, h/w, Appellants v. The CUTLER GROUP, INC. d/b/a The David Cutler Group, Inc., Appellee.
• Court: Pennsylvania Superior Court

57 A.3d 155

2012 PA Super 242

Michael and Deborah CONWAY, h/w, Appellants

v.The CUTLER GROUP, INC. d/b/a The David Cutler Group, Inc., Appellee.

Superior Court of Pennsylvania.

Argued Sept. 12, 2012.

Filed Nov. 5, 2012.

Christopher A. Bradley, North Wales, for appellants.

Paul R. Rosen, Philadelphia, for appellee.

BEFORE: MUSMANNO, J., MUNDY, J., and McEWEN, P.J.E.

OPINION BY MUNDY, J.:

Appellants, Michael and Deborah Conway (the Conways), appeal from the February 15, 2012 order, granting the preliminary objections filed by Appellee, The Cutler Group, Inc. (Builder), and dismissing their complaint. After careful review, we reverse and remand for further proceedings.

We summarize the relevant factual and procedural history of this case as follows. In September 2003, Builder constructed a home for David and Holly Fields (the Fields) on Lot 33 of the Estates of Warwick Lea subdivision in Jamison, Pennsylvania. Conways' Complaint, at ¶ 8, 9. The Conways purchased said home from the Fields in June 2006. Id. at ¶ 8. In April 2008, the Conways discovered water infiltration around the windows of their master bedroom. Id. at ¶ 10. The Conways retained the Falcon Group, an engineering and architecture firm to assess the water infiltration problems. Id. at ¶ 13. Mark McCann of the Falcon Group inspected the Conways' home and prepared a report in which he concluded that the home suffered from several defects. These defects included that the roof eave to wall junctures did not have the proper “kick-out” flashing, there were insufficient sealed expansion joints, there was a lack of expansion or control joints, a lack of weep screed, and the stucco improperly stopped too tight relative to head flashings located above various windows and doors. Id. at ¶ 14; see also Conways' Complaint, Exhibit A, at 5–10. McCann concluded that the best course of action for the home long term would be “a complete stripping off of the entire home....” Conways' Complaint, Exhibit A, at 11.

On June 20, 2011, the Conways filed a one count complaint against Builder asserting a breach of the implied warranty of habitability. The Conways did not name the Fields in their complaint. Nor did the Conways assert any claim regarding breach of contract. Builder filed preliminary objections on August 4, 2011. Builder's preliminary objections asserted, “as a matter of law, the implied warranty of habitability only extends from the builder to the initial third-party purchaser.” Builder's Preliminary Objections, 8/4/11, at ¶ 5. In addition, Builder asserted that even if the implied warranty of habitability did extend beyond the initial buyer, the Conways failed to plead that any of the alleged defects rendered their home unfit to live in. Id. at ¶ 13. As a result, pursuant to Pennsylvania Rule of Civil Procedure 1028(a)(4), Builder requested that the trial court dismiss the Conways' complaint with prejudice because the Conways “cannot plead a cognizable cause of action against [Builder] for breach of the implied warranty of habitability....” Id. at ¶ 6, 13. On February 15, 2012, the trial court entered an order granting Builder's preliminary objections and dismissing the Conways' complaint with prejudice. Trial Court Order, 2/15/12, at 1. On February 27, 2012, the Conways' filed a motion for reconsideration, which was denied on March 20, 2012. On March 15, 2012, the Conways filed a timely notice of appeal.¹

On appeal, the Conways raise two issues for our consideration.

1. Whether the [t]rial [c]ourt erred by dismissing [the Conways]' [c]omplaint on the grounds that only the initial purchaser of a home from the builder/vendor may maintain a cause of action for breach of the implied warranty of habitability against [Builder], and that [the Conways] could not maintain such an action because they bought the home from previous homeowners and not directly from [Builder?]

2. Whether the [t]rial [c]ourt erred by dismissing [the Conways]' [c]omplaint alleging breach of implied warranty of habitability for [the Conways]' failure to plead that they retained a third-party company to inspect their home prior to purchase, or to plead that the construction defects rendered their home uninhabitable, or to otherwise plead the cause of action of breach of implied warranty of habitability where [the Conways] did repeatedly allege that their home is uninhabitable[?]

Conways' Brief at 2.²

We begin by noting our well-settled standard of review.

In determining whether the trial court properly sustained preliminary objections, the appellate court must examine the averments in the complaint, together with the documents and exhibits attached thereto, in order to evaluate the sufficiency of the facts averred. The impetus of our inquiry is to determine the legal sufficiency of the complaint and whether the pleading would permit recovery if ultimately proven. This Court will reverse the trial court's decision regarding preliminary objections only where there has been an error of law or abuse of discretion. When sustaining the trial court's ruling will result in the denial of claim or a dismissal of suit, preliminary objections will be sustained only where the case is free and clear of doubt.

Floors, Inc. v. Altig, 963 A.2d 912, 915 (Pa.Super.2009) (citation omitted), appeal denied,602 Pa. 667, 980 A.2d 608 (2009).

This case addresses a question of first impression in this Commonwealth regarding the applicability of the implied warranty of habitability. Our Supreme Court first recognized the implied warranty of habitability in Elderkin v. Gaster, 447 Pa. 118, 288 A.2d 771 (1972). In Elderkin, our Supreme Court recognized that the implied warranties of habitability and reasonable workmanship were necessary to equalize the disparate positions of the builder-vendor and the average home purchaser by safeguarding the reasonable expectations of the purchaser who is compelled to depend upon the builder-vendor's greater manufacturing and marketing expertise. Id. at 776–777;see also Tyus v. Resta, 328 Pa.Super. 11, 476 A.2d 427, 431 (1984). In recognizing the implied warranty of habitability, the Elderkin court stated the following.

In Kellogg Bridge Co. v. Hamilton, 110 U.S. 108 [3 S.Ct. 537, 28 L.Ed. 86] (1884), the Supreme Court, speaking through the first Mr. Justice Harlan, stated that the law will imply a warranty of fitness for the purpose intended when a buyer has reason to rely upon and does rely upon the judgment of a seller who manufactures the product. We have concluded that one who purchases a development house conforms to this standard; he justifiably relies on the skill of the developer that the house will be a suitable living unit. Not only does a housing developer hold himself out as having the necessary expertise with which to produce an adequate dwelling, but he has by far the better opportunity to examine the suitability of the home site and to determine what measures should be taken to provide a home fit for habitation. As between the builder-vendor and the vendee, the position of the former, even though he exercises reasonable care, dictates that he bear the risk that a home which he has built will be functional and habitable in accordance with contemporary community standards. We thus hold that the builder-vendor impliedly warrants that the home he has built and is selling is constructed in a reasonably workmanlike manner and that it is fit for the purpose intended-habitation.

Elderkin, supra at 776–777 (emphasis added).

The implied warranty of habitability is a creation of public policy, recognizing that in home sales “[s]tandard form contracts are generally utilized and ‘[e]xpress warranties are rarely given, expensive, and impractical for most buyers to negotiate.’ ” Tyus, supra at 433. The implied warranty of habitability removes certain latent construction defects from the doctrine of caveat emptor and shifts the risk of those defects to the builder. Id.; see also Elderkin, supra at 776 (stating, “[t]he caveat emptor rule as applied to new houses is an anachronism patently out of harmony with modern home buying practices. It does a disservice not only to the ordinary prudent purchaser but to the industry itself ...”) (citation omitted).

[I]t seems only fair to put the burden of repairing defects in construction on the person who is (1) responsible for the defects, (2) is in a position to repair them and (3) is in a position to spread the costs of the repair. This is especially true since a significant amount of the defects can be so buried in the construction that it could be impossible to find them before buying, no matter how careful or thorough the inspection.

Tyus, supra at 431 n. 3 (citation omitted). The implied warranty of habitability covers “[d]efects which would not be apparent to the ordinary purchaser as a result of a reasonable inspection.” Id. at 433. While “a reasonable pre-purchase examination of the premises by the intended purchaser [and] not by an expert” is required, “a reasonable inspection does not necessitat[e] ‘a minute inspection of every nook and cranny.’ ” Id. (citations omitted). “[T]o the contrary, the requisites of a reasonable inspection vary with the circumstances of the individual case.” Id.

It is certainly true that the implied warranty of habitability is triggered by a contract for a sale of a newly built home. See Fetzer v. Vishneski, 399 Pa.Super. 218, 582 A.2d 23, 25 (1990) (stating, “[t]he warranty of habitability is implied by law into every contract for the sale of a new home[ ]”), appeal denied,527 Pa. 666, 593 A.2d 842 (1991). However, the warranty is based upon public policy considerations and is not a contractually dependent remedy. As the Supreme Court of Illinois succinctly put it, “[w]hile the [implied] warranty of habitability has roots in the execution of the contract for sale ... it exists independently.” Redarowicz v. Ohlendorf, 92 Ill.2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324, 330 (1982). The implied...