Maack v. Resource Design & Const., Inc.
| Decision Date | 16 May 1994 |
| Docket Number | No. 930064-CA,930064-CA |
| Court | Utah Court of Appeals |
| Parties | Prod.Liab.Rep. (CCH) P 13,959 Robert D. MAACK and Judith D. Maack, Plaintiffs and Appellants, v. RESOURCE DESIGN & CONSTRUCTION, INC., a Utah corporation; and Timothy Hoagland, an individual, Defendants and Appellees. Robert D. MAACK and Judith D. Maack, Plaintiffs and Appellants, v. Robert K. JARVIK, M.D., Defendant and Appellee. |
Mark A. Larsen, Salt Lake City, for appellants.
Kurt M. Frankenburg, Salt Lake City, for appellees Resource Design and Timothy Hoagland.
Robert K. Jarvik, New York City, appellee pro se.
Before BENCH, GREENWOOD and GARFF, 1 JJ.
Judith D. and Robert D. Maack (Maacks) appeal the trial court's orders granting two motions for summary judgment, one brought by defendants Resource Design & Construction, Inc. (Resource Design) and Timothy Hoagland, and the second by defendant Dr. Robert K. Jarvik. We affirm.
Resource Design is in the business of contracting to construct custom residential homes and light commercial buildings. Timothy Hoagland has been a shareholder and president of Resource Design since 1986. In early 1986, Dr. Jarvik contacted Resource Design concerning his designs for a personal residence to be located at 4326 White Way in Salt Lake City. Resource Design recommended that Jarvik retain a professional house designer to prepare the plans. After these plans were completed, Jarvik contracted with Resource Design to construct the home. The home, completed approximately one year later in July 1987, passed all building inspections. Jarvik was very satisfied with Resource Design's work and made the final payment due under the contract.
Due to a job change, Jarvik moved to New York City in the summer of 1987 and listed the home for sale. Jarvik arranged for someone to live in the house during the winter of 1987-88 and rented the home for a short period during the summer of 1988. In July 1988, the Maacks 2 contacted the listing agent on Jarvik's house and entered into an Earnest Money Sales Agreement (the Agreement) for the full asking price of $595,000. The Agreement stated that the Maacks were purchasing the home "as is," without any warranties as to its condition.
The Maacks did not have the home inspected before they agreed to purchase it, nor did they make the purchase contingent upon a satisfactory inspection report. They allege that they concluded an inspection was unnecessary based upon a representation made by Jarvik's real estate agent, Maclyn Kesselring. Although the parties disagree on the timing of Kesselring's statement--the Maacks claim it was before the signing of the Agreement while Kesselring claims it was after--it is undisputed that Kesselring told the Maacks that the house was subject to a one year builder's warranty covering defects, material, and workmanship. The Maacks did not ask to review the builder's warranty, nor did they ask for particular details concerning the warranty. The sale was later completed and the Maacks moved in.
In late 1988 and early 1989, Mr. Maack contacted Resource Design on several occasions concerning water leakage into the house. Resource Design attempted to resolve the problems over the course of approximately one year, at which point it refused to do any further work without compensation.
The parties dispute whether the leakage was caused by defects in the construction of the residence; however, they do not contest the fact that the stucco covering the exterior of the home was not the stucco initially requested by Jarvik. Jarvik's plans for the house specified that the exterior finish for the residence be a two-coat synthetic acrylic stucco. Hoagland claims that he discussed the specified stucco's high cost with Jarvik and that Jarvik agreed that a less expensive cement-based stucco could be substituted. Hoagland further claims that he described to Jarvik the major deficiencies associated with cement-based stucco, namely that it has potential for cracking, requires the use of expansion joints, and may not be appropriate in freezing climates. Jarvik allegedly responded that he did not mind the cracking and preferred for aesthetic reasons that Resource Design not employ expansion joints. Jarvik denies that this discussion with Hoagland occurred.
On June 1, 1990, the Maacks filed a complaint against Resource Design and Hoagland alleging negligent design and construction, breach of express and implied warranties, and negligent and intentional misrepresentation. Resource Design and Hoagland counterclaimed for breach of contract, unjust enrichment and conversion stemming from the uncompensated repair work done for the The Maacks filed their First Amended Complaint on November 4, 1991, claiming negligence, strict liability, res ipsa loquitur, and negligent and/or intentional misrepresentation. Resource Design and Hoagland filed a third-party claim against Jarvik and the Maacks filed a separate lawsuit against Jarvik. The trial court subsequently consolidated the two cases. On May 6-7, 1992, the trial court heard argument on Resource Design and Hoagland's motion for summary judgment and on Jarvik's motion for summary judgment. The trial court entered orders granting both motions and this appeal followed.
Maacks. On October 25, 1991, the trial court held a hearing on Resource Design and Hoagland's motion to dismiss the breach of warranty and misrepresentation claims. Based upon the lack of privity of contract between the parties, the trial court dismissed the express warranty claim. The trial court also dismissed the implied warranty of habitability claim on the grounds that Utah has limited the scope of this warranty to landlord/tenant relationships. With respect to the negligent and intentional misrepresentation claims, the court permitted the Maacks to amend their complaint to allege these claims with the required specificity.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Utah R.Civ.P. 56(c). When evaluating a motion for summary judgment, "a court must consider all of the facts and evidence presented, and every reasonable inference arising therefrom, in a light most favorable to the party opposing the motion." Katzenberger v. State, 735 P.2d 405, 408 (Utah App.1987). Because entitlement to summary judgment is a question of law, we review the trial court's ruling with no deference. Higgins v. Salt Lake County, 855 P.2d 231, 235 (Utah 1993).
The Maacks' complaint against Jarvik set forth six claims for relief: breach of contract, general equitable relief, negligent misrepresentation, fraudulent concealment, nondisclosure, and breach of the duty of good faith and fair dealing. These claims arose from the Maacks' allegations that (1) Jarvik's real estate agent, Maclyn Kesselring of Eagar & Company, represented to them that a one year builder's warranty existed on the property, and (2) Jarvik informed the Maacks about certain defects in the stucco on the parapets around the garage, but failed to disclose other defects in the stucco allegedly known to him.
The trial court, in granting the motion for summary judgment, entered a Rule 52 Statement of Grounds for Order in which it set forth the undisputed facts and its conclusions of law. See Utah R.Civ.P. 52(a). The trial court concluded that the Agreement was binding on the Maacks as it states that the seller makes no warranties beyond those specifically enumerated, the property is sold "as is," and the Agreement is to constitute the entire contract between the parties and "supersedes and cancels any and all prior negotiations, representations, warranties, understandings, or agreements between the parties." The Agreement also states, "There are no oral agreements which modify or affect this agreement."
The court further ruled that the Maacks' conduct in failing to ask for a copy of the alleged builder's warranty and in failing to obtain an inspection fell below the level of ordinary diligence. The Rule 52 Statement observes that "[p]laintiffs' failure to ask for a copy of the 'builder's warranty' and failure to condition their offer to purchase the Home on the existence of a 'builder's warranty' indicate that Plaintiffs did not treat the representation as material and did not rely upon the representation when they purchased the Home."
On appeal, the Maacks contend that their claims of misrepresentation, fraudulent The trial court's ultimate conclusion supporting summary judgment for Jarvik was that the Agreement's integration clause precludes consideration of any statements, nonstatements, or agreements not expressly included in the Agreement. Therefore, the Agreement's "as is" provision controls and prevents any consideration of parol evidence concerning a builder's warranty or defects in the house. This conclusion, however, is subject to an exception noted in Utah caselaw. In Lamb v. Bangart, 525 P.2d 602 (Utah 1974), the Utah Supreme Court held that notwithstanding the merger doctrine, Id. at 608. Similarly, in Union Bank v. Swenson, 707 P.2d 663 (Utah 1985), the supreme court again held that fraud is an exception to the parol evidence rule:
concealment, and nondisclosure should not have been dismissed and further, that the contract doctrine of merger does not preclude these claims. 3
The parol evidence rule as a principle of contract interpretation has a very narrow application. Simply stated, the rule operates in the absence of fraud to...
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