Maronda Homes, Inc. of Fla., v. Lakeview Reserve Homeowners Ass'n, Inc.

• Decision Date: 11 July 2013
• Docket Number: Nos. SC10–2292,SC10–2336.,s. SC10–2292
• Citation: 127 So.3d 1258
• Parties: MARONDA HOMES, INC. OF FLORIDA, etc., et al., Petitioners, v. LAKEVIEW RESERVE HOMEOWNERS ASSOCIATION, INC., etc., Respondent. T.D. Thomson Construction Company, Petitioner, v. Lakeview Reserve Homeowners Association, Inc., Respondent.
• Court: Florida Supreme Court

127 So.3d 1258

MARONDA HOMES, INC. OF FLORIDA, etc., et al., Petitioners,

v.LAKEVIEW RESERVE HOMEOWNERS ASSOCIATION, INC., etc., Respondent.

T.D. Thomson Construction Company, Petitioner,

v.Lakeview Reserve Homeowners Association, Inc., Respondent.

Nos. SC10–2292, SC10–2336.

Supreme Court of Florida.

July 11, 2013.

Steven L. Brannock of Brannock & Humphries, Tampa, FL; Scott Johnson and Heather Pinder Rodriguez of Holland & Knight LLP, Orlando, FL; Stephen W. Pickert and Anthony R. Kovalcik of Moye, O'Brien, O'Rourke, Pickert & Dillon, LLP, Maitland, FL, for Petitioners.

Robyn Severs Braun and Patrick C. Howell of Taylor & Carls, P.A., Palm Coast, FL, for Respondent.

Steven B. Lesser of Becker & Poliakoff, P.A., Fort Lauderdale, FL, and Sanjay Kurian of Becker & Poliakoff, P.A., Fort Myers, FL, for Amicus Curiae Community Association Leadership Lobby, Inc.

Keith Hetrick and David K. Miller of Broad and Cassel, Tallahassee, FL, and Nicholas A. Shannin of Page Eichenblatt Bernbaum and Bennett, P.A., Orlando, FL, for Amici Curiae Florida Home Builders

Association and National Association of Home Builders.

Thomas R. Slaten, Jr., and Patryk Ozim of Larsen & Associations, Orlando, FL, for Amici Curiae Community Associations Institute.

LEWIS, J.

This case is before the Court for review of the decision of the Fifth District Court of Appeal in Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So.3d 902 (Fla. 5th DCA 2010). The district court certified that its decision is in express and direct conflict with the decision of the Fourth District Court of Appeal in Port Sewall Harbor & Tennis Club Owners Association, Inc. v. First Federal Savings & Loan Association of Martin County, 463 So.2d 530 (Fla. 4th DCA 1985). We have jurisdiction. Seeart. V, § 3(b)(4), Fla. Const. Today we address the available and applicable law that protects Florida families when faced with defective development and construction of Florida homes. We affirm the decision of the Fifth District and disapprove the prior decision of the Fourth District to the extent that it is inconsistent with this opinion.

Facts and Procedural History

This appeal arises from an action filed by Lakeview Reserve Homeowners Association (“Lakeview Reserve”) against Maronda Homes, Inc., (“Maronda Homes”) for breach of the implied warranties of fitness and merchantability, which are also at times referred to as the implied warranty of habitability in the residential construction context. T.D. Thomson Construction Company (“T.D. Thomson”) was joined as a party to this action when Maronda Homes filed a third-party complaint against T.D. Thomson for indemnification based on the alleged violations of the implied warranties by Maronda Homes. The trial court entered final summary judgment in favor of Maronda Homes and T.D. Thomson. On appeal, the Fifth District reversed that summary final judgment, remanded for further proceedings, and certified conflict to this Court. Maronda Homes and T.D. Thomson petitioned separately for review. We granted review on both petitions and consolidated the cases for our review.

Lakeview Reserve's underlying cause of action arises from alleged defects in the development and construction of a residential subdivision that Maronda Homes developed in Orange County, Florida. Maronda Homes incorporated Lakeview Reserve to ultimately serve as the homeowners association of that subdivision. As part of the development of the subdivision, Maronda Homes and T.D. Thomson performed all infrastructure and site work that included construction of a storm-water drainage system and private roadways. During construction, Maronda Homes and T.D. Thomson retained control of and managed the subdivision site. T.D. Thomson performed the site development work connected to the damages claimed. Management control of the subdivision was ultimately transferred to Lakeview Reserve. The Declaration of Covenants, Conditions, and Restrictions running with the subdivision land requires that all residents in the subdivision join the homeowners association (Lakeview Reserve) and that the association be responsible for the repairs and replacement of common property, including retention ponds, roads, surface water management system, and drainage pipes.

After Lakeview Reserve assumed actual management control of the subdivision, residents reported water and drainage problems caused by the infrastructure of the subdivision. Residents reported that storm water failed to drain properly which flooded driveways and completely impeded normal use. Residents also reported the collapse of storm drain runoffs. The runoffs collapsed in the direction of the residential driveways, causing a depression that obstructed normal driveway use. Numerous residents also experienced standing stagnant water and flooding in their residential lawns that persisted for days after rain had ended. The flooding required the installation of additional under drains and retention walls. These drainage and flooding issues persisted in both the front and back of the homes. Soil erosion and land depressions had occurred connected to the water problems.

Residents reported leaking storm-water pipes that also caused soil erosion and depressions between residential properties, the buckling and splitting of pavement and asphalt in the subdivision, and, due to the faulty drainage issues, excessive flooding of retention ponds. The flooding of the retention ponds—which were intended to be dry beds but due to the flooding became wetlands—created not only child safety issues as the ponds were not fenced, but also produced the development of mosquito infestation and swampy conditions.

Lakeview Reserve hired an independent consulting engineer to inspect the subdivision, assess its structural and drainage problems, and provide a written report regarding the conditions surrounding the residential areas in the development. The report found that water saturation defects damaged the subdivision's roadways. Defective conditions caused shallow groundwater to produce a defective raveling and premature degradation of surface roads. A layer of clay that had been placed under the roadways as fill soil caused standing shallow groundwater resulting in defective drainage. Remediation of this clay condition required the installation of under drains. The expert engineer found abnormal washouts, as well as improperly wrapped pipes that caused distress around inlets within the roads. The engineer found that fifteen to twenty percent of the pipes in the subdivision required repair to correct the infrastructure development and construction defects.

The engineer also found soil erosion and defective runoff problems that had directly impacted thirty-six residential properties within the subdivision. There was also moderate to severe grade changes between homes that caused progressing mild to moderate erosion in the rear of the properties. Remediation for the progressing erosion required the installation of erosion control measures, such as application of riprap (i.e., a stabilizing foundation made of loose or broken stone) and the construction of concrete retention walls. The installation of retention walls was necessary on thirty-nine properties that had experienced moderately steep to extremely steep slopes due to grade changes caused by the progressing erosion. The purpose for the installation of the retention walls was to eliminate the ongoing progressive erosion and to prevent future erosion of soil from the residential properties of the development.

To correct the residential subdivision's infrastructure defects, which directly impacted the homes and access to the homes, Lakeview Reserve filed an action against Maronda Homes. Lakeview Reserve alleged that Maronda Homes defectively designed and constructed the subdivision's infrastructure, roadways, retention ponds, underground pipes, and drainage systems, breaching the implied warranties of fitness and merchantability for the residential home development and causing damage to the entire residential subdivision. Lakeview Reserve asserted that the defects were latent, as they were not readily discoverable by home purchasers who lacked specialized knowledge, and undiscoverable by homebuyers upon the exercise of reasonable diligence at the time of purchase. Lakeview Reserve also alleged that it sustained serious damages due to the defects because one of its obligations as the homeowner association was to correct and repair the subdivision's structural defects which impacted the homes in the development.

Maronda Homes and T.D. Thomson subsequently moved for final summary judgment, contending that the common law implied warranties of fitness and merchantability do not extend to the construction and design of the infrastructure, private roadways, drainage systems, retention ponds, underground pipes, or any other common areas in a residential subdivision because those structures do not immediately support the residences. The trial court agreed and entered final summary judgment in favor of Maronda Homes and T.D. Thomson relying on Conklin v. Hurley, 428 So.2d 654 (Fla.1983), and the Fourth District's decision in Port Sewall. Lakeview Reserve appealed that judgment to the Fifth District. The Fifth District reversed the trial court's summary final judgment, held that the common law warranty of habitability is applicable in this case, and certified conflict with Port Sewall.

Maronda Homes and T.D. Thomson thereafter petitioned this Court for discretionary review. We granted review on the basis of certified conflict jurisdiction, as provided for by article V, section 3(b)(4), of the Florida Constitution.

Caveat Emptor and Implied Warranties

For centuries, the doctrine of caveat emptor (“let the buyer beware”) was the applicable rule of law governing disputes arising from the sale of real property. See Conklin, 428 So.2d at 656. Under this ancient doctrine, in the absence of an express...