Maycock v. Asilomar Development, Inc.

• Decision Date: 22 April 2004
• Docket Number: No. 1 CA-CV 02-0710.,1 CA-CV 02-0710.
• Citation: 88 P.3d 565,207 Ariz. 495
• Parties: Simon MAYCOCK and Christy Maycock, husband and wife, Plaintiffs-Appellants, v. ASILOMAR DEVELOPMENT, INC., an Arizona corporation, Defendant-Appellee.
• Court: Arizona Court of Appeals

88 P.3d 565

207 Ariz. 495

Simon MAYCOCK and Christy Maycock, husband and wife, Plaintiffs-Appellants, v. ASILOMAR DEVELOPMENT, INC., an Arizona corporation, Defendant-Appellee.

No. -0710.

Court of Appeals of Arizona, Division 1, Department T.

April 22, 2004.

Combs Law Group, by Patricia A. Premeau, Kathleen D. Fox, Phoenix, Attorneys for Plaintiffs-Appellants.

Meagher & Gerr, P.L.L.P., by Jay R. Graif, Jeffrey C. Matura, Scottsdale, Attorneys for Defendant-Appellee.

OPINION

GEMMILL, Judge.

¶ 1 Plaintiffs Simon and Christy Maycock appeal the trial court's decision granting summary judgment in favor of Defendant Asilomar Development, Inc. The trial court found that Arizona Revised Statutes ("A.R.S.") section 12-552 (2003), a statute of repose governing claims against builders, precluded the Maycocks' claim against Asilomar, the builder of their home. We reverse and remand for further proceedings because we find questions of fact that preclude summary judgment. We also hold that the knowledge of a prior owner is imputed to the current owner for the purpose of applying § 12-552, and we affirm this portion of the trial court's ruling.

FACTS AND PROCEDURAL HISTORY

¶ 2 In reviewing a decision on a motion for summary judgment, we view the facts and the reasonable inferences to be drawn from those facts in the light most favorable to the party against whom judgment was entered. Prince v. City of Apache Junction, 185 Ariz. 43, 45, 912 P.2d 47, 49 (App.1996).

¶ 3 Prior to June 1992, Mark Cummings entered into a contract with Asilomar, a licensed contractor, to construct a single family home. Asilomar substantially completed construction by June 2, 1992. Cummings then occupied the home until November 1998, when he sold the property to the Maycocks.

¶ 4 After moving into the home, the Maycocks experienced problems with the residence. They noticed movements in the slab and walls throughout the home, as well as buckling in walls and sagging and cracking of the garage floor. In September 2000, Tom Thomas, a civil engineer hired by the Maycocks to evaluate the property, concluded that the unusual movements in the structure indicated inadequate compaction of the backfill soils during construction.

¶ 5 The Maycocks filed suit against Asilomar in January 2001, alleging negligence and breach of express and implied warranties.¹ ¶ 6 Asilomar moved for summary judgment on the basis that the claims of the Maycocks were barred by A.R.S. § 12-552. This statute precludes contract and implied warranty claims against builders filed more than eight years after substantial completion of the improvements, unless the injury occurs during the eighth year after substantial completion or a latent defect is discovered during the eighth year. A.R.S. § 12-552. If the injury or discovery of a latent defect occurs during the eighth year, the action must be filed within one year of the injury or discovery. A.R.S. § 12-552.

¶ 7 The Maycocks' claim was filed more than eight years after substantial completion and was not based on an injury occurring in the eighth year. Therefore, according to Asilomar, the Maycocks were required to show that the defect was latent and not discovered until the eighth year. Asilomar asserted that the Maycocks, in separate litigation against their home inspector, had claimed the defects should have been discovered through inspection. It also argued that the Maycocks' expert, Tom Thomas, had opined that the defects would have been noticeable during Cummings' ownership of the property. Asilomar contended therefore that the defects were not latent, or if they were latent, they were discovered within the first seven years, and so were barred by A.R.S. § 12-522.

¶ 8 The Maycocks opposed the motion and filed a simultaneous motion for an extension of time to conduct discovery pursuant to Rule 56(f), Arizona Rules of Civil Procedure. They did not dispute that they were bringing their claim in the ninth year after substantial completion of the improvements to the property. The Maycocks asserted that although Tom Thomas had stated that Cummings must have observed changes in the condition of the property, Thomas never opined that Cummings must have known of the actual construction defects. The Maycocks also noted that the parties had not yet taken Cummings' deposition and that in his answer he had denied knowledge of any deficiencies in the property.

¶ 9 The Maycocks further argued that whether Cummings had knowledge of the defects during his residency in the home was irrelevant to whether the Maycocks should have discovered the defects. The Maycocks also drew a distinction between whether Cummings may have known of certain defects in the structure compared to whether he knew of the inadequate compaction of the soil. They further contended that their cause of action could not have accrued based on Cummings' undisclosed knowledge.

¶ 10 Cummings submitted an affidavit in response to Asilomar's motion for summary judgment stating that he had noticed certain areas of unevenness in the floor of the property within the first two years after construction, that he brought the matter to the attention of Asilomar, that Asilomar advised him that the unevenness was the result of normal settlement, and that the floors remained the same until he sold the home to the Maycocks. He further stated that the unevenness in the floors was fully disclosed to the Maycocks and that he was unaware of any other problems or alleged defects regarding the soils or settlement of the house. Simon Maycock denied that Cummings had ever disclosed information about the unevenness of the floors or his discussions with Asilomar.

¶ 11 At oral argument before the trial court, Asilomar requested judgment on the negligence claim as well as the breach of warranty claim, alleging that the Maycocks had made no claim for personal injury or personal property damage and therefore the claim was not one for tort. The briefing by the parties prior to the argument had not focused specifically on the negligence claim.

¶ 12 The trial court granted Asilomar's motion on both the breach of warranty and negligence claims. The court found that the Maycocks' expert opined that Cummings knew or should have known of the settlement of the property during his residence and that by affidavit Cummings admitted noticing some settlement. The court found it undisputed that the defect was "known or evident after reasonable inspection during the first six years after substantial completion." The court also found that A.R.S. § 12-552 applied to a piece of real estate regardless of ownership or by whom the observation of the defect was made. Therefore, the court concluded, the one-year exception to the eight-year statute of repose in § 12-552(B) did not apply and the Maycocks' claims were barred. The court also recognized that the statute of repose would not bar claims for professional negligence, but found that the Maycocks' claims arose in contract and were subject to § 12-552.

¶ 13 The Maycocks filed subsequent motions seeking reconsideration but final judgment was eventually entered in favor of Asilomar against the Maycocks, resulting in this appeal. We have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).

ANALYSIS

¶ 14 Summary judgment may be granted when "there is no genuine issue as to any material fact and [ ] the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(c). In reviewing a decision on a motion for summary judgment, we determine de novo whether any genuine issues of fact exist and whether the trial court erred in its application of the law. Saenz v. State Fund Workers' Comp. Ins., 189 Ariz. 471, 473, 943 P.2d 831, 833 (App.1997).

¶ 15 Section 12-552 is a statute of repose that limits the time within which parties may bring breach of contract and implied warranty actions against developers, builders, and certain others. Subsection (A) provides a general limitation of no more than eight years after substantial completion:

A. Notwithstanding any other statute, no action or arbitration based in contract may be instituted or maintained against a person who develops or develops and sells real property, or performs or furnishes the design, specifications, surveying, planning, supervision, testing, construction or observation of construction of an improvement to real property more than eight years after substantial completion of the improvement to real property.

A.R.S. § 12-552(A) (emphasis added). Because the Maycocks' home was completed in June 1992, the eight-year period expired in June 2000. The Maycocks purchased the home from Cummings in November 1998 but did not file suit against Asilomar until January 2001, during the ninth year following substantial completion of the home. Section 12-552(A) therefore bars any contract or implied warranty² claims by the Maycocks unless an exception is applicable.

¶ 16 The statute allows an exception if injury to the property occurs or a latent defect is discovered during the eighth year:

B. Notwithstanding subsection A of this section, in the case of injury to real property or an improvement to real property, if the injury occurred during the eighth year after the substantial completion, or, in the case of a latent defect, was not discovered until the eighth year after substantial completion, an action to recover damages for injury to the real property may be brought within one year after the date on which the injury to real property or an improvement to real property occurred or a latent defect was discovered, but in no event may an action be brought more than nine years after the substantial completion of the improvement.

A.R.S. § 12-552(B) (emphasis added). "Latent defect" is not defined in the statute but has been generally defined by this court as a "hidden or concealed defect" that "could not be discovered by reasonable and customary observation or inspection." S Dev. Co. v. Pima Capital...