Milton Co. v. BENTLEY PLACE

• Decision Date: 18 May 1999
• Docket Number: No. 86,86
• Citation: 354 Md. 264,729 A.2d 981
• Parties: The MILTON COMPANY et al. v. COUNCIL OF UNIT OWNERS OF BENTLEY PLACE CONDOMINIUM.
• Court: Maryland Court of Appeals

729 A.2d 981

354 Md. 264

The MILTON COMPANY et al. v. COUNCIL OF UNIT OWNERS OF BENTLEY PLACE CONDOMINIUM.

No. 86, Sept. Term, 1998.

Court of Appeals of Maryland.

May 18, 1999.

J. Mitchell Kearney (Brown, Diffenderffer, Wagonheim & Kearney, L.L.P., on brief), Towson, for Petitioners.

Barry L. Steelman (Mark S. Dachille, Barry L. Steelman, P.A., on brief), Towson, for Respondent.

Kevin P. Kennedy, Schulman, Rogers, Gandal, Pordy and Ecker, P.A., Rockville, Roger D. Winston, Linowes and Blocher, L.L.P., Silver Spring, for Suburban, Maryland Bldg. Industry Ass'n, amicus curiae.

Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.

RODOWSKY, Judge.

This building construction case involves the Bentley Place Condominium (the Condominium), a complex consisting of 240 residential units in 20 two-story buildings located on approximately 14.2 acres in Montgomery County. Our grant of certiorari embraces a number of issues including whether the express and implied warranties on the sale of newly constructed private dwelling units, recognized and created by Maryland Code (1974, 1996 Repl.Vol.), §§ 10-202 and 10-203 of the Real Property Article (RP), are subject to RP § 11-131, creating warranties by the developer of a residential condominium and providing for notice of defects, duration of warranties, and limitations of actions.¹

The sole plaintiff in this action, the Respondent in this Court, is the Council of Unit Owners of Bentley Place Condominium (the Council).² The Petitioners in this Court are defendants The Milton Company (Milton) and Tuckerman Lane Development Company, Inc. (Tuckerman). Bentley Place was built in phases. The first sales of units were on January 31, 1987, and sales to original purchasers continued through July 24, 1991. By a letter dated September 13, 1989, the Council notified the Petitioners of claimed defects in materials and workmanship in common elements at the Condominium. Discussions between the parties began and continued after the parties, on January 25, 1991, executed an agreement headed "Agreement to Extend Statute of Limitations" (the Tolling Agreement). The date for filing suit under the protection of the Tolling Agreement was extended to and including October 31,1991.

This action was filed October 30, 1991. The Council sought damages for claimed defects in the common elements and in the units of individual owners. Insofar as relevant to this certiorari review the complaint, after alleging facts applicable to all counts, was divided into counts labeled as negligence, breach of implied warranties, breach of contract, breach of express warranty, negligent misrepresentation, and violation of the Maryland Consumer Protection Act.

The case was tried before a jury for over three weeks in June and July of 1994. During the trial the Council introduced a survey of unit owners that was conducted by an expert engaged by, and who testified for, the Council.

The circuit court submitted the case to the jury on special interrogatories that first asked the jury to determine liability, if any, as to each defendant on each of the above-recited counts. The jury returned a verdict in favor of the Council on each count against both Petitioners, with the exception of the negligent misrepresentation count on which the verdict was returned against Milton only. No issue is presented by the Petitioners that asks this Court to distinguish between the Petitioners.

The circuit court's verdict form next asked the jury to itemize damages on any count on which the jury found liability. Presented on the form were ten possible categories which basically coincided with the categories utilized by the Council in presenting evidence of damages. On the breach of contract, negligent misrepresentation, and negligence counts the jury awarded damages of $6,682,052 itemized in the negligence section of the verdict form as follows:

"(i) Site Components $ 214,787 (ii) Exterior Building Envelope 1,427,705 (iii) Building Attic Spaces and Ventilation 589,000 (iv) Building Services 142,400 (v) Interior Common Elements (floor/ceiling assembly) 1,620,160 (vi) Cathedral Beam 693,000 (vii) General Conditions 705,000 (viii)Contingency 300,000 (ix) Plumbing 440,000 (x) HVAC 550,000."

On the counts labeled as breach of implied warranties and breach of express warranty the jury awarded $5,677,052. Accounting for the $1,005,000 difference from the breach of contract, negligent misrepresentation, and negligence counts is the absence of any award on the warranty counts for general conditions and contingency. On the claim of violation of the Consumer Protection Act the verdict was $5,977,052. On that claim there was no award of damages for general conditions. These various theories of liability may be the basis for but one recovery, as the Council recognizes that recovery cannot exceed the maximum verdict of $6,682,052.

The parties agree that items (i) through (viii) of the special verdicts are damages that were awarded for defects in common elements and that the damages specified in items (ix) and (x) were awarded for defects in the units that are individually owned.

Following receipt of the jury verdict the proceedings in the circuit court were directed to the resolution of post-judgment motions and of a myriad of third-party claims. Final judgment was entered in May 1996, and both parties appealed to the Court of Special Appeals.

That court affirmed. Milton Co. v. Council of Unit Owners of Bentley Place Condominium, 121 Md.App. 100, 708 A.2d 1047 (1998). Milton and Tuckerman petitioned this Court for a writ of certiorari, which we granted. 351 Md. 6, 715 A.2d 965 (1998).

The petition for certiorari raises five issues. Of these issues, one raises limitations and the other an objection to the evidence of the survey of unit owners. Specifically, the Petitioners ask:

1. "Did The Trial Court And Court Of Special Appeals Err In Holding That Unit Owners Whose Claims Were Time-Barred Could Recover Damages For Alleged Defects In Their Individual Units?"³

2. "Did The Trial Court And Court Of Special Appeals Err In Holding That An Expert May Base Opinions Concerning Alleged Defects On Hearsay Information Provided By Lay Persons?"

Two other issues raised in the certiorari petition would result, if the Petitioners are successful, in the reversal of the award of damages for defects in individually owned units, assessed in the plumbing and HVAC classifications on the special verdict form. The verdicts on all counts included damages for those two classifications. Specifically, the Petitioners ask:

3. "Did The Trial Court And Court Of Special Appeals Err In Holding That Respondent Has Standing To Pursue And Recover For Individual Unit Owner Claims For Alleged Damages Uniquely Applicable To Such Claims?"

4. "Did The Trial Court And Court Of Special Appeals Err In Holding That The Implied Warranties Under Title 10 Of The Real Property Code Apply Independently Of The Warranties Found In The Maryland Condominium Act?"

Finally, the Petitioners challenge the verdict on the negligence count by asking:

5. "Did The Trial Court And Court Of Special Appeals Err In Refusing to Limit The Respondent's Negligent Construction Claim For Economic Loss To The Cost Of Repairing Only Those Improvements That Allegedly Posed A Serious And Immediate Risk Of Death Or Serious Personal Injury?"

These issues will be further explained, and additional facts will be stated, as we address the specific issues below.

Three of the issues are intimately interwoven with statutory provisions concerning warranties that are found in Title 10, "Sales of Property," Subtitle 2, "Express and Implied Warranties," and in Title 11, the "Maryland Condominium Act." The warranties addressed by Title 10 are made by a "vendor" to a "purchaser" with respect to "improvements." A vendor is "any person engaged in the business of erecting or otherwise creating an improvement on realty, or to whom a completed improvement has been granted for resale in the course of his business." § 10-201(e). A purchaser is "the original purchaser of improved realty ...." § 10-201(c). "`Improvements' includes every newly constructed private dwelling unit ...."§ 10-201(b).

Particularly relevant to the instant matter are §§ 10-202 and 10-203, dealing respectively with express and implied warranties. Under § 10-202(a) the means by which an express warranty may be created by a vendor include:

"(1) Any written affirmation of fact or promise which relates to the improvement and is made a part of the basis of the bargain between the vendor and the purchaser creates an express warranty that the improvement conforms to the affirmation or promise.

"(2) Any written description of the improvement, including plans and specifications of it, which is made a part of the basis of the bargain between the vendor and the purchaser creates an express warranty that the improvement conforms to the description."

In relevant part § 10-203(a) provides that

"in every sale, warranties are implied that, at the time of the delivery of the deed to a completed improvement or at the time of completion of an improvement not completed when the deed is delivered, the improvement is:

(1) Free from faulty materials;

(2) Constructed according to sound engineering standards;

(3) Constructed in a workmanlike manner; and

(4) Fit for habitation."

The provisions now found in §§ 10-202 and 10-203(a) have been in effect since Chapter 151 of the Acts of 1970.

The Title 10 implied warranties expire

"(1) [i]n the case of a dwelling completed at the time of the delivery of the deed to the original purchaser, one year after the delivery or after the taking of possession by the original purchaser, whichever occurs first; [or]

....

"(3) [i]n the case of structural defects, 2 years after the date of completion, delivery, or taking possession, whichever occurs first."

§ 10-204(b).

The statute of limitations for...