Smith v. Foerster-Bolser Const., Docket No. 257885.

• Decision Date: 17 January 2006
• Docket Number: Docket No. 257885.
• Parties: Larry SMITH, Corliss Smith, and Allstate Insurance Company, Plaintiffs-Appellees, v. FOERSTER-BOLSER CONSTRUCTION, INC, Defendant/Cross-Plaintiff-Appellant, and David Runyan, d/b/a The Floor Guy, Defendant/Cross-Defendant.
• Court: Court of Appeal of Michigan — District of US

711 N.W.2d 421

269 Mich. App. 424

Larry SMITH, Corliss Smith, and Allstate Insurance Company, Plaintiffs-Appellees, v. FOERSTER-BOLSER CONSTRUCTION, INC, Defendant/Cross-Plaintiff-Appellant, and David Runyan, d/b/a The Floor Guy, Defendant/Cross-Defendant.

Docket No. 257885.

Court of Appeals of Michigan.

Submitted December 13, 2005, at Lansing.

Decided January 17, 2006, at 9:00 a.m.

Released for Publication March 31, 2006.

Grotefeld & Denenberg, L.L.C. (by Jeffrey R. Learned, Alan B. McMaster, and Mark S. Grotefeld), Bingham Farms, Chicago, IL, for Larry Smith, Corliss Smith, and Allstate Insurance Company.

Running, Wise & Ford, P.L.C. (by Michael I. Conlon and Robert W. Grzech), Traverse City, for Foerster-Bolser Construction, Inc.

Before: SMOLENSKI, P.J., and SCHUETTE and BORRELLO, JJ.

PER CURIAM.

In this dispute arising out of a residential fire allegedly caused by poor workmanship, defendant Foerster-Bolser Construction, Inc. (Foerster-Bolser), appeals as of right the May 27, 2004, judgment in favor of plaintiffs. We reverse and remand for further proceedings.

In 1997, while still residents of Maryland, plaintiffs Larry Smith and Corliss Smith hired Foerster-Bolser to construct a new residence on land the Smiths had purchased in Michigan for their eventual retirement. Foerster-Bolser gave the Smiths a certificate of occupation in October 1998. In June 1999, the Smiths retired and moved into the new home. Although the home was substantially completed at that time, there were several tasks that Foerster-Bolser still needed to perform to finalize the job.

In February 2000, Foerster-Bolser hired defendant David Runyan to redo the Smiths' kitchen floor. Runyan spent the first full day on the job sanding off the kitchen floor's existing finish in preparation for application of the new stain and finish.¹ At the end of the day, Runyan packed up his equipment, but left on the kitchen floor a bag of sawdust potentially coated with urethane. When Runyan returned to complete the job the next morning, he noticed that the home was filled with smoke and called the fire department. Investigations of the fire indicated that it was caused either by an electrical fault in the crawlspace immediately below the area where Runyan left the bag of sawdust or through the spontaneous combustion of the bag of sawdust. Although the fire caused physical damage to the home, there was also extensive smoke damage to the home and its contents.

Plaintiffs eventually filed suit against defendants, claiming they were responsible for the losses incurred as a result of the fire. Plaintiffs sought compensation under various theories, including negligence, breach of contract, and breach of implied warranty.² The jury trial commenced in April 2004. After the close of plaintiffs' proofs, Runyan settled with plaintiffs and was dismissed from the case.³ Thereafter, the trial court granted a directed verdict in favor of plaintiffs with respect to plaintiffs' claim that defendant violated the implied warranty of habitability that accompanies the construction of all new homes. After the trial court granted the directed verdict, plaintiffs withdrew the remainder of their claims, and the claim of implied warranty of habitability was submitted to the jury solely for a determination of damages. The jury awarded $457,000 in damages to Allstate, but determined that the Smiths were not entitled to any compensation.

On appeal, defendant argues the trial court erred when it granted a directed verdict in favor of plaintiffs on their claim for breach of the implied warranty of habitability. Specifically, defendant contends that the implied warranty of habitability only applies to new homes sold as part of a real estate transaction by builder-vendors. We agree.

As a preliminary matter, we note that defendant raised this argument for the first time on appeal. Although this Court need not review issues raised for the first time on appeal, Herald Co., Inc. v. Kalamazoo, 229 Mich.App. 376, 390, 581 N.W.2d 295 (1998), this Court may overlook preservation requirements if the failure to consider the issue would result in manifest injustice, if consideration is necessary for a proper determination of the case, or if the issue involves a question of law and the facts necessary for its resolution have been presented, Steward v. Panek, 251 Mich.App. 546, 554, 652 N.W.2d 232 (2002). Because consideration of this issue is necessary for a proper determination of the case and the issue involves a significant question of law, the resolution of which may be determined on the facts presented, we elect to overlook the lack of preservation and consider the issue.

This Court reviews de novo a trial court's decision regarding a party's motion for a directed verdict. Elezovic v. Ford Motor Co., 472 Mich. 408, 418, 697 N.W.2d 851 (2005). A directed verdict is appropriate only when no factual question exists on which reasonable jurors could differ. Diamond v. Witherspoon, 265 Mich.App. 673, 681, 696 N.W.2d 770 (2005). This Court will "view the evidence presented up to the time of the motion in the light most favorable to the nonmoving party, granting that party every reasonable inference, and resolving any conflict in the evidence in that party's favor to decide whether a question of fact existed." Derbabian v. S. & C. Snowplowing, Inc., 249 Mich.App. 695, 702, 644 N.W.2d 779 (2002).

In Weeks v. Slavik Builders, Inc., 24 Mich.App. 621, 180 N.W.2d 503 (1970), aff'd 384 Mich. 257, 181 N.W.2d 271 (1970), this Court adopted the implied warranty of habitability for new homes. In Weeks, the plaintiffs entered into an agreement to purchase a new home, which was to be built by the defendant. Id. at 622, 180 N.W.2d 503. Shortly after the plaintiffs took possession of the new home, the roof leaked, causing damage to the ceilings of the house. Id. at 623, 180 N.W.2d 503. The defendant was unable to correct the problem and the plaintiffs eventually sued under the theories of breach of express warranty, breach of implied warranty of fitness for purpose, and misrepresentation. Id. at 622-624, 180 N.W.2d 503. On appeal, the defendant argued that the trial court erred by failing to direct a verdict in its favor on the basis that the implied warranty of fitness is not applicable to the sale of real property. Id. at 624, 180 N.W.2d 503. The Court noted that the precise issue concerned the continuing applicability of the doctrine of caveat emptor to the purchase of real property. Id.

In examining the continuing validity of the doctrine, the Court recognized that, although the doctrine of implied warranty of fitness had replaced that of caveat emptor in the field of personal property, the doctrine of caveat emptor had continued to be almost universally applied to the sale of real property. Id. However, the Court noted that several jurisdictions had moved away from the doctrine of caveat emptor and adopted some form of implied warranty in the sale of new homes. The Court explained that these jurisdictions "have recognized that in many cases, especially where there are large developments involved, the individual buyer is not on an equal footing and is not in a position to bargain at arm's length with the builder-vendor." Id. at 625, 180 N.W.2d 503. Furthermore, the Court continued, the "individual purchaser of a newly constructed home is no more able or competent to inspect for latent defects or to protect himself than is the buyer of a mass-produced automobile." Id. The Court went on to quote approvingly the rationale for adopting an implied warranty of habitability stated in Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 207 A.2d 314 (1965).

"When a vendee buys a development house from an advertised model, as in a Levitt or in a comparable project, he clearly relies on the skill of the developer and on its implied representation that the house will be erected in reasonably workmanlike manner and will be reasonably fit for habitation. He has no architect or other professional adviser of his own, he has no real competency to inspect on his own, his actual examination is, in...