Stuart v. Coldwell Banker Commercial Group, Inc.

• Decision Date: 19 November 1987
• Docket Number: No. 52134-4,52134-4
• Citation: 745 P.2d 1284,109 Wn.2d 406
• Parties: F. Craig STUART, et al., Respondents, v. COLDWELL BANKER COMMERCIAL GROUP, INC., et al., Appellants.
• Court: Washington Supreme Court

Page 406

109 Wn.2d 406

745 P.2d 1284

F. Craig STUART, et al., Respondents, v. COLDWELL BANKER COMMERCIAL GROUP, INC., et al., Appellants.

No. 52134-4.

Supreme Court of Washington En Banc.

Nov. 19, 1987.

Davis, Wright, Todd, Riese & Jones, Duncan A. Bayne, Seattle, for appellants.

Hanson, Zwink, Baker & Ludlow, John W. Martin, Jr., Bellevue, for respondents.

UTTER, Justice.

The trial court in this case awarded damages to a homeowners' association against a builder-vendor for construction defects in common and limited common areas of a condominium complex. The action was brought more than 3 years after the builder-vendor sold the last condominium unit, and many of the units changed hands before suit was filed. The applicable statutes of limitation properly should have barred many of the plaintiffs' actions. We hold that the trial court incorrectly applied the discovery rule for determining when plaintiffs' causes of action accrued.

The trial court greatly extended the implied warranty of habitability beyond the contours defined by this court. The trial court also recognized a new cause of action to this jurisdiction in negligent construction. This court cannot allow sympathy for the plaintiffs to lead to the creation of a logically inconsistent and vague theory of recovery that fails to provide useful precedent. Accordingly, we reverse and remand.

Yarrowood is a condominium complex located in Bellevue. One hundred forty-four of the 155 units have private decks. Because of the steep topography and siting, there are 32 entry walkways which traverse from the parking area to provide access to unit entrances. Twenty-three of these serve only one apartment each. The bulk of the areas at issue were these private decks and walkways.

The Declaration of Condominium (as amended) provides that private decks off individual apartments are "limited common areas", to which the individual apartment owner has exclusive access. The individual homeowners are solely responsible for their maintenance. Certain access walkways are also limited common areas, although the Declaration of Condominium does not specify precisely which walkways. The trial court found all these areas were "common areas," "regardless of the subclassification of the private decks as 'limited common areas' " (Clerk's Papers, at 15, Finding of fact 15) as that term is used in the Declaration of Condominium and by statute. See RCW 64.32.010(6)(b) ¹ and (11) ².

The original developer, Ferguson Development Company and related corporate entities (hereinafter "Ferguson") started work on the project in 1973. Ferguson intended to develop the complex in phases, and hired architect El Baylis to design the entire complex. After experimenting with various railing designs for the private decks and walkways, Ferguson adopted a wooden frame closed rail system. This involved the construction of a wall approximately 40 inches high, made of 2X4 studs enclosed on both sides with siding and gypsum board. The wall is capped by a wooden rail and joined at the bottom to the horizontal surface of the deck.

In May 1975, when Phase I (67 apartments) was partially constructed, Ferguson defaulted and Coldwell Banker took over. From that point, Coldwell Banker was the owner, developer, construction contractor and vendor of the apartment units at Yarrowood.

When Coldwell Banker took over the project it hired architect Baylis to inspect and assess the project. Baylis informed Coldwell Banker that the decks and balconies were not adequately flashed at wall and/or rail junctures. In at least one instance a deck had no way to drain and would probably rot. In September 1975, Baylis notified Coldwell Banker that standing water on the flat asphalt roof of the largest building in the complex would lead to problems unless corrected. In response and as leakage became apparent and complaints were made, Coldwell Banker took corrective steps to repair or replace each of the Phase I decks that were called to its attention. Nonetheless, the trial court found the repairs and other construction changes made were ineffective to eliminate all of the problems.

Coldwell Banker completed Phase I by mid-1976. The City of Bellevue Building Department issued a certificate of occupancy on June 10, 1976, although purchasers had occupied a number of units from late December 1975.

In March 1976, Coldwell Banker contracted with architect Baylis to prepare construction drawings for Phase II, which added an additional 88 apartment units. Coldwell Banker instructed Baylis to make design changes in the walkway and deck assemblies in an attempt to avoid the problems experienced in Phase I. Phase II construction began in 1976, and on September 15, 1977, Bellevue issued a final certificate of occupancy. The last unit was sold in February 1978, some 4 years and 9 months before the commencement of the lawsuit in November 1982.

Coldwell Banker turned over management of Yarrowood to the Board of Directors of the Yarrowood Homeowners Association ("the Board") after substantially all of the units were sold. Following a short period in which Coldwell Banker acted as property manager, the Board hired a resident manager to handle complaints from homeowners, and to perform minor maintenance and repairs. The first manager served from early 1978 to 1980. During 1978 and 1979, he received complaints relating to 10 to 15 of the decks at Yarrowood. Some of the decks had damage which was plainly visible from public areas such as the parking lot for one of the buildings.

By June 1979, at least one deck had so deteriorated that the homeowner asked the Board about having it rebuilt. In connection with this and other complaints being received, the Board contacted an attorney for advice on who was responsible for repairing the deteriorating decks. The Board described the problem to the attorney as a design defect. After reviewing the Declaration of Condominium, the attorney responded that in his view the responsibility for repair and maintenance of these limited common areas lay with the individual homeowners, rather than with the Board.

The Board relayed the attorney's advice to the homeowners, and took the position that these defects were not the Board's responsibility. Some of the Board members had initial leakage problems which Coldwell Banker had worked on. In fact, the majority of the 9 members of the Board in the years 1979 and 1980 knew during or before their service on the Board of leakage problems on Yarrowood decks.

In November 1980, the Board contacted a second attorney for his opinion on repair responsibilities. This attorney advised if the problem was a construction defect then the Board, rather than the individual homeowners, should pursue claims against the developer on behalf of the common ownership. Upon receiving this advice, the Board specifically asked the homeowners to lodge their complaints with the Board's resident manager. A number of such complaints were formally registered before the next meeting, which took place on December 18, 1980.

In November 1982, the members of the Board filed suit in their representative capacities on behalf of both original and subsequent purchasers of affected units against Coldwell Banker, El Baylis, and Ferguson. ³ The suit alleged defendants were liable under theories of negligent construction, breach of express and implied warranties, misrepresentation, and violations of the Consumer Protection Act, RCW 19.86.

As of that time, 74 out of the 155 units had changed hands from the original purchasers to subsequent purchasers. By May 1984, the month of trial, the number of units owned by subsequent purchasers had risen to 81, constituting a majority of the units in the complex.

The trial court found plaintiffs' suit was timely brought within the applicable statute of limitations, reasoning that the claims accrued at the December 18, 1980 meeting, when the Board had notice that the deck and walkway problems were widespread throughout the project. The court found that

[a]lthough plaintiffs received some isolated complaints from unit owners of water leaks and stains with respect to the private decks attached to the unit, there was not a sufficient number of complaints or sufficient quality of the complaints received to indicate a project-wide problem with substantially all decks and the degree to which the decks were affected until December 1980.

Clerk's Papers, at 20-21, Finding of fact 30.

The court held there was no liability under the Washington Consumer Protection Act, nor under plaintiffs' theory of breach of express warranty or misrepresentation. Plaintiffs have not appealed those rulings.

The court noted that the applicable provisions of the uniform building code and industry standards required that the decks, balconies, walkways, ramps, and stairway structures be constructed in a watertight manner. It found, however, that the areas were not so constructed, and allowed water to penetrate from the time of original construction. These defects, both latent and patent, the court held, led to rotting and the substantial impairment of the structures.

The court found that rotting conditions between initial occupancy and 1980 were known by the homeowners, who complained to Coldwell Banker, which responded to all complaints by making repairs and replacements. It found, however, that the complaints were not in every case communicated to the Board.

A determination was made by the court that the defective conditions were caused by negligent construction practices which left

the largest majority of the affected structures in Yarrowood unfit for their ordinary and intended purpose and dangerous to use within a very short time after their construction....

Although structurally safe for the buyer's intended purpose at the time of construction and initial purchase by individual owners, a number of the private decks, balconies and walkways became unsafe through the...