Sullivan v. Pulte Home Corp.

• Court: Arizona Court of Appeals
• Writing for the Court: GEMMILL
• Citation: Sullivan v. Pulte Home Corp., 231 Ariz. 53, 290 P.3d 446 (Ariz. App. 2012)
• Decision Date: 04 December 2012
• Docket Number: No. 1 CA–CV 10–0754.,1 CA–CV 10–0754.
• Parties: John F. SULLIVAN and Susan B. Sullivan, Plaintiffs/Appellants, v. PULTE HOME CORPORATION, Defendant/Appellee.

231 Ariz. 53

290 P.3d 446

John F. SULLIVAN and Susan B. Sullivan, Plaintiffs/Appellants,

v.PULTE HOME CORPORATION, Defendant/Appellee.

No. 1 CA–CV 10–0754.

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

Dec. 4, 2012.

John F. Sullivan, Phoenix, In Propria Persona and Attorney for Susan B. Sullivan.

Mariscal, Weeks, McIntyre & Friedlander, P.A. By Stephen E. Richman, Anne L. Tiffen, Denise H. Troy, Phoenix, Attorneys for Defendant/Appellee.

OPINION

GEMMILL, Judge.

¶ 1 Plaintiffs John F. Sullivan and Susan B. Sullivan (“the Sullivans”) sued Pulte Home Corporation for economic damages arising from a home built and sold by Pulte. The Sullivans asserted several claims, including breach of implied warranty, various negligence claims, consumer fraud, and fraudulent concealment. Pulte filed a motion to dismiss pursuant to Arizona Rule of Civil Procedure 12(b)(6). The court granted the motion and dismissed the action for failure to state claims upon which relief could be granted. The Sullivans appeal. We affirm in part, reverse in part, and remand for further proceedings as outlined below.

FACTS AND PROCEDURAL HISTORY

¶ 2 In reviewing the dismissal of a claim under Rule 12(b)(6), we accept well-pled factual allegations in the complaint as true and resolve any conflicting inferences in favor of the non-moving party. Cullen v. Auto–Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 (2008) (citations omitted).

¶ 3 Pulte built homes and created a hillside community in 2000. It sold the home at issue to the original purchaser in 2000. In 2003, the Sullivans purchased the home from the original purchaser. At no time was there any contract or direct contact between Pulte and the Sullivans.

¶ 4 The Sullivans' home was built with a retaining wall because of the hillside nature of the lot. In March 2009, the Sullivans discovered problems with the retaining wall and construction of the home site. They contacted Pulte. Pulte said it was no longer responsible for such potential deficiencies. The Sullivans employed engineers to investigate the issues with the retaining wall. The engineers concluded that the construction of the wall and grading of the lot did not meet proper building standards.

¶ 5 The Sullivans filed their complaint in February 2010. Pulte removed the case to federal district court and filed a motion to dismiss based on Federal Rule of Civil Procedure 12(b)(6). The Sullivans filed a response to the motion to dismiss and moved to remand the case to state court. The district court remanded the case to superior court without deciding Pulte's Rule 12(b)(6) motion. Upon remand, Pulte filed with superior court the Rule 12(b)(6) filings made in federal court and requested dismissal, and the court granted the motion to dismiss. The court also awarded Pulte attorneys' fees in the amount of $5000, relying on Arizona Revised Statutes (“A.R.S.”) section 12–341.01(A) (2003), on the basis that the implied warranty claim arose out of contract.

¶ 6 The Sullivans timely appeal. We have jurisdiction in accordance with A.R.S. §§ 12–120.21(A) (2003) and 12–2101(B) (2003).

ANALYSIS

¶ 7 “We review de novo a trial court's grant of a motion to dismiss for failure to state a claim.” N. Peak Constr., L.L.C. v. Architecture Plus, Ltd., 227 Ariz. 165, 167, ¶ 13, 254 P.3d 404, 406 (App.2011)(citing Phelps Dodge Corp. v. El Paso Corp., 213 Ariz. 400, 402, ¶ 8, 142 P.3d 708, 710 (App.2006)). We will affirm if the Sullivans “would not be entitled to relief under any facts susceptible of proof in the statement of the claim.” T.P. Racing, L.L.L.P. v. Ariz. Dep't of Racing, 223 Ariz. 257, 259, ¶ 8, 222 P.3d 280, 282 (App.2009).

DUE PROCESS AND EQUAL PROTECTION CLAIMS

¶ 8 The Sullivans initially contend that they were treated unfairly, denied due process, and denied equal protection of the law when the superior court relied on the motion papers filed in federal court and ruled on Pulte's motion to dismiss before receiving the Sullivans' response in superior court. But the Sullivans had already filed a response opposing Pulte's motion in federal court. After the remand to superior court, Pulte filed its motion to dismiss and the Sullivans' response. When the superior court granted Pulte's motion to dismiss, the court specifically stated that it had received and considered the Sullivans' response (originally filed in federal court).

¶ 9 There is no unfair treatment or constitutional violation here. The court considered the Sullivans' response originally filed in federal court. See Ayres v. Wiswall, 112 U.S. 187, 190–91, 5 S.Ct. 90, 28 L.Ed. 693 (1884) ( “[I]t will be for the State court, when the case gets back there, to determine what shall be done with pleadings filed ... during the pendency of the suit in the other jurisdiction.”); State ex rel. Village of Los Ranchos de Albuquerque v. City of Albuquerque, 119 N.M. 169, 889 P.2d 204, 207 (App.1993) (recognizing that “pleadings filed in federal court, while the federal court has jurisdiction, become part of the state court record on remand”). We are not dealing with a situation in which a motion was granted without the opposing party having had an opportunity to respond and oppose the motion. Additionally, the Sullivans' response filed in state court one day after the court granted the motion to dismiss was not substantially different from the original response they filed in federal court, which the superior court considered before ruling. Moreover, the Sullivans did not file a motion for new trial or motion for reconsideration, which would have allowed the trial court to consider their complaint of unfair treatment in a timely fashion.

¶ 10 The Sullivans received notice of the motion to dismiss and an opportunity to be heard by filing a response-the essentials of due process. And they did in fact oppose the motion in a substantive response. The record reveals no violation of due process or equal protection.

BREACH OF IMPLIED WARRANTY CLAIMS

¶ 11 The Sullivans argue that Pulte breached the implied warranties of good workmanship and habitability by virtue of the latent defects in the retaining wall and home site preparation.¹ Pulte counters that even if a latent defect was present, the Sullivans are barred from asserting a breach of implied warranty claim by the construction statute of repose, A.R.S. § 12–552 (2003). The Sullivans respond with three alternative arguments: A.R.S. § 12–552 is not applicable to their implied warranty claim; if applicable, § 12–552 is unconstitutional as applied; and the statutory period should be tolled.

The Statute of Repose Applies to Implied Warranty Claims

¶ 12 “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.” Maycock v. Asilomar Dev., Inc., 207 Ariz. 495, 498, ¶ 15, 88 P.3d 565, 568 (App.2004). The Sullivans allege a breach of the implied warranty of workmanship and habitability, which is specifically governed by subsection (C) of the statute of repose.

¶ 13 The statute of repose provides:

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.

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.

C. The limitations in subsections A and B of this section include any action based on implied warranty arising out of the contract or the construction, including implied warranties of habitability, fitness or workmanship.

A.R.S. § 12–552 (emphasis added).

¶ 14 Pulte substantially completed the home in 2000. In March 2009, the Sullivans alerted Pulte to problems with the retaining wall. The Sullivans filed this action on February 25, 2010. The Sullivans' action was filed well beyond the eight-year limitation created by the statute of repose. Even if we assume Pulte completed the home as late as the last day of 2000, the eight-year period then ended on December 31, 2008. Additionally, the exception provided in A.R.S. § 12–552(B)—that discovery of a latent defect in the eighth year will provide additional time to file—does not help the Sullivans. Section 12–552(B) plainly states that “in no event may an action be brought more than nine years after the substantial completion of the improvement.” (Emphasis added.) The Sullivans filed their claim in February 2010, more than nine years after Pulte completed the home. Therefore, the statute of repose bars their suit based on alleged breach of the implied warranty of workmanship and habitability, unless the statute is unconstitutional as applied or the statutory period is equitably tolled.

A.R.S. § 12–552 is Constitutional

¶ 15 The Sullivans argue that A.R.S. § 12–552 is unconstitutional as applied. The provision of the Arizona Constitution relied upon by the Sullivans, however, applies to tort claims, not contract claims.

¶ 16 Article 18, Section 6, of the Arizona Constitution, provides that “the right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall...