Summer Chase Second Addit. v. Taylor-Morley

• Decision Date: 19 October 2004
• Docket Number: No. ED 84250.,ED 84250.
• Citation: 146 S.W.3d 411
• Parties: SUMMER CHASE SECOND ADDITION SUBDIVISION HOMEOWNERS ASSOCIATION, Plaintiff/Appellant, v. TAYLOR-MORLEY, INC., et al., Defendants/Respondents.
• Court: Missouri Court of Appeals

146 S.W.3d 411

SUMMER CHASE SECOND ADDITION SUBDIVISION HOMEOWNERS ASSOCIATION, Plaintiff/Appellant, v. TAYLOR-MORLEY, INC., et al., Defendants/Respondents.

No. ED 84250.

Missouri Court of Appeals, Eastern District, Division One.

October 19, 2004.

Appeal from the Circuit Court, St. Louis County, Philip J. Sweeney, J Richard Joseph Magee, Clayton, MO, for appellant.

Kenneth B. Newman, Angela N. Loehr—co-counsel, St. Louis, counsel for Taylor-Morley, Inc.

Lawrence Bovard Grebel, Aaron Matthew Finter—co-counsel, St. Louis, counsel for KBA-Durrant, Inc.

Stephen C. Hiotis, Todd West—co-counsel, Clayton, MO, counsel for Geotest, Inc.

Christopher P. Leritz, St. Louis, counsel for Perotti Bros., Incorporated.

SHERRI B. SULLIVAN, J.

Introduction

Summer Chase Second Addition Subdivision Homeowners Association (Summer Chase) appeals from a judgment of the trial court sustaining the motions to dismiss filed by Taylor-Morley, Inc. (Taylor-Morley), Perotti Brothers, Inc. (Perotti Brothers), KBA-Durrant, Inc. (KBA-Durrant), and Geotest, Inc. (Geotest) (collectively Respondents) and dismissing Summer Chase's Petition for Damages (Petition). We affirm.

Factual and Procedural Background

On June 18, 2003, Summer Chase filed its four-count Petition based upon an alleged defectively designed and constructed railroad tie retaining wall in the Summer Chase Second Addition residential subdivision. The Petition alleged the following. The wall was constructed behind certain homes to provide additional backyard space. The defectively designed and constructed wall resulted in movement of the wall that requires repair to prevent continued movement.

Count I of the Petition was against Taylor-Morley, the general contractor, for breach of implied warranty. Count II was against Taylor-Morley and Perotti Brothers for negligent construction. Count III was against KBA-Durrant and Geotest for negligent design. Count IV was against Taylor-Morley for negligent misrepresentation. The Petition also alleged that the common areas of the subdivision, including the retaining wall, were conveyed and transferred to Summer Chase under a Declaration of Trust, Covenants, Conditions and Restrictions dated February 28, 1994. Also, under the Declaration of Trust, Summer Chase is responsible for repairing, maintaining, replacing and restoring the retaining wall. Respondents filed answers to the Petition.

Subsequently, Respondents filed motions to dismiss the Petition. The common ground for dismissal alleged by each Respondent was that the cause of action is time barred under Section 516.120,¹ the five-year statute of limitations. Taylor-Morley and Geotest also alleged that the Petition failed to state a claim upon which relief can be granted. Taylor-Morley filed a memorandum in support of its motion to dismiss to which Summer Chase filed a memorandum in response to which Taylor-Morley filed a reply memorandum.

After a hearing, the trial court sustained Respondents' motions to dismiss, without stating any specific ground(s) upon which the dismissal was based, and dismissed Summer Chase's Petition, without designating the dismissal as with or without prejudice.

Standard of Review

The law generally favors trial on the merits. Thomas v. B.K.S. Dev. Corp., 77 S.W.3d 53, 57-58 (Mo.App. E.D.2002). Appellate review of a trial court's order granting a motion to dismiss is de novo. M.M.H. v. J.P.C., 42 S.W.3d 16, 18 (Mo. App. E.D.2001). When the trial court fails to state a basis for its dismissal, we presume the dismissal was based on at least one of the grounds stated in the motion to dismiss. Johnson v. Vee Jay Cement, 77 S.W.3d 84, 88 (Mo.App. E.D.2002). We will affirm the dismissal if any ground supports the motion to dismiss, regardless of whether or not the trial court relied on that ground. Id. When reviewing the dismissal, we examine the pleadings, allowing the broadest intendment, treating all alleged facts as true, and construing the allegations in favor of the pleader, to determine whether they involve principles of law. Olean Associates, Inc. v. Knights of Columbus, 5 S.W.3d 518, 521 (Mo.App. E.D.1999).

Discussion

We must first determine our jurisdiction sua sponte. Because the trial court did not specify "with prejudice" in its judgment dismissing the Petition, the dismissal is "without prejudice." See Rule 67.03.² Generally, a dismissal without prejudice is not a final judgment because the party may re-file the cause of action, and thus the dismissal is not appealable. Doe v. Visionaire Corp., 13 S.W.3d 674, 676 (Mo.App. E.D.2000). However, where the trial court's dismissal has the practical effect of terminating the cause of action, such as a dismissal based on a statute of limitations or failure to state a claim, it is appealable. Id. Because the motions to dismiss argued such grounds for dismissal, and therefore the trial court's dismissal may have been based on at least one of these grounds, its judgment is final and appealable.

Summer Chase raises six points on appeal. Because we find points three, four, five and six dispositive, we address those points first. In its points three, four, five and six on appeal, Summer Chase argues that assuming the trial court sustained Respondents' motions to dismiss based upon a failure to state a claim upon which relief can be granted, the court erred in doing so.

A motion to dismiss for failure to state a claim is solely a test of the adequacy of the plaintiff's petition. Missouri Am. Water Co. v. Collector of St. Charles County, Missouri, 103 S.W.3d 266, 268 (Mo.App. E.D.2003). We do not attempt to weigh whether or not alleged facts are credible or persuasive. Id. at 269. Rather, we review the petition to determine if the alleged facts meet the elements of a recognized cause of action, or of a cause of action that might be adopted in that case. Id. We will reverse a dismissal if the alleged facts in the petition and any reasonable inferences drawn therefrom state any basis for relief. Id. A petition cannot be dismissed for failure to state a claim unless it appears that the plaintiff can prove no set of facts in support of the claim that would give a right to relief. Thomas, 77 S.W.3d at 58.

Count I of the Petition alleged breach of implied warranty against Taylor-Morley. Implied warranties of merchantable quality and reasonable fitness apply in the purchase of a new home by the first purchaser from a vendor-builder. Smith v. Old Warson Dev. Co., 479 S.W.2d 795, 796 (Mo. banc 1972). This theory of recovery, which is derived from the common law, is a limited departure from the strict application of the doctrine of caveat emptor. Id. We conclude that Summer Chase is not entitled to claim relief under this theory of recovery because the Petition does not allege, and the facts would not support, that Summer Chase is a first purchaser of a new home.

Summer Chase argues that it is the "first owner of the common ground upon which the retaining wall is located," and therefore it should have the same protection as the first purchaser of a new home. We disagree. Such status is not the equivalent of a first purchaser of a new home, which is a requirement for the departure from the strict application of the doctrine of caveat emptor. The Petition does not allege that a residential home sits on the common areas, as it would be illogical to have such an arrangement. As the Old Warson Court reasoned in establishing the implied warranties in this limited context:

Although considered to be a `real estate' transaction because the ownership to land is transferred, the purchase of a residence is in most cases the purchase of a manufactured product—the house. The land involved is seldom the prime element in such a purchase, certainly not in the urban areas of the state.

Summer Chase is not the purchaser of a house. Additionally, the Petition states that the common areas were "conveyed and transferred," not purchased, to Summer Chase under the Declaration of Trust. Thus, Summer Chase did not "purchase" the common areas. The retaining wall is located on common ground, not purchased by any specific new home owner and without a specific home as part of the common areas.

We do not agree with Summer Chase's policy argument that our holding "would allow developers of residential subdivisions to evade the implied warranty by placing ownership of integral items with the Association rather than with the Purchasers of homes in the subdivision." We find it unlikely that a purchaser of a new home would agree to this scenario. Nonetheless, we will not expand the limited context in which the Missouri Supreme Court departed from the strict application of the doctrine of caveat emptor.

Accordingly, Summer Chase did not state a claim upon which relief can be granted under Count I of the Petition, and therefore, the trial court did not err in dismissing Count I for breach of implied warranty against Taylor-Morley.

Count II of the Petition alleged negligent construction against Taylor-Morley, as the general contractor, and Perotti Brothers.³ Perotti Brothers was a subcontractor of Taylor-Morley. The Petition did not allege that Summer Chase entered into a separate contract with Perotti Brothers, and therefore Summer Chase was not in privity of contract with Perotti Brothers. Generally, a party is not liable in negligence to a third party with whom the party is not in privity. Fleischer v. Hellmuth, Obata & Kassabaum, 870 S.W.2d 832, 834 (Mo.App. E.D. 1993). Although there are recognized exceptions to the rule of privity, we do not find any applicable here.⁴

In determining whether or not a defendant is liable to a third party with whom the defendant is not in privity, we consider various conditions and circumstances. First, we consider the policy concerns of exposing the defendant to an unlimited, indeterminate or excessive number of potential claimants and depriving parties control over their contracts. Id. at 835....