Yanni v. Tucker Plumbing, Inc.

• Decision Date: 20 November 2013
• Docket Number: No. 2 CA–CV 2013–0024.,2 CA–CV 2013–0024.
• Citation: 233 Ariz. 364,312 P.3d 1130
• Parties: Louis YANNI; Alfred Thompson; Anthony and Myrna Gunderson; Marwan Alsayegh; and Hannah Sayegh, Individually and on behalf of all Persons Similarly Situated, Plaintiffs/Appellants, v. TUCKER PLUMBING, INC., an Arizona Corporation; Brewer Enterprises, Inc., an Arizona Corporation, Defendants/Appellees.
• Court: Arizona Court of Appeals

233 Ariz. 364

312 P.3d 1130

Louis YANNI; Alfred Thompson; Anthony and Myrna Gunderson; Marwan Alsayegh; and Hannah Sayegh, Individually and on behalf of all Persons Similarly Situated, Plaintiffs/Appellants,

v.TUCKER PLUMBING, INC., an Arizona Corporation; Brewer Enterprises, Inc., an Arizona Corporation, Defendants/Appellees.

No. 2 CA–CV 2013–0024.

Court of Appeals of Arizona, Division 2.

Nov. 20, 2013.

Kasdan, Simonds, Weber & Vaughan, L.L.P. By Stephen L. Weber, Michael J. White, and James W. Fleming, Phoenix, Counsel for Plaintiffs/Appellants.

Jones, Skelton & Hochuli, P.L.C. By Michael A. Ludwig, Lori L. Voepel, R. Christopher Pierce, and Jonathan P. Barnes, Phoenix, Counsel for Defendant/Appellee Tucker Plumbing, Inc.

O'Connor & Campbell, By J. Daniel Campbell and Stephanie Van Splunder, Phoenix, Resnick & Louis, P.C. By Mitchell J. Resnick and Michael G. Wales, Scottsdale, Co-counsel for Defendant/Appellee Tucker Plumbing, Inc.

Welsh Law Group, P.L.C. By Kenneth W. Welsh and Keely Verstegen, Phoenix, Counsel for Defendant/Appellee Brewer Enterprises, Inc. Co-counsel for Defendant/Appellee Tucker Plumbing, Inc.

Rai & Barone By Adam B. Campbell and Shannon R. Guererro, Phoenix, Co-counsel for Defendant/Appellee Brewer Enterprises, Inc.

OPINION

KELLY, Presiding Judge.

¶ 1 Louis Yanni and other similarly situated homeowners (“Yanni”) appeal from the trial court's grant of summary judgment in favor of plumbing subcontractors Tucker Plumbing, Inc., and Brewer Enterprises, Inc. (“Subcontractors”). Yanni argues the court erred by concluding Subcontractors were not subject to suit for breach of the implied warranty of workmanship and habitability. For the following reasons, we affirm.

Factual and Procedural Background

¶ 2 We view the facts in the light most favorable to the party against whom summary judgment was entered. Villa De Jardines Ass'n v. Flagstar Bank, FSB, 227 Ariz. 91, ¶ 2, 253 P.3d 288, 291 (App.2011). Yanni filed a “construction defect state-wide class action” ¹ against Subcontractors, who were hired by and performed plumbing work under a general contractor of new home construction. The complaint alleged Subcontractors had breached the implied warranty of workmanship and habitability by using defective plumbing components in the construction of plaintiffs' homes.² Specifically, Yanni alleged Subcontractors had “select[ed], construct[ed], assembl[ed], and install[ed] ... brass plumbing fittings ... not suitable for their service environment, ... resulting in compromised plumbing systems that have prematurely corroded, occluded, leaked,” and otherwise deteriorated. Yanni further alleged Subcontractors had “failed to follow acceptable construction and/or building practices” when installing plumbing in the homes.

¶ 3 Subcontractors moved for summary judgment, arguing in part that “only parties and privies to contracts can bring claims for breach of the implied warranty of workmanship and habitability.” They argued that because Subcontractors contracted with a general contractor or developer to perform the work—and not with the homeowners—there was no contractual privity between the parties and suit should be barred as a matter of law.³ Yanni filed a cross-motion for summary judgment, arguing that contractual privity is not required to maintain an action for breach of the implied warranty because the warranty “arises from the construction of the home as a matter of law.”

¶ 4 At the conclusion of a hearing on the motion and cross-motion, the trial court granted Subcontractors' motion for summary judgment. Without ruling explicitly on the privity issue, the court stated there were other “[d]efendants in line,” such as the builder, vendor, developer or contractor, that either were or should be “primary to” the Subcontractors and that there was an “issue of remoteness.” ⁴

Discussion

¶ 5 Yanni claims the trial court erred in granting Subcontractors' motion for summary judgment, which had argued that only parties and privies to contracts properly can bring claims for breach of the implied warranty of workmanship and habitability. Yanni maintains that contractual privity no longer is required in breach of implied warranty causes of action and that those “who actually constructed the homes' defective plumbing systems” should be held responsible for their work. He therefore concludes the court's ruling should be reversed.

¶ 6 A trial court properly grants summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a); Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). “ ‘On appeal from summary judgment, we must determine de novo whether there are any genuine issues of material fact and whether the trial court erred in applying the law.’ ” Miidas Greenhouses, LLC v. Global Horticultural, Inc., 226 Ariz. 142, ¶ 5, 244 P.3d 579, 581 (App.2010), quoting Bothell v. Two Point Acres, Inc., 192 Ariz. 313, ¶ 8, 965 P.2d 47, 50 (App.1998). We consider only the evidence that was before the trial court during its summary judgment deliberations. GM Dev. Corp. v. Cmty. Am. Mortg. Corp., 165 Ariz. 1, 4, 795 P.2d 827, 830 (App.1990). We will uphold the court's ruling if summary judgment is correct for any reason. See Sanchez v. Tucson Orthopaedic Inst., P.C., 220 Ariz. 37, ¶ 7, 202 P.3d 502, 504 (App.2008).

¶ 7 The doctrine of implied warranty of workmanship and habitability was determined to apply to new home construction in Columbia Western Corp. v. Vela, 122 Ariz. 28, 33, 592 P.2d 1294, 1299 (App.1979). In that case, the court held, “as to new home construction, ... the builder-vendor impliedly warrants that the construction was done in a workmanlike manner and that the structure is habitable.” ⁵Id. “A claim for breach of the implied warranty sounds in contract.” Lofts at Fillmore Condo. Ass'n v. Reliance Commercial Constr., Inc., 218 Ariz. 574, ¶ 5, 190 P.3d 733, 734 (2008); see also Woodward v. Chirco Constr. Co., 141 Ariz. 514, 516, 687 P.2d 1269, 1271 (1984). As our supreme court has affirmed, generally “ ‘only the parties and privies to a contract may enforce it.’ ” Lofts, 218 Ariz. 574, ¶ 5, 190 P.3d at 734,quoting Treadway v. W. Cotton Oil & Ginning Co., 40 Ariz. 125, 138, 10 P.2d 371, 375 (1932).

¶ 8 In 1984, however, the court created a narrow exception to the contractual privity requirement by holding that subsequent homebuyers, despite the lack of contractual privity, could sue the homebuilder for breach of implied warranty. Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 245, 678 P.2d 427, 430 (1984). The court noted that latent defects are “just as catastrophic on a subsequent owner as on an original buyer” and “[b]ecause the builder-vendor is in a better position ... to prevent occurrence of major problems, the costs of poor workmanship should be his to bear.” Id. at 245, 678 P.2d at 430. The court thus held that contractual privity was not required for a subsequent homeowner to sue a builder-vendor for breach of implied warranty and that “any reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally deserving of recovery is incomprehensible.” Id.

¶ 9 Our supreme court further expanded the exception to the privity requirement, albeit narrowly, in Lofts at Fillmore Condominium Association. In Lofts, the court addressed two issues—whether a non-vendor homebuilder gave an implied warranty of workmanship and habitability in a condominium conversion project, and whether residential homebuyers, who had no direct contractual relationship with the builder, could properly bring suit for breach of the implied warranty. 218 Ariz. 574, ¶¶ 7, 14, 190 P.3d at 735, 736. The court answered both in the affirmative. As to the first issue, it held that the builder gave an implied warranty by constructing the new homes, even though it was not also the vendor. Id. ¶¶ 13–14. In addressing the second issue, the court cautiously expanded the exception to the privity requirement to allow suit, holding that “[i]nnocent buyers of defectively constructed homes should not be denied redress on the implied warranty simply because of the form of the business deal chosen by the builder and vendor.” Id. ¶ 17.

¶ 10 On appeal, Yanni first argues that contractual privity is not required to maintain an implied warranty claim. Relying on Lofts, Yanni argues that “implied warranty arises out of the construction of a new home,” rather than contract, and the claim thus “naturally extends to and is properly asserted against [subcontractors] who actually worked on the home.” Requiring contractual privity before a homeowner may bring suit for breach of implied warranty, he argues, “has been abolished in the new home setting.” We disagree that Richards and Lofts changed the rule requiring privity to bring suit for breach of the implied warranty of workmanship and habitability under the circumstances present here.

¶ 11 Yanni correctly states that it is the construction of the home that gives rise to the subject matter of an implied warranty. See Lofts, 218 Ariz. 574, ¶ 13, 190 P.3d at 736 (“ ‘It is the structure and all its intricate components and related facilities that are the subject matter of the implied warranty.’ ”), quoting Moxley v. Laramie Builders, Inc., 600 P.2d 733, 735 (Wyo.1979). But nothing in Richards or Lofts suggests that this language permits a homebuyer to assert a breach of the implied warranty against any subcontractor that contributed to the home's construction in the absence of a contract between the homebuyer and the subcontractor. There is a distinction between the creation of an implied warranty by virtue of construction of a structure and the contractual relationship required to assert its breach as a cause of action. Although an implied warranty flows from the construction of a residence and applies to all of its individual components, the exceptions to the general...