Hudgins v. Bacon ( 1984 )

On Motion for Rehearing.

We must note here that the Holmes v. Worthey doctrine of liability for a defect the builder-seller knew or should have known, is not the “passive concealment doctrine” (see dissent in this case). Passive concealment refers to the “apathetic form of fraud” first allowed as an exception to caveat emptor in Wilhite v. Mays, 140 Ga. App. 816 (232 SE2d 141), affirmed it Wilhite v. Mays, 239 Ga. 31 (235 SE2d 532) and applied by the Supreme Court in P.B.R. Enterprises v. Perren, 243 Ga. 280 (253 SE2d 765). What we and the Supreme Court did in Holmes v. Worthey was extend liability beyond requirement of fraud, to negligence.

It is also worth note that in Holmes v. Worthey, the breach of contract action was clearly founded upon the failure to construct the dwelling in a fit and workmanlike manner, which is the duty implied in the contract to build (Holmes, supra, p. 266), since “ ‘[a]s a general rule, there is implied in every contract for work or services a duty to perform it skilfully, carefully, diligently, and in a workmanlike manner.’ ” Howell v. Ayers, 129 Ga. App. 899, 900 (202 SE2d 189) (cert. denied). However, in affirming Holmes v. Worthey, the Supreme Court apparently “reaffirmed the inapplicability of implied warranty concepts to build-sell agreements for new homes” (Worthey, supra, p. 105; P.B.R. Enterprises, supra), although the statement was made in connection with the ruling on the negligence claim. At the same time, the Supreme Court equated the breach of contract action to what we held necessary for negligence actions, i.e., proof of a defect which the builder knew or in the exercise of ordinary care would have discovered. It therefore seems that, if there is in the sell-build contract no implied obligation to build the house in a fit and workmanlike manner, in most cases there will be only a negligence action, as necessarily the builders-sellers will soon cease to promise to build, complete, or construct the house in a workmanlike manner. For practical purposes, unless the usual duty to employ skill is implied in a contract to build (see Howell v. Ayers, supra), there will be no contract actions, and all that we and the Supreme Court have said on the subject will be extinct, including the grounds for holding liable most developers and investors.

Rehearing denied.