Sewell v. Gregory ( 1988 )

McGRAW, Justice:

This is an appeal from an order by the Circuit Court of Berkeley County dismissing certain claims of Arthur L. and Irma J. Sewell, Appellants, against Appellee Paul G. Gregory, Sr., both individually and in his various business capacities.

In 1975, the Appellee built a three bedroom house in his Forest Hills subdivision, located near Martinsburg, and sold the house to William L. and Beverly K. Toup.¹ When the Toups sold the house some three and one-half years later to the Appellants, the Appellee acted as the real estate agent. In June of 1979, two months after the Appellants moved into their new home, heavy rains caused flooding throughout much of the house, resulting in significant damage. The Appellants made various efforts to correct the flooding problem, but contend they did not work because of how and where the house was constructed.

The Appellants filed suit on December 21, 1983, among other things, complaining that the Appellee negligently designed and constructed the house, that he was strictly liable for selling the house in a defective condition, and that he breached the warranty of habitability and fitness for use as a family residence. The circuit court dismissed these counts whereby the Appellants sued the Appellee directly, noting the lack of privity of contract.²

I.

Two of the Appellant’s claims against the Appellee are based in the tort theories of negligence and strict liability. In West Virginia, tort actions must be brought within a maximum of two years of the time they accrue. W.Va.Code § 55-2-12 (1981 Replacement Vol.). The circuit court was correct in stating that the two year statute of limitation for a tort action arising from latent defects in the construction of a house begins to run when the injured parties knew, or by the exercise of reasonable diligence should have known, of the nature of their injury and its sources, and determining that point in time is a question of fact to be answered by the jury. See Syl. Pt. 1, Hickman v. Grover, 178 W.Va. 249, 358 S.E.2d 810 (1987); see also Pauley v. Combustion Engineering, Inc., 528 F.Supp. 759 (S.D.W.Va.1981). The flooding involved in this case occurred in June 1979, and the Appellants filed their suit in December 1983, some four and one-half years later. The Appellants contend, however, that they did not discover the defective nature of the construction until after their attempts at correcting the problem failed, a date not entirely apparent from the record. Assuming that date to be less than two years before the suit was filed, it is up to the jury to determine when the Appellants discovered the defect and if the tort claims are barred by the statute of limitation.

We assume, although it is difficult to ascertain with certainty from the order, that the circuit court intended to dismiss the Appellants’ two tort claims because of lack of privity. The concept of privity is one associated with claims under contract theories and is not generally required in tort actions. Hawthorne v. Kober Construction Co., 196 Mont. 519, 640 P.2d 467 (1982); J. Lee and B. Lindahl, Modern Tort Law § 2.05 (Revised Ed. 1977-88); see W. Prosser, Handbook on the Law of Torts § 93, at 667-68 (5th ed. 1984). From the earliest days of law school, prospective attorneys are taught that the three elements of every tort action are the existence of a legal duty, the breach of that duty, and damage as a proximate result. Joseph v. Hustad Corp. 153 Mont. 121, 454 P.2d 916, 918 (1969). “[I]n matters of negligence, liability attaches to a wrongdoer, not because of a breach of a contractual relationship, but because of a breach of duty which results in an injury to others.” Wright v. Creative Corp., 30 Colo.App. 575, 578, 498 P.2d 1179, 1181 (1972). Thus, the concept of privity is not relevant to the instant tort claims.

Most courts which have considered the issue have encountered no difficulty in recognizing the existence of a negligence cause of action against a contractor/builder by a subsequent purchaser. Wright, 30 Colo.App. 575, 498 P.2d 1179; Coburn v. Lenox Homes, 173 Conn. 567, 378 A.2d 599 (1977); Parliment Towers Condominium v. Parliment House Realty, Inc., 377 So.2d 976 (Fla.App.1979); McDonough v. Whalren, 365 Mass. 506, 313 N.E.2d 435 (1974); Arnold v. New City Condominiums Corp., 78 App.Div.2d 882, 433 N.Y.S.2d 196 (1980); Terlinde v. Neely, 275 S.C. 395, 271 S.E.2d 768 (1980); Brown v. Fowler, 279 N.W.2d 907 (S.D.1979); Moxley v. Laramie Builders, Inc., 600 P.2d 733 (Wyo.1979). The states which have rejected the negligence claims of subsequent purchasers, e.g. Nastri v. Wood Brothers Homes, Inc., 142 Ariz. 439, 690 P.2d 158 (App.1984); Redarowicz v. Ohlendorf, 92 Ill.2d 171, 441 N.E.2d 324 (1982); Crowder v. Vandendeale, 564 S.W.2d 879 (Mo.1978); see Ellis v. Morris, 128 N.H. 358, 513 A.2d 951 (1986), have done so primarily because their case law prevents recovery for “economic loss” in tort actions, which damages we specifically allowed in Star Furniture Co. v. Pulaski Furniture Co., 171 W.Va. 79, 297 S.E.2d 854 (1982).

The courts which have allowed negligence actions have done so because it is entirely foreseeable that there will be subsequent owners of the houses built.

Liability will be imposed, however, only if it is foreseeable that the contractor’s work, if negligently done, may cause damage to the property or injury to persons living on or using the premises.

The ultimate test of the existence of a duty to use care is found in the foreseeability that harm may result if it is not exercised_ The test is, would the ordinary man in the defendant’s position, knowing what he knew or should have known, anticipate that harm of the general nature of that suffered was likely to result?

Coburn, 173 Conn. at 575-76, 378 A.2d at 602-03 (citations omitted). The Appellee foresaw that there would be subsequent purchasers when he constructed the house in question. Indeed, he took economic advantage of that eventuality by acting as the real estate agent in the sale to the Appellants.

We agree with the Colorado Court of Appeals that a builder “is under a common law duty to exercise reasonable care and skill in the construction of a building ... [and a] subsequent homeowner can ‘maintain an action against a builder for negligence resulting in latent defects which the subsequent purchaser was unable to discover prior to purchase.’ ” Johnson v. Graham, 679 P.2d 1090 (Colo.App.1983), reversed on other grounds, Tri-Aspen Construction Co. v. Johnson, 714 P.2d 484 (Colo.1986). The Appellants may present their evidence of negligence against the Appellee as the builder of the house.³

II.

The remaining claim by the Appellant is based on an asserted breach of an implied warranty of habitability and fitness for use of the premises as a family home.⁴ In Syllabus Point 1 of Gamble v. Main, 171 W.Va. 469, 300 S.E.2d 110 (1983), we recognized such an implied warranty of habitability or fitness for new homes. The question before us now is whether to expand that implied warrant to used homes and subsequent purchasers.

In recognizing an implied warranty for new homes, we joined the majority of jurisdictions. Annotation, Liability of Builder-Vendor or Other Vendor of New Dwelling for Loss, Injury, or Damage Occasioned by Defective Condition Thereof, 25 A.L.R.3d 383 (1969 and Supp.1986); see Gamble, 171 W.Va. 469, at 472, 300 S.E.2d at 114. In Gamble, we rejected the doctrine of caveat emptor and agreed with the New Jersey Supreme Court that (1) the purchase of a home is often the most important transaction of a lifetime, (2) buyers do not generally have the skills necessary to adequately inspect the house or detect defects, and (3) the builder is in a superior position to prevent problems. Gamble, 171 W.Va. 472, 300 S.E.2d 113-14 (citing McDonald v. Mianecki, 79 N.J. 275, 287-89, 398 A.2d 1283, 1289-90 (1979)). All of these reasons apply with equal strength to used homes.

A distinction between purchasers of a new home and subsequent purchasers, however, is that the original buyer is in privity with the builder/vendor. The existence of privity “was traditionally essential to the maintenance of an action on any contract....” Black’s Law Dictionary 1079 (5th ed. 1979). The traditional view, however, has been abandoned in this state and lack of privity is no longer a barrier in matters of implied warranty. As we said well over a decade ago, “[t]he requirement of privity of contract in an action for breach of an express or implied warranty in West Virginia is hereby abolished.” Syllabus, Dawson v. Canteen Corp., 158 W.Va. 516, 212 S.E.2d 82 (1975).

Without the privity barrier, we see no sound reason not to extend the implied warranties recognized in Gamble to subsequent purchasers. We agree with the Supreme Court of Wyoming that:

[t]he purpose of a warranty is to protect innocent purchasers and hold builders accountable for their work. With that object in mind, any reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally as deserving of recovery is incomprehensible.... No reason has been presented to us whereby the original owner should have the benefits of an implied warranty or a recovery on a negligence theory and the next owner should not simply because there has been a transfer. Such intervening sales, standing by themselves, should not, by any standard of reasonableness, effect an end to an implied warranty or, in that matter, a right of recovery on any other ground, upon manifestation of a defect. The builder always has available the defense that the defects are not attributable to him.

Moxley, 600 P.2d at 736.

We hold that implied warranties of habitability and fitness for use as a family home may be extended to second and subsequent purchasers for a reasonable length of time after construction, but such warranties are limited to latent defects which are not discoverable by the subsequent purchasers through reasonable inspection and which become manifest only after purchase. In so holding, we become part of a growing number of jurisdictions which have extended implied warranties to subsequent home purchasers. Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984); Briarcliffe West Townhouse Owners Assn. v. Wiseman Construction Co., 118 Ill.App.3d 163, 454 N.E.2d 363 (1983); Barnes v. Mac Brown & Co., 264 Ind. 227, 342 N.E.2d 619 (1976); Hermes v. Staiano, 181 N.J.Super. 424, 437 A.2d 925 (1981); Bridges v. Ferrell, 685 P.2d 409 (Okla.Ct.App.1984); Terlinde, 275 S.C. 395, 271 S.E.2d 768; Gupta v. Ritter Homes, Inc., 646 S.W.2d 168 (Tex.1983); Moxley, 600 P.2d 733; see Gay v. Cornwall, 6 Wash.App. 595, 494 P.2d 1371 (1972).

III.

The Appellants may put on their proof; it is up to the jury to determine the reasonableness of their claims. The Appellee may, of course, interpose such defenses as are available under our law. The decision of the Circuit Court of Berkeley County dismissing the Appellants’ claims is reversed and the case is remanded for trial.

Reversed and Remanded.

1 . Beverly Toup has since remarried and is now Beverly Ways.

2 . The circuit court declined to rule on the claims made against Toup and Ways, on whether the tort claims should be dismissed because of the expiration of the statute of limitations, and on the issue of the Appellee’s independent liability for actions taken as the real estate agent for sale of the house.

3 . The Appellants have stated a specific claim for negligence in their complaint, contending that the Appellee was negligent in designing and constructing the home below the waterline, proximately resulting in their damages. "The cause of action covered by the term ‘strict liability’ is designed to relieve the plaintiff from proving that the manufacturer was negligent in some particular fashion....” Morningstar v. Black and Decker Manufacturing Co., 162 W.Va. 857, 878, 253 S.E.2d 666, 677 (1979). Because the Appellants have clearly defined a negligence cause of action, we do not need to reach the possibility of maintaining an action for strict liability in tort in the instant case. See Wright 30 Colo.App. at 583, 498 P.2d at 1182-83.

4 . The Appellants, of course, would not be entitled to recover twice for the same damages, but may assert available alternate theories of liability. See W.Va.R.Civ.P. 8, 13, 18; Johnson v. Graham, 679 P.2d 1090.