Melody Home Manufacturing Co. v. Barnes , 31 Tex. Sup. Ct. J. 47 ( 1987 )

GONZALEZ, Justice,

concurring.

My concurring opinion of June 17,1987 is withdrawn and the following is substituted.

I concur with the court’s judgment, but the creation of a new implied warranty is unnecessary, confusing and ill advised. I agree with the court’s conclusion that Melody breached an implied warranty actionable under the Deceptive Trade Practices Act. Tex.Bus. & Com. Code Ann. §§ 17.-41-17.63 (Vernon Supp.1987). However, I would hold that the warranty arises only as a limited extension of the Humber warranty that a builder/vendor will construct a home in a good and workmanlike manner. Humber v. Morton, 426 S.W.2d 554 (Tex. 1968).

Who would have thought when writ was granted that the court would use this cause to create a new warranty and to overrule G-W-L, Inc. v. Robichaux, 643 S.W.2d 392 (Tex.1982). I did not and neither did the Barneses, who asked us only to hold that the Humber warranty applied to the repair efforts of a builder/vendor such as Melody. The majority opinion is unrecognizable from the case that was argued and briefed.¹

The court does not write on a clean slate when it creates an implied warranty, applicable to providers of repair services of tangible goods or property actionable under the DTPA. We are not free to create substantive rights by rewriting a statute under the guise of interpretation. Yet, the court’s uninvited imposition of an implied warranty upon all repair service transactions does just that by extending the scope of the DTPA far beyond its intended bounds.² The majority’s action constitutes an improper excursion into the legislative arena. See Seay v. Hall, 677 S.W.2d 19, 25 (Tex.1984); Ex Parte Salter, 452 S.W.2d 711 (Tex.Civ.App. — Houston [1st Dist.] 1970, writ ref d).

BACKGROUND

In order to underscore my disagreement with the court’s opinion it is necessary that I set out in more detail the findings of the jury and the judgment of the trial court. As acknowledged by this court, the Barnes-es alleged two theories of recovery against Melody Home: (1) breach of the implied warranty that the house was constructed in a good and workmanlike manner, Humber v. Morton, 426 S.W.2d at 554,³ and (2) breach of the implied warranty to repair the house in a good and workmanlike manner (the service warranty).⁴ The jury found Melody Home in breach of both warranties and awarded damages as follows:

A. Failure to manufacture the modular home in a good and workmanlike manner;

Answer: $100

B. Failure to repair the modular home in a good and workmanlike manner; Answer: $3,000

The jury further found that the breach of the service warranty was done knowingly, but that the breach of the Humber warranty was not. Conditioned upon the finding that the service warranty was knowingly breached, the jury awarded discretionary DTPA damages of $5,000. The jury also found that the Barneses had not failed to give Melody Home a reasonable opportunity to repair the defects and determined the Barneses’ reasonable attorney’s fees.

Based on these findings, the trial court rendered judgment awarding the following sums to the Barneses:

(A) $3,100 in actual damages;

(B) $2,000 in accordance with the provisions of § 17.50(b)(1) of the Texas Business and Commerce Code which provides for automatic doubling of plaintiff’s first $1000 in actual damages;

(C) $5,000 in accordance with the provisions of § 17.50(b)(1) of the Texas Business Code (sic) which are discretionary damages within the discretion of the jury when a deceptive trade practice is found to have been knowingly committed;

(D)-(G) ... (reasonable attorney’s fees for trial and appeal).

From the jury findings it is evident that the punitive DTPA damages of $2000 in paragraph (B) of the judgment are premised on the breach of the service warranty and that the discretionary DTPA damages of $5000 in paragraph (C) of the judgment are premised on the knowing violation of the service warranty.

POLICY ANALYSIS

Even if this court were free to extend the DTPA as the court has done, there are other reasons for my disagreement with the majority opinion. We have heard no public outcry indicating that services consumers’ existing remedies are inadequate. No showing is made that the Legislature has been requested to amend the DTPA to provide a cause of action for breach of such an implied warranty applicable generally to service providers. The majority cites no authority that convinces me that any other public policy requires that we create a new cause of action under the DTPA premised on breach of an implied warranty.⁵

The court’s opinion is especially disturbing in light of the fact that we so recently refused to create an implied warranty for professional service transactions. Dennis v. Allison, 698 S.W.2d 94 (Tex.1985).⁶ Under much more compelling facts than are present here, we concluded that the creation of an implied warranty was unnecessary because the plaintiff already possessed adequate remedies to redress the wrong.⁷ How is the present case any different? I would follow the reasoning of this court in Dennis v. Allison and decline to create an implied warranty for repair services. What has happened in the few months since Dennis v. Allison to alter our reasoning? How can there be any semblance of predictability and stability in our law with such sudden and abrupt changes in the writings of our highest court for civil matters?

Instead of extending Humber, the court elects to create a new implied warranty applicable to repair services. This is done on the basis of public policy and not as the logical extension of existing ease law.

Although the court lists a number of cases in footnote 2 which purport to recognize an implied warranty that repair services be rendered in a good and workmanlike manner, it is important to recognize that the present opinion, actually judicially creates the implied warranty which it uses to serve as a catalyst for DTPA damages. The cases listed by the majority in footnote 2 simply serve to illustrate that the term “implied warranty” has no fixed legal meaning at common law.⁸

EXISTING REMEDIES

The tenor of the court’s policy discussion, is that the purchaser of services lacks a remedy for substandard performance. Such a suggestion is unfounded because the service consumer has a choice of remedies for substandard performance under both contract and tort. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947). The implied duty of good and workmanlike performance has been applied under contract principles as an affirmative defense (failure of consideration) or offensively under negligence principles to collect damages proximately caused by unskillful and deficient work. See Compton v. Polonski, 567 S.W.2d 835 (Tex.Civ.App. — Corpus Christi 1978, no writ); New Trends, Inc. v. Stafford-Low-don Co., 537 S.W.2d 778 (Tex.Civ.App.— Fort Worth 1976, writ ref’d n.r.e.); Westbrook v. Watts, 268 S.W.2d 694 (Tex.Civ. App. — Waco 1954, writ ref’d n.r.e.). Moreover, providers of services are already subject to suit under the “laundry list” of deceptive acts contained in section 17.46 of the DTPA. See, e.g., Tex.Bus. & Com.Code Ann. § 17.46(b)(5) (Vernon Supp. 1987) (representing that services have characteristics or benefits which they do not have); § 17.46(b)(7) (representing that services are of a particular standard, quality or grade, if they are of another); § 17.46(b)(21) (representing that services have been performed that have not been performed). In a contract action, the consumer can recover attorney fees under Chapter 38 of the Civil Practice and Remedies Code. Tex.Civ. Prac. & Rem.Code Ann. §§ 38.001-38.006 (Vernon 1987). Before the court concludes the additional remedies provided by an implied warranty under the DTPA are necessary to protect any Texas consumer, more evidence of such need should be forthcoming than is presented here.

The question posed by the court is who should bear the loss. This question answers itself. Obviously, if the service provider has negligently performed his job, he should respond in damages. The real question is not should we compensate the injured plaintiff, but how much should we punish the service provider. In egregious cases, exemplary damages are already available for grossly negligent conduct. I see no compelling policy reason based in this record for subjecting negligent providers of service who do not engage in deception to the statutory penalties prescribed by the DTPA as a matter of law.

Limits — New Warranty

My next concern is with what constitutes a breach of the implied service warranty and how such a breach is to be proven. The court writes that a service provider impliedly warrants that services will be performed in a good and workmanlike manner which means a manner generally considered proficient by those capable of judging such work. Expert testimony is necessary “unless the nature of the breach of this implied warranty is plainly within the common knowledge of laymen.” 741 S.W. 2d 355.

The facts in this case serve to show how broadly this implied warranty will be applied in the future. The original defect in the modular home consisted of Melody Home’s failure to properly connect the sink to a drainpipe hidden from view by a wall. The jury found that this defect caused $100.00 in damages. The Barnes informed Melody Home of the defect and the result ing damage that it had caused. Melody Home workmen came out twice to repair the damage, but succeeded only in making matters worse. The repair efforts were so inept that the jury found them to be the cause of $3,000.00 in damages to the Bameses.

Examining the court’s opinion for the precise damage caused by Melody Home, I find “that additional damages were caused by the repair,” “workmen cut and tore linoleum,” and “failed to reconnect the washing machine drain, causing the house to flood with resulting damage to the floors, cabinets and carpeting.” Later in the opinion when discussing the potential need for expert testimony to prove a breach of the service warranty, the court concludes that none was necessary in this case because “the jurors had sufficient knowledge to find that the failure to connect a washing machine drain would not be considered good and workmanlike by those capable of judging repair work.” 741 S.W.2d 355.⁹

This assumes that the washing machine “flood” was the producing cause of all damages and that reconnecting the washing machine was a task within Melody Home’s implied warranty. Melody Home, however, did not come to the Barnes’ home to install a washing machine. Melody Home sent workmen to repair the water damage to flooring, drywall and trim caused by the original defect. In attempt^ ing these repairs, it was necessary to move the washing machine. I agree that Melody Home was negligent in not reconnecting the washer’s drain but, does the court intend to suggest that the failure to reconnect the washer was the actual breach of the implied warranty? Does the implied warranty go to every incidental service performed, regardless of its nature? Assuming Melody Home workmen had done a flawless job repairing the damage caused by the original defect, would the failure to reconnect the washer still be the basis for D.T.P.A. damages? Are there any limits on this new implied warranty?

The court offers additional guidance when it writes: “We do not require service providers to guarantee the results of their work; we only require service providers who repair or modify existing tangible goods or property to perform those services in a good and workmanlike manner.” 741 S.W.2d 354. This explanation, however, is inconsistent with the strict liability analysis which precedes it. If a legal meaning can be attached to the term “warranty”, it is as a guarantee to accomplish a result or as a guarantee of the truth of an existing fact. Under products liability the focus is on the character of the product and not the conduct of the manufacturer or distributor. The duty implied at law is that the product sold to the consumer is not unreasonably dangerous, but is suited for its intended purpose. The emphasis in strict liability is on results, not conduct.

So what does the court intend when it states that the implied warranty here goes to performance and not results? Although the court calls it a warranty and supports its creation with strict liability analysis, I suspect that negligence is still the standard by which to measure compliance.

Accompanying every service contract is a promise, either expressed or implied, that the service will be rendered with reasonable care; i.e. that the work will be performed in a diligent and reasonably skillful manner. Williston, supra at 1012C. Breach of this implied promise may give rise to a breach of contract action or a tort action for negligence. Montgomery Ward & Co. v. Scharrenbeck, supra. The concept of good and workmanlike performance is but an expression of the reasonable care obligation. Coulson v. Lake LBJ Municipal Utility District, 734 S.W.2d 649 (Tex. 1987). The court’s explanation then that the warranty goes to performance not results seems to indicate that negligence is still the operative standard when determining whether repair services have been rendered in a good and workmanlike manner. See Hoffman v. Simplot Aviation, Inc., 97 Idaho 32, 539 P.2d 584, 590 (1975) (“Since the case involved the rendition of personal service, a cause of action does not exist for breach of implied warranty in the absence of fault on the part of the actor.”) But see Coulson, 734 S.W.2d 649, 652 (Spears, J. concurring) (“Negligence ... does not necessarily encompass a breach of the implied warranty of good and workmanlike manner. An engineer could exercise due care, ordinary prudence and perform reasonably but through mistake or ignorance, still render unskilled or shoddy services.”). One high court has observed “it is difficult to imagine a ‘defect’ in a service being something different from the service negligently performed.” Swenson Trucking & Excavating, Inc. v. Truckweld Equipment Co., 604 P.2d 1113 (Alaska 1980).

If my interpretation is in error and it is the court’s intention to dispense with proof of negligence and extend the strict liability in tort to certain service providers, we are adopting a decidedly minority view. Virtually all efforts to extend strict liability in tort to pure service transactions have been rebuffed. 2 R. Hursh and H. Bailey, American Law of Products Liability, § 6:17 (2nd ed. 1974); 5 F. Harper, F. James, Jr., and 0. Gray, The Law of Torts, Section 28.19(A) (2nd ed. 1986); Sales, “The Sales-Service Transaction: A Citadel Under Assault,” 10 St. Mary’s L.J. ’13, 18-25 (1978). The Restatement also recommends that the conduct of service providers be judged by a negligence standard. Restatement (2d) of Torts, § 404 (1965).

Our court has adopted the rule of strict liability in tort as set forth in Section 402(A) of the Restatement (2d) of Torts. The Restatement deals specifically and only with the sale of a product. This is not by accident because strict tort liability policy considerations are not easily translated to the sale of services. In fact, there exist a number of countervailing policy considerations against extending strict tort liability to the service provider. The service provider cannot effectively distribute the risk of loss to consumers. Unlike the mass production of products for distribution to the consuming public, there exists no mass production of services. Services are custom tailored to meet the particular needs of the individual consumer. Consequently, there exists no vast body of distant consumers who are confronted with the difficult burden of tracing and proving unreliable and incompetent workmanship by the service performer. The service transaction emanates from a face to face contractual relationship in which the service consumer seeks a skilled, knowledgeable, and experienced service provider.

The service provider sells skill and time. Time limits the number of consumers that may be serviced. It is unrealistic to suggest that a service provider has the ability to effectively spread the risk among his limited number of customers.

Definition

Further, it is unrealistic to propose a standard definition for what constitutes a good and workmanlike performance. The obligation to perform a job in a good and workmanlike manner requires that the job be completed in a diligent and reasonably skillful manner. Whereas the standard of diligence may be much the same in every contract of employment, whatever its nature, the standard of skill is subject to great variation. Unless the contract contains some definition, the question is one of fact for the jury. It depends not so much upon expert testimony as it does the facts and circumstances surrounding the particular transaction and the reasonable expectations of the consumer. The degree of skill reasonably expected may depend upon such factors as the nature of the job, the amount of compensation, the age and experience of the service provider, and the representations made by the service provider.

The court, however, proposes an objective standard by which to measure the proficiency of the service provided. What I fear the court has done under the name of public policy is convert an otherwise simple contract or negligence claim into an indefinite implied warranty claim which will make every trial involving repair services a battle of conflicting experts.

CONCLUSION

Limiting the scope of this decision to an extension of the Humber warranty makes sense. This court recognized in Humber that the purchase of a home is a uniquely important transaction in the life of a consumer. Humber, 426 S.W.2d at 561 (quoting Bethlahmy v. Bechtel, 91 Idaho 55, 415 P.2d 698, 710 (1966)). Logically, a builder/vendor who attempts to repair a home in order to bring it into compliance with the Humber warranty should be required to conform to the same standard of good and workmanlike construction that governed his initial building efforts. The homebuyer’s interest — a well-built home — remains the same. Homebuilders can claim no unfair surprise in being held to the same standard of performance in repair efforts as bound them in the initial construction of a home.

Applying the Hum,ber warranty to the facts of this ease, as suggested in oral argument by the Barneses, does not run afoul of the intended scope of the DTPA. Humber was decided law at the time the DTPA was passed. Moreover, there is a certain symmetry to a result under which a defendant who may reduce his Humber /DTPA exposure by correcting defects can also increase his exposure by failing to perform in a good and workmanlike manner.

Finally, since this opinion impairs vested substantive rights acquired under existing law, the court’s decision should be given prospective application. See: Holder v. Wood, 714 S.W.2d 318, 319 (Tex.1986).

HILL, C.J., joins in this concurring opinion.

1 . The issue of whether a party can waive or disclaim the implied warranty of habitability is not before us. It was not preserved for review. The court has violated our own rules and given an advisory opinion. Nonetheless, if the court feels compelled to write on this issue, my preference is that we not deny parties the right to contract but require that the waiver or disclaimer be in clear and unequivocal language in order for it to be effective. See G-W-L, Inc. v. Robichaux, 643 S.W.2d 392, 394-95 (Tex.1982) (Spears, J. dissenting).

2 . House Bill 417, the source of the DTPA, was drafted by the attorney general’s office and reflected the input of both consumer advocates and representatives of business and industry. Discussions in committee hearings by both proponents and opponents of the bill make it clear that the warranty provisions of the DTPA were aimed chiefly at breaches of the statutory implied warranties of merchantability and fitness for a particular purpose. Tex.Bus. & Com.Code Ann. §§ 2.314, 2.315 (Vernon 1968). See The Texas Deceptive Trade Practices — Consumer Protection Act: Hearings of Tex.H.B. 417 Before the House Comm, on Bus. & Indus, and Subcommittee, 63d Leg. (Feb. 27 and Mar. 28, 1973) (tapes available at House Committee Coordinator’s office).

3 . This warranty was in existence when the DTPA was passed and was subject to its remedies.

4 . This warranty was unknown to Texas law when this lawsuit was filed.

5 . In order to bolster its opinion that a great social problem exists that cries out to be remedied by the imposition of strict tort liability to service providers, the court says: "With this change (from a goods to a service oriented economy) has come a marked decrease in the quality of services. Similar control problems and consumer protection interests led this court and the legislature to apply the theory of implied warranty to products, goods and new houses.” 741 S.W.2d 353. The "authority” to prove these "legislative facts” is found in footnote 5 which are three magazine articles in Time, Fortune and New York Times. These articles do not cite empirical studies that can withstand critical scrutiny as to their validity. See generally Walker & Monahan, Social Frameworks: A New Use of Social Science in Law, 73 Va.L.Rev. 559 (1987).

6 .Dennis sued her psychiatrist (Allison) under a theory of breach of implied warranty to follow the ethical commandments for psychiatrists. He beat and raped her. The jury found in her favor and awarded money damages. The trial court disregarded the jury answers and rendered judgment for Allison. The court of appeals affirmed the judgment of the trial court. We affirmed.

7 . The court concludes its discussion of fundamentals normally associated with strict liability in tort, with the statement ... "The caveat emptor rule as applied to services such as repairs is an anachronism patently out of harmony with modern service buying practices.” 741 S.W.2d 353-54,1 agree. This doctrine has been dead in Texas for quite some time. See: Humber v. Morton, 426 S.W.2d at 558.

8 . As Professor Williston observed, the word warranty "illustrates as well as any other the fault of the common law in the ambiguous use of terms.” 5 S. Williston, A Treatise on the Law of Contracts, § 673 (3d ed. 1961). Professor Llewellyn, father of the Uniform Commercial Code, perhaps said it best when he wrote: "To say warranty is to say nothing definite as to legal effect." K. Llewellyn, Cases and Materials on the Law of Sales at 211 (1930).

9 . The record is silent about the jurors’ education, knowledge and experience. The court makes an impermissible fact finding and makes it on a silent record to boot.