Bunch v. Cooper ( 1997 )

IN THE COURT OF APPEALS OF TENNESSEE
ROBERT G. BUNCH, et ux. ) C/A NO. 03A01-9705-CV-00154
DEBORAH C. BUNCH, )
)
Plaintiffs-Appellants, )
)
)
FILED
)
v. ) September 30, 1997
) APPEAL AS OF RIGHT FROM THE
) KNOX COUNTY CIRCUIT COURT Jr.
Cecil Crowson,
) Appellate C ourt Clerk
)
)
GARY J. COOPER, et ux., )
DOROTHY L. COOPER, and )
GJC CONSTRUCTION CO., )
) HONORABLE HAROLD WIMBERLY,
Defendants-Appellees. ) JUDGE
For Appellants For Appellees
DONALD E. OVERTON DAVID E. SMITH
GLENNA W. OVERTON Hodges, Doughty & Carson
Knoxville, Tennessee Knoxville, Tennessee
OPINION
AFFIRMED AND REMANDED Susano, J.
1
Robert G. Bunch and his wife, Deborah C. Bunch (“the
Buyers”), brought suit against Gary J. Cooper and his wife,
Dorothy L. Cooper (“the Sellers”), to recover damages allegedly
caused by the Sellers’ faulty construction of their house. Their
suit is based upon the theory that the sale of their newly-
constructed residence is subject to a four-year implied warranty
that the house “was fit for the purposes intended.” The jury
returned a verdict of $1,000 for the Buyers. They appealed,
asserting one issue, which, as taken verbatim from their brief,
is as follows:
Whether or not the trial court erred in its
instructions to the jury that the one year
warranty called “Policies and Procedures”
extended to plaintiffs at closing applied to
the purchase of the plaintiffs’ home from
defendants rather than instructing the jury
that the four year implied warranty which is
extended to plaintiffs by Dixon v. Mountain
City Construction Co., 623 S.W.2d 538 (Tenn.
1982) applied to the purchase by plaintiffs
of their home from defendants.
I. Facts
On July 11, 1992, the Buyers and the Sellers executed a
Real Estate Sales Contract (“the Contract”), by the terms of
which the Sellers agreed to sell and the Buyers agreed to buy a
house to be constructed at 2314 Scanlon Court in Powell for
$60,900. The Contract contains no warranties; in fact, it
recites, in capital letters, “NO WARRANTY BY SELLER SHALL SURVIVE
CLOSING.”
2
The Contract is a printed “fill in the blanks” form
with the name and address of Wood Smith Real Estate1 printed at
the top of the form. Some, but not all, of the blanks on the
Contract are filled in. It provides for a closing date of
October 30, 1992. Curiously, the Contract does not indicate, in
any way, that the house has not yet been built.
On September 30, 1992, the parties closed the sale and
a warranty deed was executed and delivered. The Buyers moved
into their residence the same day. At the closing, the Sellers
handed the Buyers a 21-page document. The first page reflects
the title of the document as “Policy and Procedures.” A one-page
“Table of Contents” is followed by (a) another cover page
entitled “Warranty Procedures,” (b) a 17-page “Warranty
Statement,” and (c) a one-page listing of subcontractors with
their phone numbers. The subject document essentially advised
the Buyers that the Sellers expressly warranted the construction
-- materials and workmanship -- for one year. On the first page
of the “Warranty Statement” is found the following disclaimer in
capital letters:
THIS WARRANTY IS IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY, HABITABILITY, AND FITNESS
FOR A PARTICULAR PURPOSE.
At the closing, the Buyers signed a form entitled
“Acknowledgment of Receipt” wherein they “acknowledge[d] receipt
from GJC Construction [of] the exclusive and total warranty upon
1
Apparently, Wood Smith Real Estate was not involved in the sale.
3
the house located at...2314 Scanlon Court, Powell.” That
document also recites that
I/we do hereby acknowledge that the warranty
herein received is the total and exclusive
warranty excluding any and all implied
warranties, relating to the home being
purchased herein.
The parties agree that there were no discussions regarding
warranties prior to the closing.
After the Buyers moved into their new house, they
encountered a number of problems, some of which were fixed by the
Sellers. Water problems were discovered more than one year after
the closing. These problems, which were not remedied by the
Sellers, prompted this litigation.
II. The Controversy
The Buyers argue here, as they did in the trial court,
that this sale is subject to an implied warranty, specifically
the one first recognized in this jurisdiction in the case of
Dixon v. Mountain City Const. Co., 632 S.W.2d 538 (Tenn. 1982).
Relying on T.C.A. § 47-2-725, they contend that this implied
warranty is for a period of four years.
At trial, the Buyers submitted an proposed jury
instruction to the trial court. The charge advised the jury that
the subject transaction was subject to a four-year implied
warranty of good workmanship and materials. The trial judge
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refused to give the requested instruction. He held that the sale
was instead subject to the one-year express warranty alluded to
above. The Buyers disagree with the trial court’s reasoning.
They urge us to find that the fact the Contract was silent as to
any warranties means, as a matter of law, that the implied
warranty recognized in Dixon is applicable to this case.
III. Law and Analysis
In Dixon, the Supreme Court established what has come
to be known as the implied warranty of good workmanship and
materials. In so doing, they adopted the implied warranty set
forth in the North Carolina Supreme Court case of Hartley v.
Ballou, 209 S.E.2d 776, 783 (1974):
We adopt that implied warranty rule in this
State and in accord with the factual
situation in the present case hold that it
shall also apply where, at the time the
contract is entered into, a dwelling is to be
constructed by the builder-vendor. This
warranty is implied only when the written
contract is silent. Builder-vendors and
purchasers are free to contract in writing
for a warranty upon different terms and
conditions or to expressly disclaim any
warranty.
Dixon, 632 S.W.2d at 542. The first reported appellate opinion
following Dixon that examines the implied warranty under
discussion is the Court of Appeals’ decision in the case of
Dewberry v. Maddox, 755 S.W.2d 50 (Tenn.App. 1988). In Dewberry,
we addressed the following provisions in a sales contract:
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Seller agrees to have plumbing, heating,
electrical, appliances, and air conditioning
systems in good working order at time of
closing.
* * *
Purchaser accepts Property in its existing
condition, no warranties or representations
having been made by Seller or Agent which are
not expressly stated herein.
We held that the “in good working order” statement in that case
was not “sufficient to supplant the implied warranty enunciated
in Dixon.” Id. at 54. In so doing, we stated that
[i]t would completely defeat the precedent
set by Dixon if a seller could circumvent the
implied warranty by expressly warranting some
aspect of a new house which has nothing to do
with the workmanship or the materials used.
Id. We also held that the attempted disclaimer was not “adequate
to disclaim the [Dixon] implied warranty.” Id. We opined that
in order to have a valid disclaimer, “it must be in clear and
unambiguous language.” Id.
The Dewberry case was followed by our decision in
Axline v. Kutner, 863 S.W.2d 421 (Tenn.App. 1993). In Axline, we
again found to be inadequate a disclaimer identical to the one
quoted above from Dewberry. Id. at 424-25. In Axline, we also
found that a provision in the sales contract -- “1 year builders
warranty included” -- was “meaningless” and not sufficient to
avoid the implied warranty of good workmanship and materials
“because there is no indication what the builder is warranting.”
Id. at 424.
6
In the instant case, we find and hold that the trial
court was correct in refusing to instruct the jury regarding the
implied warranty of good workmanship and materials. In this
case, the Sellers, who were in the business of building houses,
furnished the Buyers an express, detailed, expansive warranty
that covered workmanship and materials for a period of one year.
That warranty set forth reasonable procedures for invoking its
provisions, including a provision requiring that all claims be
made in writing.
The evidence is very clear that the Buyers understood
that this transaction was subject to a one-year express warranty.
They acknowledged in writing that they received a copy of that
warranty and further acknowledged that it was the only warranty
involved in the transaction. The warranty includes a disclaimer
that, unlike the one in Dewberry and Axline, is “clear and
unambiguous” as to the warranties disclaimed. See Dewberry, 755
S.W.2d at 54. Both of the Buyers testified at trial that they
read the Sellers’ express warranty and hence knew that there was
a one-year warranty covering their transaction.
The Buyers attempt to avoid the one-year express
warranty by pointing out that the Contract itself is silent as to
any warranties. They claim that the Dixon implied warranty
should control this case because, quoting from Dixon, “[t]his
warranty is implied only when the written contract is silent.”
Dixon, 632 S.W.2d at 542. Hence, so the argument goes, a
contract silent as to warranties gives rise to the Dixon implied
warranty.
7
We do not believe the quoted language from Dixon is an
impediment to the effectiveness of the express warranty furnished
to, read by, and acknowledged by the Buyers at the closing.
While it is true that the Contract in the instant case is silent
as to warranties, it is clear that the parties intended that this
transaction would be subject to the one-year express warranty.
The Buyers not only accepted the one-year express warranty at the
closing, they also made claims under it and received benefits as
a result of it. In the record before us are two letters from the
Buyers to the Sellers -- one dated October 27, 1992, and the
other dated September 28, 1993 -- listing items for repair under
the one-year warranty. The second of the two letters was written
two days before the one-year anniversary of the closing. It
includes the statement that “[t]his is a list of items that need
to be fixed or repaired on our 1 year warranty.” (Emphasis
added).
Mr. Bunch wrote the Sellers a third letter dated August
23, 1995, but the proof indicates that it was actually written
August 23, 1994. While the letter is well beyond the one year
period of the warranty, it is significant because it also refers
to the “1 year warranty.” Mrs. Bunch’s testimony is particularly
significant on this subject:
Q. All right. You wrote these letters for
your husband about the one-year warranty, did
you not?
A. Yes, sir.
Q. And you all were relying on that
warranty?
A. Yes, sir.
8
Q. And he’s stated -- Did you write the
letter in August of ‘94 that has the date of
August of ‘95?
A. I’m not sure if he wrote it or I wrote
it. I’m not sure which it was.
Q. At any rate, it also refers to the one-
year warranty, does it not?
A. Yes, sir, it does.
Q. You all reviewed that warranty when you
got it?
A. Yes, sir, we looked over it.
Q. And you both signed the acknowledgment of
the receipt of it?
A. Yes, sir.
Q. You both read it?
A. Yes, sir.
Q. Both read the acknowledgment form, the
receipt of it?
A. Yes, sir.
Q. And you acted on and used that as part of
your contract with Mr. and Mrs. Cooper?
A. I’m not sure I understand the question.
Q. The warranty. In other words, you all,
when you called them or wrote to them, you’d
write to them about the warranty?
A. Yes, sir.
Thus, the parties to the Contract clearly recognized
the one-year express warranty as a part of their transaction.
The “rule of practical construction” is applicable to the facts
of this case:
...the interpretation placed upon a contract
by the parties thereto, as shown by their
acts, will be adopted by the court and that
to this end not only the acts but the
9
declarations of the parties may be
considered.
Hamblen County v. City of Morristown, 656 S.W.2d 331, 335 (Tenn.
1983).
In the instant case, there is an express warranty of
good workmanship and materials with a clear disclaimer of any
implied warranties including “...IMPLIED WARRANTIES OF
MERCHANTABILITY, HABITABILITY, AND FITNESS FOR A PARTICULAR
PURPOSE.” Under Dixon, these provisions are sufficient to render
inapplicable the implied warranty described in that case. The
trial court was correct in refusing to give the requested
instruction. The parties to the Contract “contract[ed] in
writing for a warranty upon different terms and conditions.”
Dixon, 632 S.W.2d at 542.
The judgment of the trial court is affirmed. Costs on
appeal are taxed against the appellants and their surety. This
case is remanded to the trial court for enforcement of the
judgment and collection of costs assessed there, all pursuant to
applicable law.
__________________________
Charles D. Susano, Jr., J.
CONCUR:
________________________
Houston M. Goddard, P.J.
________________________
10
Herschel P. Franks, J.
11