Yanni, Thompson, Gunderson, Sayegh v. Tucker Plumbing, Inc., Brewer Enterprises, Inc.

IN THE
ARIZONA COURT OF APPEALS
DIVISION TWO
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
Filed November 20, 2013
Appeal from the Superior Court in Pinal County
No. CV201200476
The Honorable Gilberto V. Figueroa, Judge
AFFIRMED
COUNSEL
Kasdan, Simonds, Weber & Vaughan, L.L.P., Phoenix
By Stephen L. Weber, Michael J. White, and James W. Fleming
Counsel for Plaintiffs/Appellants
Jones, Skelton & Hochuli, P.L.C., Phoenix
By Michael A. Ludwig, Lori L. Voepel, R. Christopher Pierce,
and Jonathan P. Barnes
Counsel for Defendant/Appellee Tucker Plumbing, Inc.
O’Connor & Campbell, Phoenix
By J. Daniel Campbell and Stephanie Van Splunder
Resnick & Louis, P.C., Scottsdale
By Mitchell J. Resnick and Michael G. Wales
Co-counsel for Defendant/Appellee Tucker Plumbing, Inc.
Welsh Law Group, P.L.C., Phoenix
By Kenneth W. Welsh and Keely Verstegen
Counsel for Defendant/Appellee Brewer Enterprises, Inc.
Co-counsel for Defendant/Appellee Tucker Plumbing, Inc.
Rai & Barone, Phoenix
By Adam B. Campbell and Shannon R. Guererro
Co-counsel for Defendant/Appellee Brewer Enterprises, Inc.
OPINION
Presiding Judge Kelly authored the opinion of the Court, in which
Judge Espinosa and Judge Eckerstrom concurred.
K E L L Y, 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,
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YANNI v. TUCKER PLUMBING
Opinion of the Court
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.”
1Although Yanni describes this suit as a “class action,” the
trial court did not address whether the suit could be maintained as a
class action pursuant to Rule 23(c), Ariz. R. Civ. P.
2We treat the implied warranty of workmanship and
habitability as a single warranty. See Nastri v. Wood Bros. Homes, Inc.,
142 Ariz. 439, 444, 690 P.2d 158, 163 (App. 1984) (holding Arizona
decisions make no significant distinction between workmanship and
habitability), rejected on other grounds by Flagstaff Affordable Hous. Ltd.
P’ship v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d 664 (2010).
3Yanni
concedes there was no privity between the
homeowners and Subcontractors.
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YANNI v. TUCKER PLUMBING
Opinion of the Court
¶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
4At the same time, the trial court denied Yanni’s cross-motion
for summary judgment. Because the sole issue in both motions was
whether privity is required, and because we conclude that it is, we
do not review the court’s denial of Yanni’s cross-motion for
summary judgment. We also decline to grant oral argument as
requested by Yanni in his opening brief. Rule 18, Ariz. R. Civ. App.
P., requires a party to file a separate instrument requesting oral
argument on or before the earlier of the ten days after the reply brief
is due or filed; Yanni filed no such document.
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YANNI v. TUCKER PLUMBING
Opinion of the Court
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.”5 Id. “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
5The court based its holding, in part, on the rationale that
“[b]uilding construction by modern methods is complex and
intertwined with governmental codes and regulations. The ordinary
home buyer is not in a position, by skill or training, to discover
defects . . . which [are] usually covered up and not open for
inspection.” 122 Ariz. at 32, 592 P.2d at 1298, quoting Tavares v.
Horstman, 542 P.2d 1275, 1279 (Wyo. 1975).
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YANNI v. TUCKER PLUMBING
Opinion of the Court
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,
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YANNI v. TUCKER PLUMBING
Opinion of the Court
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 privity
requirement found in Richards and Lofts have never been extended to
a homebuyer’s claims against a builder’s subcontractors. Yanni has
not alleged any contractual relationship between homeowners and
Subcontractors, nor does he provide any evidence establishing a
disputed issue of material fact on this point. See Bothell, 192 Ariz.
313, ¶ 8, 965 P.2d at 50.
¶12 Citing Arizona’s “strong public policy of protecting
innocent home purchasers,” Yanni further urges this court to hold
those who “actually construct” the home accountable for their work,
regardless of the contractual relationship. However, the policy
reasons for creating the privity exceptions in Richards and Lofts are
not present in this case. In both of those cases, the court recognized
that homes can be constructed and sold pursuant to different
business arrangements, and it rejected the idea that the type of
purchase arrangement could bar a homebuyer from obtaining a
remedy for defective home construction. In Richards, plaintiffs
included homebuyers who had purchased repossessed homes from
a finance company, rather than the builder. 139 Ariz. at 243, 678
P.2d at 428. The court determined that precluding a subsequent
homeowner from suing a builder for breach of implied warranty
based on lack of privity could “encourage sham first sales to insulate
buyers from liability.” Id. at 245, 678 P.2d at 430. Similarly, in Lofts,
the court determined 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.” 218 Ariz. 574, ¶ 17, 190 P.3d at 736.6
6The courts also noted more general policy concerns, such as
protecting innocent and less knowledgeable homebuyers and
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YANNI v. TUCKER PLUMBING
Opinion of the Court
Concerns over depriving homebuyers of a remedy for defective
home construction based on arbitrarily chosen business forms,
however, are not present in this case.
¶13 Nothing in this decision precludes Yanni from pursuing
relief for any deficiencies in Subcontractors’ work. As noted by our
supreme court in Lofts, a party who is not permitted to bring an
implied warranty cause of action against a subcontractor still may
sue a developer, general contractor, or vendor, who may then seek
indemnity from other responsible parties or assign its claim to the
plaintiff. 218 Ariz. 574, ¶ 18, 190 P.3d at 737, referring to Webb v.
Gittlen, 217 Ariz. 363, ¶ 6, 174 P.3d 275, 276 (2008) (unliquidated
non-personal injury claims are generally assignable); see also
Highland Village Partners, L.L.C. v. Bradbury & Stamm Constr. Co., 219
Ariz. 147, ¶ 12, 195 P.3d 184, 187 (App. 2008) (implied warranty
rights can be assigned to third party); Sullivan v. Pulte Home Corp.,
232 Ariz. 344, ¶¶ 13-14, 306 P.3d 1, 3 (2013) (neither statute of repose
nor economic loss doctrine bars tort claims brought against builders
by non-contracting homeowners). We thus reject Yanni’s argument
that Lofts and Richards “ha[ve] abolished [the privity requirement] in
the new home setting.” See Chaurasia v. Gen. Motors Corp., 212 Ariz.
18, ¶ 19, 126 P.3d 165, 172 (App. 2006) (“[W]e leave any further
expansion of Richards to the Arizona Supreme Court.”).7
holding builders accountable for their work, as driving forces
behind creating the privity exceptions in those cases. See Lofts, 218
Ariz. 574, ¶ 16, 190 P.3d at 736; Richards, 139 Ariz. at 245, 678 P.2d at
430.
7Other jurisdictions also have declined to permit homebuyer
suits against subcontractors for breach of the implied warranty in
the absence of privity. See Vonholdt v. Barba & Barba Constr., Inc., 657
N.E.2d 1156, 1158-59 (Ill. App. Ct. 1995) (cause of action for breach of
implied warranty does not extend beyond action against builder-
vendor of new residence); Moglia v. McNeil Co., 700 N.W.2d 608, 614
(Neb. 2005) (subcontractor not liable in absence of contractual
privity); Cox v. Curnutt, 271 P.2d 342, 344 (Okla. 1954) (cement
subcontractor not liable to homeowners for breach of implied
warranty because no contractual privity); Pugh v. Gen. Terrazzo
Supplies, Inc., 243 S.W.3d 84, 89-90 (Tex. App. 2007) (homeowner
8
YANNI v. TUCKER PLUMBING
Opinion of the Court
¶14 Yanni also argues that definitions in certain Arizona
statutes indicate that “Arizona’s public policy . . . recognizes implied
warranty claims against subcontractors.” Yanni maintains that the
Purchaser Dwelling Act (“PDA”), A.R.S. §§ 12-1361 through 12-1366,
and Arizona’s construction defect statute of repose, A.R.S. § 12-552,
require us to conclude Subcontractors are “seller[s]” of a “dwelling”
and, thus, properly can be sued for breach of implied warranty. But
the definitions and provisions of both the PDA and the statute of
repose establish notification procedures and time limits that govern
suits by homeowners against contractors and developers. Neither
creates a cause of action. Breach of the implied warranty cause of
action is a judicially created doctrine rooted in contract, and its
scope is not affected by either the PDA or the statute of repose.
¶15 For similar reasons, we disagree with Yanni’s argument
that because the Registrar of Contractors (“ROC”) “does not require
privity . . . in enforcement actions,” we also should decline to require
privity for implied warranty actions. The ROC permits a dissatisfied
homeowner to file a complaint with the ROC as an alternative to
litigation. A.R.S. §§ 32-1155 through 32-1157. As with the PDA and
statute of repose, however, this is a statutorily created alternate
remedy that does not affect our implied warranty analysis.
Disposition
¶16 For the foregoing reasons, we affirm.
may not recover for breach of implied warranty action against
subcontractor in absence of contractual relationship). But see Minton
v. Richards Grp. of Chi., 452 N.E.2d 835, 837 (Ill. App. Ct. 1983)
(implied warranty cause of action available against subcontractor
when builder-vendor had dissolved and was insolvent and innocent
buyer had no recourse).
9