Title: VanHoldt v. Barba & Barba Construction Co.

State: illinois

Issuer: Illinois Supreme Court

Document:

NOTICE: Under Supreme Court Rule 367 a party has 21 days after 
the filing of the opinion to request a rehearing. Also, opinions 
are subject to modification, correction or withdrawal at anytime 
prior to issuance of the mandate by the Clerk of the Court. 
Therefore, because the following slip opinion is being made 
available prior to the Court's final action in this matter, it 
cannot be considered the final decision of the Court. The 
official copy of the following opinion will be published by the 
Supreme Court's Reporter of Decisions in the Official Reports 
advance sheets following final action by the Court. 
 
              Docket No. 80342--Agenda 22--September 1996. 
    JOHN W. VonHOLDT, JR., Appellant, v. BARBA & BARBA CONSTRUCTION, 
                             INC., Appellee. 
                     Opinion filed January 30, 1997. 
 
     JUSTICE MILLER delivered the opinion of the court: 
     The plaintiff, John W. VonHoldt, Jr., brought the present 
action in the circuit court of Cook County against defendant, Barba 
& Barba Construction, Inc. The complaint alleged that defendant 
breached an implied warranty of habitability in its construction of 
a structural addition to an existing residence. Plaintiff was a 
purchaser of the residence after the addition had been made. On 
defendant's motion, the circuit court dismissed the action pursuant 
to section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615 
(West 1994)), finding that plaintiff's second-amended complaint 
failed to state a cause of action upon which relief could be 
granted. On appeal, the appellate court affirmed the dismissal of 
plaintiff's complaint. 276 Ill. App. 3d 325. We granted leave to 
appeal (155 Ill. 2d R. 315(a)) and affirm the judgment of the 
appellate court on grounds different from those relied on by the 
lower courts. 
 
                               I. BACKGROUND 
     In August 1982, defendant constructed a multilevel addition to 
a single family residence in Glenview, Illinois. Before the 
addition, the residence consisted of approximately 2,300 square 
feet. After the addition, the residence consisted of approximately 
3,200 square feet. More than 11 years later, on November 5, 1993, 
plaintiff purchased the residence. 
     Shortly after taking occupancy, plaintiff noticed a deflection 
of the wood flooring at the partition wall separating the master 
bedroom from an adjoining bathroom. This deflection created a 
depression in the floor plane. Plaintiff maintained that, due to 
the thickness of the carpet, the depression was nearly concealed. 
An investigation revealed that the addition was not constructed in 
accordance with the architectural plans approved by the Village of 
Glenview or the Glenview Building Code. Specifically, the partition 
wall between the master bedroom and the bathroom was constructed as 
a bearing element supporting a portion of both the roof and ceiling 
construction. This variance resulted in excessive stress on the 
floor joists and inadequate support for a portion of the roof and 
ceiling causing a greater than expected floor deflection. 
     The plaintiff instituted the present action on March 28, 1994, 
by filing a complaint in the circuit court of Cook County. 
Plaintiff sought recovery from the defendant for breach of an 
implied warranty of habitability. Defendant moved to dismiss the 
complaint pursuant to section 2--615 of the Code of Civil Procedure 
(735 ILCS 5/2--615 (West 1992)) for failure to state a claim upon 
which relief could be granted. On September 29, 1994, the trial 
judge dismissed plaintiff's amended complaint without prejudice. 
     Plaintiff filed a second-amended complaint on October 24, 
1994, providing additional allegations in support of the breach of 
implied warranty of habitability count. Defendant again moved to 
dismiss the complaint pursuant to section 2--615. The trial judge 
granted defendant's section 2--615 motion and dismissed the 
complaint with prejudice, finding that defendant was not a builder- 
vendor and that there was an absence of privity between the two 
parties. Plaintiff subsequently appealed. 
     The appellate court affirmed the judgment of the circuit 
court. 276 Ill. App. 3d 325. The appellate court noted the reasons 
for the adoption of the implied warranty of habitability between a 
builder and a purchaser and discussed extensions of the doctrine 
following its inception. 276 Ill. App. 3d at 327-28. The appellate 
court further acknowledged that there exist compelling arguments to 
extend the implied warranty to apply to a builder of a major 
structural addition of an existing home. 276 Ill. App. 3d at 328- 
29. The appellate court, however, observed that this court had 
always spoken in terms of a right of action against a builder- 
vendor. 276 Ill. App. 3d at 329. Thus, it refused to extend 
protection under the doctrine to a construction setting not 
involving a builder-vendor of a new residence. 276 Ill. App. 3d at 
329. We allowed plaintiff's petition for leave to appeal. 155 Ill. 
2d R. 315(a). 
 
                              II. DISCUSSION 
           A. The Implied Warranty's Applicability to Additions 
     On appeal to this court, plaintiff contends that the appellate 
court erred in rejecting his claim of breach of an implied warranty 
of habitability. Plaintiff asks us to extend the implied warranty 
of habitability to a cause of action by a subsequent purchaser for 
damages against a builder constructing a later addition to a house. 
Defendant argues that the protection of the implied warranty of 
habitability should be limited to actions against builder-vendors 
and that plaintiff's action, if any exists, is time-barred. For the 
reasons expressed below, we find that the implied warranty of 
habitability extends to cases brought by subsequent purchasers 
involving subsequent additions to homes. 
     The implied warranty of habitability is a judicially created 
doctrine designed to avoid the unjust results of caveat emptor and 
the doctrine of merger. Petersen v. Hubschman Construction Co.,  76 Ill. 2d 31 , 39-40 (1979). Initially, Illinois courts applied the 
doctrine to the sale of new homes to protect innocent purchasers 
who did not possess the ability to determine whether the house they 
purchased contained latent defects. Petersen, 76 Ill. 2d  at 39-40. 
     In Petersen, this court held that the purchaser of a new home 
has a cause of action against a builder-vendor for damages 
resulting from latent defects in the construction of the new home. 
Petersen, 76 Ill. 2d  at 39-40. Petersen stated the owner needs this 
protection because he is making a major investment, in many 
instances the largest single investment of his life. Petersen, 76 Ill. 2d  at 40. Additionally, the owner usually relies on the 
integrity and skill of the builder, who is in the business of 
building houses. Petersen, 76 Ill. 2d  at 40. Finally, the owner has 
a right to expect to receive a house that is reasonably fit for use 
as a residence. Petersen, 76 Ill. 2d  at 40. 
     Since Petersen, Illinois courts have defined and extended the 
circumstances under which claims based on an implied warranty of 
habitability can be recognized. See Park v. Sohn,  89 Ill. 2d 453 
(1982) (builder-vendor need not be mass producer, just one engaged 
in the business of building such that the sale is of a commercial 
nature); McClure v. Sennstrom, 267 Ill. App. 3d 277 (1994) (house 
built upon foundation of an old house still qualified as a "new" 
home); Hefler v. Wright, 121 Ill. App. 3d 739 (1984) (doctrine 
applies to person who erected a house manufactured by another 
company and built on the plaintiff's land); Briarcliffe West 
Townhouse Owners Ass'n v. Wiseman Construction Co., 118 Ill. App. 
3d 163 (1983) (latent defect in common land can affect 
habitability); Minton v. Richards Group, 116 Ill. App. 3d 852 
(1983) (innocent purchaser could bring an action against a 
subcontractor when he had no recourse to the builder-vendor and he 
had sustained a loss in his home due to a latent defect); Tassan v. 
United Development Co., 88 Ill. App. 3d 581 (1980) (doctrine 
applies against developer-seller of new condominium unit). 
     Plaintiff claims that the implied warranty of habitability 
should now be extended to include actions against a builder brought 
by a subsequent purchaser for latent defects in a later addition to 
a home. In Kelley v. Astor Investors, Inc.,  106 Ill. 2d 505  (1985), 
this court held that the defendants were not subject to the implied 
warranty of habitability for a condominium-conversion project. The 
court held that the doctrine of implied warranty of habitability 
did not apply because the refurbishing and renovation of the 
project had not been significant. Kelley, 106 Ill. 2d  at 509. In 
the present case, the builder made a major addition to an existing 
home. We now hold that, when a builder makes a significant addition 
to a previously built home, an action for damages resulting from 
latent defects affecting habitability exists under the doctrine of 
implied warranty of habitability. 
     An owner claiming that latent defects exist in a major 
addition to a structure should be provided the same protection for 
the addition as that given to the owners in Petersen and its 
progeny. In both cases, the owner of the house usually has little 
knowledge regarding the construction. The purchaser of both a 
completed home and an addition places the same trust in the builder 
that the structure being erected is suitable for living. Further, 
the ordinary buyer is not in a position to discover hidden defects 
in a structure even through the exercise of ordinary and reasonable 
care. 
     We must next determine whether the plaintiff can bring this 
action even though he is a subsequent purchaser. In Redarowicz v. 
Ohlendorf,  92 Ill. 2d 171 , 183 (1982), this court extended the 
implied warranty of habitability to subsequent purchasers of a new 
home, finding that there was no need for privity of contract 
because the warranty of habitability exists independently of the 
contract for sale. Because the doctrine of implied warranty of 
habitability has been extended to actions by subsequent purchasers 
of new homes, we can see no reason why the doctrine should not be 
extended to actions by subsequent purchasers of a home for latent 
defects in a significant addition to the home made prior to the 
time of sale. 
     We hold that a subsequent purchaser has a cause of action for 
damages resulting from a breach of the implied warranty of 
habitability for latent defects caused in the construction of a 
significant structural addition to an existing residence. The 
decision of whether there is a latent defect in a significant 
construction by one engaged in the business of building is a 
question of fact to be determined in the trial court. 
     We note that this extension is consistent with decisions from 
other states. In Lempke v. Dagenais, 130 N.H. 782, 547 A.2d 290 
(1988), the Supreme Court of New Hampshire allowed a claim for a 
breach of the implied warranty of workmanlike quality by a 
subsequent purchaser against a builder who had added a garage to 
the house. In an unsuccessful suit against a contractor who had 
merely added a patio to a house, the Supreme Court of New Jersey 
stated that actions could be brought under the implied warranty of 
habitability so long as the defect in the construction was 
sufficiently serious to affect the home's habitability. Aronsohn v. 
Mandara, 98 N.J. 92,  484 A.2d 675  (1984). In the case before us, it 
is reasonable to conclude that a defect in a multilevel addition 
increasing the size of the original house by almost 40% could 
affect its habitability. 
 
                         B. Time-Barred Limitation 
     Having determined that a cause of action exists, we must next 
determine whether it is time-barred. In the trial court, defendant 
claimed that section 13--214 of the Code of Civil Procedure barred 
plaintiff from recovery because more than 10 years had elapsed from 
the time the addition was constructed. See 735 ILCS 5/13--214(b) 
(West 1994). In its brief before this court, however, defendant 
adopts the language of Redarowicz and asserts that plaintiff cannot 
recover because the action has not been brought "within a 
reasonable time." Redarowicz, 92 Ill. 2d  at 185. Because neither 
court addressed the issue in dismissing plaintiff's original or 
amended complaints, plaintiff contends the lower courts accepted 
the 11-year gap as reasonable for bringing suit. Plaintiff further 
asserts that the time within which an action may be brought should 
start on the date the subsequent purchaser takes ownership of the 
premises, not from the date of completion of construction. 
     Because the parties have neither briefed nor argued in this 
court whether it is the repose provision of section 13--214 of the 
Code of Civil Procedure or the "reasonable time" standard of 
Redarowicz that controls the time limitation here, we do not decide 
that question today. 
     We believe, however, that under either of defendant's 
theories--the repose period of section 13--214 or the "reasonable 
time" standard of Redarowicz--the 11-year gap between the time of 
the construction and the claim for damages resulting from a latent 
defect bars plaintiff from recovery in this case. Under section 13- 
-214 of the Code of Civil Procedure, plaintiff's action is barred 
because it has been longer than 10 years since the date of 
construction of the addition. Further, under the "reasonable time" 
standard of Redarowicz, we find the 11-year period between the date 
of the act or omission causing the defect and the time the action 
was brought to be an unreasonable time to hold a builder liable. A 
builder cannot be a lifetime guarantor of construction, susceptible 
to a claim for damages under the implied warranty of habitability 
beyond the foreseeable future. We therefore hold that the 
reasonable time for bringing a cause of action under the 
"reasonable time" standard of Redarowicz begins with the act or 
omission causing the defect rather than the date on which the 
subsequent purchaser takes title to the property. 
     Because plaintiff would not prevail whether the claim must be 
brought within 10 years under the statute of repose or within a 
reasonable time under Redarowicz, we find that the claim is time- 
barred. 
 
                              III. CONCLUSION 
     For the foregoing reasons, we hold that actions for damages 
from latent defects in the construction of a significant structural 
addition to an existing residence can be brought against the 
builder by subsequent purchasers under the doctrine of implied 
warranty of habitability. However, because here the action was 
time-barred under either the statute of repose of section 13--214 
of the Code or the "reasonable time" doctrine of Redarowicz, 
plaintiff's complaint was properly dismissed. We therefore affirm 
the judgment of the appellate court. 
 
Affirmed. 
 
     CHIEF JUSTICE HEIPLE, dissenting: 
     The majority decision expands habitability liability for all 
mechanics, artisans, contractors, and home renovators who make 
significant additions to already existing structures. This new 
liability runs in favor of subsequent home buyers in the complete 
absence of privity of contract. This is new law which opens up vast 
possibilities for new causes of action. The opinion leaves to 
future decisions the definition of "significant addition." That 
this expanded liability will increase the cost of home improvements 
cannot be doubted. It is a basic law of economics that there is no 
free lunch. For a society that is already wallowing in law suits, 
it seems to me that this judicial expansion of liability into new 
and undefined areas would be better left to the state legislature. 
Accordingly, I respectfully dissent. 
 
     JUSTICE NICKELS joins in this dissent.