Title: Greeves v. Rosenbaum

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Greeves v. Rosenbaum1998 WY 119965 P.2d 669Case Number: 97-190Decided: 09/24/1998Supreme Court of Wyoming

William 
M. GREEVES and Jeanne R. Greeves, Appellants (Plaintiffs),

v.

Dave L. ROSENBAUM and Wanda J. Rosenbaum, husband and 
wife, Appellees (Defendants).

 

Appeal from the District Court, 
Campbell County, Terrence L. O'Brien, J.

 

John M. Daly of Daly Law 
Associates, Gillette, for Appellants (Plaintiffs).

H.W. Rasmussen of Badley 
& Rasmussen, P.C., Sheridan, for Appellees 
(Defendants).

 

Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN and 
TAYLOR,* JJ.

 * Chief Justice at time of expedited 
conference.

 

TAYLOR, 
Justice.

 [¶1] Appellants challenge the dismissal of their 
claims against appellees for breach of express and implied warranties in the 
construction of a new home. Since the premises were sold "as is," and appellants 
failed to allege any structural failure covered by the express warranty, we 
affirm.

 

                                             
I. ISSUES

 

[¶2] Appellants, William M. 
and Jeanne R. Greeves (the Greeves), identify the following 
issues:

 

I. 
Did the Plaintiff[s'] complaint state a claim under an express warranty 
provision in an Agreement for Warranty Deed?

 

II. Is the existence of substandard lumber in the 
floor joists of a newly constructed house enough of a defect in and of itself to 
state a claim under an express warranty, where the warranty is for all 
construction?

 

III. Is the existence of ungraded lumber in the floor 
joists of a house a patent or latent defect, and as such, does the existence of 
an inspection clause in [an] Agreement for Warranty Deed contract require the 
purchaser of a new house to have a detailed inspection, or is it reasonable for 
the purchaser to rely on the builder for acceptable 
construction?

 

IV. Assuming that a claim under an express warranty 
was NOT made within the required time period, does an "AS IS" provision in a 
contract remove the Plaintiffs' claim for an implied warranty of 
habitability?

 

[¶3] Appellees, Dave L. and 
Wanda J. Rosenbaum (the Rosenbaums), respond:

 

1. 
Did the District Court properly grant judgment on the pleadings pursuant to Rule 
12(c) of the Wyoming Rules of Civil Procedure?

 

    
                                         II. 
FACTS

 

[¶4] The Rosenbaums, 
commercial builders, built a house and sold it to the Greeves on a contract for 
deed. Prior to closing, the parties signed an "Offer, Acceptance and Receipt 
Specific Performance Contract" (the Purchase Agreement) on August 4, 1995. At 
that time, the Greeves were aware that the property was currently the subject of 
ongoing litigation. On August 29, 1995, the parties closed the deal by executing 
an Agreement for Warranty Deed (the Final Agreement), which incorporated the 
terms of the Purchase Agreement to the extent that the provisions did not 
conflict with the Final Agreement.

 

[¶5] A visual inspection of 
the property was conducted during the course of the ongoing litigation. The 
inspection revealed that the lumber used for the floor joists did not have grade 
stamps, and many joists which could be seen from the crawl space contained knots 
and horizontal cracks. The Greeves then hired their own inspector, who concurred 
with the results of the first inspection.

 

[¶6] On August 23, 1996, the 
Greeves filed a complaint against the Rosenbaums, alleging breach of express 
warranty, breach of implied warranty, and deceptive trade practices due to the 
use of defective materials, attaching the Purchase Agreement to the complaint.1 In addition, the Greeves attached 
the inspection reports as factual underpinning for their claims. In response, 
the Rosenbaums filed an answer and a motion for judgment on the pleadings, 
attaching a copy of the Final Agreement. The district court granted the motion, 
but the Greeves salvaged leave to amend the complaint. The amended complaint was 
again rebuffed by the district court, 
but the Greeves were allowed one more opportunity to amend their pleadings as to 
express warranty issues.

 

[¶7] The district court 
granted the Rosenbaums' third motion for judgment on the pleadings, 
holding:

 

Plaintiffs have been afforded several opportunities 
to amend their pleadings, but seem unable to allege facts which entitle them to 
recovery. This is not an implied warranty case, the agreement contains an 
express warranty as the only remedy. No claims were made during the one year 
warranty, and, indeed, there is not now a claim of failure of any part of the 
building. The gravamen of plaintiffs' claim seems to be that there was a 
non-disclosure on the part of defendants, e.g. that ungraded lumber was used in 
joists in the house. However, except for the one year express warranty, the 
house was sold "as is" and buyers were given the opportunity to inspect. The use 
of ungraded lumber is not a latent defect, but one which would have been 
apparent upon inspection. Accordingly, plaintiffs have no viable 
non-disclosure claim.

 

This timely appeal followed.

 

                                      
III. STANDARD OF REVIEW

 

[¶8] A defendant is entitled 
to judgment on the pleadings if the undisputed facts appearing in the pleadings, 
supplemented by any facts of which the district court may take judicial notice, 
establish that no relief can be granted. Johnson v. Griffin, 922 P.2d 860, 
861-62 (Wyo.), cert. denied, ___ U.S. ___, 117 S. Ct. 402, 136 L. Ed. 2d 316 
(1996); Bon v. Lemp, 444 P.2d 333, 335 (Wyo. 1968); W.R.C.P. 12(c). A judgment 
on the pleadings is appropriate if all material allegations of fact are admitted 
in the pleadings and only questions of 
law remain. 5A Charles A. Wright & Arthur R. Miller, Federal Practice and 
Procedure, § 1367 at 510 (2d ed. 1990).

 

 [¶9] The parties agree that the contract 
submitted with the Rosenbaums' answer is an accurate copy of their agreement. 
Based upon the pleadings and the written terms of the contract, the district 
court determined that the Greeves were unable to state a claim upon which relief 
could be granted. Therefore, our review is akin to our consideration of a motion 
to dismiss a complaint pursuant to W.R.C.P. 12(b)(6). Landmark, Inc. v. 
Stockmen's Bank & Trust Co., 680 P.2d 471, 474-75 (Wyo. 1984). All 
allegations stated in the complaint are treated as true, and the allegations 
must be viewed in the light most favorable to the plaintiffs. Moxley v. Laramie 
Builders, Inc., 600 P.2d 733, 734 (Wyo. 1979).

 

                                          
IV. DISCUSSION

 

A. EXPRESS WARRANTY

 

[¶10] The Greeves contend 
the district court erred in holding that they failed to state a claim as to any 
structural failing. Since the Rosenbaums used ungraded lumber in the floor 
joists that did not meet the standards of the Uniform Building Code, the Greeves 
contend the Rosenbaums breached the one year express warranty on "all 
construction."

 

[¶11] Relevant provisions of 
the Purchase Agreement, incorporated into the Final Agreement, 
state:

 

  XI. INSPECTIONS.

 

            
A. Professional Inspections.

 

Buyer may obtain, at Buyer's option and expense, and 
upon the notice required herein, electrical, mechanical, structural, 
environmental and/or other inspections of the property by qualified professional 
inspectors, and shall pay for any damage to Seller's property caused by Buyer's 
inspectors. Buyer, or designee, shall have the right to make any inspections of 
the physical condition of the property at reasonable times, upon at least 24 
hours advance notice to Seller. Unless Seller receives written notice, signed by 
Buyer on or before August 11, 1995, of any defect(s) Buyer is requesting to be 
repaired, the physical condition of the property shall be deemed to be 
satisfactory to Buyer except as identified in Section XI C 
below.

 

* * *

 

         
  D. Waiver of 
Defects.

 

Buyer acknowledges that he has not been denied any 
opportunity to inspect property and has done so to Buyer's satisfaction.  Other than repairs requested by Buyer as 
set out above, or in the event no repairs or inspections are required by Buyer, 
Buyer accepts the property in its entirety in "as is, where is" condition 
without any implied or express warranty by Seller or by any 
Broker.

 

The disclaimer of an express 
warranty is specifically modified, in writing, to a "One Year Warranty on all of 
the construction to be Warranted by Seller/Builder."

 

[¶15] The Final Agreement 
contains the following provision:

 

                                            
INSPECTION

 

BUYER acknowledges by the signing of this Agreement 
that they have inspected the premises and that no warranties, either express or 
implied, have been given by SELLER concerning the premises, other than those 
stated herein regarding title and a one year warranty on all construction. 
Premises are transferred "AS IS."

 

The inspection reports 
submitted by the Greeves demonstrate that, had the Greeves taken the opportunity 
to have the house visually inspected, the ungraded lumber would have been 
discovered. Thus, under the terms of the contract, they accepted the lumber "as 
is" at the time they closed the deal.

 

[¶18] Other than the 
existence of the ungraded lumber, the Greeves do not claim any instance of 
structural or construction problems during their occupancy of the premises. They 
do not claim that the floor joists have caused any physical damage to the 
premises nor do they claim that they are limited in the use of their home. The 
requirements of the Uniform Building Code are irrelevant in this case because 
the contract warrants compliance only with city, county and state codes. The 
house passed all inspections by the county building department, including a framing inspection, 
and a certificate of occupancy was issued. Consequently, assuming every 
allegation in the complaint as true, the Greeves failed to allege any facts 
which constitute a breach of an express warranty.

 

B. IMPLIED WARRANTY

 

[¶19] The Greeves also 
attack the district court's finding that there was no implied warranty of 
habitability. In Schepps v. Howe, 665 P.2d 504, 509 (Wyo. 1983), we held that an 
"as is" clause used in the listing, advertising and selling of a house was an 
effective waiver of an implied warranty. Acknowledging this precedent, the 
Greeves claim that the facts of their case can be distinguished from the facts 
in Schepps, and that public policy warrants a different 
result.

 

[¶20] In Schepps, the buyers 
purchased a partially built home, constructed in substantial part by the owner 
for his personal use.  Because the 
owner was transferred before the completion of the house, he placed the house on 
the market and advertised its sale "as is." Shortly after the buyers took 
possession, they began to experience numerous problems. A portion of the roof 
blew off and, upon inspection, they were informed that the building structure 
would not pass state code. A subsequent electrical inspection noted fifty-two 
violations of the state electrical code. The plumbing had collapsed, and the 
buyers were warned not to use the heating system due to the possibility of fire. Id. at 
507.

 

[¶21] Rejecting the buyers' 
claims based on an implied warranty of habitability, we noted the policy of this 
state as expressed in Wyo. Stat. § 34-21-233(c) (1977),2 which provided, in pertinent 
part:

 

"(i) Unless the circumstances indicate otherwise, all 
implied warranties are excluded by expressions like 'as is,' 'with all faults' 
or other language which in common understanding calls the buyer's attention to 
the exclusion of warranties and makes plain that there is no implied warranty; * 
* *[.]"

 

Schepps, 665 P.2d  at 509 n. 
2. Based on the factual foundation that the buyers were clearly notified that 
the property was sold "as is," and the ability of the buyers to discover the 
defect prior to the sale, we held that the buyers waived an implied warranty of 
habitability. Id. at 509-10.

 

[¶23] The Greeves attempt to 
distinguish this case by claiming their failure to inspect was justified because 
their home was built as a business venture. They also claim that because the 
house was generally complete, they did not have the same opportunity to inspect. 
We are not persuaded. The Greeves were clearly notified through several 
provisions of the contract that they had the right to inspect, but the sale of 
the premises was "as is" and no implied warranties would be given. Contrary to 
the Greeves' assertions that an implied warranty of habitability must be 
specifically identified and explained before a waiver will be effective, the 
unambiguous language in the Purchase 
Agreement and the Final Agreement clearly identifying the transfer of the 
property "AS IS" sufficiently disclaimed all implied warranties, including an 
implied warranty of habitability. It is equally apparent that, as in Schepps, 
the condition of the floor joists would have been discovered upon a visual 
inspection.

 

[¶24] The Greeves claim it 
is unreasonable to expect a new home purchaser to shoulder the additional 
expense of hiring a professional to inspect the house before closing. They argue 
that public policy mandates that a builder not be allowed to hide behind an 
inspection clause to avoid responsibility for shoddy workmanship. We have 
recognized that the purchase of a new home is the largest and most important 
purchase that an individual may make in a lifetime, and have discarded the 
common law doctrine of caveat emptor in the sale of new housing by a 
builder-vendor. Schepps, 665 P.2d  at 510; Moxley, 600 P.2d  at 735; Tavares v. 
Horstman, 542 P.2d 1275, 1279-80 (Wyo. 1975). The protection afforded to 
purchasers of a new home, however, does not go so far as to allow the purchasers 
to ignore their negotiated responsibilities.

 

[¶25] Knowing that the 
premises were the subject of litigation, the Greeves signed an agreement under 
which they assumed the responsibility to conduct all inspections. The agreement 
clearly stated that whether they chose to hire someone to inspect or not, they 
waived any defect at the time of the sale. The agreement further stated that the 
sale was "as is" and specifically disclaimed any implied warranties. This is not 
a case where the builder-vendor attempted to hide a latent defect or dissuade 
the buyer from inspecting the premises; the Greeves had an unobstructed 
opportunity to protect their investment through the engagement of a professional to conduct a visual inspection. The 
Greeves made the decision to sign the contract and to forego the expense of 
inspection. The consequences of that decision cannot be fairly imputed to anyone 
but themselves.

 

[¶26] Given our 
determination that the Greeves failed to state a claim under any warranty 
theory, we will not address the issue of notice.

 

                                          
V. CONCLUSION

 

[¶27] The terms of the 
contract waived all implied warranties and provided only a one year express 
warranty on construction. Since the complaint failed to allege any construction 
defect which breached the express warranty, we affirm the district court's 
judgment on the pleadings in favor of the Rosenbaums.

  

FOOTNOTES

1The 
Greeves also had a list of specific repairs which they alleged had not been 
completed. It appears these issues were resolved during the extended time period 
involved in the pleading stage of the lawsuit.

  

2Now 
renumbered as Wyo. Stat. § 34.1-2-316 (1997).