Opinion ID: 1702344
Heading Depth: 1
Heading Rank: 3

Heading: Claims Against Land Developers

Text: The issue in the Dickinsons' action against Land Developers is whether, when the record is reviewed in a light most favorable to the Dickinsons as the nonmovants, the Dickinsons' claims are time-barred. The Dickinsons concede that Ala.Code 1975, §§ 6-5-220 through 6-5-225 govern their claims against Land Developers. Section 6-5-221(a) provides: (a) All civil actions in tort, contract, or otherwise ... against builders who constructed, or performed or managed the construction of, an improvement on or to real property designed by and constructed under the supervision, administration, or observation of an architect or engineer, or designed by and constructed in accordance with the plans and specifications prepared by an architect or engineer, for the recovery of damages for: (i) Any defect or deficiency in the design, planning, specifications, testing, supervision, administration, or observation of the construction of any such improvement, or any defect or deficiency in the construction of any such improvement; or (ii) Damage to real or personal property caused by any such defect or deficiency; or (iii) Injury to or wrongful death of a person caused by any such defect or deficiency; shall be commenced within two years next after a cause of action accrues or arises, and not thereafter.  (Emphasis added.) Section 6-5-220(e) provides that a cause of action accrues or arises when a person is injured, including injury which results in death, or when property is damaged as a proximate result of a defect or deficiency in design, planning, testing, supervision, administration, or observation of construction of an improvement by an architect or engineer or in the construction of an improvement by an architect or engineer or in the construction of an improvement on or to real estate, constructed, performed, or managed by a builder; or where the damage or injury either is latent or by its nature is not discoverable in the exercise of reasonable diligence at the time of its occurrence, the claim for relief shall be deemed to arise or accrue at the time the damage or injury is or in the exercise of reasonable diligence should have been first discovered, whichever is earlier. The cause of action accrues or arises whether or not the full amount of damages is apparent at the time of the first injury or damage, and cannot be extended as a continuous wrong.  (Emphasis added.) Section 6-5-225 provides that, through the above-quoted sections, the Legislature intended to apply[] for the first time to both these tort and contractual actions, the so-called `discovery rule,' where the injury or damage is latent. The discovery rule, found in Ala.Code 1975, § 6-2-3, [1] applies to fraud claims. See Sanders v. Peoples Bank & Trust Co., 817 So.2d 683, 686 (Ala.2001). We have held that '[t]he question of when a party discovered or should have discovered the fraud is generally one for the jury.' Potter v. First Real Estate Co., 844 So.2d 540, 546 (Ala.2002) (quoting Ex parte Seabol, 782 So.2d 212, 216 (Ala.2000), quoting in turn Liberty Nat'l Life Ins. Co. v. Parker, 703 So.2d 307, 308 (Ala.1997)). However, a party will be deemed to have discovered a fraud as a matter of law upon the first of either the actual discovery of the fraud or when the party becomes privy to facts that would provoke inquiry in a reasonable person that, if followed up, would lead to the discovery of the fraud. Auto-Owners Ins. Co. v. Abston, 822 So.2d 1187, 1195 (Ala.2001); Gray v. Liberty Nat'l Life Ins. Co., 623 So.2d 1156, 1159 (Ala.1993). Under § 6-5-221(a) (read in conjunction with § 6-5-220(e) and § 6-5-225), we must apply these discovery principles to each of the Dickinsons' claims against Land Developers, not simply the fraud claims. As stated above, the Dickinsons' asserted numerous claims against Land Developers: breach of contract, fraud, mental anguish and emotional distress, negligent and/or wanton inspection, breach of the warranty of habitability, and breach of the implied warranty of merchantability. However, the factual basis for each of these claims is the same: 1) that Land Developers made certain promises or representations to the Dickinsons, and 2) that there are numerous defects in the house. According to the Dickinsons, Land Developers' promises or representations were as follows: A. That [Land Developers] were good and competent contractors; B. That [Land Developers] would contract on behalf of the [Dickinsons] and hire subcontractors, materialmen, laborers, and others in order to secure completion of their home in a workmanlike manner ...; C. That the home would be built in accordance with the plans, specifications, and contract documents and that all work would be done in compliance with any and all applicable local building codes and the Southern Building Code; D. [Land Developers] promised and agreed to build the [Dickinsons'] home in the best possible manner and that [Land Developers] would provide [Land Developers'] best skill and attention in constructing and overseeing the construction of subcontractors on the [Dickinsons'] home; E. [Land Developers] represented to [the Dickinsons] that [Land Developers] had done all of the work in conformance with contract documents, plans, and specifications; F. [Land Developers] promised to repair and/or cure any and all faulty or defective work or failure of any workmanship or materials or equipment whether supplied by [Land Developers] or by subcontractors or materialmen hired by [Land Developers]. Many of these promises or representations appear in the contract between the Dickinsons and Land Developers. According to the Dickinsons, the defects with the Dickinsons' house are as follows: a. Wood framing extends below grade around portions of the exterior perimeter of the house which was backfilled against with dirt which has caused severe structural rot and damage over a period of time. b. The backfill and/or fill dirt around the house, drains, walls, patios, and concrete floors was improperly impacted or improperly drained causing damage to said walls, patios and floors. c. There is no evidence of proper drainage around the perimeter of the house. d. There are a number of leaks in said home. e. The perimeter of most windows and doors were not properly sealed and/or supported. f. There are some locations where the base wood and concrete has suffered from structural failure and the damaged areas have telegraphed through the house causing floors to be unlevel, walls to be out of plumb doors and windows to `sink.' g. Improper backfill and/or fill was used on the entire home. In entering a summary judgment for Land Developers, the trial court held that the Dickinsons either discovered all of these defects, or were privy to facts that would `provoke inquiry in a [person] of reasonable prudence, and which, if followed up, would have led to the discovery' of all of the defects, Auto-Owners, supra, 822 So.2d at 1195 (quoting Willcutt v. Union Oil Co., 432 So.2d 1217, 1219 (Ala.1983)), more than two years before they filed their complaint on December 21, 1999. We disagree with this holding in part. The undisputed facts of this case show that the Dickinsons discovered a number of problems with their house at an early stage. The Dickinsons were aware of roof leaks and problems with the French doors and window seals as early as 1994. In 1995 the Dickinsons were informed of water damage in parts of their home, and they knew as early as March 3, 1995, that their pool bath was leaking. The Dickinsons' also learned as early as 1995 that their driveway was starting to crack and that it was always wet. Insofar as the Dickinsons' claims against Land Developers arise out of the above problems, they are barred by the two-year statutory limitations period of § 6-5-221, Ala.Code 1975. Land Developers argues that all of the Dickinsons' problems put them on notice of facts that, if reasonably investigated, would have brought to their attention the rotten belowgrade wooden wall and the fill-soil compaction problems that caused the structural damage to their house. Land Developers correctly points out that the limitations period begins to run from the date damage is discovered, without regard to whether the full extent of the damage is apparent at that time. See Ala.Code 1975, § 6-5-220(e). However, it is incorrect in its assertion that the various problems the Dickinsons were aware of in 1994 and 1995 were, as a matter of law, sufficient to provoke inquiry in a [person] of reasonable prudence, and which, if followed up, would have led to the discovery, Auto-Owners, 822 So.2d at 1195  within the limitations period  of the fact that their house was resting in part on a rotten belowground wooden wall or that it had been constructed on allegedly improperly compacted fill soils. With respect to these hidden or latent defects, the issue is not whether the Dickinsons had general knowledge of problems with the construction of the house or whether a reasonable person would have sought professional help in an attempt to discover the source of the problems and fix them; indeed, the Dickinsons did just that when they sought the assistance of Land Developers. Instead, the issue is whether Land Developers has produced sufficient evidence on which to hold as a matter of law that the problems listed above with the Dickinsons' house, of which the Dickinsons were aware shortly after the house was constructed, would have put a reasonable person (in the Dickinsons' situation as a home buyer) on notice that he should have 1) investigated the underground wooden wall and the fill-soil area himself, or 2) gone beyond seeking Land Developers' assistance in determining the source or sources of the problems and the proper way to fix those problems. There is no evidence indicating that the Dickinsons had, or a reasonable person in the Dickinsons' position would have had, the inclination or the ability to perform a sufficient self-investigation. While there is some evidence indicating that the Dickinsons were put on notice that there was some belowground wood present at the home (through Cook's 1995 report), there is no evidence indicating that the Dickinsons knew that the belowground wooden wall existed or, more importantly, that any reasonable person would know that the presence of belowground wood was a problem at all. From the standpoint of a reasonable person, it would appear that a myriad of causes could have been the source of the problems with the Dickinsons' French doors, driveway, and pool bath, and the Dickinsons tried several times to solve the problems with their house through Land Developers  the one entity that should have the most knowledge about the house. The construction contract imposed on Land Developers a duty to repair any faulty or defective work. Pursuant to this contractual provision, the Dickinsons contacted Land Developers several times asking it to fix the problems the Dickinsons were experiencing with their house. We hold that the Dickinsons' reliance on Land Developers to fix their problems was reasonable. A reasonable person in the Dickinsons' situation would rely on Land Developers to fix the type of problems the Dickinsons were experiencing. A reasonable person would not pay to have a third party fix and diagnose problems with their house without first allowing their expert homebuilder to perform that duty  a duty that the homebuilder is generally required to perform. [2] Land Developers has failed to show that the problems the Dickinsons experienced with their house shortly after construction was completed would cause a reasonable person to discover the existence of the rotten belowground wooden wall or the allegedly improperly compacted fill soil. In contrast, the Dickinsons have produced evidence indicating that they did not know of the serious structural damage to their house until Wehrman prepared his report in 1999. Therefore, the question of when the Dickinsons should have discovered the serious structural defects in their house, such as the rotten belowground wall and the allegedly improperly compacted fill soil, may not be decided as a matter of law, and a jury question exists as to when the Dickinsons discovered facts sufficient to maintain their claims against Land Developers. Therefore, we reverse the trial court's summary judgment as to the Dickinsons' claims against Land Developers.