Opinion ID: 1834681
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Heading: Whether a Manufacturer Can Create an Improvement to Real Property.

Text: This issue concerns the language arising out of the unsafe or defective condition of an improvement to real property. Iowa Code § 614.1(11). Mapco contends that the control valve cannot be an improvement to real property. Mapco's argument in support of this contention is this. The control valve falls within the broad definition of goods under Iowa's uniform commercial code. See Iowa Code § 554.2105(1). As a good, the control valve is subject to implied warranties of merchantability and fitness for a particular purpose. Those warranties extend to persons who may reasonably be expected to use, consume, or be affected by the goods and are injured in person or property because of a breach of warranties. See Iowa Code § 554.2318. If those goods are considered improvements to real property, the warranties could be lost before any injury ever occurred because of the section 614.1(11) bar. This result would create a clash between the warranty statutes and the statute of repose. The legislature never intended such a result. The only way to resolve the conflict is to say that goods are not improvements to real property and improvements to real property are not goods. The short answer to all of this is that as a practical matter a good can be an improvement to real property as we will shortly explain. The legislature recognized this fact. Nevertheless, it made a judgment call to impose the bar although the warranties could become worthless before an injury ever occurred. All of what we say is borne out in section 614.1(11) because there the legislature expressly bars an action based on implied warranty. This language is without limitation and is therefore broad enough to include warranties in the uniform commercial code. That leads us to the question whether the control valve is an improvement for section 614.1(11) purposes. The statute does not define the word improvement, so we look to its common, ordinary meaning. Noble v. Lamoni Prods., 512 N.W.2d 290, 294 (Iowa 1994) (citation omitted). An improvement means a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs. Webster's Third New International Dictionary 1138 (P. Gove ed. 1993). The furnaceincluding its component control valvewas an integral part of the house. Without the valve, the furnace could not work properly. Without a properly working furnace, the home could not be comfortably used during cold weather. So as a part of the furnace, the control valve was a betterment of the Krull home. This betterment (1) enhanced the home's value, (2) involved the expenditure of labor or money, and (3) was designed to make the home more useful or valuable. So, applying the dictionary meaning, we conclude the control valve was an improvement to real property. Cf. J.H. Westerman Co. v. Fireman's Fund Ins. Co., 499 A.2d 116, 119 (D.C.App.1985) (heating system, including its component Klixon switches, was an improvement to real property under statute of repose because built-in heating system was an integral part of the building, without which the building could not have been used for business); Cyrus v. Henes, 89 Ohio App.3d 172, 175-77, 623 N.E.2d 1256, 1258-59 (1993) (gas conversion unit in furnace was an improvement to realty because it was an integral part of furnace which itself was an improvement to realty; unit added value to the realty and enhanced the realty's use).