Opinion ID: 1713516
Heading Depth: 1
Heading Rank: 6

Heading: Count I, Breach of Implied Duty to Perform in Workmanlike Manner, Was Properly Dismissed as to K D Roofing, Duggan, and Landgraphics but Was Improperly Dismissed as to McNeil Company.

Text: Appellants allege in count I of the complaint that K D Roofing, Duggan, Landgraphics, and the McNeil Company breached an implied duty to perform in a workmanlike manner. On appeal, appellants claim that the district court erred when it dismissed count I for failure to state a cause of action. As to K D Roofing, Duggan, and Landgraphics, we conclude the district court did not err in dismissing count I. However, we conclude that the district court erred in dismissing count I as to the McNeil Company. With respect to K D Roofing, Duggan, and Landgraphics, we agree with the district court that in the absence of an allegation of privity, count I, styled Breach of Implied Duty to Perform in a Workmanlike Manner, fails to state a cause of action against these subcontractors. We have long held that in the absence of an otherwise binding agreement, express or implied, there is no privity of contract between a subcontractor and the property owner who negotiated the original agreement with the general contractor. Boyd v. Benkelman Public Housing Authority, 188 Neb. 69, 195 N.W.2d 230 (1972). We have thus previously concluded that there is no liability on the part of subcontractors in favor of original owners, and given the more attenuated relationship with subcontractors, it logically follows that in the absence of privity, no liability on the part of subcontractors in favor of subsequent owners will be implied. See, Cox v. Curnutt, 271 P.2d 342 (Okla.1954); B & C Construction Co. v. Grain Handling Corp., 521 S.W.2d 98 (Tex.Civ.App. 1975). In urging this court to extend the warranty of workmanlike performance in favor of subsequent owners despite the absence of privity, appellants refer us to several Nebraska cases, including Peterson v. North American Plant Breeders, 218 Neb. 258, 354 N.W.2d 625 (1984), and Herman v. Bonanza Blds., Inc., 223 Neb. 474, 390 N.W.2d 536 (1986). Peterson involved extending an implied warranty of merchantability to a subsequent purchaser of seed corn under the Uniform Commercial Code. Herman involved an action in which a steel building owner sued the manufacturer of a component part where the manufacturer had made express warranties upon which the owner relied. These cases are distinguishable from the case at bar. In the instant case, there are no Uniform Commercial Code imperatives and no alleged express warranties which would lead us to impose liability on the subcontractors in favor of the subsequent owners of the home based on the implied warranty to perform in a workmanlike manner. Given the absence of an allegation of privity, the district court did not err in dismissing count I as to K D Roofing, Duggan, and Landgraphics, and we affirm this portion of the district court's order. Unlike subcontractors, as to contractors, we have long recognized that [a]s a general rule a contractor constructing a building impliedly warrants that the building will be erected in a workmanlike manner. . . . Henggeler v. Jindra, 191 Neb. 317, 318, 214 N.W.2d 925, 926 (1974). We note that the law implies the warranty, and we have applied this warranty between an original homeowner and a contractor. Id. This implied warranty provides the owner with an action against the contractor if the contractor's work is not of good quality [and] free from defects. 3 C. Allen Foster et al., Construction and Design Law § 20.3a at 27 (1998). Appellants note that the ultimate objective encompassed by the warranty of workmanlike construction is the construction of a home of good quality and urge this court to extend the warranty such that it impliedly favors subsequent owners. We find merit in appellants' argument. Although we have not previously extended the warranty, we are aware that elsewhere, the warranty of workmanlike performance has explicitly been extended to subsequent purchasers. E.g., Aronsohn v. Mandara, 98 N.J. 92, 484 A.2d 675 (1984). Although using the language of the warranty of workmanlike construction and the warranty of habitability somewhat interchangeably, we are aware that both warranties have been extended in favor of subsequent purchasers by additional courts. E.g., Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984); Keyes v. Guy Bailey Homes, Inc., 439 So.2d 670 (Miss.1983). But see, contra, Butler v. Caldwell & Cook, 122 A.D.2d 559, 505 N.Y.S.2d 288 (1986). Various public policy rationale have been offered in extending the implied warranty of workmanlike performance in favor of subsequent purchasers. In explaining why the privity requirement should be abandoned between a subsequent purchaser and a contractor in connection with an implied warranty of workmanlike performance, the court in Aronsohn, supra, stated that to require privity in such a situation would defeat the purpose of the implied warranty of good workmanship and could leave innocent homeowners without a remedy for negligently built structures in their home. The contractor should not be relieved of liability for unworkmanlike construction simply because of the fortuity that the property on which he did the construction has changed hands. 98 N.J. at 102, 484 A.2d at 680. As to the breadth of the warranty, we note that in Gupta v. Ritter Homes, Inc., 646 S.W.2d 168 (Tex.1983), overruled in relevant part in Amstadt v. U.S. Brass Corp., 919 S.W.2d 644 (Tex.1996), as recognized in PPG Industries v. JMB/Houston Centers, 146 S.W.3d 79 (Tex.2004), the warranty of workmanlike performance was extended to a subsequent owner under the Texas Deceptive Trade Practices Act, and, in so doing, the concurring opinion prudently suggested that such extension should be limited to latent defects which could not be discovered at the time of sale to the subsequent owner. In Richards, supra, the court held that privity should not be required between a remote purchaser and a contractor with respect to the implied warranty of workmanship and habitability. 139 Ariz. at 245, 678 P.2d at 430. The Richards court relied on a warranty of habitability case, Moxley v. Laramie Builders, Inc., 600 P.2d 733 (Wyo.1979), and stated that `[t]he purpose of the warranty is to protect innocent purchasers and hold builders accountable for their work. With that object in mind, any reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally deserving of recovery is incomprehensible.' 139 Ariz. at 245, 678 P.2d at 430 (quoting Moxley, supra ). The Richards court explained that the policy considerations underlying the implied warranty in favor of original owners are equally applicable to subsequent homeowners. Those considerations include that house-building is frequently undertaken on a large scale, that builders hold themselves out as skilled in the profession, that modern construction is complex and regulated by many governmental codes, and that homebuyers are generally not skilled or knowledgeable in construction, plumbing, or electrical requirements and practices. Richards, 139 Ariz. at 245, 678 P.2d at 430. The Richards court also noted that in a mobile society, homebuilders should anticipate the houses they construct will change ownership. Upon due consideration, we agree that liability under the implied warranty of workmanlike performance should be further implied and extended to subsequent home purchasers as against general contractors and that this extension should be circumscribed by certain limitations which we note other courts have adopted. E.g., Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984). Our extension of liability is thus limited to latent defects which manifest themselves after the subsequent purchase and are not discoverable by the subsequent purchaser's reasonably prudent inspection at the time of the subsequent purchase. Such liability is further subject to the statute of limitations found at Neb.Rev.Stat. § 25-223 (Reissue 1995). In extending the implied warranty of workmanlike performance to subsequent purchasers as against contractors, we note that the subsequent owner has the burden, inter alia, of proving a latent defect which is attributable to the actions or inactions of the builder, and the builder retains the traditional defenses, affirmative and otherwise. Given our conclusion that the implied warranty of workmanlike performance extends in favor of subsequent purchasers against contractors with the limitations noted above, and drawing all reasonable inferences in the complaint in favor of appellants, we conclude that the district court erred in dismissing count I as to the McNeil Company. This portion of the district court's order is reversed, and the cause remanded for further proceedings.