Opinion ID: 2640748
Heading Depth: 2
Heading Rank: 2

Heading: The AOAO's Breach of Express and/or Implied Warranties Claims

Text: As previously stated, the circuit court granted summary judgment in favor of Venture 15, Royal, Lee, and Liu on the AOAO's breach of express and/or implied warranties claims. Specifically, with respect to Venture 15, the circuit court ruled that the Condominium Public Report complied with HRS § 514A-61 and that, therefore, the AOAO's implied warranty of habitability claim was effectively disclaimed. The circuit court, with respect to Royal, Lee, and Liu, essentially ruled that: (1) the applicable statute of limitations barred the AOAO's breach of warranties claims; and (2) Royal, Lee, and Liu did not extend any warranties to the AOAO.

The AOAO maintains that the circuit court erred in granting summary judgment in favor of Venture 15 on its breach of implied warranties claims. First, the AOAO contends that an implied warranty of habitability extends to residential home purchases. In support, the AOAO relies on Ass'n of Apartment Owners of the Park Towers v. Child, 1 Haw.App. 130, 615 P.2d 756 (1980) [hereinafter, AOAO Park Towers ], and cases from other jurisdictions. Second, the AOAO contends that the Condominium Public Report did not disclaim the implied warranty of habitability pursuant to HRS § 514A-61. The AOAO asserts that Venture 15 furnishes no legal authority to support the proposition that a developer can `disclaim' warranties via HRS § 514A-61, particularly implied warranties, which arise by operation of law. Venture 15, on the other hand, contends that AOAO Park Towers did not expressly conclude that an implied warranty of habitability indeed existed with regard to the sale or purchase of a new home. Venture 15 relies on American Towers Owners Ass'n v. CCI Mechanical, Inc., 930 P.2d 1182 (Utah 1996), declined to follow on other grounds by Grynberg v. Questar Pipeline Co., 70 P.3d 1 (Utah 2003) [hereinafter, American Towers ], for the proposition that an implied warranty of habitability does not extend to residential home purchases. Venture 15 also asserts that it followed the dictates of [HRS] § 514A-61 and very clearly stated in the Condominium Public Report that it was not providing any warranties, either express or implied, with regard to . . . Newtown Meadows[.] The Condominium Public Report is a public record available to any prospective purchaser of a unit at Newtown Meadows. As such, the AOAO cannot logically maintain that Venture 15 violated any statutory requirements regarding a disclosure that it was not providing any warranties[.] In AOAO Park Towers, the Association of Apartment Owners of Park Towers (the plaintiff) brought a complaint against the owner of the land on which the Park Towers Condominium was situated (the defendant), alleging, inter alia, that the sale of a defective retaining wall constructed at the site was a breach of the defendant's implied warranty that the wall was structurally safe and was fit for its intended purpose. 1 Haw.App. at 131, 615 P.2d at 757. The defendant apparently moved for summary judgment on what was construed as the plaintiff's implied warranty of habitability claim, which the circuit court denied. Id. On appeal, the Intermediate Court of Appeals (ICA) stated: The defendant admits that an implied warranty of habitability extends to the sale and purchase of new homes (including condominium apartments) but argues that this is true only where the seller is a builder or real estate developer. Therefore, the defendant contends that she cannot be held liable under an implied warranty of habitability because she was only a passive owner and was neither a real estate developer nor builder. Furthermore, she contends that at the time of its sale the condominium was not new housing. [The p]laintiff contrarily contends that[,] even assuming [the] defendant's statement of the law to be correct[, the] defendant was not a passive property owner but was a real estate developer or a builder-vendor and the condominium was new housing. In light of the above, we conclude that a genuine issue of material fact exists and hold that the [circuit] court properly denied [the] defendant's [m]otion for [s]ummary [j]udgment. Id. at 132, 615 P.2d at 757-58 (citations and emphasis in original omitted). As evident from the foregoing, the ICA did not expressly recognize that an implied warranty of habitability extends to residential home purchases; rather, the ICA implicitly agreed with the defendant's concession of law that an implied warranty of habitability extends to the sale and purchase of new homes (including condominium apartments) where the seller is a builder or real estate developer. Here, at the hearing on July 29, 2002 regarding Venture 15's motion, Venture 15's counsel conceded that AOAO Park Towers stands for the proposition that there is an established implied warranty of habitability in [this] state[.] Indeed, the circuit court subsequently stated that both counsel agree that [ AOAO Park Towers ] establishes [the implied] warranty [of habitability]. None of the parties on appeal, however, refer to Venture 15's apparent concession of law. Nevertheless, we are not bound by such a concession. See McCandless v. Campbell, 20 Haw. 404, 405 (1911) (concluding that, where a statement in question is purely of a conclusion of law[, it] does not bind the court. If it becomes essential to a disposition of the appeal, the issue of the alleged unconstitutionality will be considered and decided.); F.A.C.E. Trading, Inc. v. Todd, 393 Md. 364, 903 A.2d 348, 355 n. 7 (2006) (stating that it is not bound by a party's concession of law). Other jurisdictions have recognized that a developer-vendor could be held liable for breach of an implied warranty of habitability. See Tassan v. United Dev. Co., 88 Ill.App.3d 581, 43 Ill.Dec. 769, 410 N.E.2d 902, 908 (1980) (determining that a developer-vendor of condominium units could be held liable for breach of implied warranty of habitability); see also Mazurek v. Nielsen, 42 Colo.App. 386, 599 P.2d 269, 270-71 (1979); Smith v. Miller Builders, Inc., 741 N.E.2d 731, 740-43 (Ind.Ct.App.2000); Bolkum v. Staab, 133 Vt. 467, 346 A.2d 210, 211-12 (1975). As one court explains: [T]he fundamental reason for requiring an implied warranty of habitability to attach to the sale of new homes by a builder-seller is because of the unusual dependent relationship of the vendee to the vendor. Purchasers from a builder-seller depend on his ability to construct and sell a home of sound structure. Purchasers from a developer-seller depend on his ability to hire a contractor capable of building a home of sound structure. The buyers here had no control over [the defendant-developer-seller's] choice of a builder. [The defendant-developer-seller] stood in the best position to know which contractor could perform the work adequately. The dependent relationship here between the buyers and [the defendant-developer-seller] is the same as if [the defendant-developer-seller] was a builder-seller. Tassan, 43 Ill.Dec. 769, 410 N.E.2d at 908 (internal quotation marks and citation omitted) (emphasis added). Although American Towers  the sole case relied on by Venture 15 on appeal and at the circuit court level  stands for the proposition that an implied warranty of habitability does not extend to residential home purchases in Utah, such a position appears to be a minority one. See Conklin v. Hurley, 428 So.2d 654, 656-57 & n. 2 (Fla.1983) (stating that [a] majority of the jurisdictions in this country now recognizes an implied warranty of habitability in the sale of new residences and collecting cases from thirty-three states to support such position). Nonetheless, as previously stated, the circuit court in the instant case ruled that the Condominium Public Report, which was the final report issued on Newtown Meadows by the real estate commission, complied with HRS § 514A-61 and that, therefore, the AOAO's implied warranty of habitability claim was effectively disclaimed. HRS § 514A-61, entitled Disclosure requirements, is set forth in Part IV of HRS chapter 514A, which, in turn, is entitled Protection of Purchasers. At the time the relevant events took place in this case, HRS § 514A-61 (1985 & Supp.1998) provided in pertinent part: (a) Each developer of a project subject to this chapter shall prepare and provide to each prospective initial purchaser an abstract which shall contain the following: . . . . (3) A description of all warranties for the individual apartments and the common elements, including the date of initiation and expiration of any such warranties; and if no warranties exist, the developer shall state that no warranties exist[.] . . . . (c) This section shall be administered by the real estate commission. The real estate commission may waive the requirements of subsections (a) and (b) if the information required to be contained in the disclosure abstract is included in the real estate commission's public report on the project. (Emphases added.) It is undisputed that Venture 15 was the developer of Newtown Meadows and, thus, subject to HRS chapter 514A. It is unclear, however, whether Venture 15 followed the dictates of [HRS] § 514A-61 as it claims on appeal. Specifically, it is unclear from the record whether Venture 15 provided to each prospective initial purchaser an abstract which contained a statement that no warranties exist. Although Venture 15 correctly points out that the Condominium Public Report provides in relevant part that [t]here are no expressed or implied warranties including any implied warranty of merchantability of fitness of the apartment for a particular purpose[,] such information was not provided in the disclosure abstract attached to the Condominium Public Report as required by HRS § 514A-61(a). Although the disclosure abstract requirement can be waived, HRS § 514A-61(c), the real estate commission did not waive such requirement. In fact, the first page of the Condominium Public Report provides: Disclosure Separate Disclosure Abstract on this Abstract: condominium project: [X] Required [] Not Required  disclosures covered in this report. (Exhibit B) (Emphasis in original.) (Format altered.) Exhibit B, the disclosure abstract attached to the Condominium Public Report, merely provides the estimate of maintenance fee disbursements and initial maintenance fee assessments, as required by HRS § 514A-61(a)(2), [20] and does not include any information relating to warranties, as required by HRS § 514A-61(a)(3). Although Venture 15 apparently believes that the Condominium Public Report and the abstract/disclosure abstract referred to in HRS § 514A-61 are one and the same, they are not. Indeed, HRS § 514A-61(c) makes clear that the disclosure abstract and the real estate commission's public report on the project, i.e., the Condominium Public Report, are two separate documents. Finally, inasmuch as it does not appear that an abstract containing the requisite information on warranties was prepared by Venture 15, it reasonably follows that each prospective initial purchaser was not provided with such an abstract, as required by HRS § 514A-61(a). We, therefore, disagree with Venture 15's assertion that, because [t]he Condominium Public Report is a public report available to any prospective purchaser of a unit at Newtown Meadows[,] the AOAO cannot logically maintain that Venture 15 violated any statutory requirements regarding a disclosure that it was not providing any warranties. Consequently, even assuming arguendo that HRS § 514A-61 provides a statutory vehicle for developers to utilize in order to disclaim warranties, including the implied warranty of habitability, Venture 15 cannot rely on HRS § 514A-61 in light of its failure to follow[ ] the dictates of such section. Moreover, the burden on Venture 15 to establish that it disclaimed the implied warranty of habitability is very high, Bd. of Managers of Chestnut Hills Condo. Ass'n v. Pasquinelli, Inc., 354 Ill.App.3d 749, 290 Ill. Dec. 730, 822 N.E.2d 12, 19 (2004), and such disclaimers are strictly construed against the defendant. Id.; see also Tusch Enters. v. Coffin, 113 Idaho 37, 740 P.2d 1022, 1030 (1987) (observing that [t]he majority of states permit a disclaimer of an implied warranty of habitability, but the disclaimer must be clear and unambiguous and such disclaimers are strictly construed against the [defendant]) (citations omitted). Accordingly, we hold that the circuit court erred in granting summary judgment in favor of Venture 15 on the AOAO's implied warranty of habitability claim.
The AOAO also contends that the circuit court erred in granting summary judgment in favor of Venture 15 on its breach of express warranties claims. [21] Specifically, the AOAO's argument with respect to its breach of express warranties claims against Venture 15 states, in its entirety: Venture 15's summary judgment motion argued [that the AOAO] had no express warranty claim because [the AOAO] had no contract with Venture 15. This is flawed because: (1) it contradicts the holding in [ AOAO Park Towers ], where the court specifically recognized an association's cause of action for breach of implied warranty of habitability even though the association was not technically the contracting party; and (2) HRS § 514A-93 specifically grants associations standing to bring suit on behalf of its [sic] home-owners. (Some emphases omitted and some added.) Preliminarily, we note that the AOAO does not indicate to this court what express warranty or warranties, if any, were made by Venture 15 to the AOAO (and/or its members), and this court is not required to sift through a voluminous record for documentation of a party's contentions. Int'l Bhd. of Elec. Workers v. Hawaiian Tel. Co., 68 Haw. 316, 332, 713 P.2d 943, 956 (1986). The record in this case consists of sixty-four volumes of court documents and over 300 pages of transcripts. Moreover, contrary to the AOAO's characterization, Venture 15's motion for partial summary judgment did not argue[] that the AOAO had no express warranty claim because [the AOAO] had no contract with Venture 15. Rather, Venture 15 argued that the AOAO's claims against Venture 15 for breach of warranty must . . . be dismissed, since Venture 15 made no warranties, either express or implied, with regard to . . . Newtown Meadows[,] and that it followed the dictates of [HRS] § 514A-61[.] The AOAO's first argument raised on appeal, to wit, that the ICA specifically recognized an association's cause of action for breach of implied warranty of habitability even though the association was not technically the contracting party in AOAO Park Towers has no bearing on the AOAO's express warranty claim. And, whether the AOAO has standing pursuant to HRS § 514A-93 does not address the issue whether Venture 15 made any express warranties to the AOAO. Thus, the AOAO's contentions on appeal relating to its breach of express warranties claims against Venture 15 are without merit. Accordingly, we hold that the circuit court did not err in granting summary judgment in favor of Venture 15 on the AOAO's breach of express warranties claims.
The AOAO contends that the circuit court erred in granting summary judgment in favor of Royal, Lee, and Liu on its breach of warranties claims. The AOAO essentially argues that Royal, Lee, and Liu extended express warranties to the AOAO and that implied warranties arose by operation of law. The AOAO, however, does not assign as error the circuit court's orders that granted Royal's, Lee's, and Liu's motions for partial summary judgment that asserted that the AOAO's breach of warranties claims were barred by the applicable statute of limitations. And, the AOAO does not present any argument with respect to the circuit court's ruling that the statute of limitations barred the AOAO's breach of warranties claims. Consequently, even assuming arguendo that the AOAO prevails on its argument asserted on appeal that Royal, Lee, and Liu extended express warranties to the AOAO and that implied warranties arose by operation of law, the AOAO's breach of warranties claims are barred by the applicable statute of limitations in light of the AOAO's failure to challenge such basis. The AOAO's contention with respect to its breach of warranties claims, therefore, is deemed waived. See HRAP Rule 28(b)(4) (2007) (Points not presented . . . will be disregarded [.] (Emphasis added.)); HRAP Rule 28(b)(7) (2007) (Points not argued may be deemed waived.); see also Whitey's Boat Cruises, Inc. v. Napali-Kauai Boat Charters, Inc., 110 Hawai`i 302, 318 n. 26, 132 P.3d 1213, 1229 n. 26 (2006). Accordingly, we hold that the circuit court did not err in granting summary judgment in favor of Royal, Lee, and Liu on the AOAO's breach of warranties claims.