Opinion ID: 1669608
Heading Depth: 2
Heading Rank: 3

Heading: Breach-of-Warranty Claims

Text: The Turners allege that Westhampton breached the terms of the warranty, which was an express warranty. They also allege that Westhampton breached the implied warranty of habitability. The trial court entered a summary judgment in favor of Westhampton as to both claims. An action alleging a breach of warranty is a subset of a breach-of-contract action. A plaintiff's cause of action for breach of warranty accrues and the statute of limitations begins to run on the date the defendant completes performance. Stephens v. Creel, 429 So.2d 278, 280 (Ala.1983). In the context of construction of a house, this Court explained in Stephens that [b]y its very nature it is the failure to construct the house in a workmanlike manner that constitutes the breach of the warranty. 429 So.2d at 280. The statute of limitations on a breach-of-express-warranty action is six years. Ala.Code 1975, § 6-2-34(9); the statute of limitations on a breach-of-the-implied-warranty-of-habitability claim, while limited to a reasonable time, can extend as long as six years. Sims v. Lewis, 374 So.2d 298, 305 (Ala.1979) (citing Ala.Code 1975, § 6-2-34). Westhampton completed performance during the month of February 1996. This action was filed on June 22, 2001. The Turners filed this action within the applicable six-year limitations period.
The warranty provided the Turners with coverage for one year from the date they closed on the purchase of the home. However, in order for Westhampton to be liable under the warranty, the Turners were obligated to fulfill two separate requirements. As the Turners acknowledge, paragraph 4 of the warranty requires them to bring any legal action alleging a breach of the warranty within 90 days of the expiration of the one-year warranty. However, as the Turners note, and as we stated above, the Legislature has provided a six-year statute of limitations on breach-of-warranty actions. Ala.Code 1975, § 6-2-34(9). Moreover, Ala.Code 1975, § 6-2-15, provides that any agreement or stipulation, verbal or written, whereby the time for the commencement of any action is limited to a time less than that prescribed by the law for the commencement of such action is void. Clearly the 90-day provision in the warranty does not override the 6-year statute of limitations. However, the Turners have failed to address the other requirement set out by the warranty. Paragraph 3 provides that [Westhampton] shall not be liable under this Agreement unless written notice of the latent defect shall have been given by [the Turners] to [Westhampton] within the one (1) year warranty period. Such a provision is not akin to a statute of limitations. Rather, such a provision operates as a waiver of the Turners' right to sue under the warranty if they fail to give notice of the defect within the one-year warranty period. In Ex parte Miller, 693 So.2d 1372, 1376 (Ala.1997), a case decided under Alabama's version of the Uniform Commercial Code, we held that a company can limit its warranty coverage. In Southern Energy Homes v. Washington, 774 So.2d 505, 511 (Ala.2000), we held that a warranty can require a certain method by which the warranty holder notifies the party giving the warranty of a defect covered by the warranty. See also Copenhagen Reinsurance Co. v. Champion Home Builders Co., 872 So.2d 848 (Ala.Civ.App.2003). If a purchaser were to attempt to hold the seller liable when the purchaser had not notified seller pursuant to the method set out in the warranty, the seller would not be liable. While these cases are based upon Alabama's Commercial Code, we see no reason to limit the rule to cases concerning goods. Rather, we are led by the principle of freedom of contract. Therefore, we hold that companies selling houses are similarly capable of limiting warranty coverage. The warranty in this case requires that the purchaser give notice of the defect within one year of the commencement of the warranty. The Turners have failed to provide any evidence indicating that they provided the required notice within that period. Therefore, the trial court did not err in entering a summary judgment for Westhampton. [3]
The warranty signed by the Turners included text set off in a box from the rest of the document. This box contained capital letters in a font larger than the rest of the text; the boxed text stated, in pertinent part: THIS WARRANTY IS GIVEN IN LIEU OF ANY AND ALL OTHER WARRANTIES, EITHER EXPRESSED OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, HABITABILITY AND WORKMANSHIP.... (Capitalization original; emphasis added.) The box containing the above text also contained a line for the purchaser to initial, signaling the purchaser's agreement with the statement. Mr. Turner initialed this line. On appeal, the Turners argue that the disclaimer was wholly unreasonable and in contravention to the stated purpose of the law. In Cochran v. Keeton, 47 Ala.App. 194, 199, 252 So.2d 307, 311-12 (Civ.1970)( Cochran I ), the Court of Civil Appeals first recognized the implied warranty of habitability in the sale of a new house in Alabama. This Court affirmed the judgment of the Court of Civil Appeals, agreeing that the time had come to recognize such a warranty. Cochran v. Keeton, 287 Ala. 439, 440-41, 252 So.2d 313, 314-15 (1971)( Cochran II ). In Cochran I, the Court of Civil Appeals wrote: This State long ago adopted the law of manufacturers liability and has codified the law of implied warranty in the sale of goods by adopting the Uniform Commercial Code (Title 7A, Article 21967). It is totally incongruous that the purchaser of an automobile, a refrigerator or almost any other item of personal property is protected from negligent manufacture or unfitness of use, but the purchaser of a new home should be at the mercy of an unscrupulous builder and seller. The purchase of a new home is usually the largest single purchase of a lifetime, and a lifetime is required to pay for it. Particularly today, a seller's market prevails and the purchaser is in no position to force inclusion of express warranties in a deed. There are myriad possibilities of hidden and latent defects in the construction of a home, and most purchasers are not capable by training or experience to detect or recognize them. This is an era of mass production of houses, just as it is of consumer goods. The courts gave birth to the rule of caveat emptor. The courts must now give relief from it. Manufacturers' liability and implied warranty in the sale of personal property were first recognized in the courts, and legislative action followed.  (Emphasis added.) Though we have never decided whether one can effectively disclaim the implied warranty of habitability, one can disclaim an implied warranty as to personal property. Ala.Code 1975, § 7-2-316(3). Because it was the existence of an implied warranty as to personal property that was said to justify the recognition of an implied warranty of habitability of a new house, should we not hold that this court-created warranty can be contracted away where a reasonable express warranty of some duration is given to the purchaser of the new house in lieu of that implied warranty? This is not an area of law that has been traditionally entrusted to the Legislature. Real-estate transactions have traditionally been governed by the common law, and the concept at issue herethe implied warranty of habitability on a new houseis itself a creature of the common law. These considerations lead us to conclude that the principle of freedom of contract permits a party to effectively disclaim the implied warranty of habitability. To succeed on their claim of breach of the implied warranty of habitability then, the Turners would have to offer substantial evidence indicating that they did not disclaim the implied warranty of habitability. In this case, Westhampton offered the Turners the warranty when the Turners purchased their house. The warranty was offered in consideration for the Turners' waiving all other warrantiesexpress and implied. The Turners are both professionals: Mrs. Turner is a registered nurse who now homeschools one of their children; Mr. Turner is a board-certified physician's assistant. Mr. Turner has stated that he read every word of the new home warranty before signing it. The Turners have produced no evidence whatsoever indicating that they did not agree to disclaim all implied warranties; indeed, the evidence indicates the opposite. We hold that the trial court did not err in entering a summary judgment in favor of Westhampton as to the Turners' breach-of-implied-warranty claim.