Opinion ID: 4194545
Heading Depth: 2
Heading Rank: 1

Heading: The Implied Warranty is a contract term

Text: ¶8 Under the Implied Warranty, a residential builder warrants that its work is performed in a workmanlike manner and that the structure is habitable. See Lofts at Fillmore Condo. Ass’n v. Reliance Commercial Constr., Inc. (Lofts), 218 Ariz. 574, 575 ¶ 5 (2008). The Warranty “is imposed by law” and serves “to protect innocent purchasers and hold builders accountable for their work.” Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 244-45 (1984) (citation and internal quotation marks omitted). A homeowner is not required to have privity of contract with the builder to sue it for breach of the Implied Warranty. See Lofts, 218 Ariz. at 577 ¶ 15; Richards, 139 Ariz. at 245. Rather, the Implied Warranty “arises from construction of the home,” and therefore runs to subsequent purchasers. Lofts, 218 Ariz. at 577 ¶¶ 13– 14 (reasoning that Richards and other cases “make clear that an implied 3 SIRRAH ENTERPRISES, LLC V. WAYNE WUNDERLICH, ET UX. Opinion of the Court warranty arises from construction of the home, without regard to the identity of the vendor”). ¶9 Sirrah argues that because the Implied Warranty “arises from construction of the home,” it neither constitutes a contract term nor arises from a contract. We disagree. ¶10 Woodward v. Chirco Construction Co., Inc., 141 Ariz. 514 (1984), directs our decision. The homebuilder there, Chirco Construction, argued that the six-year statute of limitations applicable for contract claims, A.R.S. § 12-548(A), did not apply to preserve the purchasing homeowners’ claim for breach of the Implied Warranty. Id. at 515–16. Relying on Richards’s pronouncement that the Implied Warranty “is imposed by law,” Chirco Construction asserted that the Warranty could not arise from the parties’ contract and, even if it did, breach of the Warranty only created a tort claim. Id. at 515. This Court disagreed. We decided that negligent construction of a residence can simultaneously support contract damages for breach of the Implied Warranty and tort damages for any personal injury or damaged personal property caused by the contractor’s negligence. Id. at 515–16. The Court recognized that the Implied Warranty “arises from the contractual relation between the builder and the purchaser.” Id. at 516 (citation and internal quotation marks omitted). Significantly, we also clarified Richards: Our statement in Richards, supra, that the implied warranty of workmanlike performance and habitability “is imposed by law” was not meant to transform the duty arising out of the contract into one based on tort principles alone; instead, it was meant to inform buyers and sellers that the law imputes the warranty into the contact for the construction and sale of the residence. We then held that the warranty runs to subsequent purchasers of the residence. If the warranty did not arise out of the contract and provide for a cause of action in contract, we would have had no cause to be concerned about the absence of privity between Richards and Powercraft Homes, Inc. Id. The Court concluded that the court of appeals properly applied the sixyear statute of limitations to the Implied Warranty claim at issue. Id. 4 SIRRAH ENTERPRISES, LLC V. WAYNE WUNDERLICH, ET UX. Opinion of the Court ¶11 In Lofts, the Court did not retreat from its position in Woodward that the Implied Warranty is imputed into a construction contract and runs to subsequent purchasers. Indeed, the Court cited Woodward for the principle that “[a] claim for breach of the implied warranty sounds in contract.” Lofts, 218 Ariz. at 575 ¶ 5. Also consistent with Woodward, the Court held that a subsequent homebuyer who lacked contractual privity with a non-vendor builder could nevertheless sue the builder for breach of the Warranty. See id. at 577–78 ¶¶ 13–19. The only reason for addressing privity was because the Court treated the Implied Warranty as a contract term. ¶12 Finally, since deciding Lofts, we have reiterated Woodward’s characterization of the Implied Warranty as a contract term. See Sullivan v. Pulte Home Corp. (Sullivan II), 232 Ariz. 344, 346 ¶ 13 (2013) (“[The] law imputes [the] warranty into [a] construction contract and allows subsequent purchasers a cause of action.” (citing Woodward, 141 Ariz. at 516)). We again confirm that description here.