Opinion ID: 2626450
Heading Depth: 2
Heading Rank: 1

Heading: woodside's relationship with mr. yazd and ms. yousefi created a legal duty

Text: ¶ 11 We have stated that [i]t is axiomatic that one may not be liable to another in tort absent a duty. Loveland v. Orem City Corp., 746 P.2d 763, 765 (Utah 1987). Any analysis of a tort claim, then, begins with an inquiry into the existence and scope of the duty owed the plaintiff by the defendant. ¶ 12 The court of appeals, however, began its analysis by examining the materiality of the Delta report following the sequence of elements set out in Mitchell. The court of appeals then wasted little time reaching the conclusion that [t]here is little question that the information contained in the Delta report would have been material to the Buyers in this case. Yazd v. Woodside Homes Corp., 2005 UT App 82, ¶ 9, 109 P.3d 393. ¶ 13 With its finding of materiality in hand, the court of appeals moved on to the matter of duty. The court appeared to link the materiality of the Delta report to the existence of Woodside's duty when it stated, We can say, however, that if Woodside possessed the Delta report, or had knowledge of its content, prior to the sale with the Buyers, it had a duty to disclose the information to the Buyers. Id. ¶ 10. It is important that the court of appeals' opinion not be read to suggest that the materiality of the Delta report created Woodside's duty to disclose the contents of the report to Mr. Yazd and Ms. Yousefi. Indeed, materiality becomes an issue only after a legal duty has been established. ¶ 14 The determination of whether a legal duty exists falls to the court. It is a purely legal question, and since in the absence of a duty a plaintiff will not be entitled to a remedy, it is the first question to be answered. See Loveland, 746 P.2d at 766. ¶ 15 From where does a duty arise? To properly answer the duty question, a court must understand that the structure and dynamics of the relationship between the parties gives rise to the duty. The question of whether a duty exists is a question of law. As always, resolution of this issue begins with an examination of the legal relationships between the parties, followed by an analysis of the duties created by these relationships. Id. ¶ 16 A relationship that is highly attenuated is less likely to be accompanied by a duty than one, for example, in which parties are in privity of contract. Age, knowledge, influence, bargaining power, sophistication, and cognitive ability are but the more prominent among a multitude of life circumstances that a court may consider in analyzing whether a legal duty is owed by one party to another. Where a disparity in one or more of these circumstances distorts the balance between the parties in a relationship to the degree that one party is exposed to unreasonable risk, the law may intervene by creating a duty on the advantaged party to conduct itself in a manner that does not reward exploitation of its advantage. ¶ 17 Legal duty, then, is the product of policy judgments applied to relationships. DeBry v. Valley Mortgage Co., 835 P.2d 1000, 1003-04 (Utah Ct.App.1992) (Duty is not sacrosanct in itself, but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection. (internal quotation marks and brackets omitted)). A person who possesses important, even vital, information of interest to another has no legal duty to communicate the information where no relationship between the parties exists. ¶ 18 An example which illustrates this point is the special relationship doctrine in tort law. A person has no legal duty to protect another person from the conduct of a stranger unless the person upon whom a duty is sought to be imposed has a special relationship with either the stranger or the potential victim. Rather, [t]he duty to control another person may arise where a special relationship exists. Wilson v. Valley Mental Health, 969 P.2d 416, 419 (Utah 1998); see also Restatement (Second) of Torts § 315 (1977) (stating that a duty is premised on a special relationship); Higgins v. Salt Lake County, 855 P.2d 231, 236 (Utah 1993) (adopting Restatement position). Here, it is Woodside's status as builder-contractor that gives rise to its legal duty to the home buyers. The communication of material information to Mr. Yazd and Ms. Yousefi is one of the obligations that flow from Woodside's assumption of its legal duty. ¶ 19 There are occasionally instances in which a court is called upon to make policy choices based on assessments of social, economic, and technological conditions. To cite but one example, the maturation of the industrial revolution and, in particular, the ever lengthening chain of participants in the manufacture of goods cut deeply into the doctrines of caveat emptor and privity of contract that had served well an agrarian and economically insular nation prior to the last century. This changed in MacPherson v. Buick Motor Co., where Justice Cardozo held that manufacturers must exercise reasonable care to protect consumers and others who, despite a lack of privity or direct contractual contact with the manufacturer, may come into contact with their products. 217 N.Y. 382, 390, 111 N.E. 1050 (1916). ¶ 20 Typically, courts cede authority over matters of policy to the political branches of government. When policy considerations bear on a subject lodged firmly within the court's sphere, like the common law, it is entirely appropriate for the court to make the policy judgments necessary to get the law right. ¶ 21 We have never explicitly recognized that a duty is owed to buyers of homes by builder-contractors. Insofar as we have signaled a willingness to impose this duty, it has been by indirection and expressed in dictum. In Smith v. Frandsen, 2004 UT 55, ¶ 9, 94 P.3d 919, we turned away an attempt by the Smiths, owners of a home that had been constructed on unsuitable soil, to impose a duty on the developer of the subdivision where the home was located. Our reasons for doing so had as much to do with the conclusions that we reached about the scope of knowledge acquired and the responsibility assumed by the Smiths' contractor-builder as with the issue of whether the developer knew of the poor soil conditions and whether that knowledge was material. ¶ 22 Our focus in Smith was not on whether the relationship between the Smiths and their builder-contractor imposed a legal duty to disclose information about soil conditions. After all, the builder-contractor was not a party to the lawsuit. The inquiry into the builder-contractor's role was, instead, directed at whether parity existed between what the builder-contractor knew about the condition of the soil that lay beneath the Smiths' house and the developer's knowledge of the same soil instability. This was relevant to our analysis of the developer's duty because we had formerly indicated that a remote purchaser who had no privity of contract with a developer might nevertheless recover for breach of the developer's duty to disclose unsuitable soil conditions to a previous unsophisticated purchaser who had no knowledge of the adverse conditions. Id. ¶ 25. ¶ 23 Smith required us to define limits on the right to recover from remote parties. One limiting principle that we recognized and applied in Smith was that a duty to disclose material information is extinguished once the information is communicated or otherwise acquired by the party to whom the duty was owed. Id. ¶ 17. ¶ 24 Modern home construction requires a high degree of knowledge and expertise, including knowledge of soil conditions. We have found that the disparity in skill and knowledge between home buyers and builder-contractors leads buyers to rely on the builder-contractor's expertise. Based on these observations, we chose to adopt in Loveland, 746 P.2d 763, a statement of duty borrowed from Wyoming of `reasonable care to insure that the subdivided lots are suitable for construction of some type of ordinary, average dwelling house and he must disclose to his purchaser any condition which he knows or reasonably ought to know makes the subdivided lots unsuitable for such residential building.' Id. at 769 (emphasis omitted) (quoting Anderson v. Bauer, 681 P.2d 1316 (Wyo.1984)). ¶ 25 The imposition of this duty had the effect in Smith of imputing to the builder-contractor the knowledge of deficient soil conditions that the Smiths accused the developer of failing to disclose to them. The imputation of this knowledge, however, cut off any duty the developer may otherwise have owed to future owners of the property, including the Smiths. ¶ 26 Although we did not recognize the duty of the builder-contractor in the context of a direct action for recovery brought by a home buyer in Smith, we today extend its application to that setting. To do otherwise would fatally undermine the legitimacy of our reasoning in Smith.