Court Opinion

ID: 9598322
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:07:57.155014+00
Date Added: 2024-06-11T12:45:55.328799
License: Public Domain

STERNBERG, Judge,
dissenting:
Because I perceive no reason to carve out an exception to the doctrine of implied warranties of a builder-vendor, and because I believe that such an exception creates undue difficulties in application of the doctrine, I dissent.
Colorado is recognized as a leader in the development of the implied warranty rule. Note, The Doctrine of Caveat Emptor as Applied To Both The Leasing & Sale Of Real Property: The Need For Reappraisal & Reform, 2 Rutgers-Camden L.J. 120 (1970); Tavares v. Horstman, 542 P.2d 1275 (Wyo.1975). Until the 1950’s one who built and sold a home was protected by the doctrine of caveat emptor. This ancient principle gradually eroded in the face of modern realities. In Newcomb v. Schaeffler, 131 Colo. 56, 279 P.2d 409 (1955), proceeding on negligence principles, the court in effect placed the duty on a builder to conduct soil tests and held him liable to the purchasers of a new home which sustained damage through being built on unstable soil. In Cohen v. Vivian, 141 Colo. 443, 349 P.2d 366 (1960), the court proceeded on a constructive fraud basis and held that a builder has a duty to disclose his knowledge of defects that were latent to the purchaser.
Then, in Giisan v. Smolenske, 153 Colo. 274, 387 P.2d 260. (1963), and particularly in Carpenter v. Donohoe, 154 Colo. 78, 388 P.2d 399 (1964), the modern doctrine of implied warranties of workmanlike construction and habitability came into full fruition. Following those decisions it was the law in Colorado that a builder impliedly warranted his construction techniques and the habitability of new homes to his purchaser.
That this doctrine is expanding in Colorado, is evidenced by the holding in Duncan v. Schuster-Graham Homes, Inc., Colo., 578 P.2d 637 (1978). There, the builder took a home back from the first purchaser because of alleged defects, made some repairs and sold it again. The second purchaser sued, alleging breach of implied warranties. Relying on H. B. Bolas Enterprises, Inc. v. Zarlengo, 156 Colo. 530, 400 P.2d 447 (1965), this court took a restrictive view of the builder-vendor warranty and held that because the house was not new, implied warranties cannot apply. Duncan v. Schuster-Graham Homes, Inc., 39 Colo.App. 92, 563 P.2d 976 (1977). The Supreme Court, however, looking to substance rather than form, reversed, explaining that implied warranties were needed to protect home buyers from “comparatively more knowledgeable builder-vendors.” (emphasis added)
It is true that some states have refused to imply warranties in the case of builders who construct homes for their own use and then sell the house when they change their minds. See, e. g., Capra v. Smith, Ala., 372 So.2d 321 (1978); Yepsen v. Burgess, 269 Or. 635, 525 P.2d 1019 (1974); Elderkin v. *74Gaster, 447 Pa. 118, 288 A.2d 771 (1972); Klos v. Gockel, 87 Wash.2d 567, 554 P.2d 1349 (1969). However, I do not find persuasive the reasons advanced for restricting the doctrine in those cases or in the recent case of this court, Mazurek v. Nielsen, Colo. App., 599 P.2d 269 (1979). Rather, the policies underlying the doctrine call for its application even to those who may well not have intended to sell the home at the start of construction but who indeed do sell it.
In my view there is no harm done by requiring that any builder use good workmanship in constructing a home. No home should be shoddily built. Experience tells us that homes last for generations and are inhabited by several families. If we encourage construction of homes that are initially to be builder occupied to be built with less than good workmanship, then there is no protection accorded to eventual renters or purchasers of the home after it is placed in the stream of commerce.
Finally, the rule the majority adheres to has the effect of removing the protections of implied warranties in just the situation where they are most needed: That of the first-time builder. Such a builder is more apt to construct a defective home than is a more experienced builder. Thus, he, above all, should be held to warrant his product. Regardless of this builder’s intention when he constructed the home he did finally place it into the stream of commerce by selling it. As between the purchaser who has no reasonable opportunity to observe defective construction techniques, and the builder who has every chance to see and avoid them, the risk of loss should be placed on the builder. Cf. Cohen v. Vivian, supra.
I decry the situation where Colorado, formerly on the crest of the wave of logic that has eroded the ancient doctrine of caveat emptor in the home construction field, now, for no good reason retreats and creates one. outpost of that doctrine which will only cause confusion and further litigation before its inevitable fall.