Court Opinion

ID: 9632043
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:59:48.077618+00
Date Added: 2024-06-11T18:08:06.908849
License: Public Domain

BAKES, Justice,
concurring in part and dissenting in part:
I concur in the Court’s opinion with the exception of Part V(D). Part V(D) holds, in effect, that a builder is liable in a contract action to a remote purchaser of housing even though no contract exists between the two persons. The Court states, ante at 50-51, 740 P.2d at 1035-36 “We hold only that subsequent purchasers of residential dwellings, who suffer purely economic losses from latent defects manifesting themselves within a reasonable time, may maintain an action against the builder (or builder-developer, as the case may be), of the dwelling hosed upon the implied warranty of habitability despite the fact that no privity of contract exists between the two.”
Privity of contract is a “relationship which exists between two or more contracting parties.” Black’s Law Dictionary, 1079 (5th ed. 1979). Causes of action based upon breach of warranty, whether express or implied, are contractual in nature. As stated in 77 CJ.S. Sales § 302 (1952). “Warranties may be either express or implied, but in either event the relations between the parties arise out of a contract and are not based on what is known as tort or on duties imposed by law or on any theory unrelated to contract.” It is a sheer contradiction for *52the Court today to hold that a subsequent buyer has a cause of action against a builder “upon the implied warranty of habitability” and then state that no privity of contract need exist between the two. I agree with Chief Justice Shepard that the Court’s action today is not based upon the well established and understood cause of action in contract for breach of implied warranty, but has created a new cause of action in tort.
Implied warranty, as a legal concept, grew out of the law relating to express warranty provisions in contracts. The courts recognized that even though parties may or may not have expressly agreed as to what was warranted, that certain understandings, if not expressly disclaimed, were implied by the nature of the transaction. Thus, in the sale of property, if nothing was said with regard to the condition of title, a trier of fact nevertheless might be warranted in finding from the nature of the transaction that an implied warranty of good title existed. Of course, the facts could support a finding otherwise, as in the case where the sale was by quitclaim deed and the consideration paid was nominal. Under those circumstances, a finder of fact would be justified in determining that no implied warranty of title existed. Similarly, in the case of the sale of food, a finder of fact is justified in finding an implied warranty that the product is fit for human consumption. However, it would not be difficult to think of circumstances in which no such implied warranty would be justified. Thus, perishable food commodities which were deteriorating and which were sold to a pig farmer, would probably not justify an implied warranty of fitness for human consumption. If the pig farmer attempted to salvage some of the spoiled commodities and resold them to a third party for human consumption, would the original seller be responsible in a contract action to the subsequent purchaser from the farmer for breach of an implied warranty of fitness for human consumption? The Court’s decision today would support such a warranty claim. Whatever expectations a third party purchaser has with regard to the quality of a product, and whatever rights the law gives him against the original manufacturer of the product, should be based either upon tort law, or some statutory obligation, not based upon a contract cause of action for breach of implied warranty with its privity requirement removed.
Today’s decision will result in a great deal of uncertainty. The Court’s opinion does not define what is required to establish a prima facie case under its new cause of action, or what the applicable burden of proof should be. The opinion is silent as to whether tort or contract statutes of limitations will apply, in fact suggesting that maybe neither would be applicable, but that some other “reasonable time” period might be. Ante at 50, 740 P.2d 1035. A limitation period which commences only upon the appearance of “latent defects manifesting themselves within a reasonable time” will prove to be the most elusive part of the Court’s opinion today. It will require the issue to be litigated in every case.
The new cause of action established in this case may well cause an inundating flood of litigation before the numerous ambiguities and uncertainties caused by it are resolved. I believe it would have been better if the Court today had decided this case on existing legal principles, which are adequate to the task, rather than create this new uncertain cause of action.