Court Opinion

ID: 2760233
Source: CourtListenerOpinion
Date Created: 2014-12-12 15:03:47.863824+00
Date Added: 2024-06-11T11:27:03.117204
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                No. 13–1285

                         Filed December 12, 2014

ROSAUER CORPORATION,

      Appellant,

vs.

SAPP DEVELOPMENT, L.L.C.; TODD SAPP; WHISPERING CREEK,
L.L.C.; and W.C. DEVELOPMENT, INC.,

      Appellees.

      On review from the Iowa Court of Appeals.

      Appeal from the Iowa District Court for Woodbury County,

Duane E. Hoffmeyer, Judge.

      Residential developer seeks further review of court of appeals

decision affirming summary judgment that dismissed claim implied

warranty of workmanlike construction applied to sale of building lot

without a dwelling.       DECISION OF COURT OF APPEALS AND

JUDGMENT OF DISTRICT COURT AFFIRMED.

      Paul D. Lundberg of Lundberg Law Firm, P.L.C., Sioux City, for

appellant.

      Patrick L. Sealy and John C. Markham of Heidman Law Firm,

L.L.P., Sioux City, for appellees.
                                          2

WATERMAN, Justice.

       In this appeal, we must decide whether to extend the implied

warranty of workmanlike construction to the sale of a residential lot

without a home or other structure. The plaintiff, a contractor-developer,

bought the lot from a realtor to build townhomes for sale. He alleges the

lot had improperly compacted backfill, requiring extensive additional

work to get it ready for construction.               Plaintiff sued the original

developers whose contractor had performed the substandard soil work.

The district court granted defendants’ motion for summary judgment,

ruling that the implied warranty did not apply to the sale of a lot without

a dwelling. The court of appeals affirmed, appropriately deferring to our

court whether to extend the implied warranty to this scenario.                     We

granted further review.

       We now join the majority of courts reaching this question and hold

the implied warranty of workmanlike construction does not apply to the

sale of a lot with no dwelling. As explained below, the implied warranty

was judicially created to protect residents from substandard living

conditions.     The purpose of the implied warranty is to redress the

disparity in expertise and bargaining power between consumers and

builder-vendors in recognition of the difficulty of discovering latent

defects in complex modern residential structures. We decline to extend

the implied warranty to the sale of land between developers able to

protect themselves through express contract terms and simple soil tests. 1

Accordingly, we affirm the decision of the court of appeals and the

judgment of the district court.

       1In Luana Savings Bank v. Pro-Build Holdings, Inc., decided today, we decline to
extend the implied warranty to allow claims by a foreclosing lender that acquired the
buildings by deed in lieu of foreclosure. ___ N.W.2d ___, ___ (Iowa 2014).
                                           3

       I. Background Facts and Proceedings.

       Defendants, Todd Sapp and his company, W.C. Development,

L.L.C., developed a large residential subdivision, Royal Highland, out of

farmland on the southeast side of Sioux City, Iowa. W.C. Development

hired an engineer to prepare a topographical map, perform soil testing,

and create a plat.     At the center of this dispute is lot 13 of the third

addition. The actual grading, backfilling, and compaction of lot 13 was

performed by Burkhardt Construction, hired by W.C. Development. W.C.

Development also hired Certified Testing Services (CTS) to ensure that

the fill and soil compaction were done correctly.          In April 2003, W.C.

Development sold lot 13 to Kenneth Beaulieu, a realtor.

       Plaintiff, Rosauer Corporation, owned by Anthony Rosauer, is a

home building and landscaping corporation doing business since 1997.

Rosauer purchased lot 13 from Beaulieu for $50,000 on July 24, 2007.

It was Rosauer’s first purchase of a residential building lot. The lot was

subject to restrictive covenants, and Rosauer planned to build two

townhomes for sale. Before he purchased lot 13, Rosauer heard rumors

that homes in the development were settling due to soil compaction

problems. Rosauer nevertheless failed to request any soil tests on lot 13

before he bought it. After the sale was final, Rosauer’s lender required

soil   testing   on   the   lot,   which   revealed    undocumented    fill   with

inconsistent moisture levels. CTS recommended complete removal and

replacement of existing fill material before building on lot 13. Rosauer

telephoned Sapp to discuss the CTS report.              During this phone call,

Sapp told Rosauer that the problem had happened on several other lots,

and W.C. Development had paid extra costs associated with soil work for

those lots.      They had no further discussions before this litigation

commenced.         Rosauer     spent   $76,858    to   comply   with   the CTS
                                            4

recommendations, with $69,995 of the work completed by his own

landscaping company.

      Rosauer ultimately built two townhomes on lot 13 and continued

to buy other lots in the same development. As he purchased additional

lots, Rosauer requested soil testing, but the lot owners refused, asserting

liability concerns. Rosauer then negotiated contractual provisions that

allowed the option of rescission of those purchases based on postsale soil

testing.

      In June 2012, Rosauer filed this lawsuit to recover the costs of the

soil work on lot 13, naming Sapp and W.C. Development as defendants

on theories of negligence and breach of implied warranty. Sapp moved

for summary judgment, alleging that Rosauer’s economic losses were not

recoverable in tort and that Iowa courts had not recognized a claim for

implied warranties in the sale of unimproved land.                    Rosauer conceded

that the economic loss doctrine precluded recovery in negligence, 2 but

resisted summary judgment on his implied warranty claims. The district

court granted summary judgment for Sapp, reasoning that the land was

an unimproved lot lacking a dwelling, and therefore the implied warranty

of workmanlike construction did not apply. Rosauer appealed, and we
transferred the case to the court of appeals.                  The court of appeals

affirmed, declining to extend the implied warranty to land without a

dwelling.    We granted further review to decide whether to extend the

implied warranty of workmanlike construction to these facts.

      II. Standard of Review.

      We review rulings that grant summary judgment for correction of

errors at law.       Parish v. Jumpking, Inc., 719 N.W.2d 540, 542 (Iowa

      2The   economic loss doctrine is not at issue in this appeal.
                                    5

2006).    Summary judgment is appropriate when there is no genuine

issue of material fact and the moving party is entitled to judgment as a

matter of law. Iowa R. Civ. P. 1.981(3). We view the evidence in the light

most favorable to the nonmoving party. Parish, 719 N.W.2d at 543.

        III. Analysis.

        We must decide whether to extend the implied warranty of

workmanlike construction to the sale of land without a dwelling. This is

a question of first impression in Iowa.    We begin our analysis with a

review of the history of the implied warranty of workmanlike construction

in our state and the policies underlying that doctrine. Then we examine

the elements of the implied warranty as applied to the sale of a lot. Next,

we determine whether the underlying policies support extending the

doctrine to these facts.       Finally, we examine cases from other

jurisdictions adjudicating whether to allow implied warranty claims on

the sale of lots without dwellings. We conclude the doctrine should not

be extended to the sale of lots between developers.

        A. The Implied Warranty of Workmanlike Construction in

Iowa.    Iowa has long recognized in construction contracts an implied

warranty that a building “ ‘will be erected in a reasonably good and

workmanlike manner’ ” and that it “ ‘will be reasonably fit for the

intended purpose.’ ”     See Busker v. Sokolowski, 203 N.W.2d 301, 303

(Iowa 1972) (quoting Markman v. Hoefer, 252 Iowa 118, 123, 106 N.W.2d
59, 62 (1960) (discussing the implied warranty found in construction

contracts)); see also Smith & Nelson v. Bristol, 33 Iowa 24, 25 (1871)

(stating the rule that in a construction contract that did not express a

specific manner in which work was to be done, the work “was to be done

in a workmanlike manner”).      This warranty, however, was not initially

recognized in residential construction.
                                           6

      In Mease v. Fox, we recognized an implied warranty of habitability

in a residential lease. 3 200 N.W.2d 791, 793–95 (Iowa 1972) (describing

the retreat from the common law of caveat emptor in leases and the

growing trend of implying a warranty of habitability). Mease emphasized

that changing housing conditions gave a tenant far less bargaining power

than landlords. Id. at 794 (describing a tenant’s inability to know about

potential housing law violations or deficiencies on the premises).

      We      did    not   adopt     the   implied   warranty   of    workmanlike

construction in the sale of residential real estate until our decision in

Kirk v. Ridgway.           See 373 N.W.2d 491, 493–94, 496 (Iowa 1985)

(explaining that there had been no prior implied warranties in Iowa

residential real estate contracts).            “Traditionally, the common law

presumed the home buyer was on the same footing as the seller because

he or she could inspect the property and negotiate accordingly.

Therefore, each side should live with the bargain.”                  Dee Pridgen,

Consumer Protection and the Law § 18:2, at 18-3 (2002). After World War

II, sales of premade homes that builder-vendors mass-marketed to

consumers increased dramatically, and purchasers complained of

shoddy construction. Id. § 18:2, at 18-4. Because of the harshness of

the common law, courts began to recognize implied warranties in the sale

of a home for the protection of innocent consumers.                  See Kirk, 373
N.W.2d at 493.

      In     Kirk,   we    adopted    an   implied   warranty   of    workmanlike

construction in the sale of new homes by a builder-vendor. See id. at

496. Kirk had purchased a new home from Ridgeway, a contractor who

      3The  common law implied warranty of habitability adopted in Mease to protect
tenants has been codified by the Uniform Residential Landlord and Tenant Act, Iowa
Code chapter 562A. See Crawford v. Yotty, 828 N.W.2d 295, 299 (Iowa 2013).
                                    7

built and owned the home. Id. at 492. After purchasing the home, Kirk

discovered peeling paint resulting from defective construction and

brought an action for breach of an implied warranty. Id. The district

court found that Ridgeway had breached the implied warranty of

workmanlike construction, and on appeal we addressed the situation in

which “a prospective homeowner does not hire the builder to build the

house but buys one from him already built.” Id. at 492–93.

      In Kirk, we gave three reasons for adopting the implied warranty of

workmanlike construction in the sale of a new home.         Id. at 493–94.

First, we noted the change in house-construction techniques “from

single-unit construction under the supervision of the owner, to the tract

development commonly found today.” Id. at 493. Second, we noted the

increasing interest other courts had taken in consumer protection in real

estate transactions.    Id.   Finally, we pointed out the increasing

complexity of home construction makes it more difficult for the buyer to

discover latent defects, requiring a buyer to rely on the skill and

judgment of the builder. Id. at 494. We concluded that the adoption of

the implied warranty was a “logical extension of Mease,” protecting the

innocent purchaser of a home who must rely on the skill of another for

the basic condition of their habitation. Id. at 496. In Kirk we adopted

the following “generally recognized” elements for the newly adopted

implied warranty:

            (1) That the house was constructed to be occupied by
      the warrantee as a home;
           (2) that the house was purchased from a builder-
      vendor, who had constructed it for the purpose of sale;
             (3) that when sold, the house was not reasonably fit for
      its intended purpose or had not been constructed in a good
      and workmanlike manner;
                                    8
            (4) that, at the time of purchase, the buyer was
      unaware of the defect and had no reasonable means of
      discovering it; and
            (5) that by reason of the defective condition the buyer
      suffered damages.

Id.

      We revisited the second element in Flom v. Stahly, 569 N.W.2d
135, 142 (Iowa 1997). In that case, the Stahlys began construction of a

home on land they owned, intending to live in it themselves. Id. at 137.

Before completing construction, the Stahly family moved out of state and

sold the incomplete home to the Floms. Id. at 137–38. When wood in

the home began to rot, the Floms sued under several theories, including

breach of implied warranty of workmanlike construction. Id. at 138–39.

We rejected this extension of Kirk because the Stahlys did not meet the

second element of the Kirk test—they were not builder-vendors building a

home for the purpose of sale.     Id. at 142.   Because the Stahlys had

intended to live in the house themselves and had never built a home for

resale before, the Stahlys did not have the same unequal relationship

with the Floms that a builder-vendor would have with a homebuyer.

      We extended the implied warranty to subsequent purchasers of

homes in Speight v. Walters Development Co., 744 N.W.2d 108, 116 (Iowa

2008). Again, we emphasized the inequality in bargaining power between

a homebuyer and a builder-vendor, due to “the buyer’s lack of expertise

in quality home construction and the fact that many defects in

construction are latent. These defects, even if the home were inspected

by a professional, would not be discoverable.” Id. at 111. In choosing to

extend the implied warranty to subsequent purchasers, we noted its

purpose “is to ensure the home will be fit for habitation, a matter that

depends upon the quality of the dwelling delivered not the [privity] status
                                    9

of the buyer.” Id. at 113 (internal quotation marks omitted). As in Kirk,

we were influenced by both the modern trend of the law in other

jurisdictions and changes in society. See id. at 113–14 (surveying other

jurisdictions that had adopted extensions similar to Speight and noting

that society is increasingly mobile, with more frequent resales of newer

homes).

      The primary purpose behind the implied warranty of workmanlike

construction adopted in Kirk is the protection of consumers.         See 373
N.W.2d at 494. Defects in home construction in stairways, heating and

cooling systems, or a defective wall or ceiling pose a risk of serious

injury. Id. The costs to remedy such defects “ ‘should be borne by the

responsible developer who created the danger . . . rather than by the

injured party who justifiably relied on the developer’s skill and implied

representation.’ ” Id. at 494 (quoting Schipper v. Levitt & Sons, Inc., 207
A.2d 314, 326 (N.J. 1965)).      In Speight, we again emphasized the

significance of the actual habitation of the home.     See 744 N.W.2d at

113. We have yet to extend the implied warranty beyond its purpose of

protecting consumers actually living in defectively built housing.

      B. The Elements of Kirk’s Implied Warranty as Applied to the

Sale of a Lot With No Dwelling. Rosauer admittedly cannot satisfy the

first three elements of the Kirk test for the simple reason there was no

house or dwelling constructed or sold by the defendants.        We briefly

address each element in turn.

      1. The requirement that the house was constructed to be occupied

by the warrantee as a home. The first element limits the potential class

of plaintiffs to innocent homebuyers for whose benefit we created the

warranty.   In this case, Rosauer purchased a vacant lot on which to

build townhomes to sell, rather than to build his own residence.
                                      10

Rosauer thus is not within the class of persons that the implied warranty

was designed to protect.       See Kirk, 373 N.W.2d at 496–97; see also

Speight, 744 N.W.2d at 111 (noting “home buyers are ill-equipped to

discover defects in homes, which are increasingly complex, and therefore

must rely on the skill and judgment of the vendor”); Cook v. Salishan

Props., Inc., 569 P.2d 1033, 1035 (Or. 1977) (en banc) (“[P]laintiffs have

not convinced us that purchasers of developed but unimproved land, as

a class, need the additional protection of the application of warranty

. . . .”).   As our court of appeals observed, “Rosauer is not the kind of

naïve purchaser the implied warranty normally works to protect. As a

commercial investor, Rosauer would have more skills than the average

consumer to determine if the lot was suitable for building.” We agree.

         2. The requirement that the house was purchased from a builder-

vendor, who had constructed it for the purpose of sale. Just as the first

element limits the class of potential plaintiffs, the second element limits

the class of potential defendants to a builder-vendor doing construction

for the purpose of sale. In Kirk, we adopted the following definition for

the term “builder-vendor”:

         “[A] person who is in the business of building or assembling
         homes designed for dwelling purposes upon land owned by
         him, and who then sells the houses, either after they are
         completed or during the course of their construction,
         together with the tracts of land upon which they are
         situated, to members of the buying public.
               The term ‘builder’ denotes a general building
         contractor who controls and directs the construction of a
         building, has ultimate responsibility for a completion of the
         whole contract and for putting the structure into permanent
         form thus, necessarily excluding merchants, material men,
         artisans, laborers, subcontractors, and employees of a
         general contractor.”
373 N.W.2d at 496 (quoting Jeanguneat v. Jackie Hames Constr. Co., 576
P.2d 761, 762 n.1 (Okla. 1978)).           Other jurisdictions have adopted
                                     11

essentially the same definition.    See Elderkin v. Gaster, 288 A.2d 771,

774 n.10 (Pa. 1972) (“A builder-vendor . . . refers to one who buys land

and builds homes upon that land for purposes of sale to the general

public.”); Frickel v. Sunnyside Enters., Inc., 725 P.2d 422, 424–25 (Wash.

1986) (en banc); Bagnowski v. Preway, Inc., 405 N.W.2d 746, 750 (Wis.

Ct. App. 1987).

      When no dwelling has been constructed at the time of the sale of

property, we do not have a builder-vendor, only a vendor. It is true that

defendants W.C. Development and Sapp acquired the land for sale and,

through a subcontractor, graded and backfilled the lot in preparation for

its sale. However, the defendants constructed no home on the lot and

sold only the land without any dwelling. The definition we adopted in

Kirk and reaffirmed in Flom is clear—a builder-vendor must construct a

home on land it owns for purposes of sale to the public. In this case, the

defendants are land developers, not builder-vendors. Indeed, Rosauer is

the builder-vendor of the townhomes he built on this lot.          Rosauer

cannot meet the second element requiring proof the defendant is a

builder-vendor.

      3. The requirement that the house was unfit for its intended

purpose or defectively built.      Rosauer also cannot satisfy the third

element of the Kirk test because there was no house sold by defendant

that was defectively built or unfit for its intended purpose. See Kirk at

496. Builders generally sell homes they hold out “ ‘to the public as fit for

use as a residence, and of being of reasonable quality.’ ”       Id. at 494

(quoting Smith v. Old Warson Dev. Co., 479 S.W.2d 795, 798 (Mo. 1972)

(en banc)).

      This case, however, involves more than a sale of raw land. Rather,

the lot at issue was graded, backfilled, and compacted by defendants’
                                     12

subcontractor.   The evidence supports a finding that the work was

substandard, requiring costly additional soil work by Rosauer. We will

now examine the policies underlying Iowa’s implied warranty doctrine to

decide whether it should be extended to the sale of a lot without a

dwelling.

       C. The Public Policies Underlying the Implied Warranty of

Workmanlike Construction.        In Kirk, we identified several reasons to

extend an implied warranty to new homeowners: changes in construction

techniques, a growing consensus in other jurisdictions that implied

warranties   should    extend   to   protect   consumer-homeowners,     the

increasing complexity of homes, and our concern for the safety and living

standards of persons inhabiting new houses. Kirk, 373 N.W.2d at 493–

96. None of these concerns apply with the same force to a developer’s

purchase of land without a dwelling.       First, as discussed below, the

majority of jurisdictions have declined to extend the implied warranty to

the sale of land with no dwelling.        Second, while many features a

homebuyer would need to inspect in order to make an informed decision

are hidden behind walls or inaccessible without costly and destructive

testing, land is easily inspected before purchase. See Cook, 569 P.2d at

1035 (“Land is accessible for inspection before it is purchased.”).

Rosauer argues that the defect in the land was latent because it was

below the surface, but a routine, nondestructive soil test revealed the fill

issues in lot 13.     While modern homes involve complex construction

techniques, land that has been graded and backfilled is comparatively

simple to inspect. See id.

       Third, homes are built as a final product for habitation.          A

homebuyer relies on the expertise of the builder. Kirk, 373 N.W.2d at

494.   The safety and health of the buyers is at stake as soon as they
                                       13

enter into the home. Id. at 493 (“[T]he courts which have given relief to

the purchaser of a new house . . . put their theory of recovery on the

breach of an implied warranty of fitness for human habitation . . . .”

(internal quotation marks omitted)).        By contrast, the developer

purchasing land without a dwelling is not relying on the seller to

construct habitable housing. Instead, the purchasing developer has the

responsibility to take all the steps necessary to construct a safe dwelling

on the lot, using its own expertise.

      Finally, the overriding policy of our decision in Kirk was the

protection of innocent homeowners who lacked sophistication and

bargaining power to protect themselves. See 373 N.W.2d at 494. As a

class, for-profit developers in the business of construction are not in

need of judicially imposed implied warranties to redress disparities in

expertise or bargaining power. Rather, the developer can protect itself

through inspections and express contract provisions. Rosauer argues he

should not be considered a sophisticated developer because this is the

first residential construction lot that he purchased.    Alternatively, he

argues that the sophistication of the purchaser should not be

determinative when workmanship is faulty. However, the record shows

that Rosauer has been in the landscaping and construction business

since 1997 and owned a business capable of doing the majority of the

soil work. He had substantially more sophistication and knowledge of

construction, fill, and grading than an average homebuyer.        Rosauer

concedes there was no disparity in bargaining power with Beaulieu at the

time of the lot purchase. Indeed, Beaulieu agreed to float the land to

Rosauer without requiring payment up front. Rosauer’s own experience

acquiring subsequent lots shows how developers can protect their

interests contractually. Rosauer purchased the additional lots subject to
                                    14

express contract terms he negotiated that allowed rescission if the soil

sample taken after purchase was unsatisfactory.

      Homebuyers are a class apart from developers such as Rosauer.

Iowa’s existing implied warranty of workmanlike construction protects

consumers buying their own residences.      Homeowners are seeking the

basic necessity of shelter, often with a time limit imposed by career or

family demands. Conklin v. Hurley, 428 So. 2d 654, 659 (Fla. 1983). For

many persons, the home is the largest investment they will ever make,

involving a major percentage of their income and savings.               Id.

Substandard construction of their homes may lead to health hazards or

financial ruin. Id. We do not see the same reasons to protect developers

speculating in real estate for profit. “Those who speculate in land, as a

class, simply do not need the sort of protection [offered by an implied

warranty].” Id. An investor or developer risks a financial setback, but

does so with the hope and expectation of gain. If the land is not as fit as

the investor or developer hoped for construction, it may prove to be a bad

risk, but is unlikely to be catastrophic for the developer.       Id.   We

conclude that unlike homeowners, for-profit developers do not require

the protection of a judicially imposed implied warranty of workmanlike

construction.

      D. Caselaw in Other Jurisdictions on the Applicability of

Implied Warranties for the Sale of Lots Without Dwellings. In both

Kirk and Speight, we looked to caselaw from other jurisdictions for

guidance to determine national trends in the scope of implied warranties

of workmanlike construction. We do so again today.

      A majority of courts to address the question decline to extend the

implied warranty of workmanlike construction to the sale of lots with no

dwelling.   See, e.g., DeAravjo v. Walker, 589 So. 2d 1292, 1293 (Ala.
                                     15

1991) (applying the doctrine of caveat emptor to the purchase of

unimproved land); Conklin, 428 So. 2d at 658 (recognizing a distinction

between modern home-buying practices and traditional real estate sales

of land, and concluding that land with a defective seawall was

“essentially an empty lot” that did not carry an implied warranty);

Lehmann v. Arnold, 484 N.E.2d 473, 477 (Ill. App. Ct. 1985) (concluding

“it would be unfair to impose a warranty of habitability on the seller of

unimproved land for a house that has not yet been built”); San Luis

Trails Ass’n v. E.M. Harris Bldg. Co., 706 S.W.2d 65, 69 (Mo. Ct. App.

1986) (“Plaintiff here has not alleged deterioration of a house . . . and

cannot recover damages based on implied warranty.”); Cook, 569 P.2d at

1035 (“[W]hile it is true that the ordinary purchaser of subdivided land

relies . . . on the expertise of the developer, the degree of the purchaser’s

necessary reliance is not as great as that of the purchaser of a home.”);

Jackson v. River Pines, Inc., 274 S.E.2d 912, 913 (S.C. 1981) (declining to

extend the implied warranty to the sale of land for construction).

      Rosauer argues that, while lot 13 did not have a structure when he

purchased it, it had been backfilled and compacted. Further, the land

was subject to restrictive covenants limiting new construction to

residences. Therefore, Rosauer claims, the land was not raw but instead

developed and marketed as a buildable lot, and his expectation that it

would be buildable should be backed by an implied warranty. What is

significant for our purposes is that lot 13 was sold without a dwelling. In

any event, other courts have rejected the argument that work preparing

lots for new construction or restrictive covenants give rise to the implied

warranty of workmanlike construction on the sale of a lot without a

dwelling.   See Morris v. Strickling, 579 So. 2d 609, 610–11 (Ala. 1991)

(concluding that a seller who constructed curbs, gutters, drainage
                                     16

ditches, and sewers in a development still sold unimproved land where

there was no building upon the lot); Cook, 569 P.2d at 1034 (declining to

extend the warranty to the sale of land subject to a residential restrictive

covenant); Jackson, 274 S.E.2d at 912–13 (concluding that restrictive

covenants on the land did not require extension of implied warranty).

      A few courts have extended implied warranties to improved lots

without a dwelling. In Rusch v. Lincoln–Devore Testing Laboratory, Inc.,

the court awarded relief to a purchaser for defective fill in a building lot.

698 P.2d 832, 835 (Colo. App. 1984). However, the holding was narrowly

limited to proof of actual reliance. Id. (holding that “if [a] vendor has

reason to know that the purchaser is relying upon the skill or expertise

of the vendor in improving the parcel . . . , and the purchaser does in fact

so rely, there is an implied warranty”). Another court gave relief under

similar facts through the contractual doctrine of mutual mistake. See

Hinson v. Jefferson, 215 S.E.2d 102, 110–11 (N.C. 1975). The Hinson

court relied on a finding that a reasonable inspection would not have

disclosed the defect in that case. Id. at 111. By contrast, Rosauer could

have discovered the fill problems with a simple soil test and in fact did so

after his purchase.

      Two other appellate courts have adopted an implied warranty in

sale of building lots without a dwelling when the purchaser was closer to

our description in Kirk of an innocent homebuyer.           See Overton v.

Kingsbrooke Dev., Inc., 788 N.E.2d 1212, 1218 (Ill. App. Ct. 2003) (“We,

too, believe that the same public policy concerns apply for the protection

of a buyer from a developer/seller as those that apply for the protection

provided to buyers in [cases similar to Kirk].”); Jordan v. Talaga, 532
N.E.2d 1174, 1185–86 (Ind. Ct. App. 1989) (concluding that developers

who graded lots were in the best position to decide suitability).         In
                                    17

Jordan, the defendant platted and graded the lot, sold it to a second

developer who built a home, which was then sold to the plaintiff-

homebuyer. 532 N.E.2d at 1178. The court determined, based on the

experience and sophistication of the initial developers, that they should

have discovered the latent drainage defects in the lot and never sold it as

buildable.   Id. at 1185–86.   Similarly, in Overton, the plaintiffs were

relatively unsophisticated consumers who bought the lot in order to hire

a contractor to build their residence there. 788 N.E.2d at 1214. These

cases are distinguishable in that the plaintiffs were unsophisticated

homeowners, not developers like Rosauer.

      Our survey shows the caselaw extending the implied warranty to

the sale of lots is sparse. The weight of authority nationally limits the

implied warranty of workmanlike construction to the sale of homes

already built.   We join the majority of courts to hold that the implied

warranty of workmanlike construction in our state does not extend to a

developer’s purchase of a lot without a dwelling.

      IV. Disposition.

      For these reasons, we decline to extend the implied warranty of

workmanlike construction to a for-profit developer’s purchase of a lot

with no dwelling, regardless of the work performed by the seller to make

the lot buildable. We therefore affirm the decision of the court of appeals

and the district court’s summary judgment in favor of defendants.

      DECISION OF COURT OF APPEALS AND JUDGMENT OF

DISTRICT COURT AFFIRMED.

      All justices concur except Wiggins and Appel, JJ., who concur

specially, and Hecht, J., who takes no part.
                                      18
                                      #13–1285, Rosauer Corp. v. Sapp Dev.
WIGGINS, Justice (concurring specially).

      The rationale behind the implied warranty of workmanlike

construction is to ensure a dwelling “will be fit for habitation.” Speight v.

Walters Dev. Co., 744 N.W.2d 108, 113 (Iowa 2008) (internal quotation

marks omitted).    The rationale behind the warranty does not apply to

land that does not include a structure designed for human habitation. It

is for this reason, I concur in the result only.

      Appel, J., joins this special concurrence.