Court Opinion

ID: 2677750
Source: CourtListenerOpinion
Date Created: 2014-06-10 16:02:08.123313+00
Date Added: 2024-06-11T09:51:02.411330
License: Public Domain

NOTICE: NOT FOR PUBLICATION.
   UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
          LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

                                    IN THE
               ARIZONA COURT OF APPEALS
                                 DIVISION ONE

DARRYL R. EMBREY and RICHARD G. SILVA, as Trustees of the Darryl
    Embrey and Richard Silva Living Trust, dated May 2, 2001,
                     Plaintiffs/Appellants,

                                        v.

  BURROWS CONCRETE, L.L.C., an Arizona limited liability company,
                    Defendant/Appellee.

                             No. 1 CA-CV 13-0427
                              FILED 06-10-2014

           Appeal from the Superior Court in Maricopa County
                          No. CV2010-052910
           The Honorable Colleen L. French, Judge Pro Tempore

    AFFIRMED IN PART; VACATED IN PART AND REMANDED

                                   COUNSEL

Loose Brown & Associates, P.C., Phoenix
By Donald A. Loose, Jesse R. Callahan
Counsel for Plaintiffs/Appellants

Rai & Barone, P.C., Phoenix
By Jack Barone, Gian Duran
Counsel for Defendant/Appellee
                       EMBREY et al. v. BURROWS
                         Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court,
in which Judge John C. Gemmill and Judge Randall M. Howe joined.

T H U M M A, Judge:

¶1            Plaintiffs homeowners Darryl R. Embrey and Richard G.
Silva individually and as trustees of their living trust (collectively Embrey)
appeal from the grant of partial summary judgment in favor of defendant
subcontractor Burrows Concrete, L.L.C. (Burrows). The superior court
properly granted summary judgment on Embrey’s breach of implied
warranty of habitability and good workmanship claim because Embrey is
not in contractual privity with Burrows. Accordingly, that portion of the
judgment is affirmed. Because Arizona’s economic loss doctrine does not
bar tort claims between parties that lack contractual privity, that portion
of the judgment in favor of Burrows on Embrey’s negligence claim is
reversed.

                 FACTS AND PROCEDURAL HISTORY

¶2            In 2004, Embrey entered into a contract with Loma Vista
Development Company, LLC (Loma Vista) to build a home. Loma Vista,
in turn, entered into a subcontract with Burrows to provide concrete at the
home. Burrows provided the concrete, Loma Vista built the home and
Embrey moved into the home in late 2004. At all times relevant here, there
was no contract between Embrey and Burrows.

¶3            In 2009, Embrey found a leak in a sewer pipe located under a
concrete slab and had the leak repaired. Embrey also found that the home
was experiencing both heave and settlement causing damage, and had
that damage repaired. As relevant here, Embrey then sued Burrows in
superior court alleging breach of implied warranty of habitability and
workmanship and negligence. 1 Embrey claimed that Burrows breached its
standard of care by causing a sewer line to be punctured by a stake, which

1Although Embrey also sued Loma Vista, those claims are not part of this
appeal.

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                       EMBREY et al. v. BURROWS
                         Decision of the Court

caused the sewer pipe to leak underneath the main slab, leading to slab
movement and damage to Mr. Embrey’s health.

¶4           Burrows moved for summary judgment. After full briefing
and oral argument, the superior court granted Burrows’ motion for
summary judgment on Embrey’s breach of implied warranty of
habitability and workmanship claim because Embrey was not in
contractual privity with Burrows. The court granted partial summary
judgment on Embrey’s negligence claim, allowing the claim to proceed
only for claimed damages for personal injury and personal property,
concluding that the other aspects of the negligence claim were barred by
Arizona’s economic loss doctrine. Although the order resolved less than
all claims against all parties, the superior court made the findings
pursuant to Arizona Rule of Civil Procedure 54(b), making the decision an
appealable order. This court has jurisdiction over Embrey’s timely appeal
pursuant to Arizona Revised Statutes (A.R.S.) sections 12-2101(A)(1) and
12-120.21(A)(1) (2014). 2

                               DISCUSSION

¶5            Summary judgment is appropriate “if the moving party
shows that there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Ariz. R. Civ. P.
56(a). This court reviews the grant of summary judgment de novo,
“viewing the evidence and reasonable inferences in the light most
favorable to the party opposing the motion.” Andrews v. Blake, 205 Ariz.
236, 240 ¶ 12, 69 P.3d 7, 11 (2003) (citation omitted).

I.     The Superior Court Properly Granted Summary Judgment On
       Embrey’s Breach Of Implied Warranty Of Habitability And Good
       Workmanship Claim.

¶6            As stated by the Arizona Supreme Court, the general rule is
that only parties to a contract may enforce the implied warranty of
habitability and good workmanship. See Yanni v. Tucker Plumbing, Inc., 233
Ariz. 364, 367 ¶ 7, 312 P.3d 1130, 1133 (App. 2013) (quoting Lofts at Fillmore
Condo. Ass’n v. Reliance Commercial Constr., Inc., 218 Ariz. 574, 576 ¶ 12, 190
P.3d 733, 735 (2008)); see also Treadway v. W. Cotton Oil & Ginning Co., 40
Ariz. 125, 138, 10 P.2d 371, 375 (1932). A narrow exception allows a

2 Absent material revisions after the relevant dates, statutes cited refer to
the current version unless otherwise indicated.

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                        EMBREY et al. v. BURROWS
                          Decision of the Court

subsequent homebuyer to sue a homebuilder (including “a non-vender
homebuilder”) for breach of the implied warranty of habitability and good
workmanship. See Yanni, 233 Ariz. at 367 ¶¶ 8-9, 312 P.3d at 1133 (citing
Lofts, 218 Ariz. at 576-77 ¶¶ 7, 14, 190 P.3d at 735-36) and Richards v.
Powercraft Homes, Inc., 139 Ariz. 242, 244-45, 678 P.2d 427, 429-30 (1984));
cf. N. Peak Const. LLC v. Architecture Plus, Ltd., 227 Ariz. 165, 168 ¶ 17, 254
P.3d 404, 407 (App. 2011) (finding no privity of contract required to bring
a breach of implied warranty claim against a design professional). Embrey
is not such a subsequent homebuyer, and Burrows is a subcontractor, not
the homebuilder, meaning this narrow exception does not apply here.

¶7            Although arguing that privity should not be required to
press an implied warranty of habitability and good workmanship claim
against Burrows, Embry candidly admits to being “unaware of any
reported decision in Arizona expressly holding that an original
homeowner may bring suit against a subcontractor for breach of the
implied warranty of habitability and good workmanship.” Moreover,
nothing in Lofts, Richards or the other cases cited by the parties permits a
homebuyer to assert a breach of implied warranty of habitability and
good workmanship claim against a subcontractor in the absence of privity
between the two. See, e.g., Lofts, 218 Ariz. at 575, 190 P.3d at 734; Richards,
139 Ariz. at 242, 678 P.2d at 427; see also Columbia W. Corp. v. Vela, 122 Ariz.
28, 31, 592 P.2d 1294, 1297 (App. 1979) (discussing implied warranty).
Arizona cases have not extended the implied warranty of habitability and
good workmanship to homeowner claims against a subcontractor, and
Embrey has not shown how such an expansion of the law is compelled
here. Accordingly, given the lack of contractual privity between the
parties, the superior court properly granted summary judgment to
Burrows on Embrey’s breach of implied warranty of habitability and good
workmanship claim.

II.    Arizona’s Economic Loss Doctrine Does Not Apply To Embrey’s
       Negligence Claim.

¶8             “Arizona’s economic loss doctrine limits contracting parties
to their agreed upon remedies for purely economic losses.” Sullivan v.
Pulte Home Corp., 232 Ariz. 344, 345 ¶ 1, 306 P.3d 1, 2 (2013); see also
Flagstaff Affordable Hous. Ltd. v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d
664 (2010). The Arizona Supreme Court has expressly “decline[d] to
extend the doctrine to non-contracting parties.” Sullivan, 232 Ariz. at 346 ¶
9, 306 P.3d at 3 (citation omitted). Sullivan made clear that the doctrine
does not apply where the parties lack contractual privity: “‘Rather than
rely on the economic loss doctrine to preclude tort claims by non-

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                       EMBREY et al. v. BURROWS
                         Decision of the Court

contracting parties, courts should instead focus on whether the applicable
substantive law allows liability in the particular context.’” 232 Ariz. at 346
¶ 9, 306 P.3d at 3 (quoting Flagstaff Affordable Hous. Ltd., 223 Ariz. at 327 ¶
39, 223 P.3d at 671). Accordingly, given the lack of contractual privity
here, Arizona’s economic loss doctrine does not apply to Embrey’s
negligence claim.

                              CONCLUSION

¶9            The grant of summary judgment in favor of Burrows on
Embrey’s breach of implied warranty of habitability and good
workmanship is affirmed. The grant of partial summary judgment with
respect to Embrey’s negligence claim is vacated. Embrey’s request for
attorneys’ fees pursuant to Arizona Rule of Civil Procedure 11(a) and
A.R.S. § 12-349(A)(1)-(3) is denied. Burrow’s request for attorneys’ fees
cites no substantive authority and, accordingly, is denied pursuant to
Arizona Rule of Civil Appellate Procedure 21(a)(2). Embrey is awarded
taxable costs on appeal upon compliance with Arizona Rule of Civil
Appellate Procedure 21.

                                   :gsh

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