Court Opinion

ID: 9522069
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:17:30.331+00
Date Added: 2024-06-11T13:02:15.981427
License: Public Domain

Kupersmith, Supr. J.,
¶ 36. Specially Assigned, dissenting. Oliver Wendell Holmes famously observed that it was “revolting to have no better reason for a rule of law” than its ancient lineage and worse still “if the grounds upon which it was laid down have vanished . . . and the rule simply persists from blind imitation of the past.” 0. Holmes, The Path of the Law, 10 Harv. L. Rev. 457, 469 (1897). The privity requirement to which the Court today adheres falls, in my view, in this category. Courts and commentators alike have observed that any reasons for allowing new home purchasers to recover from builder-vendors for breach of the implied warranty of workmanship while denying the same protection to a subsequent purchaser have long since vanished; adherence to the rule merely perpetuates an arbitrary distinction, promotes poor social policy, and results in economic injustice. That the subsequent purchaser here managed to obtain a partial settlement from the initial purchaser before suing the builder-vendor provides no sound basis for concluding otherwise. Accordingly, I respectfully dissent from that portion of the Court’s *339decision affirming summary judgment for Engelberth on the implied warranty claim.3
¶ 37. In Rothberg v. Olenik, 128 Vt. 295, 262 A.2d 461 (1970), the seminal Vermont decision recognizing an implied warranty against structural defects in the construction of new homes, the Court concluded that the venerable rule of caveat emptor had no place in a modern market economy.
Conditions have radically changed since the origin of the common law rule. Homes are being constructed on a large scale by persons engaged in the building business for the purpose of selling them to individual homeowners. The ordinary purchaser is in not in a position to discover a latent defect by inspection, no matter how thoroughly his scrutiny may be, because usually he lacks sufficient familiarity with the complexities of building construction and the intricacies of applicable regulations.
Id. at 301, 262 A.2d at 465 (quotation omitted). Noting that this and other courts had recognized an implied warranty of merchantability in the sale of goods, and finding “no rational doctrinal basis” for differentiating between the sale of a new home and a car or other manufactured product, the Court ruled that “the law will imply a warranty against structural defects” in the sale of new homes. Id. at 305, 262 A.2d at 467. The vast majority of states today recognize a similar warranty of quality or workmanship. See L. Libertucci, Comment, Builder’s Liability to New and Subsequent Purchasers, 20 Sw. U. L. Rev. 219, 223 (1991) (noting that most states “have abolished caveat emptor in favor of an implied warranty of quality for the purchaser of a new home”).
*340¶ 38. The Association today asks the Court to extend the logic of Rothberg and permit subsequent purchasers of homes to recover for breach of the implied warranty of good workmanship. As noted, many courts and commentators have endorsed this additional step. See Speight v. Walters Dev. Co., 744 N.W.2d 108, 112 n.2 (Iowa 2008) (listing nineteen state court decisions allowing recovery by subsequent purchasers); see generally S. O’Brien, Note, Caveat Venditor: A Case for Granting Subsequent Purchasers a Cause of Action Against Builder-Vendors for Latent Defects in the Home, 20 J. Corp. L. 525, 527, 530 (1995) (observing that the “increasing trend is to recognize a cause of action for subsequent home buyers” and that predicating recovery “on whether the plaintiff was the original or subsequent purchaser . . . is unjust and illogical”); Libertucci, supra, at 219, 228 (noting that the “current trend” is to extend implied warranty protection to subsequent purchasers and concluding that “[pjublic policy demands that builder-vendors be held liable to both new and .subsequent purchasers for hidden defects in housing”).
¶ 39. The principal doctrinal objection to affording subsequent purchasers the same protection as new-home purchasers is the lack of contractual privity. This is the ground cited by the majority here. Many courts have recognized, however, that the implied-warranty obligation is one imposed by operation of law, and thus contractual privity between the parties is no more essential in this context than in product liability. See O'Brien v. Comstock Foods, Inc., 125 Vt. 158, 160-61, 212 A.2d 69, 70-71 (1965) (explaining that implied warranty of merchantability is “imposed by law . . . apart from considerations entirely contractual” and thus rejecting “illogic and injustice” of applying contractual privity to restrict liability). As the Iowa Supreme Court has explained, “the implied warranty of workmanlike construction is a judicial creation and does not, in itself, arise from the language of any contract between the builder-vendor and the original purchaser.” Speight, 744 N.W.2d at 114. Thus, “there is no contractual justification for limiting recovery to the original purchaser.” Id. The Illinois Supreme Court reached a similar conclusion, observing that, while the implied warranty “has roots” in the contract of sale, it is a “judicial innovation that has evolved” to protect home purchasers, “exists independently,” and thus “[p]rivity of contract is not required.” Redarowicz v. Ohlendorf 441 N.E.2d 324, 330 (Ill. 1982).
*341¶ 40. Viewed in this light, there is no logical or equitable reason to deny recovery to a subsequent purchaser who has no more opportunity to scrutinize the methods and standards used in constructing their home than the original buyer, and who must rely to the same extent on the knowledge and experience of the builder-vendor. Many courts have therefore concluded that the mere fortuity of an intervening owner — often, as here, for only a short time — provides no basis for denying a home buyer the protection afforded by the implied warranty of good workmanship. See, e.g., Redarowicz, 441 N.E.2d at 330 (“The compelling public policies underlying the implied warranty of habitability should not be frustrated because of the short intervening ownership of the first purchaser.”); Speight, 744 N.W.2d at 114 (“[T]he public policy justifications supporting our decision to recede from the doctrine of caveat emptor in the sale of new homes by builder-vendors equally apply to the sale of used homes to subsequent purchasers.”); Lempke v. Dagenais, 547 A.2d 290, 294 (N.H. 1988) (“The mitigation of caveat emptor should not be frustrated by the intervening ownership of the prior purchasers.”); Aronsohn v. Mandara, 484 A.2d 675, 680 (N.J. 1984) (“The contractor should not be relieved of liability for unworkmanlike construction simply because of the fortuity that the property on which he did the construction has changed hands.”); Terlinde v. Neely, 271 S.E.2d 768, 770 (S.C. 1980) (holding that “[t]he only logical application” of the principles underlying the implied warranty of workmanship requires a holding that it “extends to subsequent home purchasers for a reasonable amount of time”); Sewell v. Gregory, 371 S.E.2d 82, 85-86 (W. Va. 1988) (holding that all of the reasons for recognizing an implied warranty of workmanship in the sale of a new home “apply with equal strength to used homes”); Moxley v. Laramie Builders, Inc., 600 P.2d 733, 736 (Wyo. 1979) (“[A]ny reasoning which would arbitrarily interpose a first buyer as an obstruction to someone equally as deserving of recovery is incomprehensible”).
¶ 41. A more practical objection to extending implied-warranty protection to a subsequent owner is the concern that it might expand the risks for builder-vendors beyond those for which they contracted, and ultimately increase the costs of construction. The concern, however, is unfounded. As the New Hampshire Supreme Court succinctly explained, since “[t]he builder already owes a duty to construct the home in a workmanlike manner . . . *342extension to a subsequent purchaser, within a reasonable time, will not change this basic obligation.” Lempke, 547 A.2d at 295 (quotation omitted); see also Speight, 744 N.W.2d at 114 (“The builder-vendor’s risk is not increased by allowing subsequent purchasers to recover for the same latent defects for which an original purchaser could recover.”); Keyes v. Guy Bailey Homes, Inc., 439 So. 2d 670, 673 (Miss. 1983) (reasoning that builder “already owes a duty to construct the home in a workmanlike manner” so that extension of liability to subsequent home purchaser will require “no greater effort [by] . . . the builder to protect himself’); Nichols v. R.R. Beaufort & Assocs., 727 A.2d 174, 180 (R.I. 1999) (concluding that “allowing subsequent owners to maintain a similar cause of action . . . will not drastically enlarge this basic obligation of the home builder”). The risk is also clearly one that builder-vendors should foresee. As the Illinois Supreme Court has observed, “[w]e are an increasingly mobile people” and a builder-vendor should therefore “know that a house he builds might be resold within a relatively short period of time and should not expect that the warranty will be limited by the number of days that the original owner chooses to hold onto the property.” Redarowicz, 441 N.E.2d at 331.
¶ 42. Most courts, moreover, have limited a builder-vendor’s exposure by requiring that claims for latent defects be brought within a reasonable period of time after completion of the construction. See, e.g., Lempke, 547 A.2d at 297 (“The implied warranty of workmanlike quality for latent defects is limited to a reasonable period of time.”); Nichols, 727 A.2d at 181-82 (holding that, to avoid unlimited exposure, “we restrict the coverage of the implied warranties ... to those latent defects that subsequent owners discover within a reasonable period of time after these home contractors have substantially completed their work”); Terlinde, 271 S.E.2d at 769 (stating that “[t]he length of time for latent defects to surface . . . should be controlled by the standard of reasonableness”); Moxley, 600 P.2d at 736 (holding that a home builder’s implied warranty “extends to subsequent purchasers for a reasonable length of time”). The same rule applies in Vermont for initial home buyers, and would apply with equal force to subsequent purchasers. See Heath v. Palmer, 2006 VT 125, ¶ 7, 181 Vt. 545, 915 A.2d 1290 (mem.) (noting that “the general rule is that the duration of the implied warranty of habitability and good workmanship is determined by a standard of reasonableness” (quotation omitted)).
*343¶43. In holding that the law will imply a warranty against structural defects to protect the purchaser of a new home, this Court explained that its duty was to keep “common law principles abreast with the times” and to reject those “[ajncient distinctions which make no sense in today’s society and tend to discredit the law.” Rothberg, 128 Vt. at 305, 262 A.2d at 467. That same duty today impels the rejection of privity as a basis for denying the equivalent protection to a subsequent purchaser of the same home.
¶44. Accordingly, I would reverse the summary judgment in favor of Engelberth on the implied warranty claim.
¶45. I am authorized to state that Justice Johnson joins this dissent.

 While my dissent is limited to the contraet/warranty issue, I note that a number of jurisdictions have also extended a tort recovery to subsequent home purchasers on the basis that builder-vendors owe them the same duty of care as new purchasers, and that the so-called “economic loss” rule serves no sound policy purpose. See, e.g., A.C. Excavating v. Yacht Club II Homeowners Ass’n, 114 P.3d 862, 864 (Colo. 2005) (holding that economic loss rule did not bar negligence action by homeowners against subcontractor who owed independent duty of care); Navajo Circle, Inc. v. Dev. Concepts Corp., 373 So. 2d 689, 691-92 (Fla. Dist. Ct. App. 1979) (holding that condominium association could maintain negligence action against project architect and contractor). In light of the Court’s consistent adherence to the economic loss rule, however, I confine my dissent to the implied-warranty issue, which this Court has not addressed in the context of subsequent home purchasers.