Court Opinion

ID: 6758202
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:29:11.623076+00
Date Added: 2024-06-11T16:02:30.925248
License: Public Domain

Holmes, J.,
dissenting. In the much cited case of Mitchem v. Johnson (1966), 7 Ohio St. 2d 66 [36 O.O.2d 52], this court rejected the legal theory of implied warranty in the sale of a real-property structure by the builder-vendor, and adopted the standard that such structure be constructed in a reasonably efficient and workmanlike manner. Whether such ruling extended beyond the first vendee was not an issue, nor addressed, in Mitchem; however, the facts show that the action was fundamentally based upon the negligent performance of the builder-vendor and was brought by the original vendee. Therefore, I conclude that the syllabus law, and the discussion of the law within the case, had reference only to actions being available to the original purchaser of the structure.
Whatever might have been the intent of the court in Mitchem as to the breadth of the applicability of that holding, clarification came in the subsequent case of Insurance Co. v. Bonnie Built Homes (1980), 64 Ohio St. 2d 269 [18 O.O.3d 458], In that case, the plaintiff insurance company had been subrogated to the claim of negligent construction of a home as against a builder-vendor as alleged by an owner subsequent to the original purchaser. The court was squarely presented with the question of “whether Mitchem is applicable when the builder-vendor’s failure to construct the real-property structure in a workmanlike manner results in latent defects which are not discovered until the structure is in the hands of a subsequent vendee. In *7other words, is a builder-vendor liable to an owner for the diminished value resulting from unworkmanlike construction in the absence of privity of contract? * * *” Id. at 270. The court specifically answered this query by the syllabus of the case, which states:
“Privity of contract is a necessary element of an action brought by an owner of a real-property structure against the builder-vendor of the structure for damages proximately caused by unworkmanlike construction.”
Supportive of such syllabus law, the majority of the court, speaking through Justice Paul W. Brown, discussed the inapplicability of prior products liability cases in which the court had held that privity of contract was not a necessary element of those causes of action, as follows, at page 270:
“Appellant cites Iacono v. Anderson Concrete Co. (1975), 42 Ohio St. 2d 88 [71 O.O.2d 66], and Lonzrick v. Republic Steel Corp. (1966), 6 Ohio St. 2d 227 [35 O.O.2d 404], in support of its claim that privity of contract is not a necessary element in its cause of action. These two cases are inapposite. They are products liability cases based on breach of an implied warranty, an area of the law distinct from that involved here. In products liability cases, privity of contract is not necessary and a manufacturer is strictly liable for injuries caused by a defect in the product. In Mitchem, this court, at page 72, refused to apply the theory of implied warranty that it had adopted in Lonzrick, supra, to real-property construction cases.”
Going right to the heart of the issue as to whether the duty of a builder-vendor should be extended beyond the purchaser with whom the builder-vendor had dealt, Justice Brown at pages 270-271 stated that:
“The duty of the builder-vendor to build a structure in a workmanlike manner is a duty arising out of the contract of sale and not out of a general duty owed to the public at large. Mitchem, at page 73. In the absence of privity the action must fail because there is no contractual basis upon which to determine the duty owed. This analysis was followed by the court below, and by other courts interpreting and applying Mitchem. See, e.g., Tibbs v. National Homes Constr. Corp. (1977), 52 Ohio App. 2d 281 [6 O.O.3d 300]; Lloyd v. William Fannin Bldrs. (1973), 40 Ohio App. 2d 507 [69 O.O.2d 444]; Hubler v. Bachman (1967), 12 Ohio Misc. 22 [41 O.O.2d 21].”
The pronouncements of the Bonnie Built Homes court were good law then. Nothing having occurred in this state which would change the socioeconomic aspects of this area of law, Bonnie Built Homes is good law now as such would relate to actions brought by subsequent vendees for claims of diminished value of a structure due to unworkmanlike construction.
I am well aware that an increasing number of other state courts are embracing the broadened theory of available negligence actions by subsequent vendees for claimed defects, both in actions seeking damages for personal injuries and in actions seeking damages for diminished value. This case does not involve personal injury by a third party, which could well result in my reaching other conclusions. This case involves only the claim of diminished economic interest in the structure, and in this regard it is my position *8that the law expressed in Bonnie Built Homes remains a more valid and reasonable balance of the interests of both the general public and the homebuilding industry. The opinion of the majority here moves Ohio law markedly in the direction of the builder-vendor being an insurer of the structure he builds — not only as to the original owner, but as to all subsequent owners.
The review and determination of what might be the appropriate law to be applied to the multitude of transactions between the various commercial interests and the general buying public, requires not only differing standards, but also a determination of the scope and reach of the applicability of such standards. Within this context, it should be realized that every .purchase and sale has within it certain risks and certain corresponding obligations and duties. Routine sales of minor or everyday items in our lives involve minor decisions on the part of the buyer, and corresponding minor risks to the consumer. The courts have recognized that the risk involved in purchasing a small appliance is readily distinguishable from the risk involved in purchasing real estate, and have imposed different standards for parties engaged in those transactions. Accordingly, in Mitchem, supra, Judge Schneider, while recognizing that the builder-vendor did have a duty of reasonable care in the construction of the facility, and so applying the negligence standard rather than an implied warranty to these real estate transactions, stated, at pages 71-72:
“* * * [t]he purchase of real estate is invariably preceded by a lengthy period of inspection, consideration and negotiation. One does not purchase land under conditions in any way similar to the purchase of home permanents (Rogers v. Toni Home Permanent Co., 167 Ohio St. 244 [4 O.O.2d 291]), cooking appliances (Welsh v. Ledyard, 167 Ohio St. 57 [4 O.O.2d 27]), soap (Krupar v. Procter & Gamble Co., 160 Ohio St. 489 [52 O.O. 363]), or electric blankets (Wood v. General Electric Co., 159 Ohio St. 273 [50 O.O. 286]).”
Accordingly, the law in Mitchem resulted in the pronouncement of the standard to be applied in cases brought by the vendee against his builder-vendor.
The law in Bonnie Built Homes resulted in the pronouncement of the scope or extent of the applicability of the Mitchem standard by way of the court stating that the builder-vendor’s duty did not extend to the general public, but only to the party with whom he contracted.
It is my view that this is a proper and reasonable application of the duty upon a builder-vendor in that his duty is to discuss and disclose all known elements of the site and its development with his contractee, the original purchaser. However, this duty should not be extended to all subsequent purchasers who might come forth from the general public. Quoting again from Bonnie Built Homes relative to this point, it was stated, at page 271, that:
“* * * A builder-vendor should not be required to act as an insurer for subsequent vendees. As the Court of Appeals for the Second District of Florida stated in Strathmore [Riverside Villas v. Power Dev. Corp. (Fla. App. *91979), 369 So. 2d 971], supra, at page 973: ‘Many unforeseen ramifications could arise should we opt for a rule holding builders * * * liable to remote purchasers for the diminished value of a home allegedly caused by defects in construction. If this step is to be taken, then we believe it should be accomplished by the legislature rather than by this court.’ ”
To permit a subsequent vendee, many years and many times removed from the original home purchaser, to reach back to the original builder-vendor ignores the surrounding circumstances of the original as well as all of the intervening sales transactions. Intervening “as is” sales contracts, waivers, or disclaimers in such transactions, records of which have long since been lost or discarded, might not be brought to the attention of a court in a much later review of a homeowner’s claim. If subsequent purchasers desire to protect themselves from economic loss occasioned by some improper or below standard construction, then through the process of bargaining they may acquire either specific warranties or specifically broad homeowners insurance coverage from their immediate vendor, which gives prior vendors a reasonable degree of finality to their realty transactions.
This court, albeit a different composition thereof, has, in Bonnie Built Homes, recently addressed the issue raised herein. For this court to jettison this well reasoned law, which requires privity of contract in cases such as this, would contravene the best public interest in that it would subject builders and developers to negligence actions from remote subsequent purchasers ad infinitum. This open-ended liability would necessarily be passed on to the consumer in the form of much higher prices for homes. There must be a point where builders and developers know that they will no longer be subject to allegations of negligent construction which occasions claimed diminished value of the structure. If the liability of a builder-vendor is to go beyond the initial vendee in such instances, then any extension of liability, along with the scope and terms of such extension, and appropriate statute of limitations, should be pronounced by the General Assembly, not by this court.
Sweeney, J., concurs in the foregoing dissenting opinion.