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Subsequent Owners of Homes Again Have Right to Sue Builders for Construction Defects

Construction and Surety Alert | September 23, 2016
By: Mark L. Parisi

Owners of homes with damage from construction defects have long had the standing to sue the builders of their homes using the legal theories of 1) breach of contract, 2) breach of implied warranty, and 3) breach of Pennsylvania’s consumer fraud statute, the Unfair Trade Practices and Consumer Protection Law (UTPCPL).

Before the 2014 decision of the Pennsylvania Supreme Court in Conway v. Cutler, even owners who were not the original purchasers of their homes, so-called subsequent owners, had a right to sue the builder of their homes using implied warranty as the legal theory. But the Supreme Court in Conway said in 2014 that even though an implied warranty theory is not based on a written contract, it is a quasi contract theory and because subsequent owners never had a contractual relationship with the builder of their home, the implied warranty cause of action was not available. Subsequent purchasers were thus left without a remedy for damage from defective construction in their homes and builders had a second safe harbor from claims regarding homes they built. The first safe harbor is Pennsylvania’s Statute of Repose. If the home was completed more than 12 years before a lawsuit was filed, the Statute of Repose bars the claim. But after Conway, if the home was sold, this also cut off a builder’s potential liability for construction defects in the home.

Enter the UTPCPL

On July 26, 2016 the Pennsylvania Superior Court in the case of Adams v. Hellings Builders issued a non-published (and therefore non-precedential) decision in a stucco construction defect case that held that subsequent purchasers could sue their home’s builder under the UTPCPL because the Act had no requirement that the purchaser of a product, or home, be the original purchaser. The decision cites several other appellate cases not involving construction defect claims that held that the UTPCPL was a valid legal theory for claims regarding products purchased second hand by the plaintiffs in those other cases. The court in Adams held that there was no reason that a suit regarding construction defects in a home should be treated any differently.

Counsel for the plaintiffs in Adams filed a motion to ask the Superior Court to publish their opinion so it would be precedential, arguing that their opinion decided a question of substance not previously determined by the Superior Court or Supreme Court and that the decision involves an issue of substantial public importance. The Superior Court agreed and the motion was granted and the decision was reissued with a date of August 29, 2016, which is almost exactly two years after the Conway decision was handed down by the Supreme Court.

So Adams is now the law in Pennsylvania until and unless the Supreme Court steps in and overrules Adams. However, that is not likely to happen unless the makeup of the Supreme Court changes dramatically from what it was when Conway was decided. The interesting thing about the Conway decision is that the Supreme Court was openly apologetic in its opinion saying that the law should not be as they decided that case but they felt constrained to decide Conway as they did because to do otherwise would be making law rather than interpreting law. The Supreme Court in Conway invited the legislature to change the law so subsequent homeowners would have a cause of action in implied warranty against a home’s original builder. Thus far, that has not happened.

Will the Supreme Court Affirm?

The interesting question is whether the Supreme Court Justices that decided Conway in a way that they openly stated they did not like, would affirm the Superior Court’s analysis of the UTPCPL in a case that comes before them with that issue. The Adams case was not appealed so it will not be Adams that affords the Supreme Court the opportunity to review this issue. Another subsequent purchaser case in a trial court somewhere in the Commonwealth will have to find its way through an appeal to the Superior Court and then be accepted by the Supreme Court before this issue could be reviewed and decided at that level. In the meantime, subsequent purchasers of homes with construction defects will likely find their way to a lawyer’s office to file claims under the UTPCPL.

Note that the UTPCPL does not equate to an automatic victory for such homeowners. There are proofs that are required for the Act to provide a remedy. Whether those proofs exist in any particular case is obviously something about which subsequent purchasers and builders will need guidance from attorneys experienced with residential construction defect claims.

White and Williams LLP has a team of lawyers that have a depth of experience in that practice area and we welcome the opportunity to consult with owners and builders to assist in evaluating such claims and to formulate a plan to handle them. For more information, please contact Mark Parisi (215.864.7180; parisim@whiteandwilliams.com).

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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