Johnson, L. v. Toll Brothers

2023 Pa. Super. 181

Opinion

J-A17014-23

2023 PA Super 181

LEE R. JOHNSON, JR. AND VICTORIA : IN THE SUPERIOR COURT OF H. JOHNSON, H/W : PENNSYLVANIA : Appellants : : : v. : : : No. 2118 EDA 2022 TOLL BROTHERS, INC., TOLL BROS., : INC., TOLL PA VI, L.P., TOLL PA GP : CORP., TOLL ARCHITECTURE, INC., : AND TOLL ARCHITECTURE I P.A. : ANDERSEN WINDOWS, INC., : MURTAUGH BROTHERS, INC., M A : CARDY CONSTRUCTION, INC., : MACK-DONOHOE CONTRACTORS, : INC.

Appeal from the Order Entered August 5, 2022 In the Court of Common Pleas of Chester County Civil Division at No(s): 2018-08502-TT

BEFORE: KING, J., SULLIVAN, J., and PELLEGRINI, J.*

OPINION BY PELLEGRINI, J.: FILED SEPTEMBER 26, 2023

Lee R. Johnson, Jr. and Victoria H. Johnson, H/W (the Johnsons) appeal

an order of the Court of Common Pleas of Chester County (trial court) granting

summary judgment in favor of Andersen Windows, Inc. (Andersen) and

dismissing the Johnsons’ claims against that party on the ground that they are

procedurally barred by the economic loss doctrine, the gist of the action

doctrine, and the statute of limitations. The Johnsons now assert that the trial

court erred as a matter of law in making those rulings. We affirm.

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* Retired Senior Judge assigned to the Superior Court. J-A17014-23

I.

The subject residence (the home) is located at 106 Marigold Court,

Chester Springs, Pennsylvania. The home was designed and constructed by

the above-captioned Toll entities, who are not parties to this appeal.1

Throughout the home, the Toll entities installed Andersen 200 Series Windows

(the windows) which had been manufactured, distributed, and sold by

Andersen.

Construction of the home was completed on October 18, 2004. A

certificate of occupancy was issued on that same date, and the home was then

immediately conveyed to its original purchasers. The original purchasers later

sold the home to the second purchasers who, in turn, sold the home to the

Johnsons on September 13, 2016. In 2017, the Johnsons hired an inspector

to evaluate the home, at which time the Johnsons discovered the alleged

latent defects caused by the windows.

On August 21, 2018, the Johnsons commenced this case by filing a writ

of summons. They filed a complaint in 2020, and then an amended complaint

in 2021, asserting three claims against Andersen – negligence (count five);

product liability – strict liability (count six); and product liability – breach of

1 The trial court also granted summary judgment in favor of Toll, and the Johnsons have challenged that ruling in the appeal docketed at case number 2119 EDA 2022.

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implied warranties of merchantability and fitness for particular use (count

seven).2

The asserted damages caused by the windows included “[d]amage to

the re-sale value of the home” and “damage to the interior and exterior of the

[h]ome.” First Amended Complaint, at paras. 63, 146. In their first amended

complaint, the Johnsons enumerated the findings in their inspector’s report:

i. “I found in this case that the wall system put in place by the builder is taking on water due to defective and incorrectly installed windows, and failing/missing components on the exterior of the home. This condition has led to hidden water infiltration in the wall cavities.”

ii. “I found signs that the water is leaking into the wall beneath the windows.”

iii. “I found obvious signs of failure upon initial inspection.”

iv. “All defective frames will require replacement.”

v. “The exterior doors are rotting and leaking at the sill to jamb intersections.”

vi. “The door frames are failing, therefore they require replacement.”

vii. “The builder’s mason failed to install the space required around the perimeter of the Andersen 200 windows. The mason also failed to leave enough room at the rowlocks under each of the windows.”

viii. “Most of the windows are installed without a drip cap or head flashing in the brick walls. The system is allowing water to penetrate into the wall cavity and drywall beneath the windows.” ____________________________________________

2 The remaining counts in the Johnsons’ suit were directed at the Toll entities

and other parties involved with the construction of the home.

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Id. at para 63.

Andersen filed a motion for summary judgment as to all claims alleged

against it in the Johnsons’ first amended complaint. The trial court entered

an order on August 5, 2022, granting judgment in favor of Andersen and

dismissing the Johnsons’ claims against Andersen with prejudice. See Trial

Court Order, 8/5/2022, at 1-2 n.1.

As to the negligence and product liability claims, the trial court found

that the Johnsons were barred by the economic loss doctrine, as well as the

gist of the action doctrine. See id. As to the implied warranty count, the trial

court found that the Johnsons were barred by the applicable statute of

limitations. See id.3

The Johnsons timely appealed, raising three issues for our

consideration. They maintain that the economic loss doctrine does not apply

because they suffered property damage to areas of the home other than the

allegedly defective windows; that the gist of the action doctrine does not apply

because Andersen breached a “social duty” of care to the Johnsons to supply

windows that were not defective; and that the statute of limitations does not

apply because the filing period for their warranty claim was tolled by the latent

nature of the defect in the windows which was first discovered in 2017.

3 The trial court later entered a 1925(a) opinion adopting the reasoning given

in the August 5, 2022 order which is now on review.

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II.

The Johnsons first contend that the trial court erred in finding that the

economic loss doctrine bars their tort claims because the windows were a

separate component from the home and not an integrated component which

would implicate the doctrine. According to the Johnsons, the windows have

damaged the home’s “internal structure” causing water intrusion and rotting

wood near the window frames. The Johnsons seek to recover in damages the

cost of repairing the home, remediation, and the diminution of the home’s

resale value.

“The general rule of law is that economic losses may not be recovered

in tort (negligence) absent physical injury or property.” Spivack v. Berks

Ridge Corp., Inc., 586 A.2d 402, 405 (Pa. Super. 1990). In a product liability

action, a plaintiff cannot recover damages under tort theories such as

negligence because a “contract action . . . is perfectly suited to providing an

adequate remedy for such losses and recognizes the parties’ ability to

structure their relative liabilities and expectations regarding the product’s

performance by setting the terms of their contractual bargain.” REM Coal

Co., Inc v. Clark Equipment Co., 563 A.2d 128, 129 (Pa. Super. 1989).

“[W]here various components of a product are provided by the same supplier

as part of a complete and integrated package, even if a defect in one

component damages another, there is no damage to ‘other property’ of the

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plaintiff.” New York State Elec. & Gas Corp. v. Westinghouse Elec.

Corp., 564 A.2d 919, 925 (Pa. Super. 1989).

Applying these concepts to the case at hand, we find that the Johnsons’

claim has no merit as a matter of law. A residence, such as the home at issue,

is akin to a single product that is the sum of its component parts. When a

home is sold, the purchaser receives ownership of the entire structure. Here,

the windows manufactured by Andersen were but one of the many

components integrated into the overall construction of the home to the extent

that the windows were, for present purposes, a part of the home itself. See

e.g., Lupinski v. Heritage Homes, Ltd., 535 A.2d 656, 657-58 (Pa. Super.

1988) (damage to house caused by defective lumber used in construction

caused only economic damages).

It is therefore of no avail for the Johnsons to argue that the windows

were somehow “separate” from the home to the degree necessary to establish

damage to “other property” and avoid the economic loss doctrine. Rather,

any damage that the alleged defects in the windows could have caused to

other parts of the home was purely economic damage to the home itself, which

is not recoverable in tort. Thus, the trial court did not err in barring the

Johnsons’ claims on this ground because the economic loss doctrine applies

as a matter of law.

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III.

The Johnsons next claim that the trial court abused its discretion in

applying the gist of the action doctrine and barring their product liability

claims.4

“Implied warranties are implied by law to protect buyers from loss where

goods purchased are below commercial standards.” Barton v. Lowe’s Home

Centers, Inc., 124 A.3d 349, 357 (Pa. Super. 2015). The Pennsylvania

Commercial Code provides that “a warranty that the goods shall be

merchantable is implied in a contract for their sale if the seller is a merchant

with respect to goods of that kind.” 13 Pa.C.S. § 2314(a).

“In general, courts are cautious about permitting tort recovery based on

contractual breaches.” Hart v. Arnold, 884 A.2d 316, 339 (Pa. Super. 2005)

(citation omitted). When a plaintiff alleges that the defendant committed a

tort in the course of carrying out a contractual agreement, Pennsylvania courts

examine the claim and determine whether the “gist of the action” sounds in

contract or tort. See Egan v. USI Mid-Atlantic, Inc., 92 A.3d 1, 18 (Pa.

Super. 2014) (stating that the “gist of the action” doctrine is designed to

maintain the conceptual distinction between breach of contract and tort

4 On review of a trial court’s order granting summary judgment, we must affirm unless it is shown that the trial court committed an error of law or abused its discretion. See Maas v. UPMC Presbyterian Shadyside, 192 A.3d 1139, 1144 (Pa. Super. 2018). We must consider whether, in light of the record evidence, there exists a genuine issue of material fact. See Wright v. Misty Mountain Farm, LLC, 125 A.3d 814, 818 (Pa. Super. 2015).

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claims). A tort claim will be barred by the gist of the action doctrine if the

claim:

(1) aris[es] solely from the contractual relationship between the parties; 2) when the alleged duties breached were grounded in the contract itself; 3) where any liability stems from the contract; and 4) when the tort claim essentially duplicates the breach of contract claim or where the success of the tort claim is dependent on the success of the breach of contract claim.

See Reardon v. Allegheny Coll., 926 A.2d 477, 486 (Pa. Super. 2007).

To determine whether the doctrine applies, courts must make a duty-

based inquiry into whether the claim sounds in tort or contract:

[T]he substance of the allegations comprising a claim in a plaintiff’s complaint are of paramount importance, and, thus, the mere labeling by the plaintiff of a claim as being in tort, e.g., for negligence, is not controlling. If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract – i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract – then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant’s violation of a broader social duty owed to all individuals, which is imposed by the law of torts and, hence, exists regardless of the contract, then it must be regarded as a tort.

Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014) (citations omitted).

Here, the substance of the Johnsons’ product liability tort claims is

contractual in that they seek to hold Andersen liable for defects in the windows

which Andersen sold to the builders of the Johnsons’ home. To the extent

Andersen owed a duty, it was to the builders who purchased the subject

windows, pursuant to their contract of sale. We find nothing in the record or

in governing decisional law supporting the Johnsons’ contention that Andersen

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breached a broader “social duty” owed to all individuals. Thus, the trial court

did not err in dismissing the Johnsons’ product liability claims against

Anderson.

IV.

The Johnsons’ third and final issue on appeal is that the trial court erred

in finding that claim of breach of implied warranty of merchantability was

barred by the statute of limitations.

“An action for breach of any contract for sale must be commenced within

four years after the cause of action accrued.” 13 Pa.C.S. § 2725(a). The

applicable statute of limitations is clear that a “cause of action accrues when

the breach occurs, regardless of the aggrieved party’s lack of knowledge of

the breach.” 13 Pa.C.S. § 2725(b). With respect to a breach of warranty

claim, the action accrues “when tender of delivery is made, except that where

a warranty explicitly extends to future performance of the goods and discovery

of the breach must await the time of such performance[,] the cause of action

accrues when the breach is or should have been discovered.” Id. (emphasis

added).

Here, the construction of the Johnsons’ home was completed in 2004,

at which time a certificate of occupancy was issued and the first purchasers

received ownership. Tender of delivery of the home (including the windows)

was therefore made in 2004.

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The Johnsons, who purchased the home in 2016, did not commence

their action until 2018. The Johnsons rely on the exception in section 2725(b),

arguing that the statute of limitations did not begin to run for their implied

warranty of merchantability claim until the moment they discovered the

windows’ latent defects in 2017, making their warranty claim timely filed

within the four-year limitations period.

The law is clear, however, that the Johnsons cannot successfully invoke

the exception to section 2725(a) because, as this Court has held in several

cases, an implied warranty claim, “by nature, cannot ‘explicitly’ extend to

future performance,” as would be required to make the exception applicable.

Nationwide Ins. Co. v. Gen. Motors Corp., 625 A.2d 1172, 1176 (Pa.

1993). Since the exception to section 2725(a) does not apply, the Johnsons

had to assert their implied warranty claim within four years from the date the

construction of the house was completed in 2004. The Johnsons failed to do

so and, thus, the trial court did not err in granting summary judgment for

Andersen and dismissing the implied warranty claim.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 9/26/2023

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