Lempke v. Dagenais

547 A.2d 290, 130 N.H. 782, 1988 N.H. LEXIS 59
CourtSupreme Court of New Hampshire
DecidedAugust 8, 1988
DocketNo. 87-006
StatusPublished
Cited by49 cases

This text of 547 A.2d 290 (Lempke v. Dagenais) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lempke v. Dagenais, 547 A.2d 290, 130 N.H. 782, 1988 N.H. LEXIS 59 (N.H. 1988).

Opinions

Thayer, J.

This is an appeal from the Trial Court’s {Dray, J.) dismissal of the plaintiffs’ complaint alleging breach of implied warranty of workmanlike quality and negligence. The primary issue before this court is whether a subsequent purchaser of real property may sue the builder/contractor on the theory of implied warranty of workmanlike quality for latent defects which cause economic loss, absent privity of contract.

[784]*784We hold that privity of contract is not necessary for a subsequent purchaser to sue a builder or contractor under an implied warranty theory for latent defects which manifest themselves within a reasonable time after purchase and which cause economic harm. Accordingly, we reverse the dismissal by the trial court, and remand.

In 1977, the plaintiffs’ predecessors in title contracted with the defendant, Dagenais, to build a garage. In April, 1978, within six months after the garage’s construction, the original owners sold the property to plaintiffs, Elaine and Larry Lempke. Shortly after they purchased the property, the plaintiffs began to notice structural problems with the garage — the roof line was uneven and the roof trusses were bowing out. The plaintiffs contend that the separation of the trusses from the roof was a latent defect which could not be discovered until the separation and bowing became noticeable from the exterior of the structure. Fearing a cave-in of the roof, the plaintiffs contacted the defendant and asked him to repair the defects. The defendant initially agreed to do so, but never completed the necessary repairs. The plaintiffs then brought suit against the builder. In turn, the builder filed a motion to dismiss, which the superior court granted based on our holding in Ellis v. Morris, 128 N.H. 358, 513 A.2d 951 (1986). This appeal followed.

The plaintiffs set forth three claims in their brief: one for breach of implied warranty of workmanlike quality; one for negligence; and one, in the alternative, for breach of assigned contract rights. We need address only the first two claims.

We have previously denied aggrieved subsequent purchasers recovery in tort for economic loss and denied them recovery under an implied warranty theory for economic loss. See Ellis v. Morris supra. The court in Ellis acknowledged the problems a subsequent purchaser faces, but declined to follow the examples of those cases which allow recovery. 128 N.H. at 361, 513 A.2d at 952. The policy arguments relied upon in Ellis for precluding tort recovery for economic loss, in these circumstances, accurately reflect New Hampshire law and present judicial scholarship, see generally Bertschy, Negligent Performance of Service Contracts and Economic Loss, 17 J. Mar. L. Rev. 246 (1984) (hereinafter Negligent Performance) and, as such, remain controlling on the negligence claim. However, the denial of relief to subsequent purchasers on an implied warranty theory was predicated on the court’s adherence to the requirement of privity in a contract action and on the fear that to allow recovery without privity would impose [785]*785unlimited liability on builders and contractors. Thus we need only discuss the implied warranty issue.

I. Privity

This case affords us an opportunity to review and reassess the issue of privity as it relates to implied warranties of workmanlike quality. In Norton v. Burleaud, 115 N.H. 435, 342 A.2d 629 (1975), this court held that an implied warranty of workmanlike quality applied between the builder of a house and the first purchaser. The Norton court so held based on the facts before it, and did not explicitly or impliedly limit the benefit of implied warranties solely to the first purchaser. The question before us today is whether this implied warranty may be relied upon by subsequent purchasers and, if so, whether recovery may be had for solely economic loss.

There has been much judicial debate on the basis of implied warranty. Some courts find that it is premised on tort concepts. See, e.g., LaSara Grain v. First National Bank of Merchants, 673 S.W.2d 558, 565 (Tex. 1984) (“implied warranties are created by operation of law and are grounded more in tort than contract”); Berman v. Watergate West, Inc., 391 A.2d 1351 (D.C. App. 1978).

Other courts find that implied warranty is based in contract. See, e.g., Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 183, 441 N.E.2d 324, 330 (1982) (Implied warranty extended to subsequent purchaser, who purchased house from original owner within first year, for policy reason. Plaintiff could recover under implied warranty theory for cracks in basement, chimney and adjoining wall separating, water leakage in basement, but no recovery in negligence for economic harm.); Aronsohn v. Mandara, 98 N.J. 92, 484 A.2d 675 (1984) (suit for implied warranty of habitability for structurally unsound patio); Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo. 1983) (en banc) (implied warranty arises from contractual relationship).

Other authorities find implied warranty neither a tort nor a contract concept, but “a freak hybrid born of the illicit intercourse of tort and contract. . . . Originally sounding in tort, yet arising out of the warrantor’s consent to be bound, it later ceased necessarily to be consensual, and at the same time came to lie mainly in contract.” Prosser, The Assault Upon the Citadel, 69 YALE L. J. 1099, 1126 (1960); accord Scott v. Strickland, 10 Kan. App. 2d 14, 18, 691 P.2d 45, 50 (Kan. App. 1984) (discussing first purchaser, court found implied warranty could be tort or contract); Edmeades, The Citadel Stands: The Recovery of Economic Loss in [786]*786American Products Liability, 27 Case W. Res. L. Rev. 647, 662 (1977) (hereinafter The Citadel Stands).

Regardless of whether courts have found the implied warranty to be based in contract or tort, many have found that it exists independently, imposed by operation of law, the imposition of which is a matter of public policy. See 67A Am. Jur. 2d § 690 (“Implied warranties arise by operation of law and not by agreement of the parties, their purpose being to protect the buyer from loss. . . .”); Elliott v. Lachance, 109 N.H. 481, 483, 256 A.2d 153, 155 (1969) (“Such warranties [referring to UCC merchantability] are not created by agreement . . . but are said to be imposed by law on the basis of public policy.”); Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 678 P.2d 427 (1984) (en banc) (Warranty of workmanlike quality and habitability is imposed by law. Homeowners were entitled to recover for breach of implied warranty of workmanlike quality for damages such as cracking, separation of floors from walls, regardless of privity, so long as no substantial change occurred to structure.); Terlinde v. Neely, 275 S.C. 395, 271 S.E.2d 768 (1980) (Subsequent purchaser can rely on theories of implied warranty and negligence for cracks in structure, ill-fitting doors, etc. Court allowed recovery on both theories as a matter of public policy, holding builder to industry standards.); Barnes v. Mac Brown & Co., Inc., 264 Ind.

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Bluebook (online)
547 A.2d 290, 130 N.H. 782, 1988 N.H. LEXIS 59, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lempke-v-dagenais-nh-1988.