Archive for November 2010

Implied Warranty of Habitability Applies to Non-Vendor Builders

November 17, 2010

The Illinois Appellate Court recently held that the implied warranty of habitability applies to builders of residential homes regardless of whether they are in privity of contract with the plaintiff homeowner. 1324 W. Pratt Condo. Ass’n v. Platt Constr. Group, No. 1-10-0159, 2010 WL 3788057 (1st Dist. Sept. 28, 2010).

In 1324 W. Pratt, a contractor constructed an eight-unit residential building pursuant to its contract with a developer.  The developer sold the units to various homeowners.  After unit owners had moved in, they discovered water intrusion throughout the building.  The water leaks caused structural and property damage and worsened in the fall of 2008 when the Chicago area experienced a series of severe rainstorms.  Soon thereafter, the condominium association filed suit against the construction company, developer and the roofing contractor alleging, among other claims, negligence and breach of the implied warranty of habitability.

The trial court dismissed the negligence and implied warranty of habitability claims.  On appeal, the condominium association argued that the implied warranty of habitability applies to builders, not just to builder-vendors, and that the fall 2008 storms met the “sudden or dangerous occurrence” exception in the Moorman doctrine, which, absent an exception to the general rule, bars negligence claims seeking solely economic loss.

The appellate court reversed the dismissal of the implied warranty claim.  The court noted that the implied warranty of habitability has been greatly expanded in recent years.  In expanding the implied warranty of habitability to builders, the court cited public policy considerations and a long line of cases that confirmed “the primary objective of the implied warranty of habitability has always been to hold builders themselves accountable for latent defects because they are in the best position to ensure that the residences they build are habitable and free of defects that unsophisticated home buyers are unable to detect.”  The court noted that the warranty “has roots in the execution of the contract for sale” and that it has been clear that “it exists independently” of a sales contract regardless of privity of contract.  Therefore, the court found unpersuasive the contractor’s argument that the warranty only applies to a builder who also sold the condominium units, holding that it applies to non-vendor builders as well.

As to the negligence action, the court affirmed the trial court’s dismissal and rejected the association’s assertion that the severe 2008 rain storms were a “sudden or dangerous occurrence.”  The court noted that even if it were to accept the storms as a “sudden or dangerous occurrence,” the Moorman exception would not apply because the storms did not cause the damage.  The leaks were present before the fall of 2008, so it necessarily follows that the damage was not the result of a “sudden or dangerous occurrence.”

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

Federal Construction Quality Assurance Bill – Status Update

November 1, 2010

The Construction Quality Assurance Act of 2009 (Act) was introduced by Representative Paul Kanjorski of Pennsylvania on July 31, 2009, and is cosponsored by Representatives Mazie Hirono of Hawaii and Carolyn Maloney of New York.  Subsequent to its introduction, this bill was referred to the Subcommittee on Government Management, Organization, and Procurement on October 23, 2009, where it remains pending.  While the future of the Act is unclear, if it becomes law, it does include some significant features for those who perform federal construction contracts.

As currently drafted, the proposed Act is intended to assure quality and best value with respect to federal construction projects by prohibiting the practice known as bid shopping.  It would mandate that executive agency solicitations of construction in excess of $1 million require bidders to submit the name, business location, and nature of work of each subcontractor with whom such bidder will subcontract for work in excess of $100,000.  A bidder who fails to comply with these requirements would be deemed non-responsive and would not be considered for the project.  Contractors would be prohibited from substituting another subcontractor for a listed subcontractor, permitting any subcontract to be voluntarily assigned or transferred, or subcontracting work for which the contractor listed itself, without the contracting officer’s consent.  Additionally, the Act sets forth examples of good cause and procedures required for substitution requests as well as penalties for violations of such prohibitions, including suspension or debarment from federal courts for multiple violations.

With the 111th Congress on its way out, and with major issues to be resolved in a lame duck session, it is unlikely that progress will be made on this bill until 2011 when the 112th Congress is seated.  We will provide updates if there is any further action on this bill.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

 


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