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Oral Arguments

Allowing subsequent home buyers to sue builders for allegedly latent defects some 12 years after a home was built would create a host of “horrors,” an attorney representing a builder argued before the state Supreme Court.

Paul Rosen of Spector Gadon & Rosen told the high court that extending the implied warranty would inflate builders’ liability and costs, and would make litigating cases more than a decade after a home was built nearly impossible.

“The amount of horrors that would happen to the person who’s never been released,” Rosen said, adding that key witnesses would likely be unable to testify by the time the cases went to litigation. “A builder has liability to 300 homes for 12 years.”

Chief Justice Ronald D. Castille attempted to clarify Rosen’s position.

“It’s basically making the builder the insurer for 12 years,” Castille said.

The arguments in Conway v. Cutler Group centered on a 2012 decision from the state Superior Court, which held that home buyers who were not the original purchaser-owners of a home could bring implied warranty of habitability claims against the builder if defects were discovered. The Superior Court had limited the claims to the 12-year statute of repose.

Christopher Bradley of Fairlie & Lippy, who represented the plaintiffs, said extending the ability to sue for implied warranty to buyers of previously used homes would allow the law to be applied more evenly, and would eliminate instances where homeowners would be unable to sue a few months after a home was built simply because they were not the original owners.

“I don’t see how it is a slippery slope to simply state that when you hold yourself out as a builder … [the home is] going to be habitable for 12 years,” Bradley said. “We’re just asking it to be applied” evenly.

According to court documents, the Cutler Group built a home for David and Holly Fields in Jamison, Pa., in September 2003. The Conways bought the home from the Fieldses in June 2006 and discovered water coming into the home around the windows of their master bedroom in April 2008, court records said.

An engineering and architecture firm inspected the home and discovered several defects, records said. The plaintiffs sued the Cutler Group in June 2011, alleging breach of implied warranty of habitability.

After the case was dismissed by the trial court upon motions the Cutler Group filed arguing that implied warranty does not extend beyond the initial purchaser, the Conways appealed to the Superior Court, arguing that privity of contract is not required for an implied warranty of habitability claim.

When Justice J. Michael Eakin asked why privity was not required, Bradley cited the Superior Court’s 1990 ruling in Spivack v. Berks Ridge, in which the court held that “privity of contract is not required to assert a breach of warranty claim against the builder of a new residential unit.”

Justice Seamus P. McCaffery likened buying new or used homes to buying new or used cars, and noted that the purchases require different warranties. Used homes require certificates of occupancy, McCaffery said as an example.

“How do you expect the builders to guarantee what someone else does with a home?” McCaffery asked.

Bradley said issues regarding inspections and certificates of occupancy could be used to support the defendant builders if they are sued; however, he maintained that the cases should still be actionable.

Rosen, however, argued that Spivack and the state Supreme Court’s 1972 decision in Elderkin v. Gaster, which first recognized the implied warranty of habitability, were distinguishable from the Cutler case because neither decision involved homes that had been lived in by a previous owner.

According to Rosen, privity does not exist after the original owners have occupied and re-sold the home.

Rosen additionally argued that recently enacted protections for home buyers address the concerns of second- and third-generation buyers by putting some of the onus on the sellers to ensure that a home is habitable.

“There’s now legislation that addresses the issues that were never raised by the Superior Court,” Rosen said.

Justice Debra M. Todd asked about whether plaintiffs should still be able to have a case if latent defects caused by negligent builders manifest after the home has been sold to a second owner without the seller’s knowledge of the defect.

Rosen said he did not believe there should be a case, but cited an opinion from Allegheny County Court of Common Pleas Judge R. Stanton Wettick Jr., which Rosen said held that a remote liability needed to exist. Rosen said Wettick’s opinion correctly limited the potential claims to the statute of limitations starting when the home was built, and not when the defects manifested.

Max Mitchell can be contacted at 215-557-2354 or mmitchell@alm.com. Follow him on Twitter @MMitchellTLI.