REAL ESTATE:  Developer-builder and implied warranty of workmanlike construction

The Millers appeal order granting partial summary judgment and dismissing Donna Hutson from a civil action regarding the construction of a house claiming the circuit court erred by dismissing, as to Hutson, their claims of breach of the implied warranty of construction in a workmanlike manner and breach of an express warranty.  Affirmed.

In Kentucky, the doctrine of caveat emptor applies to the sale of a house.

However, an exception to this rule was established in Crawley v. Terhune, 437 S.W.2d 743, 745 (Ky. 1969), wherein the court held:

Because the caveat emptor rule is completely unrealistic and inequitable as applied in the case of the ordinarily inexperienced buyer of a new house from the professional builder-seller, and because a contract by the builder to sell a new house is not much distinguishable from a contract to build a house for another . . . in the sale of a new dwelling by the builder there is an implied warranty that in its major structural features the dwelling was constructed in a workmanlike manner and using suitable materials.

The circuit court did not err by granting partial summary judgment in Hutson’s favor, as there was no genuine issue as to whether Hutson was a builder-seller, and the fact that Hutson signed a Warranty of Completion of Construction as “Donna Hutson DBA Scott Partin Builders” does not compel a different result. Both Hutson and Partin stated that Veterans Affairs required the signed form in order to process the Millers’ loan, and that Hutson signed the form on Partin’s behalf, with his permission, because Partin was unavailable at the time to sign the document.

As such, Hutson’s signature alone, on Partin’s behalf, did not create a genuine issue as to whether Hutson was the builder-seller of the Millers’ home.

Although COAKY did recognize that other jurisdictions have held developer-sellers liable for breach of the implied warranty of workmanlike construction. E.g., Wash. Road Developers v. Weeks, 549 S.E.2d 416 (Ga. Ct. App. 2001), COAKY did not feel it was bound to follow the doctrine of caveat emptor.  The Crawley exception to that doctrine simply does not apply in this case, and COAKY was unwilling to extend the exception to include developer-sellers in addition to builder-sellers.

Neither have they shown that Hutson supplied equipment, materials, or workmanship in building the home. Nor have they shown that Hutson dealt directly with any subcontractors or suppliers, or that any defects were caused by a subcontractor or supplier.

Accordingly, the circuit court did not err by granting Hutson’s motion seeking partial summary judgment as to this claim.

A dissenting opinion was filed by CJ Combs.

Digested by Michael Stevens.

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