Builders enter into contracts to construct homes with buyers that contain many contingencies. Contingencies may include a waiver of implied warranties, including a waiver of warranties on defects in materials and workmanship. Numerous courts in Ohio have upheld the right to waive warranties, and the waivers have provided defenses to many defendants subsequently sued for defects in the structure.
The Ohio Supreme Court recently issued an opinion that will directly affect the ability to include the waiver of a warranty in workmanship. In Jones v. Centex Homes, the Ohio Supreme Court addressed the issue of whether a buyer can waive the duty of the home builder to construct a house in a workmanlike manner. The court held that a buyer cannot waive the duty, and that a home builder’s duty to construct a house in a workmanlike manner using ordinary care is a duty imposed by law. In so holding, the court clarified two previous cases, Velotta v. Leo Petronzio Landscaping Inc. and Mitchem v. Johnson.
In Jones, the buyers purchased a new home built by defendant in 2004. After moving into the home, the buyers discovered that their computers, cordless telephones and televisions did not operate properly. After investigation, they alleged that the builder used metal joists in the house that were magnetized and caused the problem with the electronic devices.
The builder moved for summary judgment on the basis that the contract included a waiver of all warranties except a specific limited warranty that was provided in the agreement. The trial court granted summary judgment and the Court of Appeals affirmed. The Court of Appeals found that the sales agreement and Limited warranty explained in numerous places the extent of the warranty and the defects in material and workmanship that would be covered under its terms. The Court of Appeals found that the agreement was not unconscionable.
The Ohio Supreme Court reversed. The Court found that the duty to construct a house in a workmanlike manner had been imposed by law on all homebuilders since at least 1966. The Court referred to Mitchem in which it previously imposed the duty upon the builder to construct in a workmanlike manner. In Mitchem, the court balanced two concepts, caveat emptor and strict liability, and found a middle ground in which a builder is held to a standard to perform the construction with the skill and choice of materials commensurate with the gravity of risk involved in protecting the structure against faults and hazards.
The Court also reviewed its prior decision in Velotta. In Velotta, the Court determined a cause of action for failure to construct the structure in a workmanlike manner is not based on the contract, but rather is a duty imposed by law. Of significance in Velotta, the structure at issue was a house that had been sold "as is."
In addressing the specific issue before it in Jones, the Court determined the requirement of the home builder to construct a house in a workmanlike manner is not an implied warranty, but rather a duty imposed by law. As such, it cannot be waived under the terms of a contract. The Court cautioned, however, that builders are not expected to build the perfect structure, but must use ordinary care in the choice of materials and labor in constructing the structure.
The Ohio Supreme Court has now definitively stated that a waiver of implied warranties does not waive the duty to construct the structure in a workmanlike manner. This eliminates what some courts have found to be a complete defense to a claim for construction defects. The court did caution that builders will not be held to a strict liability standard, but rather one of reasonable care.
If you have any questions on the decision or would like a copy, please contact a member of our Construction and Design Liability Practice Group.