§ 5.9.2.2.3 Breach of Warranty
In construction defect cases, plaintiffs typically include breach of warranty causes of action. A breach of warranty can be based on express warranty provisions, contained in the contract between the plaintiff and the builder/developer, and/or warranties implied by law.
1. Breach of Implied Warranty. Before 1979, Arizona did not recognize a cause of action for implied warranties as to the quality or condition of construction of realty.37 Rather, the doctrine of caveat emptor prevailed as to purchasers of residential construction in Arizona. However, the Supreme Court of Arizona in Columbia Western Corp. v. Vela,38 abandoned the doctrine of caveat emptor and adopted the rule that the builder/vendor impliedly warrants that the construction of a home is constructed in a workmanlike manner and that the structure is habitable. The court further held that a builder may not escape the imposition of such warranties merely because a “sale” placed the purchaser in a position to discover the defects.39 In abolishing caveat emptor, the court observed, “the caveat emptor rule, as applied to new houses, is an anachronism patently out of harmony with modern home buying practices. It does a disservice, not only to the ordinary prudent purchaser, but to the industry itself, by lending encouragement to the unscrupulous fly-by-night operator and purveyor of shoddy work.”40
In Arizona, workmanship and habitability are considered to be covered by one warranty. The standard for breach of this type of warranty is reasonableness and not perfection. In other words, the test is whether the work performed is comparable to that of the quality of work ordinarily performed by a worker of average skill and intelligence.41 Such claims represent a significant threat to developers/builders and subcontractors in Arizona. Moreover, in 1984, the Supreme Court of Arizona, in Richards v. Powercraft Homes, Inc.,42 held that the implied warranty of workmanship and habitability claims can be made by subsequent purchasers. This implied warranty is available to subsequent purchasers upon their discovery of latent defects. Proof of a defect, due to improper construction, design or preparation, is sufficient to establish liability.43 Accordingly, builders/ developers cannot avoid liability on the basis that the subsequent purchaser of a home is not in privity of contract with them. The underlying policy behind Richards is that persons who construct homes should foresee that persons injured by defective workmanship may not be the same person with whom they contract. The warranty of habitability and workmanship is intended to protect the injured homebuyer by holding the builder accountable for his work.
The Richards court was silent as to whether or not privity was required to maintain a cause of action where the original purchaser had never been in privity with the contractor. In 2013, the Supreme Court of Arizona, in...
