In a recent Fifth Circuit case, Plaintiff’s filed suit under the New Home Warranty Act (NHWA) against the builder of their home. Campo v Sternberger, Fifth Circuit, 15-CA-52 c/w 15-CA-53 (11/19/15). The Trial Court found that the builder breached his warranty that the house would remain free of major structural defects as required under the New Home Warranty Act and awarded damages. The builder appealed arguing, among other things, that some damages were perempted under the New Home Warranty Act.

Facts

Plaintiff’s purchased the home from an original owner in July 2008, approximately three years after the original owner took possession of the home. Within a few months, plaintiffs experienced plumbing problems such as clogged drains and backed up sewer lines. A video inspection of the plumbing revealed that a drain line was sheared and needed replacement. The drain line was repaired; however, the owners were informed that additional sand was needed under the home before plumbing repairs could be completed. The drain line repair did not resolve the plumbing issues.

In May 2009, the plaintiffs retained a company to pump sand under the home. In connection with this work, it was determined that the plumbing problems were more serious than initially suspected and that the entire under slab sewer system required repairs.

To undertake these repairs, the plumber tunneled under the home. Plaintiffs began to notice cracks in the sheetrock and separations of moldings near windows and doors. Some doors and windows in the home did not function properly. In September 2009, plaintiffs sent a certified letter to the builder informing him of the issues including sheetrock cracking, electrical, subsidence and plumbing issues. A report sent in March 2010 noted that the home was in “serious structural distress.”

Trial

Expert testimony at trial indicated that there was an abnormal amount of settlement in the home and that poor soil fill and compaction techniques likely contributed the issues. The expert conducted four inspections of the home during a three-year period and noticed that the cracking and separation issues became more pronounced as time passed. Plaintiffs were awarded damages to shore the home, repair flatwork and fences, and to repair the various cosmetic defects such as drywall cracks, remedial paint and trim work and door work.

Appeal

The builder appealed arguing that plaintiffs’ claims for plumbing damages were perempted under the two-year warranty period provided for in the New Home Warranty Act and that the flatwork repairs were excluded under the New Home Warranty Act.

Regarding the plumbing work, the Court reasoned that there were no allegations that the plumbing itself was defective. Rather, the plumbing issues were the result of a failing foundation. As such, the court applied the five-year warranty period applicable to major structural defects rather than the two year plumbing period.

Regarding flatwork and fences, the Court agreed that the homeowner could not recover for these items under the New Home Warranty Act. Because the New Home Warranty act is the exclusive remedy to a homeowner against a builder for damages related to construction defects, they were unable to recover under a negligence theory. As such, the award for those repairs was subtracted from the Trial Court’s Judgment.

Other arguments raised on appeal were rejected.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.