CV-24-0252-PR
Ariz.
Jul 29, 2026
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Background

  • Hovnanian developed a 18-unit residential community, created Gallery Community Association to manage it, and recorded CC&Rs requiring Gallery to maintain the common areas and some unit exteriors. 1
  • Gallery alleged defects in the common areas and unit exteriors and sued Hovnanian for breach of the implied warranty of workmanship and habitability under the HADA statutes. 2
  • The trial court granted summary judgment for Hovnanian, ruling Gallery could not sue because it did not own the units and common areas are not residences. 3
  • The court of appeals reversed, holding § 33-2002 authorized an HOA dwelling action for construction defects, including implied-warranty-type claims. 4
  • The supreme court granted review to decide whether HADA authorizes an HOA to sue for implied warranty defects in common areas and unit exteriors. 5
  • The majority held HADA modifies the common law to allow such HOA suits and remanded; the dissent would have treated HADA as only procedural. 6
  • The CC&Rs gave Gallery maintenance control over the common areas and unit exteriors, but ownership of the unit exteriors remained with individual homeowners. 7

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Does HADA create an HOA construction-defect cause of action? 8 Gallery said § 33-2002 expressly authorizes HOA dwelling actions. Hovnanian said § 33-2002 only sets procedural prerequisites for existing claims. Yes; HADA authorizes an HOA dwelling action. 9
Does the statutory dwelling action encompass implied warranty defects? 10 Gallery argued construction-defect language reaches workmanship defects covered by the implied warranty. Hovnanian said the statute covers other defect claims, not implied warranty. Yes; the statutory scheme mirrors an implied warranty claim. 11
Are common areas and unit exteriors “dwellings” under HADA? 12 Gallery contended both qualify under § 33-2001(2). Hovnanian argued only HOA-owned property qualifies, so unit exteriors are excluded. Common areas and residential units qualify; unit ownership does not bar coverage. 13
Did HADA abrogate the common-law ownership/privity limits? 14 Gallery said legislative text necessarily modified common law. Hovnanian said no express or necessary implication changed common law. Yes, to the extent needed for HOA dwelling actions involving unit defects. 15
Does Zambrano control? 16 Gallery said Zambrano supports HOA recovery and is distinguishable. Hovnanian and dissent said Zambrano shows HADA is procedural only. No; Zambrano does not bar this result. 17

Key Cases Cited

  • W Halo OPCO, LP v. Arizona Department of Revenue, 261 Ariz. 393 (Ariz. 2026) (summary judgment reviewed de novo 18)
  • Cao v. PFP Dorsey Investments, LLC, 257 Ariz. 109 (Ariz. 2024) (statutory interpretation reviewed de novo 19)
  • In re Drummond, 257 Ariz. 15 (Ariz. 2024) (clear statutes are enforced according to plain language 20)
  • State v. Marner, 261 Ariz. 275 (Ariz. 2026) (statutory text is the law judges apply 21)
  • Stambaugh v. Killian, 242 Ariz. 508 (Ariz. 2017) (statutes are read as a whole and in pari materia 22)
  • Zambrano v. M & RC II LLC, 254 Ariz. 53 (Ariz. 2022) (PDA does not itself provide a legal cause of action; implied warranty/public policy discussion 23)
  • Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (Ariz. 1984) (implied warranty reaches latent defects and privity is unnecessary for subsequent purchasers 24)
  • Sirrah Enterprises, LLC v. Wunderlich, 242 Ariz. 542 (Ariz. 2017) (breach of implied warranty sounds in contract 25)
  • Lofts at Fillmore Condominium Ass'n v. Reliance Commercial Construction, Inc., 218 Ariz. 574 (Ariz. 2008) (only parties and privies may enforce the implied warranty 26)
  • Columbus Life Insurance Co. v. Wilmington Trust, N.A., 255 Ariz. 382 (Ariz. 2023) (common law changes by statute must be express or by necessary implication 27)
  • Sullivan v. Metro Productions, Inc., 150 Ariz. 573 (Ariz. Ct. App. 1986) ('may file' can authorize a private cause of action 28)
  • Hannosh v. Segal, 235 Ariz. 108 (Ariz. Ct. App. 2014) ('may file' still requires a qualifying substantive injury 29)
  • State Farm Automobile Insurance Co. v. Orlando, 259 Ariz. 531 (Ariz. 2025) (statutory words are read in context 30)
  • N. Valley Emergency Specialists, L.L.C. v. Santana, 208 Ariz. 301 (Ariz. 2004) (last-antecedent rule applies absent contrary intent 31)
  • Action Marine, Inc. v. Arizona Department of Revenue, 218 Ariz. 141 (Ariz. 2008) (avoid interpretations that render statutory text meaningless or superfluous 32)
  • Pleak v. Entrada Property Owners' Ass'n, 207 Ariz. 418 (Ariz. 2004) (legislature may modify common law by statute 33)
  • Nicaise v. Sundaram, 245 Ariz. 566 (Ariz. 2019) (statutes should be read with attention to structure and the relation of their parts 34)
  • Woodward v. Chirco Construction Co., 141 Ariz. 514 (Ariz. 1984) (builder owes common-law duty of care in residential construction 35)
  • Pointe 16 Community Ass'n v. GTIS-HOV Pointe 16, LLC, 260 Ariz. 377 (Ariz. 2025) (HOA may pursue assigned homeowners' implied-warranty claims 36)
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