Goodspeed v. Shippen, 303 P.3d 225

Background

In 2007 the Shippens sold a house to the Goodspeeds by warranty deed; the property had known groundwater/flooding risks and a leaching system was promised.
After repeated basement flooding (including water entering the house in 2008), the Goodspeeds sued in 2009 alleging, among other claims, breach of the implied warranty of habitability.
The purchase and sale agreement (PSA) contained a boilerplate "Entire Agreement" clause stating "No warranties, including, without limitation, any warranty of habitability...shall be binding."
At trial the court declined the Goodspeeds’ requested jury instruction on the legal requirements to disclaim the implied warranty; the jury returned verdicts for the Shippens.
The district court granted the Goodspeeds a new trial only on the implied-warranty claim, concluding the court had erred in excluding the instruction because the disclaimer clause was not shown to be conspicuous or the product of a knowing waiver.
The district court deferred ruling on the Shippens’ post-trial attorney-fee request pending final resolution; the Shippens appealed the new-trial order and the fee ruling.

Issues

Issue	Plaintiff's Argument (Goodspeed)	Defendant's Argument (Shippens)	Held
Whether the trial court erred by refusing the requested jury instruction on disclaimer of the implied warranty of habitability	Instruction required because disclaimer may be ineffective; jury should be told legal standards for disclaimer	No instruction needed because Goodspeeds had actual notice of the disclaimer and the PSA explicitly mentioned warranty of habitability	Affirmed new trial: court erred in excluding the instruction because a reasonable view of the evidence supported giving it and the disclaimer was not conspicuous or shown to be a knowing waiver
Whether the PSA disclaimer was conspicuous and effectuated a knowing waiver	Boilerplate clause insufficient; not conspicuous; parties did not knowingly waive protection	Clause explicitly references warranty of habitability and thus should suffice	Court held disclaimer was not shown to be conspicuous or the product of actual notice/knowing waiver; Tusch controls and boilerplate is ineffective
Whether the error in failing to instruct was prejudicial (necessitating a new trial)	Yes — jury could have relied on an unexamined disclaimer to find no breach	No — jury verdict properly reflects facts	Error was potentially prejudicial because the verdict could have rested on an uninstructed disclaimer; new trial on implied-warranty claim affirmed
Whether the Shippens were entitled to attorney fees below or on appeal	Shippens asserted prevailing-party fees under PSA and I.C. § 12-120(3) based on jury verdict	Goodspeeds argued prevailing party is not final while new trial is pending; § 12-120(3) inapplicable because transaction was not commercial for both parties	Fee rulings affirmed: district court properly deferred fees until final judgment; no appellate fees awarded to Shippens (they did not prevail); no fees to Goodspeeds on appeal under § 12-121 because Shippens presented at least two non-frivolous arguments

Key Cases Cited

Tusch Enterprises v. Coffin, 113 Idaho 37, 740 P.2d 1022 (1987) (implied warranty of habitability protects buyers from major, non-readily-remediable defects; disclaimer requires conspicuous language and proof of knowing waiver)
Munns v. Swift Transp. Co., Inc., 138 Idaho 108, 58 P.3d 92 (2002) (standard of review for new-trial orders; appellate court will not reverse absent manifest abuse of discretion)
Schmechel v. Dillé, 148 Idaho 176, 219 P.3d 1192 (2009) (standards for jury instructions and review; view instructions as a whole)
Clements Farms, Inc. v. Ben Fish & Son, 120 Idaho 185, 814 P.2d 917 (1991) (example of conspicuous contract term where layout and placement made a clause noticeable)
Carrillo v. Boise Tire Co., Inc., 152 Idaho 741, 274 P.3d 1256 (2012) (interpretation of I.C. § 12-120(3) — prevailing-party fees for "commercial transactions" require commercial purpose by both parties)