Rosauer Corporation v. Sapp Development, L.L.C. Todd Sapp Whispering Creek, L.L.C. And W.C. Development, Inc.
856 N.W.2d 906
Iowa2014Background
- Rosauer, a contractor-developer, purchased Lot 13 from Beaulieu to build two townhomes for sale.
- Lot 13 was graded, backfilled, and compacted by a subcontractor for the seller, WC Development/Sapp.
- CTS tested Lot 13 and recommended removal/replacement of fill due to undocumented material and inconsistent moisture.
- Rosauer spent approximately $76,858 on soil work after CTS's report, largely by his landscaping firm.
- District court granted summary judgment that implied warranty of workmanlike construction does not apply to sale of unimproved land; court of appeals affirmed; the Iowa Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the implied warranty of workmanlike construction applies to sale of land with no dwelling | Rosauer argues warranty should extend to land sale to protect developers from latent soil defects | Sapp/WC Development argue warranty applies only to homes, not unimproved land | No; warranty does not extend to land without dwelling |
| Whether Rosauer qualifies as a builder-vendor under Kirk | Rosauer contends he is in the business of building/selling homes and thus fits builder-vendor | Defendants are developers/sellers of land, not builder-vendors who build for sale | Rosauer cannot satisfy builder-vendor element; defendants are land developers, not builder-vendors |
| Whether the third Kirk element (defect unfitness) is satisfied | Destruction of substandard fill caused damages; defect existed | No house was sold; no defect in a dwelling; elements not met | Not met because no dwelling was sold; thus no basis under Kirk |
| Public policy basis to extend or not extend the warranty to lots without dwellings | Extending protects consumers and aligns with housing-safety concerns | Developers can protect themselves via contracts and inspections; land inspection is feasible | Policy does not justify extension to for-profit developers; no extension |
Key Cases Cited
- Kirk v. Ridgway, 373 N.W.2d 491 (Iowa 1985) (adopted implied warranty in sale of new homes; elements set forth)
- Speight v. Walters Development Co., 744 N.W.2d 108 (Iowa 2008) (extended warranty to subsequent home buyers; policy focus on consumers)
- Flom v. Stahly, 569 N.W.2d 135 (Iowa 1997) (rejected extension to incomplete homes; lacking builder-vendor status)
- Mease v. Fox, 200 N.W.2d 791 (Iowa 1972) (implied habitability warranty in leases; Mease groundwork for consumer protections)