517 P.3d 1168
Ariz.2022Background
- In 2013 Tina Zambrano bought a newly built home from Scott Homes under a standard preprinted purchase agreement that disclaimed all implied warranties and promised a forty‑page, componentized “Home Builder’s Limited Warranty” (administered by PWC).
- The purchase agreement expressly stated the PWC builder warranty was the only warranty and disclaimed/waived all other express or implied warranties, limiting any implied warranty to one year.
- Latent construction and design defects later manifested; Zambrano sued in 2017 for breach of the implied warranty of workmanship and habitability after PWC coverage was unavailable or time‑barred for many defects.
- The trial court granted summary judgment to Scott Homes on the ground Zambrano waived the implied warranty; the court of appeals reversed.
- The Arizona Supreme Court accepted review and held that public policy underpinning the implied warranty clearly outweighs enforcement of a contractual disclaimer/waiver when replaced by an express warranty like the PWC policy; it reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a builder‑vendor and homebuyer waive/ disclaim Arizona’s judicially implied warranty of workmanship and habitability when an express builder warranty is provided? | Zambrano: waiver/disclaimer is contrary to public policy protecting buyers and successive purchasers from latent defects; unenforceable. | Scott Homes: freedom of contract; parties may substitute an express warranty for implied protections; waiver is valid. | Waiver/disclaimer unenforceable as a matter of public policy; implied warranty cannot be waived in this manner. |
| Is the PWC express warranty an adequate substitute for the implied warranty? | PWC warranty is component‑limited, short‑term for most items, caps repairs, excludes many latent/design defects—so it does not protect the same interests. | PWC warranty defines obligations, can extend up to ten years for some items and avoids litigation over vague concepts like "habitability." | PWC warranty is not an adequate substitute; it protects different, narrower interests and cannot displace the implied warranty. |
| Would enforcing the waiver materially harm subsequent purchasers and the public interest? | Zambrano: allowing waivers would let builders defeat implied warranty rights of later buyers and reduce builders’ accountability, harming buyers and communities. | Scott Homes: waiver pertains to the contracting parties; sophisticated buyers can protect themselves; policy concerns are overstated. | Court found enforcement would likely eliminate protections for original and subsequent buyers and injure public welfare; that outcome weighs against enforcement. |
| Appellate attorney fees request | Zambrano sought fees on appeal. | Scott Homes opposed. | Request denied for failure to specify a statutory or other basis per ARCAP 21; costs awarded to Zambrano. |
Key Cases Cited
- Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (1984) (recognizing Arizona’s implied warranty of workmanship and habitability)
- Columbia W. Corp. v. Vela, 122 Ariz. 28 (App. 1979) (origin of Arizona’s judicially created implied warranty for new homes)
- 1800 Ocotillo, LLC v. WLB Grp., Inc., 219 Ariz. 200 (2008) (framework for invalidating contract terms on public‑policy grounds)
- CSA 13‑101 Loop, LLC v. Loop 101, LLC, 236 Ariz. 410 (2014) (use of constitution, statutes, and decisions to identify public policy)
- Sirrah Enters., LLC v. Wunderlich, 242 Ariz. 542 (2017) (implied warranty can be enforced by subsequent purchasers despite lack of privity)
- Sullivan v. Pulte Home Corp., 232 Ariz. 344 (2013) (economic‑loss doctrine limits negligence recovery for repair costs from builders)
- Woodward v. Chirco Constr. Co., 141 Ariz. 514 (1984) (limitations/repose rules governing suits for construction defects)
- Buchanan v. Scottsdale Env’t Constr. & Dev. Co., 163 Ariz. 285 (App. 1989) (court of appeals precedents holding attempted disclaimers of the implied warranty are void)