Tomlinson v. Douglas Knight Constr., Inc.
423 P.3d 1167
Utah2017Background
- Lot 84 (a single-purpose LLC) contracted with Douglas Knight Construction, Inc. (DKC) to build a house; the contract included a one-year express warranty and implied covenant of good faith.
- Lot 84 assigned its rights under the construction contract to Outpost Development, Inc.; Outpost later sold the completed house to Joseph Tomlinson but did not assign the construction-warranty/contract rights to him at the sale.
- Defects (notably a persistent leak causing water damage) were discovered before and after Tomlinson’s purchase; Outpost sought repairs from DKC under the one-year warranty but problems persisted.
- Outpost later entered bankruptcy and assigned to Tomlinson in the bankruptcy proceedings “all of Outpost’s right title and interest in and to any and all rights, claims, causes of action…that Outpost has asserted…or may otherwise assert, against” DKC; Outpost’s claims against DKC were discharged in bankruptcy.
- Tomlinson sued DKC for breach of the express warranty and implied warranties; the district court dismissed (1) implied warranty of habitability/workmanlike manner (DKC not a vendor), and (2) all remaining contract/warranty claims on the ground Tomlinson lacked privity/assignment rights; DKC’s third-party indemnity claim against subcontractors was also dismissed as untimely.
Issues
| Issue | Plaintiff's Argument (Tomlinson) | Defendant's Argument (DKC) | Held |
|---|---|---|---|
| Whether Tomlinson may sue DKC for breach of the construction contract/warranties as an assignee | The bankruptcy assignment transferred Outpost’s claims against DKC (including warranty claims) to Tomlinson, so he has standing to sue | The assignments did not convey direct contract/warranty rights to Tomlinson; he never received the construction agreement or warranty rights in the property sale and Outpost had no direct damages at bankruptcy | Court: Affirmed dismissal — Tomlinson is not in privity and was not validly assigned contract/warranty rights; bankruptcy assignment did not include unasserted hypothetical claims |
| Whether the implied warranty of habitability/workmanlike manner applies here | Tomlinson urged broader application to builders who build through single-purpose LLCs | DKC argued the warranty is limited to builder-vendors/developer-vendors, and DKC never owned or sold the property | Court: Dismissed the implied warranty claim — DKC is not a vendor; court did not decide whether Davencourt should be extended |
| Whether DKC’s third-party indemnity/contribution complaint against subcontractors was timely | (DKC) Timely right to seek indemnity/contribution if found liable to Tomlinson | (Subcontractors) Third-party complaint was untimely; and DKC has no actionable claim if Tomlinson’s claims are dismissed | Court: Did not reach merits because Tomlinson’s claims were dismissed; no actionable indemnity/contribution claim survives |
Key Cases Cited
- Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009) (limits implied warranty of habitability/workmanlike manner to builder-vendors and developer-vendors)
- Shurtleff v. United Effort Plan Trust, 289 P.3d 408 (Utah 2012) (discusses right to contribution where one party pays damages for which another is partially responsible)
- Eggett v. Wasatch Energy Corp., 94 P.3d 193 (Utah 2004) (recognizes that an implied covenant of good faith and fair dealing inheres in every contract)