*1 CHANDLER, and MARILYN SHELDON CHANDLER Respondents, wife, v. Plaintiffs husband Appellant. MADSEN, H. ROBERT Defendant No. 81-265. Dec. 1981. Submitted 15, 1982. March Decided *2 Colberg, Sweeney, Koessler, Col- Jensen & Maurice Hibbs, appellant. berg, argued, Billings, for defendant and Crowley, Haughey, Dietrich, Toole, Bruce Hanson, Toole & respondents. argued, Billings, plaintiffs opinion HARRISON MR. JUSTICE delivered Court. Marilyn complaint appeal from a Sheldon and
This arises seeking against Madsen, Robert wife, husband and Chandler, warranty negligence, implied breach of habitability liability in and strict tort. April respondents, into a Chandlers, entered purchase
buy- agreement appellant, Madsen, sell Billings, near house, him, at 3203 Silverwood Street built agreed price purchase $90,280,which was was Montana. paid building of this At time when the was transferred. place, agreement, but the on the house was framework building completed. not was engineer working for the United States a civil
Madsen, buildings for *3 Government, a number of sale had constructed including family single on his residences. own, completed 1977, fall the Chandlers the In the summer and of swimming pool landscaping and final the lot and installed a of sprinkling system. im- the into the house and June Chandlers moved
mediately experienced problems with and windows doors sticking failing operate. to The Chandlers noticed and locks living hump in the room cracks in the walls and bedroom supporting partition in the basement. floor which was above Through adjustments employees, to made his Madsen they doors, to stick. but continued May settling By in severe cracks had caused additional bulging bending floors, of house, most rooms of the inoperative bowed locks, doors and door broken windows, badly plumbing, base- cracked dividers, room bent decorative fireplace masonry separation floors, between ment walls and separation tiles, structure, cracked bathroom and the house walls, bathtubs uneven basement floors between interior The of house. settlement general unsightly side so that the foundation on the west developed parts the house were as much as 3.6 inches than the founda- lower tion on east side.
A of the in extends the north end lot depression along ques- tion an The east-west direction. collects water depression done since took periodically has so before the Chandlers of the possession house. Former of the neighbors next-door Chandler house testified had to via deposition they refrain from their watering lawn to in the prevent “ponding” both during and after construction of the depression Chandler house and that water in the collected periodically depression before any was done. to the land- landscaping According Jim scaper, Stum, only change made near the grade north end of the was the lot removal of earth near the some deck, which would have to tended improve drainage out depression.
Madsen testified he a depression created east and extending west collect to water and constructed a on the swale east side of the house to drain the area. The depression created was such that it be would difficult to observe the naked He did not eye. use or any instrument transit deter- survey mine if in fact the area drain, nor did he inform should they proceed create drainage.
The house is on which, located moisture-sensitive soil when wet, becomes water soil compressible. presence of in the caused settling and other footings, foundations, parts turn house caused the to the extensive damage structure. an
Testimony showed estimated cost of the house repairing was $65,000. This estimate on a plus was calculated cost overhead basis awith 12% allowance for certain contingency portions however, the work. Further revealed, testimony *4 that a firm contract for the would cost more price 50% than the estimate, $97,500, or of considering contingencies the work. The to move repairs require out of their home for three to four months. sitting the District without a
The case was heard Court findings jury. January 15, the District Court issued On holding liable fact and conclusions'of law of warranty negligence implied the theories of and Chandlers on awarding damages Following post-trial $107,462.51. of and February 26, Court amended its order on motions District finding negligence reducing deleting the of and $99,975.00. The reduction deleted award to temporary previously $3,487.51 rental awarded moving storage. previously order, From this awarded parties appeal. both
The issues are: before appellant, 1. as a of a residence Whether builder-vendor may respondents, be held liable to which sold to warranty respondents implied under the doctrine habitability? allowing ap-
2. the District in not Whether Court erred pellant his to recover the amount claimed on counterclaim? deleting finding
3. Whether the District its Court erred negligence appellant’s proximate that the was the cause of respondents’ damages? appellant
4. Whether is liable under the doctrine of strict liability in tort? Whether the District Court erred the award of
damages? HABITABILITY
IMPLIED WARRANTY OF question liability a a of builder-vendor of new warranty purchaser implied residence to the under an first habitability impression is one of first before this Court. emptor, traditionally applied
Caveat has to sales of developed buyer estate, real at a time when a seller were equal bargaining positions. They comparable were skill knowledge protect and each could himself in a transaction. marketplace equality position In the modern no longer necessarily growing jurisdic- exists, and number of emptor implied tions have caveat in favor of abandoned war- Yepsen ranties where a builder-vendor sells new residence.
239 (1974), Burgess 635, v. 1019; v. 269 Or. Pollard Saxe Development (1974), Cal.Rptr. 12 374, 115 & Yolles Co. Cal.3d (1972), Dye Ill.App.3d 648, 88; 4 576, 281 525P.2d Hanavan v. Bethlahmy (1966),91 398; 55, 415 N.E.2d v. Bechtel Idaho P.2d (1964), Carpenter 698; v. 154 P.2d 78, Donohoe Colo. 388 agree Oregon Supreme with the We Court which stated in Yepsenthat the essence of the a builder- transaction between buyer implicit agreement vendor and a is an that the seller will transfer a house which is suitable for The habitation. buyer equal bargaining position essentially is not in an rely knowledge regarding forced to on the seller’s skill and the habitability addition, of the house. In the builder is in a better position Yepsen Burgess, to examine and discover defects. v. 525 at 1022. P.2d emptor longer
The doctrine of caveat no the serves marketplace. of Therefore, realities we hold that impliedly builder-vendor a new home warrants that the residence is constructed in a workmanlike manner and is suitable for habitation. argues implied warranty that if the even
habitability adopted, apply it should not this case because the defect which caused here is not structural but rather is inherent in the land. primarily claim,
In Madsen relies on Beri, Inc. v. Properties, Salishan Inc. 282 Or. P.2d plaintiffs buildings by where the leased the defen- constructed began subsequently eroding. dant on oceanfront lots which Oregon implied warranty apply The court found an did not susceptibility solely because the to erosion—had to do defect— product with the inherent nature of the land and was not a the builder’s work on land. supra, question Beri, the land in was on the oceanfront prospect
where the if certain, of erosion should have not been, equally apparent buyer-lessees at least as as seller- gives opinion lessors. In addition, the Beri no indication anything by the erosion was furthered other than the natural action ocean. present District Here,
That is in the case. not so settling damage to the Chandler found the cause presence in the soil was the of water moisture-sensitive house upon The fact of the moisture- which the house was built. “pooling” the sole of water sensitive soil was not defect. part of the defective the north end of the house was also found if water col that, The District Court also condition. any so land house, at the end of the it did before lected north scaping was not caused the Chandlers and Chandlers. applying implied warranty is
A basic concern in whether *6 essentially occupancy of the house. the defect relates to useful (1979), Colo.App. 269; v. 42 Mazurek Nielsen supra. occupancy Yepsen, Sometimes defect essential to (defect strictly Yepsen, supra in is not structural. See: but drainfield); septic improper tank construction of volved 1975), (Wyo. (septic P.2d Tavares v. 1275 drain- Horstman drain); clay gumbo not Forbes v. field so it would installed (well 291, 583P.2d 552 unusable Mercado 283Or. water content). high because iron suspect argues no he had reason to there was
Madsen settling. which cause But that is moisture- sensitive soil wrong- concept is not one of or not the issue. The here fault doing parties one innocent will suf- but, rather, where of two position prevent harm? fer, which was in the better to the suspect Madsen or not there was reason for to Whether clearly problem, as was in the better the builder-vendor prevent problem. position We, affirm the therefore, to liability regarding implied District Court Madsen’s under warranty.
COUNTERCLAIM agree for the Chandlers Madsen counterclaimed $637 specific completed by unpaid remained “extras’ Madsen. District concludedthat Madsen was not entitled Madsen because of failure to consideration. the counterclaim argues was incorrect because the defense this conclusion alleged an as failure of consideration was not in their order pretrial or raised affirmative defense that Madsen did not perform there is no evidence because for those extras. work is an affirmative defense which consideration
Failure of
If an affir
8(c), M.R.Civ.P.
must
Rule
affirmatively.
be plead
waived. Camalier
is not
it is
generally
mative defense
plead,
Buckley-Madison,
Hotel,
v. Madison
Inc.
Inc.
&
suffi
(D.C.Cir.1975),
key
determining
Here, the Chandlers did not specify either of consideration as a defense to Madsen’s counterclaim in the or their memorandum. Sheldon pleadings pretrial testified at trial that the items among purchased Chandler the house in addition to those included in the purchase price that he were “extras” from Madsen. Chandler also testified had still owed The evidence paid $637. does not “extras” nor does it what were involved specify establish that those “extras” were not supplied.
We find the Chandlers’ failure to failure of con plead sideration here the District defense, was fatal to that Court’s evidence. conclusion unsupported
NEGLIGENCE In its of fact original and conclusions law findings *7 District Court that found Madsen had responsibility pro around the house to to the viding drainage prevent damage Further, house and that Madsen failed to do so. negligently the District Court found Madsen’s caused or con negligence tributed to cause the to enter the subsoil and the house water to settle.
The amended and conclusions stated the Chandlers findings failed to their burden of that Madsen’s carry negligence proof the cause was of the proximate damage. argue that the District that the most given finding Court’s probable cause to the house was water under damage is Madsen’s conduct. footings, only explanation apply is whether the review, the standard we must On by supported is substantial credi- District conclusion Court’s If this will not disturb it. so, and the law. ble evidence (1982), St.Rep. Mont., 1165, 639 P.2d v. Matthews Woodahl (1977), Lauterjung 74, 175Mont. 572P.2d v. Johnson 238; might Although weighing in a the facts have resulted our findings the District Court’s conclusion,we find different negligence supported regarding are substantial conclusions prove to Madsen’s that the Chandlers failed evidence negligence. LIABILITY
STRICT liability theory im- have determined here on the Since we unnecessary plied warranty, we find it to discuss the strict liability doctrine.
DAMAGES finding of the cost of District Court’s claims the Madsen speculative unsupported punitive, repairs heavily Spackman v. in his claim on He relies the evidence. Ralph in 147Mont. M. Parsons Co. resulting sewage sought damages plaintiff from argues property. flooding personal to and real forges Spackman that the a strict rule of law Montana if the cost is less than is the cost of measure of property in no case will the but diminution in value injury. property recovery before exceed the value of the principle Spackman however, as a out, does not set guide sense: rather, as to common but, rule hard-and-fast purpose property concerned, “Where to injured party awarding damages same, is to return the enjoyed nearly possible as he same, condition as as or property injury ... his before the ingenious propounded methods, “Ingenious have men monetary determining terms systems formulas damaged destroyed. property partially or While such value of guides, must rest useful the final answer methods serve as
243 for of such application rather than mechanical sense good at 921-922. 506, Mont. mulas.” Spackman, 1258, 1, 534 P.2d (1975), 167 Mont. In Bos v. Dolajak always rule cannot that the Spackman recognized In Bos the defendants contracted be clearly applied. had silo which $6,500 plaintiffs a grain to erect for plaintiffs of a new but which was equivalent secondhand purchased than silo with fewer jacks the raised silo. Defendants secured allowed the silo to manual and the construction required a During process, not be lowered. readily twist so it could virtually and the silo off its foundation windstorm threw it. destroyed $25,274.61; damages totaling
At trial presented plaintiffs $9,932 the silo and cost the cost of $15,342.61 replacing was $17,626.75. awarded jury from loss of use. of damages
This Court approved determination rule readily replaceable that the dealt with Spackman noted item an market value. Where an was items with established an market not did not have established readily replaceable, to a such as value, integral larger operation plain- and was farm, this Court held that other considerations tiffs’ dairy loss of use. including compensation were appropriate contractor, Gerbase, us, Billings In the case before Claude dry- house would require that of the Chandler testified repair from its foundation subsoil, the house loose out the ing cutting the house was made it to a Once grade. level bringing and structural repairs additional cosmetic secure, level and of sheetrock. be including replacement required of the house cost of repair testified his estimated Gerbase He fur factor. $65,000, contingency was which included 12% uncertain of the uncomplicated because that ther testified a fixed enter into charge he would the job nature of awarded The District Court contract repairs. price $97,500. to law in contrary Madsen argues finding punitive sold for less than because the house was originally part award. disagree. We any damages also claims if he is liable for proper is $65,000 which was amount Gerbase’s argues speculative estimate. Madsen the $97,500is in that it quoted price only was Gerbase as his fixed contract *9 guarantee money disagree. job. on would lose no the We very speculative, particularly estimate,
An nature, its is job subject complicated where, here, as is and to revision progresses. questionable as it It be would value to the repairs only $65,000 Chandlers to receive for discover, to once project, significantly into the the cost would be more. Given damage the nature of the to the Chandler home and the repairs required, we affirm the District Court’s award for repairs. argue that the District Court when it erred temporary moving storage
deleted the costs rental and and damage from the award. question resolving
The initial issue whether a warranty implied obliga- of an breach a arises out of contract obligation. tion or some other That determination will damages establish what are available as a breach. result of 27-1-317, Sections 27-1-311and MCA. Ferguson Pump,
In
Town
122,
v.
Inc.
177Mont.
P.2d
this Court
an
found
oral contract for construction of
gasoline
carry
implied
station to
it an
term that
work
performed
reasonably
would be
in a
skillful and workmanlike
negligent
perform
manner. It also
a
found that
ac
failure
cording
implied
to the
term resulted
a
breach
contract as
well
a tort.
as
Although component negligence here we do not have the theory Ferguson, the tort sustained we have a do implied breach anof term of the contract. Madsen’s breach implied warranty subject is a breach of contract and to the provisions provision of section 27-1-311, That MCA. sets obligation arising measure of for breach of an from a compensate party ag- contract as “the amount which will grieved proximately for all the detriment which was caused thereby ordinary things likely or in the course of would be result therefrom.” from a necessity moving
It that apparent and of a renting tempor massive undergoing repairs residence to a struc major damage to result from likely residence is rary find that for We, therefore, moving storage ture. costs rental were deleted from the temporary improperly award. Chandler testified she had obtained estimates from Marilyn real estate office Billings suitable rental for temporary the Chandlers would cost between month. $1,000 per $600 She testified that she also had an obtained estimate of $3,487.51 for moving addition, Chandlers’ furniture. Gerbase testified the Chandlers be to move required from their house for three to four months during repairs.
Since the establishes a testimony $400-per-month disparity in rental an figures, award of the middle figure appears ap- ($800 propriate. Therefore, we award the Chandlers months) month for per four rental and reinstate temporary $3,487.51 the award of moving storage.
The Chandlers also the District in argue Court erred failing to grant for emotional distress. Since we have found no for liability or strict negligence liability, such damages need not be considered here.
SURPRISE trial requests new be on granted the damage issue on the grounds he been has surprised under sections 25-11-102(3)and 25-11-103, This MCA. is based on the request affidavit of Madsen’s attorney, which states that an extensive discussion with Claude Gerbase, had lieu of on deposition 6, 1980, December indicated Gerbase’s estimate for cost of would be $65,000. On December 9,1980, at the request of Madsen’s attorney, Gerbase submitted a detailed breakdown of the estimate. to the af- Subsequently, according fidavit, Madsen’s contacted another attorney contractor who examined documentary evidence and con- videotaped cluded his estimate would not be than significantly less $65,000. argue surprise In the claim of is unfounded.
The Chandlers support position, their refer to a letter Oc- Chandlers attorney attorney from their to Madsen’s 29, 1980, tober is that the stated: “Another item to take into account which only agreement is not an estimate is that. It Gerbase house. The Chandlers are entitled to have their restore the requires if a an additional sum house restored and contractor regularly charge money contingencies, such as would trade, of his then we will want to add that on.” the course addition, Gerbase, affidavit, stated that accor- Claude ding meeting of the December 6,1980, to his recollection attorneys parties, present for both he told all those that he firm would not enter into a contract for the amount his estimate. only gran-
Surprise accepted has once been as the basis for ting Printing a new trial in Montana. Porter v. Industrial Co. P. 839, modified, 26 Mont. 67 P.67. The Court granted surprise such where the trial court had default found against reply plaintiff for failure to to the defendant’s only later declared three of the counterclaim. judgment causes entered counterclaims stated of action and “ordinary plaintiff. surprise This Court found guarded against”. prudence Porter, could not have 26 Mont. 66 P. have We do not such situation here. We find there was fixed-price sufficient reference to the fact a contract would be than different the estimate and would be relied on preclude surprise. This case is remanded to the District Court with instruc- judgment opinion. tions to amend its accordance with HASWELL and JUSTICES JUSTICE CHIEF MR. concur. SHEA MORRISON *11 concurring specially: SHEEHY JUSTICE
MR.
award
agree
I affirm the
result here.
I
with the
by the
are bound
repair
we
the house because
$97,500for
may
findings
not be
court
appellate
of a district
rule that
A
52(a),
set aside unless
erroneous. Rule
M.R.Civ.P.
clearly
when,
erroneous”
there
finding
“clearly
although
the entire
it, on
evidence to
court
support
reviewing
is left with
firm
evidence
the definite and
conviction that
mistake has been committed. United States v.
Co.
Gypsum
333 U.S.
394-395,
525, 541-542,
68 S.Ct.
92 L.Ed.
746.1 am
on
the evidence of the con-
persuaded
point by
tractor that he would not enter into a firm
contract
$67,500.
figure
burden of
on the
proof
plaintiffs
was
of the evidence. The
preponderance
Gerbase
evidence, being credible, is substantial and therefore it over-
See Western Cottonoil
comes the
erroneous” rule.
“clearly
(5thCir. 1954),
Co. v. Hodges