VanHoldt v. Barba & Barba Construction Co.

NOTICE: Under Supreme Court Rule 367 a party has 21 days after
the filing of the opinion to request a rehearing. Also, opinions
are subject to modification, correction or withdrawal at anytime
prior to issuance of the mandate by the Clerk of the Court.
Therefore, because the following slip opinion is being made
available prior to the Court's final action in this matter, it
cannot be considered the final decision of the Court. The
official copy of the following opinion will be published by the
Supreme Court's Reporter of Decisions in the Official Reports
advance sheets following final action by the Court.

Docket No. 80342--Agenda 22--September 1996.
JOHN W. VonHOLDT, JR., Appellant, v. BARBA & BARBA CONSTRUCTION,
INC., Appellee.
Opinion filed January 30, 1997.

JUSTICE MILLER delivered the opinion of the court:
The plaintiff, John W. VonHoldt, Jr., brought the present
action in the circuit court of Cook County against defendant, Barba
& Barba Construction, Inc. The complaint alleged that defendant
breached an implied warranty of habitability in its construction of
a structural addition to an existing residence. Plaintiff was a
purchaser of the residence after the addition had been made. On
defendant's motion, the circuit court dismissed the action pursuant
to section 2--615 of the Code of Civil Procedure (735 ILCS 5/2--615
(West 1994)), finding that plaintiff's second-amended complaint
failed to state a cause of action upon which relief could be
granted. On appeal, the appellate court affirmed the dismissal of
plaintiff's complaint. 276 Ill. App. 3d 325. We granted leave to
appeal (155 Ill. 2d R. 315(a)) and affirm the judgment of the
appellate court on grounds different from those relied on by the
lower courts.

I. BACKGROUND
In August 1982, defendant constructed a multilevel addition to
a single family residence in Glenview, Illinois. Before the
addition, the residence consisted of approximately 2,300 square
feet. After the addition, the residence consisted of approximately
3,200 square feet. More than 11 years later, on November 5, 1993,
plaintiff purchased the residence.
Shortly after taking occupancy, plaintiff noticed a deflection
of the wood flooring at the partition wall separating the master
bedroom from an adjoining bathroom. This deflection created a
depression in the floor plane. Plaintiff maintained that, due to
the thickness of the carpet, the depression was nearly concealed.
An investigation revealed that the addition was not constructed in
accordance with the architectural plans approved by the Village of
Glenview or the Glenview Building Code. Specifically, the partition
wall between the master bedroom and the bathroom was constructed as
a bearing element supporting a portion of both the roof and ceiling
construction. This variance resulted in excessive stress on the
floor joists and inadequate support for a portion of the roof and
ceiling causing a greater than expected floor deflection.
The plaintiff instituted the present action on March 28, 1994,
by filing a complaint in the circuit court of Cook County.
Plaintiff sought recovery from the defendant for breach of an
implied warranty of habitability. Defendant moved to dismiss the
complaint pursuant to section 2--615 of the Code of Civil Procedure
(735 ILCS 5/2--615 (West 1992)) for failure to state a claim upon
which relief could be granted. On September 29, 1994, the trial
judge dismissed plaintiff's amended complaint without prejudice.
Plaintiff filed a second-amended complaint on October 24,
1994, providing additional allegations in support of the breach of
implied warranty of habitability count. Defendant again moved to
dismiss the complaint pursuant to section 2--615. The trial judge
granted defendant's section 2--615 motion and dismissed the
complaint with prejudice, finding that defendant was not a builder-
vendor and that there was an absence of privity between the two
parties. Plaintiff subsequently appealed.
The appellate court affirmed the judgment of the circuit
court. 276 Ill. App. 3d 325. The appellate court noted the reasons
for the adoption of the implied warranty of habitability between a
builder and a purchaser and discussed extensions of the doctrine
following its inception. 276 Ill. App. 3d at 327-28. The appellate
court further acknowledged that there exist compelling arguments to
extend the implied warranty to apply to a builder of a major
structural addition of an existing home. 276 Ill. App. 3d at 328-
29. The appellate court, however, observed that this court had
always spoken in terms of a right of action against a builder-
vendor. 276 Ill. App. 3d at 329. Thus, it refused to extend
protection under the doctrine to a construction setting not
involving a builder-vendor of a new residence. 276 Ill. App. 3d at
329. We allowed plaintiff's petition for leave to appeal. 155 Ill.
2d R. 315(a).

II. DISCUSSION
A. The Implied Warranty's Applicability to Additions
On appeal to this court, plaintiff contends that the appellate
court erred in rejecting his claim of breach of an implied warranty
of habitability. Plaintiff asks us to extend the implied warranty
of habitability to a cause of action by a subsequent purchaser for
damages against a builder constructing a later addition to a house.
Defendant argues that the protection of the implied warranty of
habitability should be limited to actions against builder-vendors
and that plaintiff's action, if any exists, is time-barred. For the
reasons expressed below, we find that the implied warranty of
habitability extends to cases brought by subsequent purchasers
involving subsequent additions to homes.
The implied warranty of habitability is a judicially created
doctrine designed to avoid the unjust results of caveat emptor and
the doctrine of merger. Petersen v. Hubschman Construction Co., 76 Ill. 2d 31, 39-40 (1979). Initially, Illinois courts applied the
doctrine to the sale of new homes to protect innocent purchasers
who did not possess the ability to determine whether the house they
purchased contained latent defects. Petersen, 76 Ill. 2d at 39-40.
In Petersen, this court held that the purchaser of a new home
has a cause of action against a builder-vendor for damages
resulting from latent defects in the construction of the new home.
Petersen, 76 Ill. 2d at 39-40. Petersen stated the owner needs this
protection because he is making a major investment, in many
instances the largest single investment of his life. Petersen, 76 Ill. 2d at 40. Additionally, the owner usually relies on the
integrity and skill of the builder, who is in the business of
building houses. Petersen, 76 Ill. 2d at 40. Finally, the owner has
a right to expect to receive a house that is reasonably fit for use
as a residence. Petersen, 76 Ill. 2d at 40.
Since Petersen, Illinois courts have defined and extended the
circumstances under which claims based on an implied warranty of
habitability can be recognized. See Park v. Sohn, 89 Ill. 2d 453
(1982) (builder-vendor need not be mass producer, just one engaged
in the business of building such that the sale is of a commercial
nature); McClure v. Sennstrom, 267 Ill. App. 3d 277 (1994) (house
built upon foundation of an old house still qualified as a "new"
home); Hefler v. Wright, 121 Ill. App. 3d 739 (1984) (doctrine
applies to person who erected a house manufactured by another
company and built on the plaintiff's land); Briarcliffe West
Townhouse Owners Ass'n v. Wiseman Construction Co., 118 Ill. App.
3d 163 (1983) (latent defect in common land can affect
habitability); Minton v. Richards Group, 116 Ill. App. 3d 852
(1983) (innocent purchaser could bring an action against a
subcontractor when he had no recourse to the builder-vendor and he
had sustained a loss in his home due to a latent defect); Tassan v.
United Development Co., 88 Ill. App. 3d 581 (1980) (doctrine
applies against developer-seller of new condominium unit).
Plaintiff claims that the implied warranty of habitability
should now be extended to include actions against a builder brought
by a subsequent purchaser for latent defects in a later addition to
a home. In Kelley v. Astor Investors, Inc., 106 Ill. 2d 505 (1985),
this court held that the defendants were not subject to the implied
warranty of habitability for a condominium-conversion project. The
court held that the doctrine of implied warranty of habitability
did not apply because the refurbishing and renovation of the
project had not been significant. Kelley, 106 Ill. 2d at 509. In
the present case, the builder made a major addition to an existing
home. We now hold that, when a builder makes a significant addition
to a previously built home, an action for damages resulting from
latent defects affecting habitability exists under the doctrine of
implied warranty of habitability.
An owner claiming that latent defects exist in a major
addition to a structure should be provided the same protection for
the addition as that given to the owners in Petersen and its
progeny. In both cases, the owner of the house usually has little
knowledge regarding the construction. The purchaser of both a
completed home and an addition places the same trust in the builder
that the structure being erected is suitable for living. Further,
the ordinary buyer is not in a position to discover hidden defects
in a structure even through the exercise of ordinary and reasonable
care.
We must next determine whether the plaintiff can bring this
action even though he is a subsequent purchaser. In Redarowicz v.
Ohlendorf, 92 Ill. 2d 171, 183 (1982), this court extended the
implied warranty of habitability to subsequent purchasers of a new
home, finding that there was no need for privity of contract
because the warranty of habitability exists independently of the
contract for sale. Because the doctrine of implied warranty of
habitability has been extended to actions by subsequent purchasers
of new homes, we can see no reason why the doctrine should not be
extended to actions by subsequent purchasers of a home for latent
defects in a significant addition to the home made prior to the
time of sale.
We hold that a subsequent purchaser has a cause of action for
damages resulting from a breach of the implied warranty of
habitability for latent defects caused in the construction of a
significant structural addition to an existing residence. The
decision of whether there is a latent defect in a significant
construction by one engaged in the business of building is a
question of fact to be determined in the trial court.
We note that this extension is consistent with decisions from
other states. In Lempke v. Dagenais, 130 N.H. 782, 547 A.2d 290
(1988), the Supreme Court of New Hampshire allowed a claim for a
breach of the implied warranty of workmanlike quality by a
subsequent purchaser against a builder who had added a garage to
the house. In an unsuccessful suit against a contractor who had
merely added a patio to a house, the Supreme Court of New Jersey
stated that actions could be brought under the implied warranty of
habitability so long as the defect in the construction was
sufficiently serious to affect the home's habitability. Aronsohn v.
Mandara, 98 N.J. 92, 484 A.2d 675 (1984). In the case before us, it
is reasonable to conclude that a defect in a multilevel addition
increasing the size of the original house by almost 40% could
affect its habitability.

B. Time-Barred Limitation
Having determined that a cause of action exists, we must next
determine whether it is time-barred. In the trial court, defendant
claimed that section 13--214 of the Code of Civil Procedure barred
plaintiff from recovery because more than 10 years had elapsed from
the time the addition was constructed. See 735 ILCS 5/13--214(b)
(West 1994). In its brief before this court, however, defendant
adopts the language of Redarowicz and asserts that plaintiff cannot
recover because the action has not been brought "within a
reasonable time." Redarowicz, 92 Ill. 2d at 185. Because neither
court addressed the issue in dismissing plaintiff's original or
amended complaints, plaintiff contends the lower courts accepted
the 11-year gap as reasonable for bringing suit. Plaintiff further
asserts that the time within which an action may be brought should
start on the date the subsequent purchaser takes ownership of the
premises, not from the date of completion of construction.
Because the parties have neither briefed nor argued in this
court whether it is the repose provision of section 13--214 of the
Code of Civil Procedure or the "reasonable time" standard of
Redarowicz that controls the time limitation here, we do not decide
that question today.
We believe, however, that under either of defendant's
theories--the repose period of section 13--214 or the "reasonable
time" standard of Redarowicz--the 11-year gap between the time of
the construction and the claim for damages resulting from a latent
defect bars plaintiff from recovery in this case. Under section 13-
-214 of the Code of Civil Procedure, plaintiff's action is barred
because it has been longer than 10 years since the date of
construction of the addition. Further, under the "reasonable time"
standard of Redarowicz, we find the 11-year period between the date
of the act or omission causing the defect and the time the action
was brought to be an unreasonable time to hold a builder liable. A
builder cannot be a lifetime guarantor of construction, susceptible
to a claim for damages under the implied warranty of habitability
beyond the foreseeable future. We therefore hold that the
reasonable time for bringing a cause of action under the
"reasonable time" standard of Redarowicz begins with the act or
omission causing the defect rather than the date on which the
subsequent purchaser takes title to the property.
Because plaintiff would not prevail whether the claim must be
brought within 10 years under the statute of repose or within a
reasonable time under Redarowicz, we find that the claim is time-
barred.

III. CONCLUSION
For the foregoing reasons, we hold that actions for damages
from latent defects in the construction of a significant structural
addition to an existing residence can be brought against the
builder by subsequent purchasers under the doctrine of implied
warranty of habitability. However, because here the action was
time-barred under either the statute of repose of section 13--214
of the Code or the "reasonable time" doctrine of Redarowicz,
plaintiff's complaint was properly dismissed. We therefore affirm
the judgment of the appellate court.

Affirmed.

CHIEF JUSTICE HEIPLE, dissenting:
The majority decision expands habitability liability for all
mechanics, artisans, contractors, and home renovators who make
significant additions to already existing structures. This new
liability runs in favor of subsequent home buyers in the complete
absence of privity of contract. This is new law which opens up vast
possibilities for new causes of action. The opinion leaves to
future decisions the definition of "significant addition." That
this expanded liability will increase the cost of home improvements
cannot be doubted. It is a basic law of economics that there is no
free lunch. For a society that is already wallowing in law suits,
it seems to me that this judicial expansion of liability into new
and undefined areas would be better left to the state legislature.
Accordingly, I respectfully dissent.

JUSTICE NICKELS joins in this dissent.