Axline v. Kutner
863 S.W.2d 421, 1993 Tenn. App. LEXIS 393 (1993)
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Rule of Law:
A general 'as is' clause or a vague reference to an express warranty, such as a 'one-year builder's warranty,' is insufficient to disclaim the implied warranty of good workmanship and materials in a contract for the sale of a new home. Any such disclaimer must be clear, unambiguous, and provide the buyer with adequate notice of the protections being waived.
Facts:
- Seymour Kutner, a builder, contracted to sell a newly constructed house to Evelyn C. Axline.
- Kutner represented himself as a 'master builder' and stated the house would be a 'perfect house.'
- Kutner's business card identified him as a 'Contractor,' but he was not licensed as a contractor at the time.
- The sales contract included a typed-in provision stating, '1 year builders warranty included.'
- The contract also contained a handwritten clause stating, 'PURCHASER ACCEPTS PROPERTY IN ITS EXISTING CONDITION, NO WARRANTIES OR REPRESENTATIONS HAVING BEEN MADE BY SELLER OR AGENT WHICH ARE NOT EXPRESSLY STATED HEREIN.'
- Following the sale, the buyers identified numerous defects in the construction of the home.
Procedural Posture:
- The home buyers (Plaintiffs) filed suit against the seller/contractor, Seymour Kutner (Defendant), in the trial court.
- The Plaintiffs filed an amended complaint.
- The Defendant moved for partial summary judgment, seeking to limit the Plaintiffs' claims to the express one-year warranty and to dismiss the fraud claim.
- The trial court granted the Defendant's motion for partial summary judgment.
- The trial court certified its order as a final judgment, allowing for an immediate appeal.
- The Plaintiffs (Appellants) appealed the trial court's decision to the Court of Appeals of Tennessee.
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Issue:
Does a real estate contract clause providing for a '1 year builder's warranty' and a general 'as is' provision, without more specific language, effectively disclaim the implied warranty of good workmanship and habitability?
Opinions:
Majority - Farmer, Judge.
No. A contract's inclusion of a vague '1 year builder's warranty' and a general 'as is' clause does not disclaim the implied warranty of good workmanship. For a disclaimer of the implied warranty to be valid, it must be in clear and unambiguous language, strictly construed against the seller, and provide the buyer adequate notice of the protections being waived. The court reasoned that the term 'one year builder’s warranty' is meaningless without specifying what is being warranted. Citing precedent from Dewberry v. Maddox, the court also found that the boilerplate 'as is' clause was insufficient to disclaim the warranty because a new home buyer relies on the builder's skill and cannot fully inspect a completed house. Additionally, the court determined that Kutner's representations as a 'master builder' while being unlicensed created a genuine issue of material fact regarding the fraud claim, making summary judgment on that issue improper.
Analysis:
This decision reinforces the strength of the implied warranty of good workmanship for new homes in Tennessee, setting a high standard for builders who wish to disclaim it. It clarifies that sellers cannot rely on vague or boilerplate language, such as 'as is' clauses or undefined express warranties, to escape liability for defective construction. The ruling protects new home buyers, who are often at an informational disadvantage, by requiring that any waiver of their implied warranty rights be explicit and clearly understood. This precedent makes it significantly harder for builder-vendors to limit their liability for poor workmanship through contractual ambiguity.
