Centex Homes v. Buecher
46 Tex. Sup. Ct. J. 294, 95 S.W.3d 266, 2002 Tex. LEXIS 219 (2002)
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Rule of Law:
The implied warranty of good and workmanlike construction in a new home sale may be disclaimed and superseded by an express agreement providing for the manner, performance, or quality of construction. However, the implied warranty of habitability cannot be generally disclaimed, as public policy only permits waiver for specific, disclosed latent defects known to the buyer.
Facts:
- Michael Buecher and other individuals purchased new homes built by Centex Homes.
- Each homebuyer signed a standard form sales agreement prepared by Centex.
- The agreement contained a provision stating that the homebuyer accepted Centex's express limited warranty 'IN LIEU OF ALL OTHER WARRANTIES... INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF GOOD WORKMANLIKE CONSTRUCTION AND HABITABILITY.'
- The contract specified that Centex was relying on this waiver and would not sell the property without it.
- Each homebuyer initialed this specific provision in the margin to indicate their approval.
- After moving in, the homeowners alleged they discovered construction defects in their new homes.
Procedural Posture:
- Michael Buecher and other homeowners sued Centex Homes in a Texas trial court, seeking to certify a class action.
- The class action sought a declaration that Centex's waiver of implied warranties was unenforceable.
- Centex filed a special exception and motion to dismiss the class action claims, arguing the disclaimer was valid under existing precedent.
- The homeowners announced they could not amend their petition to overcome the special exception.
- The trial court granted Centex's motion, dismissed the class action claims, and severed them from the homeowners' individual claims.
- The homeowners appealed to the Texas Court of Appeals.
- An en banc panel of the Court of Appeals reversed the trial court's judgment, holding that neither the implied warranty of habitability nor good workmanship could be disclaimed, and remanded the case.
- Centex Homes petitioned the Supreme Court of Texas for review.
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Issue:
Under Texas law, may a homebuilder, through an express disclaimer in a sales contract, validly have a homebuyer waive the implied warranties of good and workmanlike construction and habitability?
Opinions:
Majority - Chief Justice Phillips
No, as to the implied warranty of habitability, but yes, as to the implied warranty of good and workmanlike construction. The implied warranty of good workmanship may be disclaimed when the parties' agreement provides for the manner, performance, or quality of the desired construction, but the implied warranty of habitability may not be disclaimed generally. The court distinguished between the two warranties, explaining that the warranty of good workmanship is a 'gap-filler' concerning the builder's conduct, which the parties can replace with specific contractual terms. In contrast, the warranty of habitability focuses on the state of the completed structure—that it be safe, sanitary, and fit for human habitation. This warranty is rooted in public policy to protect inexperienced buyers from latent defects that undermine the essential purpose of a home, and therefore a general waiver is unenforceable. A waiver of habitability is only permissible in unique circumstances where defects are fully disclosed to, and knowingly waived by, the buyer.
Dissenting - Justice Hecht
Yes. The majority's decision to prohibit disclaimers of the implied warranty of habitability and restrict disclaimers of good workmanship is an improper retroactive change in law that upsets decades of industry reliance on this Court's precedent in G-W-L, Inc. v. Robichaux. The court's new definitions are vague and will undoubtedly spawn endless litigation. This ruling is made without a factual record and demonstrates a misunderstanding of how express warranties function in the homebuilding industry. The decision should, at a minimum, be applied prospectively to avoid substantial inequitable results for builders who structured hundreds of thousands of contracts in reliance on prior law.
Dissenting - Justice Owen
Yes, or at least the court should not decide the issue at this time. The court is making a sweeping public policy decision for an entire industry based on a case with no factual record. Without evidence of how express warranties and waivers impact consumers or the market, the court is ill-equipped to craft such a rule and is acting more like a legislature than a judiciary. The decision could have unintended negative consequences, such as voiding existing express warranties for failure of consideration, thereby harming the very consumers it aims to protect. The court should have granted a rehearing to allow for a more developed record and further argument.
Analysis:
This decision significantly alters Texas real estate law by modifying the prior rule from G-W-L, Inc. v. Robichaux, which permitted waiver of both implied warranties. By separating the two warranties and making the implied warranty of habitability non-disclaimable on public policy grounds, the court strengthens consumer protection for new homebuyers against defects that render a home unlivable. However, it preserves freedom of contract by allowing parties to define the quality of construction through express warranties that supersede the implied workmanship standard. This ruling creates a new framework that will likely lead to future litigation over the distinction between workmanship and habitability defects and the sufficiency of an express warranty to displace the implied one.
