Wawak v. Stewart
449 S.W.2d 922, 247 Ark. 1093, 1970 Ark. LEXIS 1398 (1970)
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Rule of Law:
A builder-vendor of a new home impliedly warrants to the first purchaser that the house is constructed in a good workmanlike manner and is fit for human habitation, thereby abandoning the traditional doctrine of caveat emptor in such sales.
Facts:
- Wawak, a professional house builder, constructed a new house on a lot he owned.
- During construction, the heating and air-conditioning ductwork was embedded in the ground before the concrete-slab floor was poured on top.
- Wawak sold the newly constructed house to the Stewarts for $28,500.
- Several months after the Stewarts occupied the home, heavy rains caused water and fill material to enter the underground ducts.
- This water and debris then flowed through the floor vents into the house, causing damage to the interior and the Stewarts' personal property.
- Wawak attempted some corrective measures which failed to solve the underlying leakage problem.
- The Stewarts refused Wawak's offer to install an automatic sump pump, which would have prevented water from entering the living space but would not have fixed the leak itself.
Procedural Posture:
- The Stewarts (plaintiffs) brought an action for damages against Wawak (defendant) in an Arkansas trial court.
- The trial court found for the Stewarts on a theory of implied warranty and awarded them damages of $1,309.
- Wawak (appellant) appealed the judgment to the Supreme Court of Arkansas.
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Issue:
Does the seller of a new home, who was also the builder, impliedly warrant that the house is structurally safe and fit for habitation by the first purchaser?
Opinions:
Majority - Justice George Rose Smith
Yes. A builder-vendor of a new house impliedly warrants that the structure is fit for its intended purpose of habitation. The court abandons the traditional doctrine of caveat emptor (let the buyer beware) for the sale of new homes, finding it an indefensible anachronism. The court reasons that modern homebuyers are not on equal footing with professional builders and cannot reasonably be expected to discover latent defects in complex modern construction. This decision aligns with the overwhelming modern trend in other states and is analogous to the implied warranties that exist in the sale of personal property. The court also held that a general inspection clause in the sales contract does not disclaim this implied warranty for latent defects that could not be discovered through a reasonable inspection. The court reduced the Stewarts' damages, however, finding they failed to mitigate them by refusing the offer of an automatic sump pump, but allowed recovery for the cost of the permanent repair.
Dissenting - Justice Conley Byrd
No. The court should not create an implied warranty in real estate sales because doing so constitutes judicial legislation, a function reserved for the General Assembly. This dissent argues that the court is overstepping its constitutional role. It further contends that if personal property law were applied, the warranty disclaimer in the sales contract would have been effective to exclude any implied warranties, similar to provisions in the Uniform Commercial Code. The legislature is the proper forum for such a significant change in the law, as it can hear from all interested parties and craft a comprehensive statute.
Concurring-in-part-and-dissenting-in-part - Justice John A. Fogleman
No. The builder is not liable because the purchasers failed to prove a breach of the implied warranty. While this opinion agrees in principle with adopting a modern warranty rule, it dissents from the majority's finding of liability in this specific case. The Stewarts, as plaintiffs, had the burden to prove that the house was defective when constructed and that the defect caused their damages. Here, the plaintiffs failed to present any evidence as to the cause of the water intrusion or to establish that it resulted from faulty construction. Finding the builder liable without proof of a specific defect or cause effectively applies a res ipsa loquitur standard, which is inappropriate for a breach of warranty claim, and turns the builder into an insurer of the property. This opinion also argues that modifying the common law rule of caveat emptor is a legislative, not judicial, function.
Analysis:
This decision marks a pivotal shift in Arkansas property law, officially abandoning the centuries-old doctrine of caveat emptor in the context of new home sales from builder-vendors. By establishing an implied warranty of habitability, the court placed the risk of latent defects on the party best positioned to prevent them—the builder. This creates a new cause of action for first-time buyers of new homes and brings real property law more in line with modern contract and products liability principles. The ruling increases protections for consumers and will likely influence construction standards, insurance requirements, and future legislative action defining the scope and duration of such warranties.
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