No. 86-546
IN THE SUPREME COURT O F THE S T A T E O F MONTANA
1987
GEORGE SAMUELSON and HELEN
SAMUELSON ,
P l a i n t i f f s and R e s p o n d e n t s ,
A. A. QUALITY CONSTRUCTION, INC.,
and ALBERT A L D I N G E R ,
D e f e n d a n t s and A p p e l l a n t s .
A P P E A L FROM: D i s t r i c t C o u r t of t h e S e v e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of D a w s o n ,
T h e H o n o r a b l e H. R. O b e r t , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
Nye & Meyer; J e r r o l d L . N y e , B i l l i n g s , Montana
For R e s p o n d e n t :
Cox & Simonton; L o r r a i n e A. Schneider, G l e n d i v e ,
Montana
S u b m i t t e d on B r i e f s : Sept. 1 0 , 1 9 8 7
D e c i d e d : January 21, 1988
Filed: ',IAN ? 1 1988
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Defendant and appellant, A.A. Quality Construction (A.A.
Quality), appeals a jury verdict in favor of the plaintiffs,
George and Helen Samuelson. Trial was held in the Seventh
Judicial District, Dawson County. The jury found A.A. Quali-
ty liable to the Samuelsons in the amount of $11,158.90 for
damages sustained relating to the construction of the
Samuelsons' home by A.A. Quality. We reverse and remand.
We address the following three issues on appeal:
1. Is the implied warranty of habitability applicable
under the facts of this case?
2. Did the District Court err by refusing to admit the
construction contract into evidence?
3. Did the District Court err by refusing defendant's
proposed Instruction No. 19 which pertained to assumption of
risk?
In March 1981, A.A. Quality agreed to sell two lots and
construct a home in Glendive, Pllontana, for the Samuelsons.
The total contract price was $155,804. Prior to entering the
contract, George Samuelson asked Albert Aldinger, president
of A.A. Quality, whether the foundation of the home should be
equipped with any special drainage devices to help ensure
proper drainage of water away from the foundation. According
to George Samuelson's testimony, Mr. Aldinger advised them
that precautionary drain devices were not necessary. In
contrast, A.A. Quality asserts that Mr. Aldinger merely
explained that he had built 7 or 8 other homes in the same
general area and those homes had not required any special
drainage devices. Mr. Aldinger also testified that the
decision not to include such devices was left to the
Samuelsons. A.A. Quality did not install drainage devices in
the home.
During construction, the Samuelsons noted that the
basement area accumulated water several times. Mr. Aldinger
initially explained that the water entered the structure
through window cutouts that were not yet covered with glass.
Later the parties realized that the basement had a water
seepage problem. A.A. Quality attempted to correct the
problem by installing an exterior cement slab to divert water
and by repairing rock pockets in the foundation.
The Samuelsons began to occupy the house in December
1981 and did not experience water seepage during the winter
months. In the spring of 1982, water seepage began to reoc-
cur and continued intermittently during wet periods.
The affected basement areas included a guest bedroom,
storage area, recreation room and a crawl space. The record
indicates that the seepage caused problems in many respects:
furniture was removed from the guest bedroom, portions of
sheetrock were removed from two walls in an attempt to locate
the problem, the carpeting was rolled back for weeks at a
time to allow it to dry and was entirely removed on one
occasion, floor heaters were used to dry the wet areas, a
pump was used to clear the crawl space of excess water, use
of the recreation room was restricted, items in the storage
room had to be raised above the floor, and a vacuuming ser-
vice was required on several occasions to vacuum water from
the basement.
As the water continued to reoccur and the efforts of
A.A. Quality to halt the problem proved unsuccessful, the
working relation between A.A. Quality and the Samuelsons
became increasingly strained. Eventually, A.A. Quality
refused to make further attempts to remedy the problem. In
the fall of 1983, the Samuelsons hired another contractor.
The contractor excavated the cement slab and backfill from
around the house and installed a drain pipe along the
foundation to carry water away from the house. These efforts
apparently stopped the water seepage.
The Samuelsons brought an action against A.A. Quality
and Albert Aldinger. Aldinger was dismissed as a party
defendant prior to trial. The Samuelsons proceeded to trial
against A.A. Quality on theories of negligence and breach of
the warranties of habitability and workmanlike construction.
The jury found in favor of the Samuelsons, and A.A. Quality
appeals.
I
Is the implied warranty of habitability applicable under
the facts of this case?
We considered this implied warranty of habitability
initially in Chandler v. Madsen (1982), 197 Mont. 234, 642
P.2d 1028. In Chandler, the footings and foundation of the
home began to settle due to a condition of the soil upon
which the house was built. Doors and locks failed to oper-
ate, walls cracked, floors bulged, windows broke, plumbing
bent, fixtures and walls separated, and the foundation low-
ered as much as 3.6 inches in spots. The home truly was
uninhabitable. Chandler, 642 P.2d at 1030. At that time, we
held that the builder-vendor of a new home impliedly warrants
that the residence is constructed in a workmanlike manner and
is suitable for habitation. Chandler, 642 P. 2d at 1031. We
again considered the warranty in Degnan v. Executive Homes,
Inc. (Mont. 1985), 696 P.2d 431, 42 St.Rep. 262. In - -
Degnan
the home was built upon unstable ground. The hillside began
slipping downward causing severe structural damage to the
home rendering the home truly uninhabitable. 696 P.2d at
433. In that case we stated that "[tlhe implied warranty
places on the builder-vendor liability for defects in a
structure which make it uninhabitable." Degnan, 696 P.2d at
434.
In Yepsen v. Burgess (Or. 1974), 525 P.2d 1019, upon
which we relied in Chandler, the Oregon Supreme Court made an
observation which is applicable to the implied warranty of
habitability in Montana: "A more precise definition of the
scope of this warranty must await delineation on a case b7 1
case basis." Yepsen, 525 P.2d at 1022. In both Chandler and
Degnan, the dwellings were damaged so substantially as to
preclude their use as residences. That is not the situation
in the present case. Here the water collected next to the
Samuelson home and eventually seeped into the basement after
snow melt and rainfall. The evidence demonstrates that the
water problem was an inconvenience but did not render the
home uninhabitable.
We are now required to set forth a more precise defini-
tion of the implied warranty of habitability. In Chandler,
642 P.2d at 1032, we pointed out that the basic concern in
applying the warranty is whether the defect relates to "use-
ful occupancy" of the building. F e hold that the implied
7
warranty of habitability of a dwelling house is limited to
defects which are so substantial as reasonably to preclude
the use of the dwelling as a residence. That limitation is
consistent with Chandler and Degnan. Even if the record is
reviewed in its most favorable light from the standpoint of
the Samuelsons, the evidence does not show that the defects
were substantial enough reasonably to preclude use as a
residence. We hold that the implied warranty of habitability
is not applicable under the facts of this case. As a result,
the case will be remanded to the District Court for retrial.
on theories other than the implied warranty of habitability.
Did the District Court err by refusing to admit the
construction contract into evidence?
The District Court refused to admit the contract between
the Samuelsons and A.A. Quality because the court felt the
contract was irrelevant. The parties agreed in discussions
with the court that breach of contract was not being litigat-
ed. In spite of this, A.A. Quality argued that the contract
was relevant to the implied warranty of habitability issue.
In view of our determination on that issue, we need not rule
on the relationship of the contract to the implied warranty
of habitability.
A.A. Quality further argues that the contract was rele-
vant to the negligence issue. All parties agree that the
contract did not include a drainage system. We do not find
it necessary to rule on the admissibility of the contract at
the present time. It may be that the theories on retrial may
require the admission of the contract.
Did the District Court err by refusing defendant's
proposed Instruction No. 19 which pertained to assumption of
risk?
A.A. Quality contends that the trial judge should not
have refused its proposed Instruction No. 19, which would
have instructed the jury in terms of assumption of risk.
Assumption of risk is an affirmative defense which must be
plead affirmatively. Rule 8 (c), M.R.Civ.P. "If an af firma-
tive defense is not plead, it is generally waived."
Chandler, 642 P.2d at 1032. This affirmative defense was not
plead, and the District Court correctly refused to instruct
the jury on assumption of risk.
In view of our holding, we need not consider A . A .
Quality's proposed Instruction No. 16 which defined warranty.
We reverse the District Court judgment and remand for retrial
on the various theories with the exception of the implied.
warranty of habitability.
- -
We Concur:
A. ~ - ~ u r i b , ,
chief Justice , I c. -(
sittingi for Justice a ~ b r a n d s o n
sitting for J u s t d e ~ c ~ b n o u ~ h
Mr. Justice John Conway Harrison, dissenting.
I dissent. In Chandler v. Madsen (1982), 197 Mont.
234, 642 P.2d 1028, this Court took a giant step forward in
holding that a builder-vendor of a new home impliedly
warrants that the residence is constructed in a workman-like
manner and is suitable for habitation. We note that two
major policy considerations support such a warranty. The
first being that the buyer is in an unequaled bargaining
position, and second that the builder-vendor is in a better
position to discover, examine, and prevent defects. I feel
the majority's holding in this opinion has taken a giant step
backwards in protecting the consumer.
The Samuelsons had just paid $155,000 for their home.
The affected areas in their basement included a guest
bedroom, a storage area, and a recreation room. To find that
their home was not damaged sufficiently to warrant our
following the case of Chandler, shocks my credibility. As
noted in the facts of this opinion, it cost $11,158.90 to
properly remedy the problems and make the home livable. To
hold that having as much as six inches of water in the
basement in a new home does not violate the warranty of
habitability is, in my view, a mistake. Had the basement not
been repaired at a cost of over $11,000 by another
contractor, about all that it could have been used for would
have been a fishery during the periods that it leaked.
Surely, a homeowner is entitled to m8re than that.
Mr. Justice John C. Sheehy the foregoing dissent of
Justice John C. Harrison.