Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ., and Carrico, S.J.
PULTE HOME CORPORATION
OPINION BY
v. Record No. 021976 SENIOR JUSTICE HARRY L. CARRICO
April 17, 2003
PAREX, INC.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jonathan C. Thacher, Judge
On June 15, 2000, Tim L. Peckinpaugh and Pamela S.
McKinney-Peckinpaugh (the Peckinpaughs), owners of a home in
Wheatland Estates, Fairfax County, filed an amended motion for
judgment against Pulte Home Corporation (Pulte), builder of the
home, for damages allegedly caused by Pulte's use of a defective
synthetic stucco product known as "Exterior Insulation and
Finish System," or "EIFS." 1 Parex, Inc. (Parex), the
manufacturer of the EIFS, was also named as a defendant. The
Peckinaughs sought damages of $500,000 from Pulte and Parex to
cover the cost of removing the synthetic stucco, installing new
exterior siding, and repairing the damaged property.
Also on June 15, 2000, Pulte filed a cross-claim against
Parex. In separate counts, Pulte asserted claims for breach of
express warranty, breach of implied warranty, indemnification,
1
The Peckinpaughs alleged in their amended motion for
judgment that the EIFS was defectively designed and applied,
causing undue amounts of moisture intrusion into the structure
of their home, without means of escape, in turn causing wood to
rot and decay.
and contribution. 2 In each count, Pulte sought recovery from
Parex for any damages that Pulte might be required to pay the
Peckinpaughs, plus costs, interest, and attorney's fees. 3
Pulte filed a demurrer to the Peckinpaughs' amended motion
for judgment, and Parex filed demurrers to the Peckinpaughs'
amended motion for judgment and to Pulte's cross-claim. The
demurrers were argued before the trial court on September 28,
2000. With respect to Pulte's demurrer to the Peckinpaughs'
amended motion for judgment, the trial court orally overruled
the demurrer and entered a written order embodying that ruling.
With respect to Parex's demurrer to the Peckinpaughs'
amended motion for judgment, the trial court sustained that
demurrer. With respect to Parex's demurrer to Pulte's cross-
claim, the trial court orally sustained the demurrer as to each
count, except the count for breach of implied warranty, which
the court took under advisement. Later in the day on September
28, 2000, the court entered an order sustaining the demurrer to
the count for implied warranty.
2
Originally, the cross-claim also contained a count for
breach of contract, but Pulte later abandoned that count.
3
Pulte makes the assertion on brief that "[o]ne item of
damage sought by [Pulte] is the lost value of the stucco goods
received from Parex . . . (i.e. the lost value of a defective
product). App. 13." However, this claim cannot be found on Page
13 of the appendix; that is a page in the Peckinpaughs' amended
motion for judgment related to an entirely different matter.
But the claim cannot be found in the cross-claim either.
2
On October 18, 2000, Pulte sought by motion to have the
trial court reconsider its action on the demurrers but was
unsuccessful in the effort. Pulte then settled the
Peckinpaughs' claim. It does not appear from the record, but
Pulte states on brief and Parex does not deny, that the
Peckinpaughs assigned to Pulte their claim against Parex. Pulte
stated during oral argument that it is not asserting any rights
as an assignee in this appeal. 4 .
An order sustaining Parex's demurrer to the counts in
Pulte's cross-claim for breach of express warranty,
indemnification, and contribution was entered on March 2, 2001.
The proceeding was terminated by a final order entered on May
20, 2002. Thereafter, we awarded Pulte this appeal.
Pulte has filed four assignments of error, attacking in
order the sustaining of the demurrer to the cross-claim counts
for breach of express warranty, breach of implied warranty,
indemnification, and contribution. The sole question for
decision is whether the trial court erred in sustaining Parex's
demurrer to Pulte's cross-claim.
I. Breach of Express Warranty
4
The owners of fourteen other homes built by Pulte filed
similar separate actions against Pulte and Parex for damages
caused by the use of EIFS. Those cases are not before us, but
Pulte states in a footnote to its brief that the cases "followed
a similar path, with the plaintiffs settling their claims with
[Pulte] and assigning their remaining claims against [Parex] to
[Pulte]," and that Pulte and Parex agreed that Pulte "would non-
3
Pulte argues that, in its cross-claim, it "pled its breach
of express warranty based on two separate theories." First, it
alleged in the cross-claim that, to the extent it approved the
use of EIFS on the Peckinpaughs' house, such "approval was based
upon the express oral or written warranties of Parex by way of
affirmations of fact, promises, descriptions, and/or use of
samples and/or models regarding the appearance, durability,
and/or water-resistance of [EIFS]." Second, Pulte alleged in
its cross-claim that it was entitled to recover as a direct
and/or intended beneficiary under written limited warranties
provided by Parex to the subcontractors and supplier.
Pulte maintains that, in sustaining Parex's demurrer, the
trial court engaged in "raw fact finding," erroneously
"determining that there was 'no express warranty'" and that "no
[written limited] warranties existed." For this error, Pulte
concludes, the judgment of the trial court should be reversed.
We disagree with Pulte. Before demurring to Pulte's cross-
claim, Parex filed a motion referencing the allegations in the
cross-claim with respect to oral and written express warranties
and craving oyer. The motion sought "any alleged contract or
agreement and any alleged express warranty forming the basis" of
the count for breach of express warranty in Pulte's cross-claim.
Pulte responded that it was "not yet in possession of any
suit its assigned claims against Parex in the other cases
pending the outcome of this appeal . . . ."
4
written contract entered into by Parex, nor any written warranty
issued by Parex" but would soon serve requests for documents
upon Parex, the subcontractors, and the supplier.
Hence, Pulte was left with the naked allegation in its
cross-claim that its approval of the use of the EIFS was based
upon the express oral or written warranties of Parex "by way of
affirmations of fact, promises, descriptions, and/or use of
samples and/or models regarding the appearance, durability,
and/or water-resistance of [EIFS]." This allegation merely
parroted the language of Code § 8.2-313, which sets forth
several legal bases for the creation of express warranties, and
amounted to no more than a legal conclusion. 5 The cross-claim
did not identify any "affirmations of fact, promises,
descriptions, and/or use of samples and/or models" purportedly
made by Parex. The allegations of the cross-claim were
insufficient, therefore, to state a claim for breach of express
warranty. Rule 1:4(d); see also Moore v. Jefferson Hospital,
Inc., 208 Va. 438, 440, 158 S.E.2d 124, 126 (1967) (motion for
5
Code § 8.2-313 provides in pertinent part as follows:
(1) Express warranties by the seller are created as
follows:
(a) Any affirmation of fact or promise made by the
seller to the buyer which relates to the goods and becomes
part of the basis of the bargain . . . .
(b) Any description of the goods which is made part of
the basis of the bargain . . . .
(c) Any sample or model which is made part of the
basis of the bargain . . . .
5
judgment must set forth the essential facts of a claim, not
conclusions of law).
II. Breach of Implied Warranty 6
Whether the trial court erred in sustaining Parex's
demurrer to Pulte's claim for breach of implied warranty turns
on whether the damages for the alleged breach are direct or
consequential. Parex contends the damages are consequential and
not recoverable in the absence of privity between Pulte and
Parex. Pulte does not claim privity exists but contends the
damages at issue are direct and recoverable despite the lack of
privity. 7
In its order of September 28, 2000, the trial court stated
that it was sustaining Parex's demurrer to Pulte's count for
breach of implied warranty "based upon the ruling in Beard
Plumbing and Heating, Inc. v. Thompson Plastics, Inc., et al.,
254 Va. 240, 491 S.E.2d 731 (1997)." There, we responded to a
question certified to us by the United States Court of Appeals
for the Fourth Circuit. The question read as follows:
Is privity required to recover economic loss under Va. Code
§ 8.2-715(2) due to the breach of the implied warranty of
merchantability, notwithstanding the language of Va. Code
§ 8.2-318?
254 Va. at 244, 491 S.E.2d at 733.
6
Pulte states it is the implied warranty of merchantability
that is at issue in this case.
7
Pulte did not purchase the EIFS from Parex. Rather, Pulte
engaged a subcontractor to apply the EIFS, the subcontractor
6
We said that to "answer this question, we must first
determine whether § 8.2-715(2) requires the existence of a
contract for the recovery of economic loss damages in breach of
warranty cases." 254 Va. at 244, 491 S.E.2d at 733. Section
8.2-715(2) provides as follows:
Consequential damages resulting from the seller's breach
include
(a) any loss resulting from general or particular
requirements and needs of which the seller at the time of
contracting had reason to know and which could not
reasonably be prevented by cover or otherwise[.]
We said that because the Court of Appeals had directed its
inquiry specifically to this section, we would assume the court
had concluded that the economic loss damages claimed by Beard
were consequential damages rather than direct damages. 254 Va.
at 244, 491 S.E.2d at 733. We also said that because § 8.2-
715(2)(a) contained the language, " 'at the time of
contracting,' " the statute "requires a contract between the
parties for the recovery of consequential economic loss damages
incurred as a result of a breach of warranty by the seller."
254 Va. at 245, 491 S.E.2d at 733-34.
We then turned to the question whether the provisions of
§ 8.2-318, also referenced in the certified question, supersede
the contract requirement of § 8.2-715(2)(a). Section 8.2-318
provides in pertinent part as follows:
obtained the EIFS through a supplier, and the supplier purchased
the EIFS from Parex.
7
Lack of privity between plaintiff and defendant shall be no
defense in any action brought against the manufacturer or
seller of goods to recover damages for breach of warranty,
express or implied, or for negligence, although the
plaintiff did not purchase the goods from the defendant, if
the plaintiff was a person whom the manufacturer or seller
might reasonably have expected to use, consume, or be
affected by the goods[.]
We stated that because § 8.2-715(2)(a) addresses in a
specific way the subject of the ability to raise the common law
requirement of privity as a defense and § 8.2-318 addresses the
subject in a general way, § 8.2-715(2)(a) prevails. We stated
further that "because § 8.2-715(2)(a) requires a contract
between the parties for recovery of consequential economic loss
damages in a claim for breach of the implied warranty of
merchantability, we answer the certified question in the
affirmative," 254 Va. at 246, 491 S.E.2d at 734, meaning that
privity is required to recover economic loss under Code § 8.2-
715(2) due to the breach of the implied warranty of
merchantability.
Here, Pulte argues that the trial court misapplied this
Court's opinion in Beard. That case dealt only with
consequential damages, not direct damages, Pulte maintains, yet
the trial court cited Beard in ruling that privity is required
not only to assert claims for consequential damages but also to
assert claims for direct or non-consequential damages.
Pulte cites a passage from the record to show that the
trial court made such a ruling. During oral argument on Parex's
8
demurrer on September 28, 2000, the trial judge stated he was
taking under advisement the question whether the damages in
question were direct or consequential and that he would "have an
answer on that this afternoon." One of the counsel then stated
that "the Beard case doesn't address whether the anti-privity
[rule] does apply to direct damages" and "[t]hat will have to be
part of your ruling." The judge replied: "You are right.
Thank you." This indicates, Pulte says, that when the trial
judge entered the order that afternoon sustaining Parex's
demurrer based upon Beard, such entry meant that the judge had
held the requirement of privity applicable to both consequential
and direct damages.
We do not read the record this way. Since the trial judge
cited Beard, it will be presumed that he had read our opinion,
understood that the case involved only consequential damages,
and applied our ruling correctly. Without some indication the
trial judge acted otherwise, we can only conclude that his
reference to Beard meant he found the damages in this case, like
those in Beard, to be consequential, not direct, and, as a
result, there could be no recovery for Pulte without privity
between it and Parex.
Pulte maintains that if the trial court did determine that
the damages at issue were consequential, its determination was
inappropriate because made at the demurrer stage and "this was
the wrong point in time." Pulte says that in its cross-claim it
9
specifically requested "direct damages under Section 8.2-714(2)
of the Virginia Code, together with consequential damages to the
extent available by law." This was sufficient, Pulte concludes,
to save its claim for direct damages from dismissal on demurrer,
and it was "entitled to have [its] day in court on that issue." 8
We disagree with Pulte. Whether damages are direct or
consequential is a matter of law for decision by the court.
R.K. Chevrolet, Inc. v. Hayden, 253 Va. 50, 56, 480 S.E.2d 477,
481 (1997). The trial court had before it Pulte's fourteen page
cross-claim with each count set forth fully, giving the court
all the information it needed to make an informed judgment on
Parex's demurrer. Furthermore, we cannot find from the appendix
where Pulte ever objected to the court's acting on the demurrer
on the ground it was "the wrong point in time," Rule 5:25, and
none of Pulte's assignments of error mentions the point, Rule
5:17(c).
With respect to Pulte's argument that its claim for direct
damages should have survived demurrer merely because it
requested such damages in its cross-claim, the trial court
during argument appropriately observed that just saying damages
are direct does not make them direct. The allegations of the
8
Code § 8.2-714(2) provides that "[t]he measure of damages for
breach of warranty is the difference at the time and place of
acceptance between the value of the goods accepted and the value
they would have had if they had been as warranted, unless
special circumstances show proximate damages of a different
amount."
10
cross-claim leading up to the request disclose the true nature
of Pulte's damages as consequential. These allegations read as
follows:
In the event [Pulte] is found liable to [the
Peckinpaughs] or otherwise incurs any loss whatsoever as a
result of [the Peckinpaughs'] allegations, [Pulte] is
entitled to recover from Parex for the breach of said
implied warranties insofar as Parex's breach would be the
factual and proximate cause of all or part of [Pulte's]
loss.
WHEREFORE, [Pulte] demands payment from Parex for any
damages that [Pulte] may be required to pay [the
Peckinpaughs] and for any other loss that [Pulte]
consequently may incur . . . .
In other words, Pulte would suffer damages from Parex's
breach of warranty only upon the happening of an intermediate
event, i.e., Pulte being found liable to the Peckinpaughs for
the damages they suffered. Hence, by their very nature, Pulte's
damages would be consequential rather than direct.
"The term 'consequential damages' is thus defined in
Black's Law Dictionary: 'Such damage, loss, or injury as does
not flow directly and immediately from the act of the party, but
only from some of the consequences or results of such act.' "
Washington & Old Dominion Ry. Co. v. Westinghouse Elec. & Mfg.
Co., 120 Va. 620, 634, 91 S.E. 646, 647 (1917) (quoting Black's
Law Dictionary 249 (2nd ed. 1910)).
Pulte's damages fit into this definition like a hand in a
glove. They did not flow directly and immediately from the act
of Parex's breach of warranty but from a consequence of the
11
Peckinpaughs' recovery of damages from Pulte. Indeed, Pulte
acknowledges that it is entitled to recover only on some "sort
of a pass through." Since such a detour is required to get from
Parex's breach of warranty to Pulte's damages, those damages
cannot be considered as direct but consequential, with a showing
of privity necessary for their recovery. There has not been
such a showing in this case.
III. Indemnification
Pulte states that its claim for indemnification "is based
on the theory that any liability incurred by [Pulte] 'would be
derivative, constructive, passive and/or secondary, while the
acts and omissions of [Parex] would be the active, direct and
primary cause of Plaintiffs' damages.' " Pulte says it is
entitled to implied or equitable indemnification because it is
called upon to discharge the obligation of Parex, the party
primarily liable for the Peckinpaughs' damages. Yet, Pulte
complains, the trial court denied its claim for implied or
equitable indemnity because the court erroneously relied upon
Virginia Elec. & Power Co. v. Wilson, 221 Va. 979, 277 S.E.2d
149 (1981), which states that "[t]he distinguishing feature of
indemnity is that it must necessarily grow out of a contractual
relationship." Id. at 981-82, 277 S.E.2d at 150.
Pulte maintains that the statement in Wilson is "pure
dicta," that the case involved contribution, not
indemnification. However, the statement is not dicta; the Court
12
stated that it had granted the appeal "to determine if Vepco
. . . has a right of contribution or indemnity against Wilson,"
id. at 980, 277 S.E.2d at 150 (emphasis added), the Court noted
that the third-party motion for judgment alleged "liability for
contribution or indemnity," id., 277 S.E.2d at 149 (emphasis
added), and the Court held that "no right of contribution or
indemnity could exist in favor of Vepco," id. at 982, 277 S.E.2d
at 150 (emphasis added).
However, Pulte argues, Wilson is not controlling because
this Court held in Carr v. The Home Ins. Co., 250 Va. 427, 463
S.E.2d 457 (1995), that equitable indemnification is viable
under Virginia law. We did say in Carr that we agreed that
"[e]quitable indemnification arises when a party[,] without
personal fault, is nevertheless legally liable for damages
caused by the negligence of another." Id. at 429, 463 S.E.2d at
458. But we also said that "[a] prerequisite to recovery based
on equitable indemnification is the initial determination that
the negligence of another person caused the damage." Id.
So, whether Wilson or Carr is applied, Pulte loses either
way. It cannot win under Wilson because the claim for
indemnification did not arise out of a contractual relationship,
and it cannot win under Carr because there has been no
determination that any act or omission of Parex caused the
damage to the Peckinpaughs' house.
IV. Contribution
13
Pulte initially said on brief that its claim to
contribution was based upon Code § 8.01-34, which provides that
"[c]ontribution among wrongdoers may be enforced when the wrong
results from negligence and involves no moral turpitude."
Countering, Parex stated that it cannot be deemed a joint
tortfeasor with Pulte and, therefore, Code § 8.01-34 is
inapplicable.
Apparently conceding the point, Pulte now says that, "even
if Parex were not a joint tortfeasor," this Court recognized in
Thweatt's Adm'r v. Jones, Adm'r, 22 Va. (1 Rand.) 328 (1823),
"that the common law right to contribution is not limited just
to joint tortfeasors, but rather that contribution runs to all
parties who 'are equally bound to bear a burthen.' 22 Va. at
334." Responding, Parex maintains that because the trial court
sustained its demurrer to "each and every claim" in the
Peckinpaughs' amended motion for judgment, there is no joint
liability for those claims and contribution will not lie.
We agree with Parex. In Virginia Elec. & Power Co. v.
Wilson, supra, we emphasized that " 'before contribution may be
had it is essential that a cause of action by the person injured
lie against the alleged wrongdoer from whom contribution is
sought.' " 221 Va. at 981, 277 S.E.2d at 150 (quoting Bartlett
v. Roberts Recapping, Inc., 207 Va. 789, 792-93, 153 S.E.2d 193,
196 (1967)). And in Gemco-Ware, Inc. v. Rongene Mold & Plastics
Corp., 234 Va. 54, 360 S.E.2d 342 (1987), we made it clear that
14
while contribution will lie if the injured party's cause of
action is not presently enforceable but was enforceable at some
time in the past, contribution is unavailable if the injured
party "never had an enforceable cause of action against the
target of the contribution claim." Id. at 58, 360 S.E.2d at 344
(emphasis added).
The trial court's action in sustaining Parex's demurrer to
the Peckinpaughs' amended motion for judgment was tantamount to
a holding that the Peckinpaughs never had an enforceable cause
of action against Parex. 9 Hence, there is no joint liability for
the Peckinpaughs' claims as between Pulte and Parex, and Pulte's
claim for contribution against Parex does not lie.
V. CONCLUSION
Finding no error in the rulings of the trial court, we will
affirm its judgment.
Affirmed.
9
In a last-ditch effort to demonstrate that the
Peckinpaughs have an enforceable cause of action against Parex,
Pulte says that the Peckinpaughs "alleged facts that supported
an unasserted claim against Parex for false advertising, in
violation of Va. Code § 18.2-216," and that the same allegations
in the fourteen companion cases withstood demurrers by Parex.
However, Pulte does not tell us what facts support the
unasserted claim, where they can be found in the record, or how
we can even consider, let alone find determinative, what
happened in cases not before us.
15