Present: Carrico, C.J., Compton, Stephenson, * Lacy,
Hassell, Keenan and Koontz, JJ.
JAMES E. DAVIS, ET AL.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 962102 September 12, 1997
TAZEWELL PLACE ASSOCIATES
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Charles E. Poston, Judge
In this appeal, we consider issues relating to
statutory and express warranties arising from the sale of
real property.
This case was decided in the trial court on a motion
for summary judgment and, therefore, in accordance with
familiar principles, we will state the facts in the light
most favorable to the plaintiffs, the non-moving parties,
"unless the inferences are strained, forced, or contrary to
reason." Bloodworth v. Ellis, 221 Va. 18, 23, 267 S.E.2d
96, 99 (1980).
Plaintiffs, James E. and Delores Z. Davis, executed a
sales contract with defendant, Tazewell Place Associates, a
Virginia general partnership, for the construction and
purchase of a townhouse. The contract required that the
defendant construct the townhouse "in a good and workmanlike
manner in substantial accordance with the plans and
specifications." On March 10, 1993, the plaintiffs and
defendant closed on the contract, and the plaintiffs
*
Justice Stephenson participated in the hearing and
decision of this case prior to the effective date of his
retirement on July 1, 1997.
received a deed to the property. The express contractual
warranty was not included in the deed.
Several months after the closing, the plaintiffs began
to notice structural changes and defects in the townhouse.
They made numerous complaints, but the defendant failed to
correct or remedy the defects to the plaintiffs'
satisfaction.
Subsequently, the plaintiffs retained an architect and
contractor to correct the defects. During the course of
correcting the defects, the plaintiffs learned that the
design of the townhouse was "flawed and inadequate; that the
initial construction and the corrective action taken by [the
defendant were] both inadequate and insufficient to cure the
defects; that the construction as well as the corrections
and repairs attempted by [the defendant] had not been
designed and/or performed in a competent and/or good and
workmanlike manner, and that by virtue of all of this, the
defects were exacerbated and made worse."
On April 28, 1995, the plaintiffs filed their motion
for judgment against the defendant alleging, inter alia, a
claim for breach of contract. The defendant filed
responsive pleadings and a motion for summary judgment
asserting that it was entitled to judgment because the
plaintiffs' action was barred by the statute of limitations
contained in Code § 55-70.1(E) and that the express warranty
in the sales contract was not included in the deed and,
therefore, when the sales contract merged with the deed at
closing, the contractual warranty was extinguished. The
trial court agreed with the defendant and entered judgment
on its behalf. Plaintiffs appeal.
Code § 55-70.1(B) states in part:
"[I]n every contract for the sale of a new
dwelling, the vendor, if he is in the business of
building or selling such dwellings, shall be held
to warrant to the vendee that, at the time of
transfer of record title or the vendee's taking
possession, whichever occurs first, the dwelling
together with all its fixtures is sufficiently (i)
free from structural defects, so as to pass
without objection in the trade, (ii) constructed
in a workmanlike manner, so as to pass without
objection in the trade, and (iii) fit for
habitation."
Code § 55-70.1(E) states in part:
"The warranty shall extend for a period of
one year from the date of transfer of record title
or the vendee's taking possession, whichever
occurs first. . . . Any action for its breach
shall be brought within two years after the breach
thereof."
The plaintiffs contend that the statute of limitations
contained in Code § 55-70.1(E) does not bar their cause of
action. Continuing, the plaintiffs assert that the
defendant must have corrected any defect in the townhouse
for a period of one year from the date of transfer of record
title and that the statute of limitations did not begin to
run until the defendant breached its duty under the warranty
by failing to remedy the defects when requested to do so.
The defendant responds that any breach of warranty
occurred at, or before, closing and that, at the latest, the
statute of limitations began to run on the date of the
closing. The defendant says that the plaintiffs' cause of
action is barred because their motion for judgment was filed
more than two years from the date of the closing.
We will not, as the defendant suggests, decide the
meaning of Code §§ 55-70.1(B) and (E) by resorting to our
prior decisions on statutes of limitations or legal
dictionaries. Rather, resolution of this issue involves
simple statutory construction, and we must apply the plain
language that the General Assembly chose to employ when
enacting these statutes.
We have repeatedly stated the principles of statutory
construction that we must apply when statutes, such as Code
§§ 55-70.1(B) and (E), are clear and unambiguous.
"'While in the construction of statutes the
constant endeavor of the courts is to ascertain
and give effect to the intention of the
legislature, that intention must be gathered from
the words used, unless a literal construction
would involve a manifest absurdity. Where the
legislature has used words of a plain and definite
import the courts cannot put upon them a
construction which amounts to holding the
legislature did not mean what it has actually
expressed.'"
Barr v. Town & Country Properties, 240 Va. 292, 295, 396
S.E.2d 672, 674 (1990) (quoting Watkins v. Hall, 161 Va.
924, 930, 172 S.E. 445, 447 (1934)); accord Abbott v.
Willey, 253 Va. 88, 91, 479 S.E.2d 528, 529 (1997); Weinberg
v. Given, 252 Va. 221, 225, 476 S.E.2d 502, 504 (1996);
Dominion Trust Co. v. Kenbridge Constr. Co., 248 Va. 393,
396, 448 S.E.2d 659, 660 (1994).
At common law, a purchaser did not acquire an implied
warranty associated with the sale of a new dwelling. See
Bruce Farms v. Coupe, 219 Va. 287, 289, 247 S.E.2d 400, 402
(1978). Code §§ 55-70.1(B) and (E), which changed the
common law, create certain statutory warranties, provide a
warranty period of one year from the date of transfer or
possession, and prescribe a statute of limitations of two
years from the date of the breach of the warranty. If the
buyer notifies the builder of any defects covered by the
statutory warranty within the one-year statutory warranty
period, and the builder fails to remedy such defects, then
the builder has breached its statutory duty, and the buyer
is entitled to file an action for damages against the
builder within two years from the date that the buyer
notified the builder of the defect.
Here, the defendant, who had the burden of proving that
the plaintiffs' cause of action was barred by the statute of
limitations, failed to establish that the plaintiffs filed
their motion for judgment more than two years from the date
they notified the defendant of any defects. Accordingly,
the trial court erred in holding that the plaintiffs'
statutory warranty claim was barred by the statute of
limitations.
Next, the plaintiffs argue that the trial court erred
in holding that the express warranty contained in the sales
contract between the parties was extinguished under
"Virginia's merger doctrine." The plaintiffs contend that
the doctrine of merger does not apply to collateral
agreements such as the defendant's contractual warranty that
the townhouse would be constructed in a good and workmanlike
manner in substantial accordance with the plans and
specifications provided by the defendants. Responding, the
defendant argues that "[a]n express warranty concerning the
quality of construction of a dwelling which is contained in
the contract for sale, but which is not set forth in the
[d]eed for the subject property is extinguished by the
doctrine of merger recognized in Virginia law." We disagree
with the defendant.
In Sale v. Figg, 164 Va. 402, 180 S.E. 173 (1935), we
considered whether an oral warranty alleged to have been
made contemporaneously with a real estate sale contract was
enforceable even though the warranty was not contained in
the deed. In Sale, the purchaser and seller of certain real
estate agreed, among other things, "that the house was
guaranteed for a year from the date of purchase against all
defects in workmanship and materials, except cracked walls."
Id. at 405, 180 S.E. at 175. Subsequently, a deed was
recorded which contained a general warranty and the usual
covenants of title, and the property was conveyed to the
purchaser. The deed did not contain the seller's promise to
guarantee the workmanship on the house for a year. After
the purchaser had taken possession of the property, the
purchaser notified the seller of certain defects in the
property, and the seller failed to correct the defects to
the purchaser's satisfaction.
The purchaser filed an action for damages against the
seller, and at the conclusion of the purchaser's evidence,
the trial court struck the evidence because the deed made no
reference to the sales warranty. We reversed the judgment
of the trial court because the purchaser presented
sufficient evidence which, if true, showed that the seller
agreed to perform certain collateral undertakings which the
purchaser and seller did not intend to be merged in the deed
of conveyance. Id. at 409-10, 180 S.E. at 176-77.
In Miller v. Reynolds, 216 Va. 852, 223 S.E.2d 883
(1976), we observed that "'[i]n accordance with contract law
generally, all provisions in the contract are merged into
the deed when executed and delivered except those covenants
which are deemed to be collateral to the sale.'" Id. at
854, 223 S.E.2d at 885 (quoting G.W. Thompson on Real
Property, 1963 Repl. Vol. 8A, § 4458). We also stated in
Miller that:
"'In this regard it is to be observed that a
contract for a deed antedates the execution of the
deed, and may, and often does, contain many
provisions which the execution of the deed neither
adds to nor takes away from. A deed is a mere
transfer of title, a delivery so to speak of the
subject-matter of the contract. It is the act of
but one of the parties, made pursuant to a
previous contract either in parol or in writing.
It is not to be supposed that the whole contract
between the parties is incorporated in the deed
made by the grantor in pursuance of, or as the
consummation of, a contract for the sale of land.
There are many things pertaining to the contract
which it is manifest are never inserted in a
deed. . . . The instrument of conveyance may be
complete for its purpose, which is to declare and
prove the fact of conveyance; yet very naturally
and commonly it is but a part execution of a prior
contract, and parol evidence is admissible to show
the true consideration for which it is given and
all other parts of the transaction, not
inconsistent with the recitals in the deed,
provided the fact of conveyance is not affected by
it.'"
216 Va. at 855, 233 S.E.2d at 885, (quoting Collins v. Lyon,
181 Va. 230, 245, 24 S.E.2d 572, 579 (1943)).
Applying these principles, we hold that the express
warranty contained in the contract between the plaintiffs
and defendant did not merge with the deed at closing and is
enforceable. The defendant's warranty to construct the
townhouse in a good and workmanlike manner is collateral to
the sale of the property and did not qualify, or in any way
affect, title to the land. Furthermore, the agreement is
not a matter with which a title examiner would be
necessarily concerned.
The defendant, relying upon Bruce Farms v. Coupe,
supra, argues that the express contractual warranty is
extinguished by the doctrine of merger. The defendant's
reliance is misplaced. It is true, as defendant asserts,
that in Bruce Farms, we stated: "'when a deed is executed
and accepted in performance of a prior preliminary contract,
the deed, if unambiguous in its terms, and unaffected by
fraud or mistake, must be looked to alone as the final
agreement of the parties.'" 219 Va. at 289, 247 S.E.2d at
401 (quoting Woodson v. Smith, 128 Va. 652, 656, 104 S.E.
794, 795 (1920)). However, the defendant has failed to read
this quotation in the context of Bruce Farms and Woodson.
We did not consider in Bruce Farms whether a warranty
in a real estate sales contract merged with the deed upon
closing. Rather, we stated, "[t]he principal issue raised
by this writ is whether, as the trial court ruled, the sale
of a newly completed residence by a builder-vendor to the
initial homeowner carries an implied warranty." 219 Va. at
288, 247 S.E.2d at 400.
In Woodson, an irreconcilable conflict existed between
the antecedent real estate sales contracts which contained
one date relating to the delivery of possession and the
deeds which contained a different date specifying delivery
of possession. Resolving the clear conflict between the
deeds and the contracts, we stated that, "[t]he rule is that
when a deed is executed and accepted in performance of a
prior preliminary contract, the deed, if unambiguous in its
terms, and unaffected by fraud or mistake, must be looked to
alone as the final agreement of the parties." 128 Va. at
656, 104 S.E. at 795.
Additionally, the defendant fails to note the following
statement that we made in Woodson, which is equally
pertinent here:
"Doubtless many cases may arise in which
distinct and unperformed stipulations contained in
a contract for sale will not be merged in or
discharged by deed where that instrument is silent
upon the subject of such stipulations. In such
cases there is no conflict between the contract
and the deed. But the deed must be regarded as
the sole and final expression of the agreement
between the parties as to every subject which it
undertakes to deal with. All inconsistencies
between the prior contract and the deed must be
determined by the latter alone, and previous
negotiations or agreements, verbal or written,
cannot be set up for the purpose of contradicting
it."
Id. Woodson is entirely consistent with our holding today
because this is indeed a case in which a distinct
stipulation is contained in the contract for sale, the deed
is silent upon such subject, and there is no conflict
between the contract and the deed.
Accordingly, we will reverse the judgment of the trial
court and remand this case for further proceedings
consistent with this opinion.
Reversed and remanded.