What happens when you buy a new home — expecting it to be, well, new, and therefore problem-free — but you experience nothing but problems after moving in? This is exactly what happened when four families in Philadelphia purchased their residential homes in 2015. Noticing water infiltration problems upon moving in, they notified the builder and developer: Ninetieth Street Development and Streamline Solutions, LLC (“builder and developer”). Only, the builder and developer refused to do anything about it.
So now what?
Keep in mind, Pennsylvania’s Home Improvement and Consumer Protection Law (“HICPA“) only pertains to home renovation or remodeling: it does not govern the construction of new homes. That said, the builder and developer offered a warranty. But when the home owners asserted a claim under the warranty, the builder and developer only provided minimal, “band-aid”-type repairs, then declined to cover any of the harm, blaming the homeowners for causing the harm themselves and/or waiting to assert the warranty.
The Need For Litigation Over New Home Construction
Not every case should be litigated. But when innocent home owners purchase their homes subject to a warranty — and the seller blames the homeowner for problems that fall within the warranty — then it’s a time for war. A warranty is a special promise. The failure to honor a warranty — by, for example, offering contrived excuses for refusing to honor it — starts to sound like fraud. That’s exactly what the Plaintiffs in the above case alleged against Ninetieth Street Development and Streamline Solutions, LLC.
Is the Claim for a Construction Defect for Breach of Contract or Fraud?
Pennsylvania follows the “gist of the action” doctrine, which forces a plaintiff to decide whether to sue for breach of contract, or fraud (also called a “tort”), but not both. This is important, because a claim for breach of contract only limits the recovery to only the benefit of his bargain, meaning, he gets the goods (or house) he paid for — meaning the cost to fix or replace — but not an award for his attorney fees (unless the contract provides for it). A claim for fraud, on the other hand, allows the victim to recover an award for his harm (the cost to fix damages) plus attorney fees plus punitive damages.
Here, evidently, the judge saw fraud as the “gist” of the action, and allowed the Plaintiff to make a claim for punitive damages, attorney fees, and damages to repair the property.
The Construction Defect Case Goes to the Jury
The jury found that the builder and developer had acted intentionally and fraudulently. Their verdict was for $3.2M. Only one third of the verdict was for actual damages (the cost to fix the property). The remaining 2/3 was for punitive damages. The trial judge, however, has yet to rule on how Pennsylvania Unfair Trade Practices and Consumer Protection law (“UTPCPL“) would apply. Plus, an appeal is likely. That said, any builder or developer should take notice: blaming the new home purchaser for defects discovered shortly after the sale is a risky strategy, to put it mildly. T
Conclusions About New Construction Defect Claims
Buying a new home is attractive for many not wanting to update an older dwelling. But in truth, purchasing any home — even a brand new one — comes with risk of needing “work” done. A home can pass an inspection relative to the purchase, but new materials can suddenly fail, even without “negligence.” Or, the builder could have cut corners and concealed potential defects. The truth is, not every “defect” involves “fraud” or “deceit.” Contact a Pittsburgh lawyer at our firm to evaluate any potential claim against a home builder or contractor.
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Contact a Pittsburgh attorney at our firm to learn more about any construction or renovation defect of a new home or commercial property.
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