Case of the Week - Yazd v. Woodside Homes

One of my goals on this blog (and time will tell if I achieve it) will be to summarize a court case of note. There are lots of interesting cases out there; many from Utah, and many more from other states. I'll try to get in at least one a week, focussing on more timely cases, and leading, eventually, to a summary of all of the leading Utah community association cases.

This week's case is a recent case that doesn't deal directly with community associations, but that should be of significant benefit to Utah associations. It's a construction defect case that affirms that the Utah appelate courts are back on the right track in construction law.

The case, Yazd v. Woodside Homes Corporation, 2006 UT 47, dealt with a home built on collapsible soil. Evidence showed that the seller of the soil, the LDS Church, had purchased the property for construction of a church, but abandoned those plans and sold the property when a soils report revealed the presence of the unsuitable soil. The report did not evaluate the suitability of the soil for residential construction. Woodside bought the property; the sales contract said that the report would be made available. Woodside claimed it never saw the report.

Woodside had its own soil study prepared after it bought the lots, and their study also affirmed the presence of collapsible soil. Woodside came up with a plan that was intended to compensate for these conditions. They then sold the lot, but they did not disclose the contents of the reports.

The buyers moved in in September 1995, and the settling became evident within the following year. When they tried to sell the home in 2002, their purchaser discovered the need for major repairs.

The Court evaluated the duty owed by evaluating the nature of duties as established by law. "Legal duty," the court stated, "is the product of policy judgments applied to relationships. The Court noted that they had never explicitly recognized that a duty is owed to buyers of new homes by builder-contractors.

However, in Yazd, the Court explicitly extended the duty of a builder-contractor in a direct action for recovery brought by a home buyer. The Court noted "Modern home construction requires a high degree of knowledge and expertise, including knowledge of soil conditions....the disparity in skill and knowledge between home buyers and builder-contractors leads buyers to rely on the builder-contractor's expertise."

The Court's opinion is significant, because it seems to obliterate, indirectly, the holding in the earlier opinion of American Towers , a prior holding by the Court which had seemingly precluded associations from bringing claims against builders with whom they had no privity.

Barring any major developments in the next week, the American Towers case will be reviewed next week.