PHOENIX -- Arizona homeowners don't have to buy directly from builders to sue them for defective work, the state Supreme Court ruled unanimously Tuesday in a case with implications for consumers and businesses alike.
"Innocent buyers of defectively constructed homes should not be denied redress on the implied warranty simply because of the form of the business deal chosen by the builder and vendor," Justice Andrew Hurwitz wrote in the unanimous ruling.
The ruling in a high-profile business case that attracted interest from industry, homeowner and consumer groups revives a lawsuit filed in connection with a Phoenix lofts project.
The Lofts at Fillmore Condominium Association had sued Reliance Commerce Construction in connection with alleged defects in the conversion of a commercial building into residences. A developer hired Reliance to do the building work, and buyers had contracts only with the developer.
The Supreme Court overturned rulings in which a trial judge and the Arizona Court of Appeals said the association couldn't sue Reliance.
The Court of Appeals' 2007 ruling said it did not find that either prior court rulings or "public policy" decided by the Legislature allowed the association to sue the builder absent a direct business relationship.
However, the Supreme Court said previous rulings made it clear that implied warranties for homes stem from construction of the homes, without regard to who sold them.
"In today's marketplace, as this case illustrates, there has been some shift from the traditional builder-vendor model to arrangements under which a construction entity builds the homes and a sales entity markets them to the public," Hurwitz wrote. "In some cases, the builder may be related to the vendor; in other cases, the vendor and the builder may be unrelated.
"But whatever the commercial utility of such contractual arrangements, they should not affect the homebuyer's ability to enforce the implied warranty against the builder," he added.
The ruling follows on previous Arizona rulings that said buyers are entitled to construction that is "in a good and workmanlike manner" and that subsequent buyers -- not just original buyer -- could sue over alleged defects.
Reliance argued that its potential liability shouldn't be expanded and that doing so could disrupt an important economic sector.
The Supreme Court rejected the argument, saying that builders can be sued by developers themselves and sued by home buyers.
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