In 2014, the Pennsylvania Supreme Court, in Conway v. The Cutler Group, 626 Pa. 660, 99 A.3d 67 (2014) held that the second purchaser of a previously inhabited home could not file suit against the builder of the home, asserting breach of the implied warranty of habitability and seeking contract damages. In Conway, the Court held that it was up to the Legislature to decide whether a second purchaser could sue in such circumstances, where there is no contractual privity between the parties.
In Conway, the plaintiffs did not include a claim sounding in negligence or some other tort-based theory of recovery. Now, the Pennsylvania Superior Court, whose decision was reversed by the Supreme Court in Conway, has determined that another set of second purchasers of a newly constructed home can go forward with a suit against the original home builder for defects in the construction of the home, based on alleged violations of the UTPCPL (Pennsylvania’s Unfair Trade Practices and Consumer Protection Law), including fraud. The name of the case is Adams v. Helling Builders, Inc., 2016 WL 4522278 (Pa. Super. August 29, 2016). According to plaintiffs, in Adams, the defendant home builders held themselves out as one of the “most reputable builders” in the area, with a corporate slogan, “Building a Higher Standard,” and made other representations, all of which were allegedly not true but on which they relied in purchasing their home — even though the representations were not made directly to them, i.e. there was “no technical privity.” According to the Superior Court, the “focus is on whether reliance on alleged misrepresentations [is] specially foreseeable” in such cases. And in the circumstances pleaded there, it was.
Adams is only at the pleading stage. Accordingly, watch should be kept on how it develops at the trial court level (Chester County) and if an appeal to the Supreme Court is eventually taken. If the courts allow Adams to go forward, homebuilders will need to evaluate their marketing practices to avoid a potential lawsuit along the same lines.