In a case of first impression, the Rhode Island Supreme Court this term held that a homeowner has (1) ten years following the substantial completion of an improvement to real property to discover a latent defect and (2) three years following the discovery of the latent defect or three years of the date when, in the exercise of due diligence, the homeowner should have discovered such latent defects, to bring a claim for breach of implied warranty. Mondoux v. Vanghel, No. 2018-219-Appeal (PC 16-3438), 2021 WL 264542, at *1 (R.I. Jan. 27, 2021).
While the Supreme Court previously had imposed the same limitation for subsequent homeowners, in Mondoux it extended its prior holding to original homeowners that purchased their homes from the builder.
In Mondoux, the plaintiff-homeowners purchased a waterfront home in Glocester, Rhode Island directly from the defendant-builder in 1997. Fifteen years later, in 2012, the homeowners discovered water infiltration and extensive damage on the lakeside-facing wall of their home, which they believed had been caused by a recent hurricane. The water damage was confirmed by a detailed investigation in 2013, through which the homeowners learned it would be necessary to remove and replace the entire lakeside-facing wall of the house. The homeowners further learned that the water damage was due to the defendant’s improper workmanship and use of improper materials.
In 2016 the homeowners filed suit and, in response, the defendant-builder argued that the homeowners’ claim for breach of the implied warranty of habitability was barred by the statute of repose, R.I.G.L. § 9-1-29, and time-barred under the Court’s holding in Nichols v. R.R. Beaufort & Associates, Inc., 727 A.2d 174 (R.I. 1999). The homeowners countered that because the breach of the implied warranty of habitability count sounded in contract, the general statute of limitations for civil actions under R.I.G.L. § 9-1-13 applied. The homeowners also asserted, with respect to claims involving improvements to real property, § 9-1-13 “begins to run when the evidence of the injury to property * * * is sufficiently significant to alter the injured party to the possibility of defect.” Thus, the homeowners maintained that the statute of limitations did not begin to accrue until 2013, when the homeowners were alerted to their injury.
A hearing justice granted summary judgment in favor of defendant on all counts of the homeowners complaint, finding, inter alia, that the Supreme Court’s holding in Nichols barred the homeowners’ claim based on the implied warranty of habitability.
On appeal, the homeowners argued that § 9-1-29 (the repose statute) served only as a bar to untimely tort claims and that § 9-1-13 (the general statute of limitations for civil actions) applied to claims of contract-based breach of implied warranty. The homeowners also maintained that Nichols supported their argument that the discovery rule applied to their contract-based breach of implied warranty claim. Finally, the plaintiff argued that Nichols imposed a ten-year limitation on claims for breach of the implied warranty of habitability, but that the limitation did not apply to claims against the original builder – only to sales between parties other than the original builder.
In response, the defendant argued that the ten-year limitation in Nichols should act as a bar to the homeowners’ claim. Moreover, the defendant argued that drawing a distinction between original and subsequent homeowners would eliminate the protection that the General Assembly sought to provide to builders when it enacted the statute of repose.
The Court ultimately affirmed the judgment of the Superior Court and held that (1) “any homeowner has a period of ten years following the substantial completion of improvement to real property to discover a latent defect,” and (2) a claim for breach of implied warranty will be considered timely if filed within three years of the date of discovery of the latent defect, or within three years of the date when, in the exercise of due diligence, the homeowner should have discovered such defects.
While the Court acknowledged that case law with respect to claims for breach of the implied warranty of habitability is “somewhat fog-shrouded” and that neither Nichols nor § 9-1-29 was directly controlling, the Court found Nichols’s reasoning instructive. Most notably, the Court determined that the underlying public policy reflected in both Nichols and § 9-1-29 (the repose statute), that a builder’s “exposure to potential liability must come to an end at some definite point in time,” was equally applicable to claims brought by an original homeowner. Thus, the Court extended its holding in Nichols to apply to original homeowners, finding “no reason” to distinguish between original and subsequent homeowners with respect to how long a claim for breach of the implied warranty of habitability remains actionable.