Defective construction claim dismissed: Economic loss rule bars recovery for negligence; privity rule bars recovery for breach of warranties.

 Long Trail House Condominium Association, v. Engelberth Construction, Inc., 2012 VT 80 (Skoglund, J.)

Plaintiff Condominium Association appeals from the trial court's order granting summary judgment to defendant general contractor Engelberth Construction, Inc. on the Association’s complaint that Engelberth in constructing the project was negligent and breached express and implied warranties. The Association argues that the court erred by: (1) applying the economic loss rule to bar its negligence claim; and (2) dismissing its breach of warranty claim because of lack of privity. We affirm.

The economic loss rule "prohibits recovery in tort for purely economic losses." EBWS,LLC v. Britly Corp., 2007 VT 37, ¶ 30, 181 Vt. 513, 928 A.2d 497. The rule serves to maintain a distinction between contract and tort law. Id. We require actual injury, not simply risk of harm, before one can recover in negligence. Privity, or lack thereof, is not the determining factor. The rule's application does not turn on whether the parties had the opportunity to allocate risks. The existence of a duty, apart from a contractual duty, is a prerequisite to recovery of economic damages in a negligence case. That critical element is lacking in the instant case.  The "professional services" exception to the economic loss doctrine does not apply.  Foreseeability alone is not sufficient to warrant the imposition of a professional duty. We have twice rejected the notion that contractors owed a special duty of care for purposes of this exception, separate and apart from their contractual obligations.  Engelberth presented itself as a contractor and it operated as a contractor, not as a provider of a specialized professional service. 

Our case law plainly contemplates the existence of contractual privity before a breach of implied warranty claim can be raised. The Association's warranty remedy lies against the entity that sold it the condominium units and implicitly warranted through the sale that the units were built in a good and workmanlike manner and that they were suitable for habitation. Its remedy does not lie against Engelberth.

Note: Only two regular members of the Court sat on this case, Skoglund and Burgess, JJ.. These two joined by Davenport, Supr. JJ., formed the majority, with Kupersmit, Supr. JJ., and Johnson, J. (Ret.), dissenting.

SCOVT Note:  As  to the  Court's statement, "that the existence of a duty is a prerequisite to recovery of economic damages in a negligence case," at ¶ 18 see Restatement (Third) of Torts: Liability for Economic Harm  § 1 (rejecting a broader articulation of the economic loss rule) 

Torts: implied warranty of habitability does not protect tenant’s automobile from falling ice and snow.

Weiler v. Hooshiari,  2011 VT 16 (Burgess, J.)

 Landlord appeals from a judgment in favor of his former tenant finding that landlord violated the implied warranty of habitability when heavy snow and ice fell from the roof of tenant’s residence onto her parking place, destroying her car.  We hold that the implied warranty of habitability does not protect tenant’s automobile and therefore reverse.

The warranty of habitability promises that the landlord “will deliver over and maintain, throughout the period of the tenancy, premises that are safe, clean and fit for human habitation.”  9 V.S.A. § 4457 (a); Hilder, 144 Vt. at 159, 478 A.2d at 208.. No jurisdiction extends the warranty of habitability beyond essential sanitation and tenant safety. The warranty does not extend to loss of personal property.

In Favreau v. Miller, we declined to extend the implied warranty of habitability to personal injuries.  156 Vt. 222, 591 A.2d 68 (1991).  Favreau recognized that remedies at law already exist for personal injuries and that “the concepts of tort and negligence law provide the more straightforward way to describe the respective duties and liabilities of the parties.”  Id. at 229, 591 A.2d at 73.  We specifically declined to “do away” with the principles of tort-based claims for bodily injury in favor of recovery of all damages stemming from a breach of lease regardless of fault.  Id. at 230, 591 A.2d at 73.  

The precepts of Favreau are applicable here. Claims for personal injury or property damage sound in tort, typically in an action for negligent breach of a duty of care, and depend on comparative degrees of fault.  The Restatement confirms that, in addition to a breach of the implied warranty of habitability, a tenant must show the landlord “failed to exercise reasonable care to repair the condition,” a negligence standard.  Restatement (Second) of Property: Landlord and Tenant § 17.6.  

Plaintiff did not plead negligence.