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DAVIS v. TAZEWELL PLACE ASSOCIATES


DAVIS v. TAZEWELL PLACE
ASSOCIATES


September 12, 1997
Record No. 962102

JAMES E. DAVIS, ET AL.

v.

TAZEWELL PLACE ASSOCIATES

OPINION BY JUSTICE LEROY R. HASSELL, SR.
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK

Charles E. Poston, Judge
Present: Carrico, C.J., Compton, Stephenson,[1] Lacy,
Hassell, Keenan and Koontz, JJ.


In this appeal, we consider issues relating to statutory and
express warranties arising from the sale of real property.

This case was decided in the trial court on a motion for
summary judgment and, therefore, in accordance with familiar
principles, we will state the facts in the light most favorable
to the plaintiffs, the non-moving parties, "unless the
inferences are strained, forced, or contrary to reason." Bloodworth
v. Ellis, 221 Va. 18, 23, 267 S.E.2d 96, 99 (1980).

Plaintiffs, James E. and Delores Z. Davis, executed a sales
contract with defendant, Tazewell Place Associates, a Virginia
general partnership, for the construction and purchase of a
townhouse. The contract required that the defendant construct the
townhouse "in a good and workmanlike manner in substantial
accordance with the plans and specifications." On March 10,
1993, the plaintiffs and defendant closed on the contract, and
the plaintiffs received a deed to the property. The express
contractual warranty was not included in the deed.

Several months after the closing, the plaintiffs began to
notice structural changes and defects in the townhouse. They made
numerous complaints, but the defendant failed to correct or
remedy the defects to the plaintiffs’ satisfaction.

Subsequently, the plaintiffs retained an architect and
contractor to correct the defects. During the course of
correcting the defects, the plaintiffs learned that the design of
the townhouse was "flawed and inadequate; that the initial
construction and the corrective action taken by [the defendant
were] both inadequate and insufficient to cure the defects; that
the construction as well as the corrections and repairs attempted
by [the defendant] had not been designed and/or performed in a
competent and/or good and workmanlike manner, and that by virtue
of all of this, the defects were exacerbated and made
worse."

On April 28, 1995, the plaintiffs filed their motion for
judgment against the defendant alleging, inter alia,
a claim for breach of contract. The defendant filed responsive
pleadings and a motion for summary judgment asserting that it was
entitled to judgment because the plaintiffs’ action was barred by
the statute of limitations contained in Code ? 55-70.1(E) and that
the express warranty in the sales contract was not included in
the deed and, therefore, when the sales contract merged with the
deed at closing, the contractual warranty was extinguished. The
trial court agreed with the defendant and entered judgment on its
behalf. Plaintiffs appeal.

Code ? 55-70.1(B)
states in part:

"[I]n every contract for the sale of a new dwelling,
the vendor, if he is in the business of building or selling
such dwellings, shall be held to warrant to the vendee that,
at the time of transfer of record title or the vendee’s
taking possession, whichever occurs first, the dwelling
together with all its fixtures is sufficiently (i) free from
structural defects, so as to pass without objection in the
trade, (ii) constructed in a workmanlike manner, so as to
pass without objection in the trade, and (iii) fit for
habitation."

Code ? 55-70.1(E)
states in part:

"The warranty shall extend for a period of one year
from the date of transfer of record title or the vendee’s
taking possession, whichever occurs
first. . . . Any action for its breach shall
be brought within two years after the breach thereof."

The plaintiffs contend that the statute of limitations
contained in Code ? 55-70.1(E)
does not bar their cause of action. Continuing, the plaintiffs
assert that the defendant must have corrected any defect in the
townhouse for a period of one year from the date of transfer of
record title and that the statute of limitations did not begin to
run until the defendant breached its duty under the warranty by
failing to remedy the defects when requested to do so. The
defendant responds that any breach of warranty occurred at, or
before, closing and that, at the latest, the statute of
limitations began to run on the date of the closing. The
defendant says that the plaintiffs’ cause of action is barred
because their motion for judgment was filed more than two years
from the date of the closing.

We will not, as the defendant suggests, decide the meaning of
Code ?? 55-70.1(B)
and (E) by resorting to our prior decisions on statutes of
limitations or legal dictionaries. Rather, resolution of this
issue involves simple statutory construction, and we must apply
the plain language that the General Assembly chose to employ when
enacting these statutes.

We have repeatedly stated the principles of statutory
construction that we must apply when statutes, such as Code ?? 55-70.1(B) and (E),
are clear and unambiguous.

"’While in the construction of statutes the constant
endeavor of the courts is to ascertain and give effect to the
intention of the legislature, that intention must be gathered
from the words used, unless a literal construction would involve
a manifest absurdity. Where the legislature has used words of a
plain and definite import the courts cannot put upon them a
construction which amounts to holding the legislature did not
mean what it has actually expressed.’"

Barr v. Town & Country Properties, 240 Va.
292, 295, 396 S.E.2d 672, 674 (1990) (quoting Watkins
v. Hall, 161 Va. 924, 930, 172 S.E. 445, 447 (1934)); accord
Abbott v. Willey, 253 Va. 88, 91, 479 S.E.2d 528,
529 (1997); Weinberg v. Given, 252 Va. 221, 225,
476 S.E.2d 502, 504 (1996); Dominion Trust Co. v. Kenbridge
Constr. Co.
, 248 Va. 393, 396, 448 S.E.2d 659, 660 (1994).

At common law, a purchaser did not acquire an implied warranty
associated with the sale of a new dwelling. See Bruce
Farms
v. Coupe, 219 Va. 287, 289, 247 S.E.2d 400, 402
(1978). Code ?? 55-70.1(B)
and (E), which changed the common law, create certain statutory
warranties, provide a warranty period of one year from the date
of transfer or possession, and prescribe a statute of limitations
of two years from the date of the breach of the warranty. If the
buyer notifies the builder of any defects covered by the
statutory warranty within the one-year statutory warranty period,
and the builder fails to remedy such defects, then the builder
has breached its statutory duty, and the buyer is entitled to
file an action for damages against the builder within two years
from the date that the buyer notified the builder of the defect.

Here, the defendant, who had the burden of proving that the
plaintiffs’ cause of action was barred by the statute of
limitations, failed to establish that the plaintiffs filed their
motion for judgment more than two years from the date they
notified the defendant of any defects. Accordingly, the trial
court erred in holding that the plaintiffs’ statutory warranty
claim was barred by the statute of limitations.

Next, the plaintiffs argue that the trial court erred in
holding that the express warranty contained in the sales contract
between the parties was extinguished under "Virginia’s
merger doctrine." The plaintiffs contend that the doctrine
of merger does not apply to collateral agreements such as the
defendant’s contractual warranty that the townhouse would be
constructed in a good and workmanlike manner in substantial
accordance with the plans and specifications provided by the
defendants. Responding, the defendant argues that "[a]n
express warranty concerning the quality of construction of a
dwelling which is contained in the contract for sale, but which
is not set forth in the [d]eed for the subject property is
extinguished by the doctrine of merger recognized in Virginia
law." We disagree with the defendant.

In Sale v. Figg, 164 Va. 402, 180 S.E. 173
(1935), we considered whether an oral warranty alleged to have
been made contemporaneously with a real estate sale contract was
enforceable even though the warranty was not contained in the
deed. In Sale, the purchaser and seller of certain real
estate agreed, among other things, "that the house was
guaranteed for a year from the date of purchase against all
defects in workmanship and materials, except cracked walls."
Id. at 405, 180 S.E. at 175. Subsequently, a deed was
recorded which contained a general warranty and the usual
covenants of title, and the property was conveyed to the
purchaser. The deed did not contain the seller’s promise to
guarantee the workmanship on the house for a year. After the
purchaser had taken possession of the property, the purchaser
notified the seller of certain defects in the property, and the
seller failed to correct the defects to the purchaser’s
satisfaction.

The purchaser filed an action for damages against the seller,
and at the conclusion of the purchaser’s evidence, the trial
court struck the evidence because the deed made no reference to
the sales warranty. We reversed the judgment of the trial court
because the purchaser presented sufficient evidence which, if
true, showed that the seller agreed to perform certain collateral
undertakings which the purchaser and seller did not intend to be
merged in the deed of conveyance. Id. at 409-10, 180 S.E.
at 176-77.

In Miller v. Reynolds, 216 Va. 852, 223 S.E.2d
883 (1976), we observed that "’[i]n accordance with contract
law generally, all provisions in the contract are merged into the
deed when executed and delivered except those covenants which are
deemed to be collateral to the sale.’" Id. at 854,
223 S.E.2d at 885 (quoting G.W. Thompson on Real
Property
, 1963 Repl. Vol. 8A, ? 4458). We also stated
in Miller that:

"’In this regard it is to be observed that a contract
for a deed antedates the execution of the deed, and may, and
often does, contain many provisions which the execution of
the deed neither adds to nor takes away from. A deed is a
mere transfer of title, a delivery so to speak of the
subject-matter of the contract. It is the act of but one of
the parties, made pursuant to a previous contract either in
parol or in writing. It is not to be supposed that the whole
contract between the parties is incorporated in the deed made
by the grantor in pursuance of, or as the consummation of, a
contract for the sale of land. There are many things
pertaining to the contract which it is manifest are never
inserted in a deed. . . . The instrument of
conveyance may be complete for its purpose, which is to
declare and prove the fact of conveyance; yet very naturally
and commonly it is but a part execution of a prior contract,
and parol evidence is admissible to show the true
consideration for which it is given and all other parts of
the transaction, not inconsistent with the recitals in the
deed, provided the fact of conveyance is not affected by
it.’"

216 Va. at 855, 233 S.E.2d at 885, (quoting Collins
v. Lyon, 181 Va. 230, 245, 24 S.E.2d 572, 579 (1943)).

Applying these principles, we hold that the express warranty
contained in the contract between the plaintiffs and defendant
did not merge with the deed at closing and is enforceable. The
defendant’s warranty to construct the townhouse in a good and
workmanlike manner is collateral to the sale of the property and
did not qualify, or in any way affect, title to the land.
Furthermore, the agreement is not a matter with which a title
examiner would be necessarily concerned.

The defendant, relying upon Bruce Farms v. Coupe,
supra, argues that the express contractual warranty is
extinguished by the doctrine of merger. The defendant’s reliance
is misplaced. It is true, as defendant asserts, that in Bruce
Farms
, we stated: "’when a deed is executed and accepted
in performance of a prior preliminary contract, the deed, if
unambiguous in its terms, and unaffected by fraud or mistake,
must be looked to alone as the final agreement of the
parties.’" 219 Va. at 289, 247 S.E.2d at 401 (quoting
Woodson v. Smith, 128 Va. 652, 656, 104 S.E. 794,
795 (1920)). However, the defendant has failed to read this
quotation in the context of Bruce Farms and Woodson.

We did not consider in Bruce Farms whether a warranty
in a real estate sales contract merged with the deed upon
closing. Rather, we stated, "[t]he principal issue raised by
this writ is whether, as the trial court ruled, the sale of a
newly completed residence by a builder-vendor to the initial
homeowner carries an implied warranty." 219 Va. at 288, 247
S.E.2d at 400.

In Woodson, an irreconcilable conflict existed between
the antecedent real estate sales contracts which contained one
date relating to the delivery of possession and the deeds which
contained a different date specifying delivery of possession.
Resolving the clear conflict between the deeds and the contracts,
we stated that, "[t]he rule is that when a deed is executed
and accepted in performance of a prior preliminary contract, the
deed, if unambiguous in its terms, and unaffected by fraud or
mistake, must be looked to alone as the final agreement of the
parties." 128 Va. at 656, 104 S.E. at 795.

Additionally, the defendant fails to note the following
statement that we made in Woodson, which is equally
pertinent here:

"Doubtless many cases may arise in which distinct and
unperformed stipulations contained in a contract for sale
will not be merged in or discharged by deed where that
instrument is silent upon the subject of such stipulations.
In such cases there is no conflict between the contract and
the deed. But the deed must be regarded as the sole and final
expression of the agreement between the parties as to every
subject which it undertakes to deal with. All inconsistencies
between the prior contract and the deed must be determined by
the latter alone, and previous negotiations or agreements,
verbal or written, cannot be set up for the purpose of
contradicting it."

Id. Woodson is entirely consistent with our
holding today because this is indeed a case in which a distinct
stipulation is contained in the contract for sale, the deed is
silent upon such subject, and there is no conflict between the
contract and the deed.

Accordingly, we will reverse the judgment of the trial court
and remand this case for further proceedings consistent with this
opinion.

Reversed and remanded.

 

 

FOOTNOTES:

[1] Justice Stephenson participated
in the hearing and decision of this case prior to the effective
date of his retirement on July 1, 1997.

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