An Overview of the Louisiana New Home Warranty Act
The Louisiana New Home Warranty Act (the Act) was enacted in 1986, with the expressed purpose of "providing clear, concise, and mandatory warranties for the purchasers and occupants of new homes..." LSA-R.S. 9:3141. There are many, and sometimes conflicting, decisions interpreting the provisions of the Act, and the Act has been amended at least 4 times since enactment. Depending on the jurisdiction where the new home was constructed, the warranties, limitations and exclusions provided by the Act may not be so clear.
General Overview of the Act
The Act is codified in LSA-R.S. 9:3142, et seq. It is intended to provide the "exclusive remedies, warranties and peremptive periods as between builder and owner relative to home construction." LSA-R.S.9:3150. The Act expressly states that "no other provisions of law relative to warranties and redhibitory vices and defects shall apply". LSA-R.S. 3150.
The warranties owed by a builder are provided in LSA-R.S. 3144. Generally, for a period of one year after the warranty commencement date, the builder warrants that "the home will be free from any defect..."; for a period of two years after the warranty commencement period, that "the plumbing, electrical, heating, cooling, and ventilating system exclusive of any appliance, fixture, and equipment, will be free from any defect...."; and, for a period of five years after the warranty commencement period, that the "home will be free from major structural defects...".
Definition of a "Defect" Under the Act
A "defect" under the Act is broadly defined. Defects include "noncompliance with building standards" or "workmanship" issues which "are not regulated by building standards." "Building standards" are likewise broadly defined, and include building, mechanical and electrical codes and "any additional performance standard ... which the builder may undertake to be in compliance." LSA-R.S. 9:3142(2). Performance standards include drawings and specifications and other criteria included in the construction contract. Thorn v. Caskey, 32,310 (La. App. 2 Cir. 9/22/99), 745 So.2d 653.
The Act Only Applies as Between the "Builder" and the "Owner"
The Act only applies to claims against the "builder" by an "owner" for construction related defects only. The "builder" is defined as "any person, corporation, partnership, limited liability company, joint venture, or other entity which constructs a home, or addition thereto..." LSA-R.S. 9:3143(1). An "owner" is "the initial purchaser of a home and any of his successors in title, heirs, invitees, or assigns ...". LSA-R.S. 9:3143(6). Even though the warranties provided by the Act automatically transfer to subsequent owners of the home, the transfer of the home does not extend the duration of the warranties. LSA-R.S. 9:3148.
Absent unusual circumstances, subcontractors and suppliers are not governed by the Act. See Nolan v. Roofing Supply, Inc., 36,403 (La. App. 2 Cir. 11/26/02), 833 So.2d 1026. They typically do not fall within the definition of "builder." Thus, it is improper to assert a claim or cause of action against a subcontractor or supplier under the Act. However, the "builder" remains responsible to the "owner" for defects in material or workmanship caused by its subcontractors, and even the subcontractors of the subcontractors. See Bynog v. M.R.L., LLC, 2005-122 (La. App. 3 Cir. 6/1/05), 903 So.2d 1197.
Even though the Act does not apply to subcontractors and suppliers, other provisions of the law may apply, including La.C.C.art. 2316, which provides:
Every person is responsible for the damage he occasions not merely by his act, but by his negligence, his imprudence, or his want of skill.
Or, in redhibition, La.C.C. art. 2520; or, liability for non-conforming work, La.C.C. art. 2769.
Despite the Exclusivity Provision of the Act, Not All Claims by
an Owner Against a Builder Are Governed by the Act
Despite the exclusivity language in the Act, not all claims by an owner against a builder are governed by the Act. Only claims for defects in the materials or workmanship issues are governed by the Act. For example, in Melancon v. Sunshine Construction, Inc., 1997-1167 (La. App. 1 Cir. 5/15/98), 712 So.2d 1011, the owner sued the builder for damage caused by vandals during construction - and prevailed; and, Leon v. Deters Custom Homes, Inc., 1997-0772 (La. App. 1 Cir. 4/8/98), 711 So.2d 346, wherein the owners sued the builder for damage caused to their new home which resulted from the builder's construction of a home on adjacent property - and prevailed; and, Thorn v. Caskey, supra, wherein the owner sued for breach of contract when the builder failed to complete the construction of the home.
Additionally, the Act only provides minimum required warranties. Nowhere in the Act is a builder prohibited from increasing his warranties to an owner. See Barnett v. Watkins, 2007 W.L. 2713329, 2006-2442 (La. App. 1 Cir. 9/19/07), - - So.2d - -. If a builder contractually assumes greater warranties and fails to fulfill its obligations, the owner may then have a cause of action for breach of contract outside the Act. Id. Causes of action asserted under this theory would necessarily require the owner to show that greater warranties were contractually assumed by the builder, and that the builder breached those warranties.
Not all warranties included in a construction contract will automatically result in a the owner having a claim or cause of action outside the exclusivity of the Act. See for example, Thibodaux v. Arthur Rutenberg Homes, Inc., 2004-1500 (La. App. 1 Cir. 12/22/05), 928 So.2d 80, in which the appellate court opined that warranties included in a construction contract which are not as broad, similar or "virtually identical" to those provided by the Act does not establish a cause of action for breach of contract or warranty, and any claim for defects are governed by the Act.
Miscellaneous Information Regarding the Act
The Act does not only provide warranties owed by the builder, but it sets forth certain requirements the owner must follow before he or she is entitled to recover damages. It also attempts to limit the damages an owner may recover; and, certain elements of the home and/or claims are not expressly excluded from coverage of the Act, unless contractually assumed by the builder.
Items that are excluded from the builder's warranty unless contractually assumed include, but are not limited to, fencing, landscaping, driveways, walkways, and other improvements not part of the home itself; insect damage; mold; work done by others not employed by the builder or its agents and subcontractors; and normal wear and tear. LSA-R.S. 9:3144(B). Additionally, an owner is required to take action to minimize their damages. LSA-R.S. 9:3144(B)((5).
An important requirement the owner must follow, which is subject to current debate in the appellate court system, is that before initiating an action under the Act, the owner is required to send written notice of the defect within 30 days of the warranty expiration period. Although not at issue in Carter v. Duhe, 2005-0930 (La. 1.18/2006), 921 So.2d 963, the Supreme Court evaluated this requirement and indicated that failure to provide timely notice of a defect is fatal to an owner's claim. The Louisiana Fourth Circuit, in Barrack v. J.F. Day & Co., Inc., 2007 WL 2735972, 2007-0907 (La. App. 4 Cir. 8/29/07), - - So.2d - -, seems, however, to have taken a different approach - and, it has held that providing the builder has "actual" notice of the alleged defects prior to the expiration of the warranty commencement period, then the owner's failure to provide written notice is not fatal to the owner's claim - and that only the damage made worse by the owner's failure to give written notice may be excluded from coverage.
Regarding the limitations imposed by the Act for defects, LSA-R.S. 9:3140 provides that when a builder violates the warranties imposed by the Act, "any affected owner shall have a cause of action against the builder for actual damages, including attorneys fees and court costs, arising out of the violation." Further, the costs to repair a single defect shall not exceed the cost to repair or cure the defect and the damages regarding all defects "shall not exceed the original purchase price of the home." Id. Like other provisions of the Act, this provision has been interpreted differently by several appellate jurisdictions. For example, the Louisiana Third Circuit Court of Appeal has opined that "mental anguish" and medical expenses are "actual damage" recoverable by the owner. Prestridge v. Elliott, 2003-94 (La.App. 3 Cir 6/4/03), 847 So.2d 789. But, the First and Second Circuits have concluded otherwise. See, Thibodaux v. Arthur Rutenberg Homes, Inc., et al, 928 So. 2d 80, 2004 1500 (La.App. 1 Cir. 12/22/05) in which the court held that "'in the absence of a clearly written contract to the contrary, the [Act] excludes non-pecuniary damage, 'that is, damage of a moral nature which does not affect a 'material' or tangible part of a person's patrimony.'" Similarly, in Allstate Enterprises, Inc. V. Brown, 907 So.2d 904, 39,467 (La.App. 2 Cir. 6/29/05), the Second Circuit noted "that the Browns' mental anguish and vexation with Allstate's performance is not a compensable, nonpecuniary loss." Accordingly, when defending a claim brought pursuant to the Act, it is important to know how the jurisdiction where the case is pending has interpreted the Act.
Written for The Legal Blueprint, 2007, Issue 3.
