In the March 25, 2015 decision of Reilly Construction Co. v. Bachelder, Inc., the Iowa Court of Appeals applied defective construction principles to a dispute over construction of a pond on private land. The Bachelders wanted to add a pond to their property to be used for recreational purposes. Reilly Construction agreed to build the pond. The pond later had trouble holding water. It was determined that the pond was sited on poor soil that prevented the pond from holding water.
Bachelder asserted claims against Reilly Construction for defective construction of the pond. The claims were for breach of express warranty and breach of the implied warranties of good workmanship and fitness for a particular purpose. The trial court rejected all of those claims. Bachelder appealed.
The court first considered Bachelder’s contention that Reilly expressly warranted that the pond would hold water. Iowa law recognizes that an express warranty may form the basis for recovery in a construction contract, even an oral construction contract. An express warranty can be created without using the words “warranty” or “guaranty.” A plaintiff alleging an express warranty must show that the contractor made some distinct assertion of quality that would be relied on by the plaintiff. It has to be more than a mere statement of opinion. An express warranty is created by any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain.
The court determined that when Reilly agreed to construct a pond on Bachelder’s property, he was expressly warranting the pond would hold water. Bachelder reasonably understood Reilly’s agreement to move forward with the pond project as incorporating an affirmation that the finished product would indeed hold water. The fact that the designated location on Bachelder’s land was not a suitable place for a pond constituted a breach of Reilly’s warranty that he could build a pond at that site.
Turning to the implied warranty claims, the court noted that Iowa follows the judicial doctrine of implied warranties when reviewing agreements between a builder and a consumer. Iowa has long recognized in construction contracts an implied warranty that a building will be erected in a reasonably good and workmanlike manner and that it will be reasonably fit for the intended purpose. A good and workmanlike job is one that is done as a skilled builder or contractor should do it.
When a construction contract does not specify the manner in which the work is to be done, Iowa courts will imply the builder has agreed to perform in a workmanlike manner. An agreement to do work in a good and workmanlike manner has been interpreted to mean undertaking to produce definite and certain results. Thus a contractor undertakes not simply to do a good job of but to have the results of the labor operate with reasonable success in accomplishing its purposes.
Reilly’s lack of due care was not in the construction of the dam but in the approval of the site selected for the pond. The trial evidence demonstrated that the subsurface conditions at the site were unfavorable for ponding. A skilled workman with Reilly’s experience in digging ponds may not avoid the implied warranty of workmanlike construction by pointing to the soundness of the dam. Reilly’s miscalculation in not checking the soil conditions before digging, and thereby being unable to achieve the result of a pond that would hold water, constituted a breach of the implied warranty of workmanlike construction.
The court also found that Reilly breached the implied warranty of fitness for a particular purpose. Under that theory, when a contractor agrees to build a structure to be used for a particular purpose, there is an implied agreement that the structure when completed will be serviceable for the purpose intended. Three elements must be proved to succeed on this claim: (1) the builder must have reason to know the consumer’s particular purpose; (2) the builder must have reason to know the consumer is relying on the builder's skill or judgment to furnish appropriate services; and (3) the consumer must, in fact, rely upon the builder’s skill or judgment. The court ruled that Bachelder had proved all three elements of a claim for breach of implied warranty of fitness for a particular purpose.
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