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KATHLEEN KEYES v. GUY BAILEY HOMES

JULY 27, 1983

KATHLEEN KEYES
v.
GUY BAILEY HOMES, INC.



EN BANC

PRATHER, JUSTICE, FOR THE COURT:

This appeal results from a decision of the Circuit Court of the First Judicial District of Hinds County, which sustained a motion to dismiss submitted by the appellee, Guy Bailey Homes, Inc. Kathleen Keyes, the appellant, had previously filed a two-count complaint. One count charged the appellee with a breach of an implied warranty in the construction of her home, while the other count alleged negligence in construction of the house on the part of the appellee. The motion to dismiss was based on a lack of

privity between the parties.

 The pleadings in this case revealed that the appellee, Guy Bailey Homes, Inc., constructed a house in Jackson which was first sold to Troy Gerald Fulgram on August 7, 1975. In turn, Fulgram sold the house to the appellant Keyes on June 1, 1979. After moving into the house, Keyes allegedly discovered a latent defect, which consisted of a cracked foundation. She then filed this lawsuit.

 I.

 The issue before the Court is whether a builder-vendor of a home may be held liable on the basis of negligence or the breach of an implied warranty to a second or subsequent purchaser of a home. Under existing Mississippi case law, privity of contract between the builder and the purchaser of a permanent structure on real estate is a prerequisite to a viable cause of action. After lengthy consideration, we now believe that that rule must be abolished for it promotes an injustice against remote purchasers and it is not based on sound reasoning.

 The pertinent Mississippi law is stated in three cases. First, in Oliver v. City Builders, Inc., 303 So. 2d 466 (Miss. 1974), a divided court ruled that the doctrine of strict liability could not be employed to impose liability against a builder-vendor in favor of remote purchasers of a permanent structure on real estate for the faulty construction of the foundation. Five judges did agree, however, that, as between a builder-vendor of a new home and his vendee, there is an implied warranty that the home was built in a workmanlike manner and suitable for habitation. Id. at 470. See Recent Decisions, Courts - Strict Liability in Tort for the Builder-Vendor for Property Damage Caused by Structural Defects, 46 Miss. L.J. 510 (1975).

 Subsequently, in Brown v. Elton Chalk, Inc., 358 So. 2d 721 (Miss. 1978), Justice Walker, relying solely on the Oliver case above, clearly stated the narrow grounds upon which a purchaser of a home could recover against a builder-vendor for breach of an implied warranty. A party filing such a suit must allege in his declaration (1) that the house when purchased was new, and (2) that the plaintiff was the first purchaser. Id. at 722.

 The most recent Mississippi case concerning this issue is Hicks v. Greenville Lumber Co., Inc., 387 So. 2d 94 (Miss. 1980). Once again, relying solely on Mississippi precedent, the Court ruled that a second or remote purchaser could not

 recover, on the basis of strict liability or implied warranty, for a latent defect in a home against the builder-vendor. *fn1

 II.

 The current trend in other jurisdictions extends protection to remote purchasers who have no contractual relationship or privity with the builder-vendor. For example, where a remote purchaser can prove negligence on the part of the builder-vendor which results in foreseeable injury or loss to the remote purchaser, a remote purchaser has been entitled to recovery for damages. See, e.q. Terlinde v. Neely, 271 S.E.2d 768 (1980); Newman v. Tualatin Development Co., Inc., 287 Or. 47, 597 P.2d 800 (1979); Simmons v. Owens, 363 So. 2d la2 (Fla.App. 1978); Cohurn v. Lenox Homes, Inc., 173 Conn. 567, 378 A.2d 599 (1977); Wright v. Creative Corp., 30 Colo.App. 575, 498 P.2d 1179 (1972); Annot., 10 A.L.R. 4th. 385 (1981). And, the privity barrier has also been removed in recent cases based on the implied warranty theory. See, e.g., Hermes v. Staiano, 181 N.J. Super. 424, 437 A.2d 925 (1981); Wagner Constr. Co., Inc. v. Noonan, 403 N.E.2d 1144 (Ind.App. 1980); Moxley v. Laramie, 600 P.2d 733 (Wyo. 1979). In light of this new suhstantial trend of authority, we think it worthwhile to reexamine our past rulings on this issue.

 III.

 The purchase of a home is quite frequently the most important and expensive investment that a family makes. Yet, most purchasers simply do not have the knowledge or expertise necessary to discover many defects. They must instead rely ...


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