Persistence Pays Off for Chapel Hill Extended Warranty Plaintiffs

Chapel Hill, NCA couple from Chapel Hill who brought a Home Warranty Lawsuit against the contractor and a supplier of their custom-built home encountered a few setbacks in their litigation. But they stuck with it and late last year were rewarded with a partial victory by the North Carolina Supreme Court.

Plaintiffs George and Deborah Christie had hired a contractor - Hartley Construction - to build their custom home in Chapel Hill. The Christies chose an exterior coating manufactured by GrailCoat WorldWide to protect the exterior of their home from moisture. GrailCoat had advertised that its product would repel moisture and protect the structure for a period of 20 years.

However, that was not to be. After six years, enough water had leaked into the home to trigger rot in the walls, unbeknownst to the owners who soon faced a repair bill of some $120,000 to rehabilitate the walls and make the custom home structurally sound once more.

The Christies launched a home warranty insurance lawsuit against both the contractor and the supplier of the exterior coating in 2011 - but their initial case was doomed by the statute of repose observed by North Carolina, which holds that recovery for damages for defective or unsafe improvement to real property brought more than six years after the substantial completion of the improvement is barred, unless the defendant is guilty of fraud, or willful or wanton negligence.

The plaintiffs appealed. According to The Mecklenburg Times (12/31/14), the appellate court remained divided on the issue, but in the end affirmed the lower court’s ruling.

Undaunted, the plaintiffs took their case to the state Supreme Court and won a partial victory for their persistence.

According to The Mecklenburg Times, the Supreme Court dismissed the case against the contractor, but allowed the Christie’s Home Warranty Lawsuit against GrailCoat to move forward. In the court’s view, the presence of an express warranty and the alleged breach of such a warranty can supersede the state’s statute of repose, in spite of the case being brought beyond the six-year limit of the statute.

In a nutshell, GrailCoat warranted their product for 20 years. The Supreme Court held that any state statute should not bar the plaintiffs from seeking that such a warranty be duly honored.

“We see no public policy reason why the beneficiary of a statute of repose cannot bargain away, or even waive, that benefit,” wrote Justice Robert Edmunds, who penned the decision on behalf of the Court. “A supplier of improvements to real property who is willing in good faith to provide warranty that extends beyond six years should not be forced to offer a more limited warranty. The continuing popularity of extended warranties…indicates both that buyers are mindful of the duration of warranty coverage and that sellers are aware that extended warranties provide value.”

The Court held that the plaintiffs were influenced in their decision to purchase the product by the offer of an extended warranty totaling 20 years. To that end, it is unlawful for the vendor to vend a product with a 20-year warranty, all the while knowing that the statute of repose could limit that warranty to six years by default. Given that GrailCoat had freely entered into a contract with the plaintiffs, in so doing the supplier had in effect bargained away any protections afforded to them by the statute of repose.

The Court dismissed other claims against GrailCoat, but allowed the claim pertaining to the extended warranty to stand. The decision sends the case back to the original trial court to determine liability, if any, related to the extended warranty and whether or not the defendant was guilty of bad faith insurance.

The case is George Christie and Deborah Christie v. Hartley Construction, Inc.; GrailCoat Worldwide, LLC; and GrailCo, Inc., Case No. No. 359A13, in The Supreme Court Of North Carolina