Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Pa. Super.: Privity not required in complaint against homebuilder, (Aug 30, 2016)

By Michael Menzhuber, J.D., LL.M.

A Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) suit by two homebuyers against a homebuilder, arising from the discovery of moisture and mold in their home which had been built by the homebuilder, was reinstated by the Pennsylvania Superior Court in Pittsburgh. The court found that the trial court erred in basing its decision on privity rather than on whether reliance on the homebuilder’s alleged misrepresentations as to its superior building quality were specially foreseeable (Adams v. Hellings Builders, Inc., August 29, 2016, Olson, J.).

A trial court dismissed Christopher and Margaret Adams’s UTPCPL claim against Hellings Builders, Inc., which stemmed from the discovery of possible moisture infiltration and the presence of mold in their home due to defective stucco installation. Although the couple alleged that they relied on Hellings’ specific representations of its superior building quality in purchasing the home, the trial court found a lack of privity because the couple was not the direct purchaser of the property and Hellings made no direct representations to them.

The court determined that the trial court erred as a matter of law in dismissing the couple’s complaint on the grounds that Hellings made no representations directly to them. Although technical privity was no longer a requirement to assert a cause of action for fraud or violation of the UTPCPL, the trial court consistently referred to this fact. However, the focus should have been on whether reliance on the alleged misrepresentation was specially foreseeable, in the court’s view.

In this case, the couple asserted that they justifiably relied upon Hellings’ alleged misrepresentations in purchasing the home. The court found justifiable reliance because the couple alleged that: (1) Hellings generally represented that it was a reputable builder touting superior quality and construction; and (2) in the sale’s agreement with the original purchasers of the home, Hellings stated that the home would include, but did not, a three-coat stucco system according to International Residential Code standards. Upon inspection by an expert, the stucco system did not comply with those standards and they suffered damages as a result. These allegations were sufficient to support their UTPCPL claim, the court concluded.

The case is No. 1407 EDA 2015.

Attorneys: Gavin P. Lentz (Bochetto & Lentz PC) for Christopher Adams. Michael D. Shaffer (Shaffer & Gaier, LLC) for Hellings Builders, Inc.

Companies: Hellings Builders, Inc.

Cases: StateUnfairTradePractices PennsylvaniaNews