This new Texas Supreme Court case is an important one in residential construction cases. First, it states than the existence of an express warranty preempts a common law claim for breach of implied warranty. Additionally, it reaffirms that building owners are held to strict standards in terms of investigating problems when it comes to the statute of limitations.

            In Gonzales v. Southwest Olshan Foundation Repair Co., LLC d/b/a Olshan Foundation Repair Co., Gonzales hired a plumber to repair water leaks under her foundation and hired Olshan to repair the foundation problems the leaks had caused.  The foundation repair contract included a lifetime transferrable warranty on the work requiring Olshan to adjust the foundation due to settling.  After the repair, in April 2002, Gonzales noticed doors not locking, windows not opening, and new cracks appearing in previously repaired walls. There were apparently additional leaks, and Olshan repaired those and leveled the foundation in August 2003 and again in October 2003.

            An Olshan employee reportedly told Gonzales in 2003 that the repair job was not being performed properly.  There were other subsequent visits by Olshan.  In May 2006, Gonzales noticed more cracking, and an engineer determined Olshan had improperly repaired the foundation.  Gonzales then sued Olshan, and the jury found that Olshan breached the implied warranty of good and workmanlike repairs and violated the DTPA.  The jury failed to find Olshan breached its express warranty.  The court of appeals reversed, concluding the implied warranty of good and workmanlike repairs is actionable only under the DTPA, and thereby subject to the two-year statute of limitations, holding that Gonzales should have discovered Olshan’s acts at the latest in October 2003.

            In the Supreme Court, Olshan argued that its express warranty superseded the implied warranty of good and workmanlike repair, and the jury’s finding that Olshan did not breach the express warranty precludes liability on warranty claims.  The Supreme Court agreed.  The court found that there is in existence an implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner, and this warranty may not be waived or disclaimed.  The implied warranty attaches to a contract if the parties’ agreement does not provide for the quality of the services to be rendered.

            In this case, the parties’ agreement included 2 warranty provisions: (1) Olshan would adjust the foundation for the life of the home due to settling and (2) will perform all necessary work in good and workmanlike manner.  This language superseded the implied warranty, as it “sufficiently describes the manner, performance or quality” of how Olshan and the foundation are to perform.  The jury found that Olshan did not breach the express warranty. 

            The Supreme Court also dismissed the DTPA claim due to the two-year statute of limitations.  Olshan repaired the foundation in July 2001, and in April 2002, Gonzales noticed cracks in walls and sticking windows and doors.  Olshan re-leveled the foundation in October 2003 and an Olshan employee told her they were doing a poor repair job and she should hire an attorney.  This conclusively established she knew of the injury on October 2003, but did not file suit until July 2006.  Thus, the claims are time barred. 

             In sum, the Supreme Court found that the implied warranty of good and workmanlike repair is a “gap filler” warranty that implies terms into a contract that fails to properly enumerate them.  The warranty cannot be disclaimed outright, but it can be superseded if the express warranty specifically describes the manner, performance, or quality of the services.  Further, because Gonzales learned of her injury directly from Olshan more than two and a half years before she filed suit, her DTPA claim was barred by limitations.  The court of appeals’ judgment was affirmed.


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