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Supreme Court Reverses Holding that Implied Warranty of Habitability Extends to Subsequent Purchasers.

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In Conway v. Cutler Group, Inc., 57 A.3d 155 (Pa. Super 2012), the PennsylvaniaSuperior Court held for the first time that a subsequent buyer of a home, who has no contractual privity with the contractor, can nonetheless assert claims against the contractor for beach of the implied warranty of habitability. The Superior Court found that the implied warranty is a creature of public policy, and accordingly no privity of contract is necessary. (For a comment on the Superior Court opinion, see: Superior Court

The Pennsylvania Supreme Court accepted the case on appeal, and recently reversed the Superior Court, finding that privity of contract is necessary to assert a claim based on the implied warranty of habitability, except in very limited circumstances.

In Conway v. The Cutler Group, Inc., 99 A.3d 67 (2014), the Pennsylvania Supreme Court refused to extend the implied covenant of habitability to subsequent purchasers not in privity of contract with the builder/contractor. The Court stated: "we decline to extend the implied warranty of habitability beyond its firm grounding in contract law. Under the facts of this case, where the builder-vendor sold a new home to a purchaser-user, we hold that an action for breach of the implied warranty requires contractual privity between the parties."

The Court based its decision on, among other things, a review of case law from various other states, and in support of its holding, stated: "After careful review of the arguments of the parties, the comments of amici, and the reasoned decisions of our sister states on this issue, we conclude that the question of whether and/or under what circumstances to extend an implied warranty of habitability to subsequent purchasers of a newly constructed residence is a matter of public policy properly left to the General Assembly." Therefore the Court agreed with the Superior Court, which it ultimately reversed, on the point that the extension of the implied warranty to those without contractual privity would require an application of "public policy", and then concluded that "in the domain of economic and social controversies, a court were, under the guise of the application of the doctrine of public policy, in effect to enact provisions which it might consider expedient and desirable, such action would be nothing short of judicial legislation, and each such court would be creating positive laws according to the particular views and idiosyncrasies of its members. Only in the clearest cases, therefore, may a court make an alleged public policy the basis of judicial decision." Citing, Mamlin v. Genoe (City of Philadelphia Police Beneficiary Ass'n), 17 A.2d 407, 409 (Pa.1941); see also Weaver v. Harpster, 975 A.2d 555, 563 (Pa.2009) (citing Mamlin ).

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