In David v. Hett, No. 98,419, 2011 Kan. LEXIS 657 (Kan. Dec. 30, 2011), the Supreme Court of Kansas held that the economic loss doctrine does not prohibit homeowners' claims against residential service contractors for poor workmanship. 

 In that case, the homeowners (the Davids) had entered an oral agreement with a contractor (Hett) regarding concrete and foundation work for the Davids' house. When they experienced "unusual settling" in their basement and garage about five years after construction had commenced, the Davids sued for breach of contract, negligence, fraud, fraudulent concealment and violation of the Kansas Consumer Protection Act and alleged, among other things, that Hett “negligently performed the work” and that he failed to complete the work as required by the plans, specifications and drawings (while the homeowners' claimed that that the contractor agreed to install 30-inch deep footings as described in the original plans, specifications and drawings, the contractor argued that he had informed the Davids that he had never used such deep footings and that he intended to pour 12-inch ones as was his custom and practice).  The court examined the pleadings to determine whether the gravamen of the Davids’ claims sounded in contract or tort and, while it was “very tempted” to find that the Davids had not alleged a colorable negligence claim, the court remanded the case for a specific finding regarding whether or not the Davids had sufficiently alleged an independent duty upon which a tort claim could have been based. 

More specifically, in clarifying that residential homeowners can allege both contract and tort claims for construction defects in Kansas, the court explained that, prior to David, Kansas state courts had consistently suggested that a contractor’s obligation to provide services in a workmanlike manner referred to an implied duty in contract as well as a separate and independent tort duty.  In 2004, however, the Kansas Court of Appeals, in Prendiville v.Contemporary Homes, Inc., 32 Kan. App. 2d 435, 83 P.3d 1257 (Kan. 2004), had dismissed a homeowner’s negligence claims in a residential construction case by applying the economic loss doctrine.  In Prendiville, the homeowner did not experience water infiltration through his home’s stucco siding until four years after his one-year warranty period had expired and, even though the homeowner expressly alleged that the contractor had negligently failed to provide building services in a workmanlike manner similar to the Davids, the appellate court had ruled that the rights and liabilities of parties to a residential construction transaction were governed by contract and express warranty.  The appellate court had also noted that it was for Kansas’ state legislature, not the courts, to decide whether any exceptions to the economic loss doctrine could be applied in the context of residential construction.  Because Prendiville had ignored prior Kansas cases allowing homeowners to sue a construction contractor in tort, contract, or both, the court in David overruled Prendiville’s application of the economic loss rule to homeowners’ claims against residential contractors as contrary to Kansas caselaw. 

Thanks to Christi Kudo Chock for contributing this post.