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Melody Home Mfg. Co. v. BarnesTex.,1987.
Supreme Court of Texas.
MELODY HOME MANUFACTURING COMPANY, Petitioner,
v.
Lonnie BARNES et ux., Respondents.
No. C-5508.
Nov. 4, 1987.
Purchasers of mobile home brought action against manufacturer for breach of implied warranty that repairs would be done in a good and workmanlike manner. The 352nd District Court, Tarrant County, John Street, J., entered judgment in favor of owners, and manufacturer appealed. The Fort Worth Court of Appeals, Second Supreme Judicial District, 708 S.W.2d 600,affirmed. The Supreme Court, Spears, J., held that: (1) implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner is available to consumers suing under the Deceptive Trade Practices Act; (2) expert testimony was not required for jurors to determine that failure to connect washing machine drain would not be considered good and workmanlike repairs; and (3) warranty of good and workmanlike repairs may not be waived or disclaimed.
Affirmed.
Campbell, J., filed a concurring opinion in which Wallace, J., joined.
Gonzalez, J., filed a concurring opinion in which Hill, C.J., joined.
Mauzy, J., filed a concurring opinion.
West Headnotes
[1]
Antitrust and Trade Regulation 29T 
141
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(A) In General
29Tk139 Persons and Transactions Covered Under General Statutes
29Tk141 k. Consumers, Purchasers, and Buyers; Consumer Transactions. Most Cited Cases
(Formerly 92Hk32 Consumer Protection)
Two requirements to establish consumer status under the Deceptive Trade Practices Act are that the plaintiff has sought or acquired goods or services by purchase or lease and that the goods or services purchased or leased form the basis of complaint. V.T.C.A., Bus. & C. § 17.45(4).
[2]
Antitrust and Trade Regulation 29T 147
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(A) In General
29Tk139 Persons and Transactions Covered Under General Statutes
29Tk147 k. Contractual Relationships and Breach of Contract in General. Most Cited Cases
(Formerly 92Hk32 Consumer Protection)
Absence of cash transfer is not determinative of consumer status under the Deceptive Trade Practices Act, as standing as consumers is established in terms of plaintiff's relationship to the transaction, not plaintiff's contractual relationship with the defendant. V.T.C.A., Bus. & C. § 17.45(4).
[3]
Antitrust and Trade Regulation 29T 141
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(A) In General
29Tk139 Persons and Transactions Covered Under General Statutes
29Tk141 k. Consumers, Purchasers, and Buyers; Consumer Transactions. Most Cited Cases
(Formerly 92Hk6 Consumer Protection)
Purchasers of mobile home were “consumers” for purposes of Deceptive Trade Practices Act with respect to repairs undertaken by the manufacturer following the sale. V.T.C.A., Bus. & C. § 17.45(4).
[4]
Contracts 95 205.15(1)
95 Contracts
95II Construction and Operation
95II(C) Subject-Matter
95k205 Warranties
95k205.15 Implied Warranties
95k205.15(1) k. In General. Most Cited Cases
Implied warranties are created by operation of law and are grounded more in tort than in contract.
[5]
Contracts 95 205.15(1)
95 Contracts
95II Construction and Operation
95II(C) Subject-Matter
95k205 Warranties
95k205.15 Implied Warranties
95k205.15(1) k. In General. Most Cited Cases
Implied warranty arises by operation of law when public policy so mandates.
[6]
Sales 343 262.5
343 Sales
343VI Warranties
343k262.5 k. Implied Warranties in General. Most Cited Cases
Implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner is available to consumers suing under the Deceptive Trade Practices Act. V.T.C.A., Bus. & C. § 17.41 et seq.
[7]
Contracts 95 205.15(4)
95 Contracts
95II Construction and Operation
95II(C) Subject-Matter
95k205 Warranties
95k205.15 Implied Warranties
95k205.15(4) k. Workmanship and Workmanlike Performance. Most Cited Cases
“Good and workmanlike” is that quality of work performed by one who has the knowledge, training, or experience necessary for successful practice of a trade or occupation and performed in manner generally considered proficient by those capable of judging such work.
[8]
Contracts 95 205.15(4)
95 Contracts
95II Construction and Operation
95II(C) Subject-Matter
95k205 Warranties
95k205.15 Implied Warranties
95k205.15(4) k. Workmanship and Workmanlike Performance. Most Cited Cases
Repairmen are not required to guarantee the results of their work but those who repair or modify existing tangible goods or property are required to perform those services in a good and workmanlike manner.
[9]
Contracts 95 312(5)
95 Contracts
95V Performance or Breach
95k312 Acts or Omissions Constituting Breach in General
95k312(5) k. Warranties. Most Cited Cases
Products Liability 313A 71
313A Products Liability
313AII Actions
313Ak71 k. In General. Most Cited Cases
In strict liability cases, focus is on product and not on the conduct of the producer, whereas inquiry in breach of warranty case concerns performance of the service provider.
[10]
Contracts 95 322(3)
95 Contracts
95V Performance or Breach
95k322 Evidence
95k322(3) k. Weight and Sufficiency in General. Most Cited Cases
Breach of implied warranty of workmanlike repairs on mobile home was within common knowledge of laymen and expert testimony was not necessary for jury to find that failure to connect a washing machine drain was not good and workmanlike repair.
[11]
Contracts 95 205.30
95 Contracts
95II Construction and Operation
95II(C) Subject-Matter
95k205 Warranties
95k205.30 k. Exclusion or Limitation by Contract, Express Warranty, or Refusal to Warrant. Most Cited Cases
Implied warranty that repair or modification services of existing tangible goods or property will be performed in a good and workmanlike manner may not be waived or disclaimed. V.T.C.A., Bus. & C. § 17.42; Vernon's Ann.Texas Civ.St. art. 5221f, §§ 1 et seq., 18.
[12]
Antitrust and Trade Regulation 29T 128
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(A) In General
29Tk126 Constitutional and Statutory Provisions
29Tk128 k. Purpose and Construction in General. Most Cited Cases
(Formerly 92Hk3 Consumer Protection)
Antitrust and Trade Regulation 29T 205
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(C) Particular Subjects and Regulations
29Tk204 Warranties and Service Contracts
29Tk205 k. In General. Most Cited Cases
(Formerly 92Hk3 Consumer Protection)
Deceptive Trade Practices Act should be liberally construed and applied to promote its underlying purposes of protecting consumers against breaches of warranty and providing efficient economical procedures to secure such protection. V.T.C.A., Bus. & C. § 17.44.
[13]
Sales 343 427
343 Sales
343VIII Remedies of Buyer
343VIII(D) Actions and Counterclaims for Breach of Warranty
343k427 k. Right of Action. Most Cited Cases
Breach of implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner is actionable under the discretionary damages provision of the Deceptive Trade Practices Act. V.T.C.A., Bus. & C. § 17.50(a).
*351 M. Ward Bailey, M. Ward Bailey & Associates, P.C., Fort Worth, for petitioner.
Timothy G. Chovanec, Priddy & Chovanec, Fort Worth, Joe K. Longley, Mark L. Kincaid, Longley & Maxwell, Austin, for respondents.
ON MOTION FOR REHEARING
SPEARS, Justice.
The court's opinion of June 17, 1987 is withdrawn and the following is substituted therefor.
This is a Deceptive Trade Practices-Consumer Protection Act (DTPA) implied warranty case. Lonnie and Donna Barnes sued Melody Home Manufacturing Company under the DTPA for breach of an implied warranty that repairs would be done in a good and workmanlike manner and for other DTPA violations. The jury found that Melody Home knowingly breached this implied warranty and awarded discretionary damages. The trial court rendered judgment for the Barneses and the court of appeals affirmed the judgment of the trial court. 708 S.W.2d 600. We affirm the judgment of the court of appeals.
In 1979, the Barneses ordered a modular pre-fabricated home from Melody Home. Their home was delivered in May 1980. After the Barneses moved in, they continually experienced puddles and dampness inside the house. Over two years after moving in, they discovered that a sink was not connected to the drain in one of the interior walls.
The continual leak caused severe damage to the home's sheetrock, insulation, and flooring. The Barneses told Melody Home about the problem. Workmen from Melody Home came out twice, but their efforts were unsatisfactory, and additional damages were caused by the repair. The workmen cut and tore linoleum while attempting to repair the home. Moreover, they failed to reconnect the washing machine drain, causing the house to flood with resulting damage to the floors, cabinets, and carpeting.
The Barneses then filed this DTPA implied warranty suit against Melody Home. The jury found that Melody Home failed to construct the home in a good and workmanlike manner. The jury further found that Melody Home breached its implied warranty to repair in a good and workmanlike manner and that this breach was knowing. Based on its finding that Melody Home knowingly breached the implied warranty, the jury awarded $5,000 in discretionary damages under Tex.Bus. & Com.Code Ann. § 17.50(b)(1) (Vernon Supp.1987).
Melody Home appealed the award of DTPA discretionary damages. The court of appeals held that the sale of a service carries with it the implied warranty that the service will be performed in a skillful and workmanlike manner and affirmed the judgment of the trial court.
[1] Melody Home first challenges the Barneses' status as consumers with regard to the repairs. DTPA plaintiffs must qualify as consumers, as that term is defined in Tex.Bus. & Com.Code Ann. § 17.45(4) (Vernon Supp.1987), FN1 to maintain a private cause of action under section 17.50 of the Act. Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706 (Tex.1983). We have recognized at least two requirements to establish DTPA consumer status. First, the plaintiffs must have sought or acquired goods or services by purchase or *352 lease. Sherman Simon Enter., Inc. v. Lorac Service Corp., 724 S.W.2d 13, 15 (Tex. 1987); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539 (Tex.1981). Second, the goods or services purchased or leased must form the basis of the complaint. Sherman Simon Enter., Inc., 724 S.W.2d at 15; Cameron, 618 S.W.2d at 539.
FN1. Section 17.45(4) provides in pertinent part: “ ‘Consumer’ means an individual ... who seeks or acquires by purchase or lease, any goods or services....”
[2] It is uncontroverted that the Barneses purchased goods and thus were “consumers” when they originally bought the home. Melody Home's attempts to repair the defects in the home were, by definition, “services” under the DTPA. Section 17.45(2) defines “services” as “work, labor or service purchased ... for use including services furnished in connection with the sale or repair of goods.” (emphasis added). Melody Home argues that the Barneses were not “consumers” with regard to the repair services because they did not purchase them with cash. See, e.g., Exxon Corp. v. Dunn, 581 S.W.2d 500 (Tex.Civ.App.-Dallas 1979, no writ). The absence of a cash transfer is not determinative because DTPA plaintiffs establish their standing as consumers in terms of their relationship to a transaction, not by their contractual relationship with the defendant. Flenniken, 661 S.W.2d at 707. The question then is whether the Barneses “purchased” the repair services within the meaning of the Act.
[3] In Humber v. Morton, 426 S.W.2d 554 (Tex.1968), this court held that a builder/vendor impliedly warrants to a purchaser that a building constructed for residential use has been constructed in a good and workmanlike manner and is suitable for human habitation. Evans v. J. Stiles, Inc., 689 S.W.2d 399, 400 (Tex.1985). When the Barneses discovered the defect in their home, they had the option to immediately sue for money damages or give Melody Home the opportunity to cure the problem. The parties' choices to allow and make repairs relate back to the original purchase and were a continuation of that transaction.
The Barneses did not lose their consumer status by allowing Melody Home to attempt to correct the problem and by deferring their lawsuit. Under Melody Home's argument the Barneses would be penalized by losing their consumer status because they allowed repairs. The law encourages dispute resolution prior to litigation. See Tex.Bus. & Com.Code Ann. § 17.50A (Vernon Supp.1987). Accordingly we hold that the Barneses “purchased” the repair services.
[4] Melody Home next contends that repair services do not carry with them an implied warranty that they will be performed in a good and workmanlike manner. Implied warranties are created by operation of law and are grounded more in tort than in contract. La Sara Grain v. First Nat'l Bank of Mercedes, 673 S.W.2d 558, 565 (Tex.1984); Humber, 426 S.W.2d at 556. A number of courts of appeals decisions have expressly or impliedly recognized such an implied warranty.FN2 In addition, several articles, comments, and notes have concluded that the doctrine of implied warranty should apply to services.FN3 Despite*353 its importance, this court has never ruled on this issue. But see Dennis v. Allison, 698 S.W.2d 94, 96 (Tex.1985) (Ray, J., dissenting).
FN2. See Thrall v. Renno, 695 S.W.2d 84, 87 (Tex.App.-San Antonio, 1985, writ ref'd n.r.e.) (brick patio construction); Diversified Human Resources Group, Inc. v. PB-KBB, Inc., 671 S.W.2d 634, 636 (Texas App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.) (employee furnishing); Griffin v. Eakin, 656 S.W.2d 187, 190 (Tex.App.-Austin 1983, writ ref'd n.r.e.) (book printing); Holifield v. Coronado Bldg. Inc., 594 S.W.2d 214, 215 (Tex.App.-Houston [14th Dist.] 1980, no writ) (house repair); Import Motors Inc. v. Matthews, 557 S.W.2d 807, 809 (Tex.Civ.App.-Austin 1977, writ ref'd n.r.e.) (car repair); Boman v. Woodmansee, 554 S.W.2d 33, 34 (Tex.Civ.App.-Austin 1977, no writ) (swimming pool installation); Trends, Inc. v. Stafford-Lowdon Co., 537 S.W.2d 778, 782 (Tex.Civ.App.-Fort Worth 1976, writ ref'd n.r.e.) (printing); Mercedes Dusting Services, Inc. v. Evans, 353 S.W.2d 894, 896 (Tex.Civ.App.-San Antonio 1962, no writ) (airplane repair).
FN3. See D. Bragg, P. Maxwell, J. Longley, Texas Consumer Litigation § 5.04 (2d ed. 1983); Greenfield, Consumer Protection in Service Transactions-Implied Warranties and Strict Liability in Tort, 1974 Utah L.Rev. 661 (1974); Norman, Consumer Service Transactions, Implied Warranties and a Mandate for Realistic Reform, 11 Loy.U.Chi.L.J. 405 (1980); Singal, Extending Implied Warranties Beyond Goods: Equal Protection for Consumers of Services, 12 New Eng. 859 (1977); Comment, Expansion of Implied Warranty Coverage Under the DTPA: Service Contracts, 17 Tex.Tech L.Rev. 917 (1986); Comment, Guidelines for Extending Implied Warranties to Service Markets, 125 U.Pa.L.Rev. 365 (1976); Note, The Application of Implied Warranties to Predominantly “Service” Transactions, 31 Ohio St.L.J. 580 (1970); Note, Continuing the Common Law Response to the New Industrial State: The Extension of Enterprise Liability to Consumer Services, 22 U.C.L.A.L.Rev. 401 (1974). But see, Sales, The Service-Sales Transaction: A Citadel Under Assault, 10 St. Mary's L.J. 13 (1978); Note, Breach of Implied Warranty Under DTPA as Applied to Service Contracts: Diversified Human Resources Group, Inc. v. PB-KBB, Inc., 37 Baylor L.Rev. 549 (1985).
[5] An implied warranty arises by operation of law when public policy so mandates. Dennis v. Allison, 698 S.W.2d at 95; Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex. 609, 164 S.W.2d 828, 829 (1942). Unlike the situations in Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77, 78 (1977) and La Sara Grain, 673 S.W.2d at 565, consumers of services do not have the protection of a statutory or common law implied warranty scheme. The issue presented in this case is whether the protection of Texas consumers requires the utilization of an implied warranty that repair services of existing tangible goods or property will be performed in a good and workmanlike manner as a matter of public policy. Nobility Homes of Texas, Inc., 557 S.W.2d at 78.
During the last thirty-five years, the United States has shifted from a goods to a services oriented economy.FN4 With this change has come a marked decrease in the quality of services.FN5 Similar quality control problems and consumer protection interests led this court and the legislature to apply the theory of implied warranty to products, goods, and new houses. See Humber, 426 S.W.2d at 562; McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787, 789 (Tex.1967); Jacob E. Decker & Sons, 164 S.W.2d at 832; see also Tex.Bus. & Com.Code Ann. § 2.314 (Vernon 1968).
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Commerce Dept., Statistical Abstract of the United States 431 (106th ed. 1986). See generally, K. Albrecht & R. Zemke, Service America! Doing Business in the New Economy (1985).
The service GNP percentage has been estimated as high as 68% by some economists. See Quinn and Gagnon, Will Services Follow Manufacturing into Decline?, Harvard Bus.Rev., Nov.-Dec. 1986 at 95. In fact, of the 12.6 million new jobs created since 1982, almost 85% have been in service industries as opposed to goods-producing fields. Koepp, Pul-eeze! Will Somebody Help Me?, Time, February 2, 1987 at 50.
FN5. See generally Koepp at 48; Main, Toward Service Without a Snarl, Fortune, March 23, 1981 at 58; Quinn & Gagnon at 103; Tuchman, The Decline of Quality, New York Times Magazine, November 2, 1980 at 38.
Just as with products, an examination of several strict liability policies favors the extension of the theory of implied warranty to service transactions. See Greenfield, 1974 Utah L.Rev. at 688-691; Prosser, The Assault Upon the Citadel, 69 Yale L.J. 1099, 1120-24 (1960); Comment, 17 Tex.Tech.L.Rev. at 938-42. First, the public interest in protecting consumers from inferior services is paramount to any monetary damages imposed upon sellers who breach an implied warranty. Second, a service provider is in a much better position to prevent loss than is the consumer of the service. Many services are so complicated and individually tailored that a consumer is unable to independently determine quality and must depend on the experience, skill, and expertise of the service provider.FN6 Third, a consumer should be able to rely upon the expertise of the service provider. The application of implied warranty to services would encourage justifiable reliance on the service providers who would have more incentive to increase and maintain the *354 quality of the services they provide. Fourth, a service provider is better able to absorb the cost of damages associated with inferior services through insurance and price manipulation than is the individual consumer.
FN6. “This is a question of consumer. Of helpless consumer. Of consumer who takes what he gets, because he does not know enough technically, to test even what is before his eyes.” Llewellyn, On Warranty of Quality and Society: II, 37 Colum.L.Rev. 341, 404 (1937).
As Justice Norvell wrote in Humber:
That Court best serves the law which recognizes that the rules of law which grew up in a remote generation may, in the fullness of experience, be found to serve another generation badly, and which discards the old rule when it finds that another rule of law represents what should be according to the established and settled judgment of society, and no considerable property rights have become vested in reliance on the old rule.
426 S.W.2d at 561-62, quoting Cardozo, The Nature of the Judicial Process at 151 (1971). The caveat emptor rule as applied to services such as repairs is an anachronism patently out of harmony with modern service buying practices. It does a disservice not only to the ordinary prudent purchaser but to the industry itself by encouraging the purveyor of shoddy workmanship. Id. at 562.