Utah Court of Appeals
Do builder-sellers have disclosure duties when selling previously occupied homes? Moore v. Smith Explained
Summary
The Moores sued the Smiths, who built and briefly lived in a home before selling it to the Moores, alleging various defects discovered six years after purchase. The trial court applied the discovery rule to toll the statute of limitations and denied summary judgment on fraudulent nondisclosure claims but granted partial summary judgment on other claims.
Analysis
In Moore v. Smith, the Utah Court of Appeals addressed whether a licensed general contractor who built a home and briefly lived in it before selling had disclosure duties to the purchasers regarding construction defects.
Background and Facts
Dan Smith, a licensed general contractor and master electrician, built a home in 1993 and lived there for approximately three weeks before selling it to the Moores for $83,000. The sale included an “as is” provision and express warranties regarding building code compliance. Six years later, during fence installation, the Moores discovered forty-two Uniform Building Code violations, including improper footings and grading. The building inspector had issued a Certificate of Occupancy without completing final inspections due to muddy conditions.
Key Legal Issues
The court addressed whether the discovery rule applied to toll the statute of limitations, whether Smith had disclosure duties as a builder-seller, and the scope of recoverable expert witness fees. The Smiths argued that caveat emptor barred the nondisclosure claims and that the discovery rule could not apply to contract actions under Utah Code section 78-12-21.5.
Court’s Analysis and Holding
The court applied the recent Yazd v. Woodside Homes Corp. decision, concluding that Smith’s status as a licensed contractor created disclosure duties based on the “disparity in skill and knowledge between home buyers and builder-contractors.” The court emphasized that builder-sellers have superior expertise that creates legal duties regardless of brief occupancy periods. Additionally, the court held that expert preparation time for depositions is compensable under Rule 26(b)(4)(C)(i), joining the majority of federal courts interpreting identical language.
Practice Implications
This decision significantly impacts construction litigation by establishing that professional expertise creates disclosure duties that survive brief occupancy periods. Practitioners should note that the court remanded for determinations of materiality and knowledge regarding previously dismissed defects. The ruling also provides guidance on expert witness fees, allowing recovery for reasonable preparation time while emphasizing Utah’s sixty-day deposition timeline under Rule 26(b)(4)(A).
Case Details
Case Name
Moore v. Smith
Citation
2007 UT App 101
Court
Utah Court of Appeals
Case Number
No. 20050626-CA
Date Decided
March 22, 2007
Outcome
Affirmed in part and Reversed in part
Holding
Builder-sellers owe a duty to disclose material defects to purchasers based on their superior expertise, and expert preparation time for depositions is compensable under Utah Rule 26(b)(4)(C)(i).
Standard of Review
Correctness for questions of law including statute of limitations applicability, discovery rule applicability, and summary judgment determinations; plain error for jury instruction challenges; abuse of discretion for motions to set aside judgment and attorney fee awards
Practice Tip
When representing builder-sellers, advise clients that their construction expertise creates disclosure duties regardless of brief occupancy periods, and prepare for potential liability extending beyond obvious defects.
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