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Mardesich v. Sun Hill Homes LC

Court of Appeals of Utah

February 24, 2017

John Mardesich and Marie Mardesich, Appellants,
v.
Sun Hill Homes LC, Appellee.

         Fifth District Court, St. George Department The Honorable G. Michael Westfall No. 080502342

          James L. Spendlove, Attorney for Appellants

          Adam C. Dunn and Clifford V. Dunn, Attorneys for Appellee

          Judge J. Frederic Voros Jr. authored this Opinion, in which Judges Kate A. Toomey and Jill M. Pohlman concurred.

          OPINION

          VOROS, Judge

         ¶1 Plaintiffs John and Marie Mardesich (collectively, the Homeowners) appeal from a trial court order granting a motion for new trial filed by defendant Sun Hill Homes (the Builder). We affirm.

         BACKGROUND

         ¶2 The Builder developed the subdivision where the Homeowners' residential property (the Property) is located. The Builder prepared and graded the Property according to a grading plan created by a third-party engineer. The Builder also retained Applied Geotechnical Engineering Consultants (the Engineering Firm) to conduct a geotechnical investigation of the lots in the subdivision. The parties entered into a Real Estate Purchase Construction Contract (the REPC) for the purchase and sale of a newly constructed house on the Property.

         ¶3 The REPC allocated the risk of loss and set forth the duties of the Builder and the Homeowners; of particular significance here, it released the Builder from any liability with respect to "[f]uture improvements by Buyer, including walls, fencing, grading, landscaping or excavation work on the Lot which could disrupt drainage and/or retention and cause flooding or ponding if not correctly engineered . . . ." The REPC also contained an integration clause and an attorney fee provision.

         ¶4 Before the house was completed, flood waters damaged the Property. The Builder received funding from the Natural Resources Conservation Service, a division of the United States Department of Agriculture to change the grading of the Property and to add rock retaining walls to protect the subdivision from future flooding. In making these improvements, the Builder added soil that substantially increased the buildable size of the Property.

         ¶5 In May 2006 the Homeowners closed on the sale of the Property. Later they hired a pool builder to excavate their backyard and build a pool and spa. During the construction, the Engineering Firm told the pool builder that "the area where the pool was being constructed was . . . outside the area that had been treated to take care of potentially expansive soils and potentially collapsible soils due to the proximity to the edge of the slope." The pool builder continued construction. Later the pool and spa experienced significant settling, causing a differential elevation exceeding the industry standard. The Homeowners sued the pool builder; they also sued the Builder, alleging breach of the REPC. After a two-day bench trial, the trial court awarded damages to the Homeowners.[1]

         ¶6 The trial court found that the Builder was aware that the Homeowners wanted to build a pool on the Property before the 2005 flood. The trial court also found that, after the 2005 flooding and regrading of the Property, "[the Builder] took no action to investigate the effect the changed grading had on the suitability of the Lot for the construction of a swimming pool." The trial court found that the "REPC imposes a duty on [the Builder] to investigate the suitability of the soil added to [the Property] for its intended use as a buildable lot for the construction of a swimming pool, " but that the risk of loss associated with the placement of additional soil on the Property "was left unaddressed by the parties." The trial court concluded that where "there is no express understanding as to the changed circumstances, the risk associated with the placement of the additional soil is placed in the hands of [the Builder]." The trial court identified no legal basis to assign the risk to the Builder.

         ¶7 After ruling, the trial judge retired. The Builder filed a motion for new trial alleging an error of law and insufficient evidence. A judge newly assigned to the case granted the Builder's motion, stating that he could see no "reasonable basis for finding that [the Builder] had a contractual duty under the REPC to investigate the soil's suitability for a swimming pool." The judge relied on paragraph 14 of the REPC, which releases the Builder from any liability with respect to all future improvements by the Homeowners, including grading and excavation work. He concluded that "it is unreasonable to circumvent this express provision by purporting to fill a ...


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