I
Is the implied warranty of habitability applicable under
the facts of this case?
We considered this implied warranty of habitability
initially in Chandler v. Madsen (1982), 197 Mont. 234, 642
P.2d 1028. In Chandler, the footings and foundation of the
home began to settle due to a condition of the soil upon
which the house was built. Doors and locks failed to oper-
ate, walls cracked, floors bulged, windows broke, plumbing
bent, fixtures and walls separated, and the foundation low-
ered as much as 3.6 inches in spots. The home truly was
uninhabitable. Chandler, 642 P.2d at 1030. At that time, we
held that the builder-vendor of a new home impliedly warrants
that the residence is constructed in a workmanlike manner and
is suitable for habitation. Chandler, 642 P. 2d at 1031. We
again considered the warranty in Degnan v. Executive Homes,
Inc. (Mont. 1985), 696 P.2d 431, 42 St.Rep. 262. In - -
Degnan
the home was built upon unstable ground. The hillside began
slipping downward causing severe structural damage to the
home rendering the home truly uninhabitable. 696 P.2d at
433. In that case we stated that "[tlhe implied warranty
places on the builder-vendor liability for defects in a
structure which make it uninhabitable." Degnan, 696 P.2d at
434.
In Yepsen v. Burgess (Or. 1974), 525 P.2d 1019, upon
which we relied in Chandler, the Oregon Supreme Court made an
observation which is applicable to the implied warranty of
habitability in Montana: "A more precise definition of the
scope of this warranty must await delineation on a case b7 1
case basis." Yepsen, 525 P.2d at 1022. In both Chandler and
Degnan, the dwellings were damaged so substantially as to
preclude their use as residences. That is not the situation
in the present case. Here the water collected next to the
Samuelson home and eventually seeped into the basement after
snow melt and rainfall. The evidence demonstrates that the
water problem was an inconvenience but did not render the
home uninhabitable.
We are now required to set forth a more precise defini-
tion of the implied warranty of habitability. In Chandler,
642 P.2d at 1032, we pointed out that the basic concern in
applying the warranty is whether the defect relates to "use-
ful occupancy" of the building. F e hold that the implied
7
warranty of habitability of a dwelling house is limited to
defects which are so substantial as reasonably to preclude
the use of the dwelling as a residence. That limitation is
consistent with Chandler and Degnan. Even if the record is
reviewed in its most favorable light from the standpoint of
the Samuelsons, the evidence does not show that the defects
were substantial enough reasonably to preclude use as a
residence. We hold that the implied warranty of habitability
is not applicable under the facts of this case. As a result,
the case will be remanded to the District Court for retrial.
on theories other than the implied warranty of habitability.
Did the District Court err by refusing to admit the
construction contract into evidence?
The District Court refused to admit the contract between
the Samuelsons and A.A. Quality because the court felt the
contract was irrelevant. The parties agreed in discussions
with the court that breach of contract was not being litigat-
ed. In spite of this, A.A. Quality argued that the contract
was relevant to the implied warranty of habitability issue.
In view of our determination on that issue, we need not rule
on the relationship of the contract to the implied warranty
of habitability.
A.A. Quality further argues that the contract was rele-
vant to the negligence issue. All parties agree that the
contract did not include a drainage system. We do not find
it necessary to rule on the admissibility of the contract at
the present time. It may be that the theories on retrial may
require the admission of the contract.