PHILADELPHIA - By not executing a warranty agreement in a home purchase, a group of homebuyers escaped a mandatory arbitration clause. The Superior Court of Pennsylvania affirmed on Aug. 21 a ruling that the clause was not binding.
A handful of related home builders and home sellers (Toll Brothers Inc.; Toll PA II L.P.; Toll PA GP Corp.; Toll Architecture Inc.; and Toll Architecture, I, P.A.) filed the appeal after the Court of Common Pleas of Philadelphia County’s Civil Division decided that the buyers did not have to comply with the arbitration clause.
The Superior Court agreed that since the home buyers weren’t the ones who actually executed the warranty agreement, “there was no valid agreement compelling appellees to arbitrate," according to the opinion. It added that the buyers were actually subsequent purchasers, and the originally warranty wasn’t automatically transferred to them from the original buyer.
The arbitration clause comes into play only once the form is executed, the Superior Court said. In this case, it never was. In fact, the warranty said that it would only transfer if a subsequent buyer executed the form and mailed to the appellant, which also did not happen, the ruling said.
The builders argued that the buyers admitted to receiving the warranty when they said that they depended on it as proof that the builders had the responsibility to follow the building code regulations. The buyers "cannot have their cake and eat it too,” the builders said.
However, the Superior Court said, the warranty was never executed.
The buyers and the appellant entered in agreements together from October 2002 to January 2005. Altogether, there were 30 homes included in the lawsuit. Along with the sale agreement, the builders provided a 10-year warranty for repairs.But none of the homebuyers actually executed the warranty agreement.
The buyers sued the builders after their homes had “water infiltration issues such as condensation and leaking at various windows in their home[s],” according to the lawsuit. The damages amounted to more than $100,000.
The homebuyers sued Andersen Windows in the Court of Common Pleas on accusations of unfair trade practices, negligent misrepresentation, fraud and negligence. The lower court determined that since none of the plaintiffs actually executed the warranty, they were not bound by it. The Superior Court agreed.
Judge Mary P. Murray authored the opinion. Judge Deborah A. Kunselman and Senior Judge Dan Pellegrini concurred.