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Homeowner Whose Roof Failed May Sue Shingle Manufacturer Under Federal Consumer Protection Law
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March 31, 2008
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Howrey LLP
A California Court of Appeal has found that shingles purchased by a homeowner as part of a lump sum contract for the re-roofing of his home were "consumer products" covered by the federal Magnuson-Moss Warranty Act. The law allows consumers to sue manufacturers of defective goods although consumers purchased the goods from retailers and not directly from manufacturers.
The homeowner contracted with a roofing company to re-roof his home. The roofing company's price included labor and the cost of materials. The homeowner selected the shingles from the manufacturer's brochure, and the roofing contractor purchased them for a supplier and installed them. The manufacturer advertised the shingles under a 30-year limited warranty, covering labor and the shingles themselves.
When the shingles cracked five years later, the homeowner sought the cost of a replacement roof from the manufacturer. The manufacturer refused. It offered to pay a prorated portion of the cost of new shingles and installation, but not the full market price of a new roof, which included labor for removing the defective shingles, flashing, stucco and other costs. The offer covered less than half the cost of a new roof.
The homeowner sued the manufacturer under California's Song-Beverly Consumer Warranty Act, alleging breach of warranty claims. The trial court held that the homeowner was not a "buyer of consumer goods" within the meaning of that statute and therefore was not covered by Song-Beverly.
On appeal, the California Court of Appeal agreed that Song-Beverly did not apply. However, it allowed the homeowner to amend his lawsuit to include claims under the federal Magnuson-Moss Act and remanded the case back to the trial court. The federal law allows consumers to sue warrantors of goods even if the consumer did not purchase directly from the warrantor.
The roofing manufacturer argued that the consumer purchased an integrated roofing system and not just shingles. Relying on the lump sum nature of the contract, the trial court granted a motion for summary judgment in favor of the manufacturer. It held that the shingles were not "consumer goods" under Magnuson-Moss because the roofing materials were not charged separately under the contract and the shingles had been installed on the home. The homeowner appealed.
On appeal, the California Court of Appeal found that the shingles were covered under Magnuson-Moss. Atkinson v. Elk Corp. of Texas, 142 Cal.App.4th 212, 48 Cal.Rptr.3d 247 (2006).
The court examined the Magnuson-Moss Act, as interpreted by federal regulations, and determined that "some items that normally or usually become a part of realty when incorporated into a structure are still considered consumer products when their incorporation is part of an improvement, modification or repair of a home."
The crucial distinction between building materials, which are consumer goods, and those which are not is the time of sale, the court wrote. Where products are purchased to be added to a home, they are consumer products. On the other hand, if the products are purchased as part of a larger real estate sales contract or a contract for a substantial addition to a home, they are not consumer products. The distinction is whether the materials are being added to an existing structure or whether they are being used to create the structure.
Accordingly, the federal regulations note that air conditioning, furnaces, water heaters, paneling, siding, storm windows and remodeling could be consumer goods.
Having determined that the homeowner's shingles were covered by Magnuson-Moss, the court found that the homeowner had standing to sue the shingle manufacturer. It remanded the case to the trial court to determine whether the manufacturer breached its advertised 30-year limited warranty when it failed to fully compensate the homeowner for the cost of replacing the roof.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.
©2008 Howrey LLP
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