The Construction Counselor

When homeowners discover defective construction, it can be difficult to understand and remedy the issues. It can be even more difficult to determine which parties are responsible. The Iowa Court of Appeals recently offered some clarity in Yakel v. Wheeler, No. 23-0795, 2024 WL 3290371, at *1 (Iowa Ct. App. July 3, 2024).

Understanding Contractual Responsibility: The Facts

In the realm of home improvements, disputes over construction quality and responsibility can lead to legal battles. The case of Yakel v. Wheeler highlights one such dispute, where homeowners sought recourse for allegedly defective siding installation on their property.

In 2014, the Yakels, plaintiff homeowners, initiated several home improvement projects, including the replacement of their siding. They engaged the defendant, home designer Randy Wheeler, for design consultation and contractor recommendations, paying him $800 for his services. Wheeler, in turn, facilitated the selection of Lightwine Construction for the siding installation.

Initially, the Yakels sued Lightwine Construction and sought damages following faulty installation. Legal claims included breach of contract, breach of implied warranty and negligence. Later, the Yakels amended their petition to include Wheeler as a defendant, claiming he breached his duties under an oral contract to oversee the project as a general contractor.

Breach of Contract and Implied Warranty

The core of the Yakels’ case against Wheeler hinged on whether there was a contractual obligation for him to act as a general contractor. Despite Wheeler’s involvement in coordinating aspects of the project and providing guidance to Lightwine Construction, both Paul and Therese Yakel testified that Wheeler was not hired as their general contractor; he was merely a designer. This admission, affirmed in multiple depositions, undermined claims of a contractual relationship beyond design consultation.

The court upheld that without evidence supporting the intent to contract Wheeler as a general contractor, the claims for breach of contract and breach of implied warranty lacked merit. These claims were dismissed under Iowa law, which requires a clear contractual basis for such allegations. The court made it clear that these claims could only be directed at a contractor, not at a designer.

Negligent Construction and Economic-Loss Doctrine

The Yakels also pursued a negligent construction claim against Wheeler, arguing that his actions led to the siding’s defective installation. However, the court applied the economic-loss doctrine, which prevents recovery of purely economic losses in tort actions where a contract governs the relationship between parties. Since the damages primarily involved the cost of replacing the siding rather than physical injury or property damage beyond the siding itself, the court dismissed this claim as well.

Conclusion and Takeaways

Ultimately, the Iowa court ruled in favor of Randy Wheeler, dismissing all claims brought against him by the Yakels. The decision underscored the importance of clear contractual agreements in construction projects and affirmed the application of the economic-loss doctrine in limiting tort claims for economic damages. Purely economic damages cannot be pursued by plaintiffs under tort law when a contract exists to govern the same claims. It also offered protections to those in non-contractor roles, as they may be safe from some liabilities.

The case serves as a reminder for homeowners and contractors alike to define contractual roles and responsibilities clearly from the outset of any construction project. For legal recourse in disputes, establishing a solid foundation of evidence and contractual agreements is crucial.

If you have questions regarding contractual agreements in construction projects or construction law in general, please contact Jodie McDougal (jmcdougal@fredlaw.com, 515.242.8971) and Jack O’Brien (jobrien@fredlaw.com, 515-242-8931).