In Gines v D.R. Horton, Inc., the Fifth Circuit addressed whether a claim brought under Louisiana’s New Home Warranty Act (“NHWA”) must allege that the defect in question resulted in actual physical damage to the home.  Gines entered into a contract for the purchase of a new home built by Horton.  After Gines took possession of the home, he discovered that the air conditioning system’s capacity was not large enough to maintain an appropriate temperature in the room.  Gines eventually filed suit, alleging Horton and the designer of the air conditioning system, Reliant Heating and Air Conditioning, Inc., were liable because the air conditioning system was not reasonably fit for its ordinary use, failed to cool the home properly, was undersized and continually ran on hot days.  Horton and Reliant filed a motion to dismiss on the basis Gines’ Complaint failed to state a claim under the NHWA because the alleged defect did not result in “actual physical damage” to Gines’ home, as required under the Act.  The Fifth Circuit agreed.  The Court noted that section 9:3144(B)(13) of the NHWA excludes from coverage under its warranties “any condition which does not result in actual physical damage to the home,” unless the parties otherwise agree in writing.  The Court held that the warranties set forth in the NHWA are not available if the alleged defect does not cause actual physical damage.  At the end of its opinion the Court stated, in order to avoid the harsh result that obtained in this case, the buyer of a newly constructed home in Louisiana should seek to obtain in the contract of sale an express waiver of the actual physical damage requirement of the NHWA.

 

Author:  Jeffrey Siemann