Construction Defect Litigation in South Carolina: How to Protect Your Subrogation Interest
C. Capers Owings, Esq.
David H. Maybank, Jr., Esq.
Hennessy & Walker Group, P.C
The Supreme Court of South Carolina has been busy making it harder for subrogation professionals to pursue builders for alleged defects. With small subrogation claims, subrogated carriers often rely on a repair contractor to determine the cause of loss which is usually insufficient because they do not preserve key evidence nor do they provide the necessary testimony to trigger liability. The following are key cases in South Carolina that exemplify why an expert witness is essential to ensure a legal remedy.
In Kirkman v. Parex, Inc., 632 S.E.2nd 854 (SC 2006), the Court held as a matter of first impression that a builder or seller may effectively disclaim the implied warranty of habitability. This common law remedy was first recognized in 1976 in Lane v. Trenholm Building Company, 229 S.E.2nd 728 (SC 1976), wherein the Court held that the remedy springs from the sale itself. The Lane decision was important because it gave the homeowner a right to be protected from latent defects. With the Kirkman decision, if the warranty of habitability is properly disclaimed in the sales contract, then the homeowner loses their most viable cause of action.
In Fields v. J. Haynes Waters Builder, Inc., 568 S.E.2nd 80 (SC 2008), the Court held for the first time that a builder is not “automatically” responsible for the negligence of a subcontractor in constructing the home; rather, builder owes homeowner a duty to exercise reasonable care in such supervision to see that work is done in conformity with applicable building code and in good and workmanlike manner. This is a very pro builder holding because a homeowner does not hire the subcontractor who is delegated the work by the builder and often the subcontractor has no insurance or is out of business.
Because most construction contracts have limited one year warranties, and because common law remedies can be disclaimed by contract, the only legal avenue remaining in some cases will be a builder negligence claim. South Carolina carved out a limited exception to the economic loss rule to home buyers in Kennedy v. Columbia Lumber and Manufacturing Company, Inc., 384 S.E. 2nd 730 (SC 1989) by ruling that a builder may be held responsible in tort if he acts in such a way as to violate a legal duty. The homeowner must be able to prove that the builder violated an applicable building code, deviated from an industry standard or constructed housing that he knew or should have known posed serious risk of physical harm in order to create a tort remedy.
As these holdings reflect, in order to be successful with any construction defect case, a qualified expert must be able to opine that the loss was due to a breach of an applicable building code or industry standard. The expert must be knowledgeable of local codes and industry standards so retaining a local expert is always the best option. Recovery potential will also be enhanced by providing written notice and avoiding spoliation pitfalls.