• Iowa Supreme Court Rules for Contractors in Homeowners Association Dispute with Subcontractors
  • April 15, 2014 | Author: Jeffrey D. Stone
  • Law Firm: Whitfield & Eddy, P.L.C. - Des Moines Office
  • The construction industry can claim another victory in its ongoing effort to avoid claims by homeowners who sue companies with whom they had no contractual relationship. The Court ruled in favor of the contractors under an established doctrine of law that businesses in Iowa have relied on for over four decades.

    White Birch Town Homeowner’s Association (White Birch HOA) filed suit against various subcontractors that provided materials and labor during construction of the Village at White Birch. The general contractor / developer had already filed for bankruptcy protection, so the White Birch HOA was attempting to sue the subcontractors directly. The subcontractors, one of which was represented by Jeff Stone of Whitfield & Eddy, moved for summary judgment, arguing that Iowa law did not allow a subsequent purchaser of a home to sue a subcontractor directly. The district court granted the motions, and the court of appeals affirmed the district court’s grant of summary judgment. White Birch HOA sought further review by the Iowa Supreme Court, which was granted.

    At the oral argument to the Iowa Supreme Court, lead by Jeff Stone for the subcontractors, the main point was that without the general contractor as a named party in a lawsuit brought against subcontractors, there could be no comparison of fault under Iowa Code Chapter 668, and thus the subcontractors could be made responsible for the liability of the general contractor.

    After over six months of deliberation, the Court announced that it was deadlocked in a 3-3 tie, with one judge taking no part in the decision. By operation of law, the decision of the court of appeals stands. This is a major victory for the construction industry. However, because of the 3-3 tie, the issue can be litigated again in the future.