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SCOTT v. FIRST INV. CORP.

February 17, 1983

ALEXANDER SCOTT, JR. and MARCEAL SCOTT, Plaintiffs,
v.
FIRST INVESTMENT CORPORATION, a corporation, URBAN REDEVELOPMENT AUTHORITY OF PITTSBURGH, a local Government agency, and UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, a branch of the United States of America, Defendants



The opinion of the court was delivered by: COHILL

 COHILL, District Judge.

 This case is now before us on motions to dismiss filed by all three defendants. We have jurisdiction pursuant to 28 U.S.C. §§ 1331, 1346(a)(2) and 1346(b).

 Facts

 The plaintiffs, a married couple, bought a house in Pittsburgh from the Urban Redevelopment Authority of Pittsburgh (URA), closing on May 11, 1979. Prior to the closing, on June 21, 1978, one P. W. Pacella from the Department of Housing and Urban Development (HUD) had inspected the property, a reconditioned house at 533 Junilla Street, Pittsburgh, and appraised it for the purpose of determining eligibility for the Federal Housing Administration (FHA) insuring a mortgage on the property. This inspection was approved by the chief architect of the URA. See Exhibit B to Complaint.

 On July 5, 1979, the plaintiffs moved into the house. Within a month they discovered that the sewer line was broken. The plaintiffs claim that repair costs totaled $7,753.16; they seek damages of between $5,000 and $10,000. This ceiling avoids the mandatory jurisdiction of the Court of Claims on non-tort claims over $10,000. See 28 U.S.C. § 1346(a)(2).

 Legal Bases for Claims

 The plaintiffs' complaint contains two counts: assumpsit and trespass. The legal bases advanced for the claims appear to be essentially as follow:

 
1. Breach of implied or explicit warranty of habitability because the sewer condition violated Pittsburgh ordinances.
 
2. Failure to inspect (First Investment Co.) or negligent inspection (other defendants) of the house.

 While we shall consider both theories as they relate to each defendant, we note that counsel for the plaintiffs conceded at oral argument that they could not make out a claim on any tort theory. Instead, the plaintiffs have elected to proceed on a contract-based warranty theory, premising liability for First Investment and HUD as third-party beneficiaries of the contract of sale between the Scotts and the URA.

 Disposition of Claims

 First Investment Corporation:

 The plaintiffs have clearly failed to state a cause of action against First Investment Corporation, whose only role in the transaction was that of lender. A lender has no duty to make an inspection, and any inspection made is for the lender's benefit and not for the borrower. See Federal Land Bank of Baltimore v. Fetner, 269 Pa. Super. 455, 410 A.2d 344 (1980). The contract between the plaintiffs and First Investment Corporation does not contain any express warranty of the condition of house. Furthermore we could find no case which suggests that someone acting only as a lender makes any implicit warranty as to the condition of the property serving as security ...


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