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filed: March 25, 1983.


No. 2454 Philadelphia 1981, No. 2507 Philadelphia 1981, No. 2455 Philadelphia 1981, No. 2508 Philadelphia 1981, Appeal from the Orders of the Court of Common Pleas of Lebanon County, Civil Action - Law at Nos. 2634 and 2636 of 1979.


George E. Christianson, Lebanon, for appellants (at Nos. 2454 and 2455) and for appellees (at Nos. 2507 and 2508).

Frederick S. Wolf, Lebanon, for Leb-Co, appellee.

Thomas S. Long, Lebanon, for appellants (at Nos. 2507 and 2508) and for appellees (at Nos. 2454 and 2455).

Spaeth, Rowley and Cirillo, JJ.

Author: Spaeth

[ 312 Pa. Super. Page 146]

This case arises on four appeals, which have been consolidated.*fn1 Two of the appeals are by plaintiffs below. They argue that the lower court, sitting en banc, erred in granting exceptions to the trial court's method of calculating damages for defective construction of their sewage disposal systems. The third and fourth appeals are cross-appeals by the additional defendant. They argue that the lower court erred in holding it liable for any damages. We hold that the lower court properly held the additional defendant liable, but that it wrongly decided the issue of the measure of damages. We therefore reverse and remand with instructions to reinstate the verdicts returned by the trial court.

In the summer of 1978 appellants, Larry Fox and Glenda Kreiser and Steven and Judith Gadbois, purchased new houses from appellee, Leb-Co Builders. Soon after they moved in it became apparent that the sewer disposal systems didn't work, and raw sewage began to back up into their basements. When Leb-Co failed to fix the systems, appellants Fox and Kreiser and the Gadboises each brought an action against Leb-Co, alleging breach of an implied warranty of habitability and negligence. In each action Leb-Co joined Bethel Township as an additional defendant, alleging that the township had been negligent in issuing the sewer permits, inspecting the systems, and approving them.

The trial court, sitting without a jury, found in favor of appellants in both actions against both Leb-Co and Bethel Township, and awarded damages that included awards of $18,800 to Fox and Kreiser and $17,600 to the Gadboises. These amounts represented the "loss of value" to appellants' properties, that is, the difference between the respective values of appellants' properties with and without a properly functioning sewer system. The court en banc dismissed Leb-Co's and the township's exceptions as to liability but granted their exceptions as to damages. It held that the measure of damages should be the cost of repairing

[ 312 Pa. Super. Page 147]

    the sewer systems, and that this cost was, as to both properties, $2,750.

The opinion filed by the court en banc adequately disposes of the issue of liability. See also Evans v. Otis Elevator Co., 403 Pa. 13, 18, 168 A.2d 573, 576 (1961) ("a party to a contract [] may place himself in such a position that the law will impose upon him a duty to perform his contractual undertaking in such a manner that third persons -- strangers to the contract -- will not be injured thereby"). The only issue that needs to be discussed is the issue of the proper measure of damages.


The lower court, sitting en banc, held that the measure of damages is "'the difference in market value of the house as warranted and as built, or, where the purchaser remains in possession, the reasonable cost to repair,'" Slip op. of lower ct. at 4 (court's emphasis). In support of this proposition, the lower court cited only a law review case note, " Elderkin v. Gaster -- The Pennsylvania Experience with Implied Warranties in Sales of New Homes," 47 Temp.L.Q. 172, 179-80 (1973). The three cases cited in the case note in support of the proposition include one Pennsylvania case, Raab v. Beatty, 96 Pa. Super. 574 (1929).*fn2 Raab, however,

[ 312 Pa. Super. Page 148]

    does not support but rather contradicts the proposition. First, in Raab this court did not make the measure of damages depend upon whether the purchaser remained in possession. Nothing was made to turn upon the fact of possession or not; in fact it is unclear from our statement of the case whether the plaintiff had remained in possession, although in the cases cited this was apparently so. Second, in Raab we did not affirm an award of the reasonable cost of repairs. Quite the contrary, we affirmed an award of the difference in market value. The award was $2,168; the testimony was that the market value of the house without any defects was "somewhere around" $9,300, but as constructed, was $7,000. 96 Pa. Super at 580.

Here, the damages awarded by the trial court -- as distinguished from the court en banc -- were consistent with Raab. With respect to the Fox/Kreiser property, an expert witness testified that with an adequate septic system, the market value was $48,800, without such a system, $30,000; the award was $18,800. With respect to the Gadbois property, the comparable figures were $47,600 and $30,000; the award was $17,600. R.R. at 125a-127a.


In considering what is the proper measure of damages, we may start with the observation that it is hard to imagine why the measure of damages should depend on whether the owner remains in possession. When people move into a new house, to find the foundation cracking and subsiding, or, as here, the septic system so defective that raw sewage backs up into the basement, their remaining in possession may be attributable to their inability to buy or rent a second house until they first sell their defective house, which they can't do because it is unsalable. That is what happened

[ 312 Pa. Super. Page 149]

    here. Mrs. Gadbois's uncontradicted testimony was as follows:

Q. Mrs. Gadbois, have you and your family continued to ...

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