## Facts

- Ronald K. Johnson purchased a newly constructed single-family home in Naugatuck, Connecticut from its builder-vendor, John J. Healy, in 1965 for $17,000.
- During negotiations, Healy stated the house was built with “the best material,” that he built it, and that there was “nothing wrong with it,” and Johnson relied on these statements in deciding to buy.
- Between 1968 and 1971, the home settled, causing major displacement in foundation walls and substantial damage to sewer lines.
- The settling resulted from improper fill beneath the building that existed before Healy acquired the lot as a building lot in 1963.
- Healy lacked actual knowledge of the subsurface condition at the time of sale, and neither Healy nor the building inspector had notice of the lot’s instability.
- Johnson sued alleging misrepresentation (treated as express warranty) and negligence; the trial court found liability on misrepresentation/express warranty, rejected negligence, and awarded $5,000 in damages.
- Both parties appealed: Johnson challenged the adequacy of damages; Healy challenged liability and the damages measure.

## Issues

1. Whether a builder-vendor’s affirmative assurances about a new home’s quality and condition can create an express warranty enforceable despite the builder’s lack of knowledge of a latent subsurface defect.
2. Whether the builder-vendor was negligent for failing to discover an undisclosed, preexisting unstable fill condition without actual or constructive notice.
3. What measure of damages applies for breach of the express warranty/misrepresentation concerning the home’s condition.

## Decision

- The court affirmed liability on the misrepresentation/express warranty claim, holding the builder-vendor’s statements were actionable assurances rather than nonactionable sales talk and supported an express warranty.
- The court affirmed judgment for the defendant on negligence, concluding lack of actual or constructive notice defeated a claim premised on unreasonable failure to discover the defect.
- The court set aside the damages award and remanded for a new trial limited to damages because the trial court used an incorrect damages measure.

## Legal Principles

- A builder-vendor’s affirmative statements about a new home’s condition may be treated as an express warranty of workmanlike construction and habitability when reasonably understood as factual assurances within the builder’s special competence.
- Express warranty liability in this setting may attach even when the builder-vendor’s misstatements are innocent and the defect is latent and unknown at sale.
- Negligence liability for failure to discover a latent condition requires proof of actual or constructive notice and breach of reasonable care; absent notice and absent a reasonable means of discovery, negligence is not established.
- Damages for misrepresentation/express warranty in the sale of real property are measured by the benefit-of-the-bargain rule: the difference between the property’s value as represented and its actual value; repair costs are not the default measure and are relevant only to the extent they inform that value differential.

## Conclusion

The court held that a builder-vendor’s assurances that a new home was properly built and had “nothing wrong” could constitute an express warranty enforceable despite the builder’s lack of knowledge of a latent subsurface defect, rejected negligence absent actual or constructive notice, and required damages to be recalculated using the difference between the home’s value as represented and as delivered.


Johnson v. Healy, 405 A.2d 54 (Conn. 1978)