February 2015

INSIDE INITIATIVEIssue 2

A must read before you buy your dream home or say I do...

MACELREE HARVEY, LTD. | ATTORNEYS AT LAW | MACELREE.COM

IN THIS EDITIONCaveat Emptor...Subsequent Purchaser-User of Newly Constructed Homes Beware Patrick J. Gallo

Legalizing Same Sex Marriage Raises More Questions Than Answers Lance Nelson & Jaime Jano

In the News

Community Update

MacElree Harvey, Ltd. would like to welcome you to Inside Initiative—our new monthly newsletter featuring the latest news, topics and trends in law. Our attorneys are some of the top legal minds in Southeastern Pennsylvania & the entire state of Delaware—as evidenced by their many awards and accolades. Let them help you stay one step ahead of the law.

Inside Initiative is published for friends, clients and employees of MacElree Harvey, Ltd. Email address changes, questions, comments or requests for printed copies of the Firm’s newsletter should be directed to Marketing, MacElree Harvey, Ltd. at 610-840-0222 or 17 West Miner Street, West Chester, PA 19382. Contact us by e-mail: jcooper@macelree.com. Our monthly newsletter can also be obtained from our website, www.macelree.com

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Most people are familiar with the common law doctrine of caveat emptor, or “let the buyer beware.” Under this doctrine, absent fraud or misrepresentation, a builder is only responsible for what he expressly agrees to be responsible for. With respect to newly constructed homes, however, there is an exception to this general rule. As recognized by the Pennsylvania Supreme Court in Elderkin v. Gaster, a person who purchases a newly constructed home has a justifiable expectation that their newly constructed home will be habitable and constructed in a workmanlike manner such that the new home is fit for habitation. 288 A.2d 771, 776-77 (Pa. 1972). The purpose behind this exception, known as the implied warranty of habitability, stems from the disparate positions of the builder and the homebuyer, as well as the fact that the builder holds himself out as an expert in constructing homes and is in a much better position to ensure that the home is suitable for habitation. Id. at 776-77.

Many Pennsylvania homeowners impacted by defects in the construction of their new homes, such as the influx of cases involving failed stucco systems resulting in invasive water infiltration, have utilized the implied warranty of habitability in seeking recourse against builders. The problem with construction and design defects, however, is that many times the defects are latent and not discovered until years later. So, what if you are the subsequent purchaser of a newly constructed home and you discover a latent defect? Does the implied warranty of habitability extend to you as a remedy against the builder?

Recently, the Pennsylvania Supreme Court was faced with this question in Conway v. Cutler Group, Inc., 99 A.3d 67 (Pa. 2014). This case concerned a home that the Conways bought from the original buyers who had occupied the home for three (3) years after it was built by the defendant. Within approximately two (2) years of moving in, the Conways discovered water infiltration around some of the windows of the home which were caused by defects in the construction of the home. The Superior Court held that the implied warranty of habitability, applied to the Conaways, who were the subsequent purchaser of the newly constructed

home. The Supreme Court, however, reversed this decision, declining to extend the implied warranty of habitability to a subsequent purchaser-user of a newly constructed home. Id. at 73. Thus, in order to maintain an implied warranty of habitability claim against a builder in Pennsylvania, there must be contractual privity between the builder and the homeowner. Id.

Despite this ruling, the Supreme Court opened the door for the Pennsylvania General Assembly to enact legislation which could extend the implied warranty of habitability to subsequent purchasers of newly constructed homes by noting that such a decision is a matter of public policy and therefore a question for the General Assembly. Id. at 72. In addition, the Cutler Group decision, in distinguishing the case of Spivack v. Berks Ridge Corp., 586 A.2d 402 (Pa. Super. Ct. 1990), left open the possibility that the first user of a newly constructed home may still be able to assert an implied warranty of habitability claim against a builder even if the first user is a subsequent purchaser.

In light of the Cutler Group decision, it is crucial for homeowners and builders to scrutinize contractual representations and warranties and to carefully evaluate any disclaimers and assignment provisions which may impact their rights and remedies. It is also important for subsequent purchasers to have an adequate and thorough inspection completed prior to purchasing a newly constructed home.

If you are a contractor, developer, homeowner or design professional and are dealing with possible defects in the construction or design of a commercial or residential building, please contact P.J. Gallo by email (pgallo@macelree.com) or at (610) 840-0246.

CAVEAT EMPTOR...Subsequent Purchaser-User of Newly Constructed Homes Beware

Patrick J. Gallo, Jr. is an attorney in MacElree Harvey’s Litigation Department and concentrates his practice in the areas of construction and architectural liability, business and corporate litigation, and insurance coverage issues. With respect to his construction litigation practice, P.J. represents commercial and residential property owners with respect to cases involving construction and design defect.

Lance J. Nelson is an attorney in MacElree Harvey’s Family Law group. He works with individuals and companies in a variety of litigation-related areas. With regard to his individual clients, Lance counsels them with regard to divorce, support, custody, contract issues, business disputes, pre- and post- nuptial agreements and adoption.

Legalizing Same Sex Marriage Raises More Questions Than Answers

In a much publicized decision, on May 20, 2014, Pennsylvania’s ban on same-sex marriage was held unconstitutional by the United States District Court for the Middle District of Pennsylvania in the Whitewood v. Wolf decision.

By way of background, in 1996, Pennsylvania was one of 14 states to amend its divorce code to include anti-ceremony and anti-recognition provisions applicable to same-sex couples (collectively, the “Pennsylvania Marriage Laws”).

The unconstitutional anti-ceremony provision defined marriage as “a civil contract by which one man and one woman take each other for husband and wife.”

The unconstitutional anti-recognition provision entitled “Marriage between persons of the same sex” provided: “It is hereby declared to be the strong and longstanding public policy of this Commonwealth that marriage shall be between one man and one woman. A marriage between persons of the same sex which was entered into in another state or foreign jurisdiction, even if valid where entered into, shall be void in this

Commonwealth.”

Pennsylvania’s Governor, Tom Corbett, announced on May 21st that he would not appeal the decision and Pennsylvania effectively became the 19th state to recognize same-sex marriage.

The impact of the decision will likely be far-reaching. Because the Pennsylvania Marriage Laws were held to be unconstitutional, there is an argument that the ban on same-sex marriage in Pennsylvania was never valid. If this is the case, the ramifications will be significant, not only in family law, but also in trusts and estates law and tax law.

Not only can same-sex marriages now take place in Pennsylvania, but any couple residing in Pennsylvania that was previously married in another state that recognized same-sex marriages now has the rights of a married couple. The big question is do those rights accrue only as of May 20, 2014, or because the Pennsylvania Marriage Laws were never valid, are the rights retroactive back to the date of their marriage?

What happens if a couple that was previously

married in another state that recognized same-sex marriages separated before May 20, 2014? At the time they separated, they could not legally seek a divorce. Do they now need to go through the divorce process? What if one or both of them has remarried since their separation? Is the second marriage invalid? Even wilder yet, are they now guilty of bigamy?

Marital status affects beneficiary designations on retirement plans. Going forward, same-sex couples will need to list their spouse as the beneficiary on their retirement plans or secure a waiver from their spouse to list a third party, but what about the plans that already paid out to third parties instead of a same-sex spouse before the Whitewood decision? Can the spouse now challenge that designation? Marital status automatically confers other rights to spouses, including the right to serve as the executor of the same-sex spouse’s estate and the right to elect against the same-sex spouse’s will.

It is also unclear how the new marital status of same-sex spouses will affect their custody rights. Before Whitewood, a same-sex spouse who was not the biological parent of their

partner’s children needed to adopt the children to secure the rights of a legal parent to the children. Otherwise, the child custody standards applicable to any third party also applied to the same-sex spouse. The same-sex spouse could seek child custody rights on the grounds of in loco parentis if they acted as a parent during the relationship. This is a highly fact specific inquiry based on the best interests of the child and the outcome can be hard to predict.

A person in loco parentis can seek all forms of custody. Legal custody is decision-making ability for the children and covers all major decisions affecting a child’s well-being, including education, religion and medical decisions. A same-sex spouse who acted as a parent to a non-biological child that they did not adopt may not be granted joint legal custody. Grants of physical custody can also vary greatly, from time that is equally shared with the biological parent to a dinner visit once per week, and everything in between.

Another question is if the biological parent same-sex spouse comes into the marriage with pre-existing children should that be treated differently than if the same-sex spouses decide to start a family together and the children are born during the marriage? Pennsylvania still recognizes a presumption of paternity for the husband of an opposite-sex marriage when a child is born to the wife during the marriage. This is just an evidentiary presumption which can be challenged. In the opposite-sex case, the court recognizes that the husband could be the biological father of the child. The presumption does not lend itself well to same-sex cases where it is impossible for the

same-sex spouse to be the biological parent of the child. Still, there is an argument that the presumption should be expanded to a presumption of “parentage” to encompass same-sex couples. Changes to the custody laws meant to enlarge the rights of same-sex

spouses will likely have repercussions for other third party custody cases, including opposite-sex step-parent cases.

Married people generally save tax dollars when they file joint tax returns. Same-sex spouses will undoubtedly enjoy that tax advantage going forward, but will they also be able to amend past tax returns to seek refunds if they were married in another state before the Whitewood decision? Married people likewise do not have to pay any inheritance taxes when their spouse dies. Can a same-sex spouse who lost their spouse before Whitewood and paid taxes as an unrelated party seek a refund of those taxes?

Finally, can same-sex couples who did not have an out-of-state-marriage but held themselves out as a married couple before common law marriage was abolished in Pennsylvania on January 2, 2005 now claim the rights of marriage?

Practitioners need to be aware of these issues so that they can ask the right questions of their clients. The recognition of same-sex marriage in Pennsylvania and the resulting decisions that will need to be made by the court and the legislature in the coming years will have much broader impacts than their intended impact on the LGBT community. It is an exciting time to practice law, particularly in the areas of family law, trusts and estate law and tax law, and this host of unanswered questions provides a unique opportunity for creative lawyering.

Jaime M. Jano, an attorney in our Family Law group, represents individuals and entities in a variety of domestic relations, civil and commercial litigation disputes. In her domestic relations practice, Jaime specializes in divorce, support and custody litigation and practices in Chester, Montgomery, Delaware, Philadelphia and Bucks County Courts of Common Pleas. Jaime also counsels clients and negotiates agreements with respect to domestic relations issues.

In Pennsylvania same-sex marriage should really just be called marriage—since all the legal ups and downs still apply.

As one of the largest firms in Pennsylvania, it’s no surprise our attorneys are constantly making news. Here are a few recent highlights. Be sure to check out our News & Events section online to stay up to date. And don’t forget to friend, follow and like us on social media for instant updates at your fingertips.

IN THE NEWS

MacElree Harvey, Ltd. is pleased to announce that it has been named one of the Top Legal Firms in the United States by Martindale-Hubbell®. Fourteen MacElree Harvey attorneys have received an AV® Preeminent Rating with Martindale-Hubbell®. According to them, this rating “is the highest rating possible, and is a testament to the fact that a lawyer’s peers rank him or her at the highest level of professional excellence.”

MACELREE HARVEY, LTD. NAMED ONE OF THE TOP LEGAL FIRMS IN THE UNITED STATES BY MARTINDALE-HUBBELL

The National Iron & Steel Heritage Museum in Coatesville, PA, announced earlier this month that its ninth annual Rebecca Lukens’ Award is to be presented to noted real estate attorney, Mary Ann Rossi, director at MacElree Harvey, Ltd..

Established by The Graystone Society’s National Iron & Steel Heritage Museum to honor individuals who exhibit the qualities of Rebecca Lukens, the annual award will be presented to Ms. Rossi at a May 7th reception in Graystone Mansion, in the Lukens National Historic District. This year commemorates Rebecca Lukens’ 221st birthday.

MARY ANN ROSSI IS REBECCA LUKENS AWARD WINNER

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MacElree Harvey, Ltd. is excited to announce the launch of a new website—and the first stages of a year-long strategic rebranding initiative that will distinguish the full service legal firm apart from others in the area.

Partnering with Google Premier Partner Digital First Media, AdTaxi, the Company’s digital services platform, and Premier Partner Wehrenberg Design Company, MacElree Harvey has set the stage to provide timely, transparent legal information and news—and to become a legal resource across Southeastern Pennsylvania and Northern Delaware.

Found at www.macelree.com, the new website features expanded content, streaming videos, and a clean, open look that is consistent with MacElree Harvey’s commitment to building fluid communication with their community and clients.

With an interface that is designed to translate across desktop, tablet and mobile devices Michael Wehrenberg, President of Wehrenberg Design Company, and MacElree Harvey’s Jaimielynn Cooper designed the site with MacElree Harvey’s clients’ lifestyles in mind.

To better assist clients in making well-informed legal decisions, the site boasts all new attorney profile pages, each prominently featuring professional and biographical information, along with direct contact details, and online contact forms for rapid responses. Also new is a complete social media integration, with links to the firm’s social media pages so clients can keep up to date with happenings both in the firm and in the local community.

“We’re excited about the new website because it gives greater insight into the breadth of our services and how we provide excellent legal counsel to businesses, individuals and non-profit organizations in Pennsylvania and Delaware,” said Marketing Committee Chair Tim Rayne. “The text, photos and videos convey that, at MacElree Harvey, we are committed to living our motto, Initiative in Practice. We thank Jaimielynn Cooper and the website design team at Digital First Media for their hard work and creativity in developing the new site.”

Macelree.com will be updated regularly with news of recent representations, professional milestones, social responsibility efforts, events and the latest legal information. Visitors and clients are encouraged to sign up for the Firm’s newsletter, Inside Initiative, as well.

In an effort to reposition and strengthen the Firm’s brand, their marketing overhaul focuses on creating a consistent brand message, and over the next months, MacElree Harvey will continue to move forward with the rebranding process by unveiling new print and digital marketing campaigns which feature a professional modern look that matches the innovation and cutting edge legal services they already offer.

MACELREE HARVEY, LTD LAUNCHES NEW WEBSITE

MacElree Harvey is a full service law firm with offices located in West Chester and Kennett Square, PA and Centreville, DE. Providing Initiative in the practice of law for more than 135 years, MacElree Harvey serves clients in over thirty areas of law and is committed to providing clients with the depth of expertise and the resources expected of large firms without sacrificing the responsiveness and personal attention typically found in much smaller firms. To learn more about the firm, please visit www.macelree.com.

MACELREE HARVEY, LTD. | ATTORNEYS AT LAW | MACELREE.COM

COMMUNITY UPDATE A look at where we’ve been, and where you can find us in the local area.

Please join us for the 9th Annual Rebecca Lukens’ Award Ceremony, on Thursday May 7, 2015. 5-8pm at Graystone Manor in Coatesville to honor our own Mary Ann Rossi, Esq. The Rebecca Lukens Award honors individuals who exhibit the qualities of Rebecca Lukens— resilience, leadership, courage, and strategic outlook.

The contents of this newsletter should not be construed as legal advice on any specific fact or circumstance. Its content was prepared by MacElree Harvey, Ltd. It was designed for general information purposes only. Your receipt of such information does not create an attorney-client relationship with MacElree Harvey, Ltd. or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice. Prior results referred to in these materials do not guarantee or suggest a similar result in other matters.

Bundle up and come join us as we sponsor the 3rd Annual Winterfest, held on Saturday, Feb. 28, 2015. For more information, click the logo and visit the Winterfest website.