Schell v. Scallon

When Dustin and Lance Scallon (defendants) decided to sell their residential property, they knew buyers might struggle to acquire financing because the home lacked its own water supply. They hired Stan Davis to drill a well. While the well’s completion was pending, the Scallons contracted to sell the property to Dustin and Lonnie Schell (plaintiffs). The contract included a provision stating, “[s]eller to complete a fully functional water well prior to closing.” The contract also included provisions stating that the buyer was entitled to perform property inspections and that the property was being sold as-is except as otherwise agreed. Davis completed the well in the weeks before closing, and the Scallons used it without issue. The Schells obtained a water sample to satisfy a lending requirement but did not otherwise inspect the well. When the Schells moved into the property, the well was functioning to provide water for the residence. However, within months, they started experiencing problems with discolored water, algae, and silt. The well ceased working altogether about a year later. Cliff Ruby inspected the well. He discovered a hole in the casing and concluded the well did not comply with the state’s minimum construction requirements or industry standards. On Ruby’s recommendation, the Schells plugged the existing well and drilled a new one. The Schells then sued the Scallons for breach of contract. The trial judge concluded that the contract required only that the Scallons provide a well capable of providing water for the residence at closing, which they did. The judge therefore held in the Scallons’ favor. The Schells appealed.