James and Mary McCarthy contracted with ABC Construction to build their home.ABC employed a variety of subcontractors to work on different aspects of the construction and while ABC supervised the work.In the process of construction, one of the subcontractors misjudged the distance between their equipment and the existing foundation of the home which left a crack in the wall.James was concerned about the crack and asked his best friend's father to inspect the basement.His friend's father worked as a construction manager for another company and he indicated to James that there was a good chance that the basement would leak.ABC continued to make progress on the home including finishing work in the basement.At one point James asked the subcontractor to guarantee that the basement wouldn't leak; but they refused.At the final inspection, James again indicated to ABC his concern about the basement but ABC said that James had no reason to worry and that ABC did not think there was any reason to believe that the basement would leak.One month later, during a winter storm, the McCarthy's moved into the finished home and found the basement leaking.The McCarthy's immediately sued ABC Construction.

1. What legal issue is involved in this case?
2. Based on the Issue identified, provide an argument for McCarthy using specific facts of the case and the relevant legal theory to support it.
3. Based on the Issue identified, provide an argument for the ABC Construction using specific facts of the case and the relevant legal theory to support it.
4. Based on the facts given, and what you know about the legal issues involved, how would the court decide the case? In favor of McCarthy or ABC Construction.Provide an explanation using a reference to a homework case that involves similar issues and facts.