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BLAIR CONSTRUCTION v. WEATHERFORD CONSTRUCTION


BLAIR CONSTRUCTION, INC.

v.

RANDY WEATHERFORD, T/A W.S.
CONSTRUCTION


April 18, 1997
Record No. 961079

BLAIR CONSTRUCTION, INC.
v.
RANDY WEATHERFORD,
T/A W. S. CONSTRUCTION

J. Michael Gamble, Judge
Present: All the Justices
OPINION BY JUSTICE LEROY R. HASSELL, SR.
FROM THE CIRCUIT COURT OF CAMPBELL COUNTY


In this appeal, we consider whether the plaintiff presented
the necessary clear and convincing evidence to establish a prima
facie case of constructive fraud.

Blair Construction, Inc., a general contractor, filed its
motion for judgment against Randy Weatherford, t/a W. S.
Construction, alleging that Weatherford breached its subcontract
with Blair and that Weatherford had also engaged in acts of
constructive fraud against Blair. At the conclusion of Blair’s
evidence, the trial court granted Weatherford’s motion to strike
the constructive fraud claim, and the jury returned a verdict in
favor of Weatherford on the breach of contract claim. Since Blair
appeals only that portion of the trial court’s judgment granting
Weatherford’s motion to strike the constructive fraud claim, we
will recite the evidence and all reasonable inferences deducible
therefrom in the light most favorable to Blair.
Abbott Laboratories, Ross Products Division, a national
pharmaceutical manufacturer, decided to construct a warehouse in
Altavista. Blair was one of the five general contractors from
whom Abbott solicited proposals. Kenneth V. BeCraft, a Blair
vice-president and project manager, solicited bids from
subcontractors to perform various aspects of the construction
work, including erection of structural steel elements of the
building. BeCraft received a bid of $438,400.00 to perform the
structural steel erection subcontract from Pro-Erectors, Inc., a
steel erection company.

Weatherford, who had not been solicited by BeCraft, called him
on December 29 or 30, 1993, and informed him that Weatherford
intended to submit a bid to perform the steel erection work. On
January 3, 1994, BeCraft received a one-page facsimile from
Weatherford which contained a bid to perform the steel erection
work for a base price of $253,000.00.
Considering the amount of the bid to be "low," BeCraft
spoke with Weatherford on the telephone "to make sure
. . . the price was okay." Weatherford stated
"[h]e knew it was [a low] price" and "that this
would not be an out of town job for his men and it
. . . would allow him to have a job where they could
commute back and forth to the job site without having to stay in
motels."

After informing Weatherford that it was computing and
submitting its bid to Abbott in reliance upon Weatherford’s bid,
Blair submitted its bid to Abbott Laboratories. Between January
31, 1994 and April 8, 1994, Weatherford had numerous
conversations, both in person and on the telephone, with BeCraft,
and Weatherford indicated no reluctance to perform the steel
erection work. After Abbott awarded Blair the contract to
construct the warehouse, Blair mailed its standard confirmation
form to Weatherford and requested that he acknowledge that he
would perform the steel erection work for $260,150.00 by signing
and returning the form. Weatherford did not return the
confirmation form.

Since a significant quantity of steel was scheduled to arrive
at the construction site on May 9, 1994, BeCraft scheduled a
meeting for April 27, 1994 with Weatherford and Everett Grady,
Abbott’s site engineer and project representative, to discuss the
steel erection work. During this meeting, Weatherford and Grady
discussed Abbott’s contractors’ safety guide. Grady responded in
the negative to Weatherford’s inquiry whether Abbott would
require him to utilize safety precautions in excess of those
standards required by the Occupational Safety and Health
Administration (OSHA). Weatherford expressed no further concern
about this issue at this meeting.

However, two days later, Weatherford sent a facsimile to
BeCraft which stated in part, "[b]ased on the stric[t] safety guidelines relating to the above referenced job, we will
have [an] increase for quote of [January 3, 1994] by $75,000.00.
These are extra costs that were not taken into consideration on
the bid day. Thank you!" BeCraft called Weatherford by
telephone and informed him that BeCraft was "shocked"
by the request for additional money and told Weatherford that
BeCraft needed a "better justification" before
requesting an additional $75,000.00 from Abbott Laboratories.
This conversation occurred on a Friday afternoon, and Weatherford
agreed to contact BeCraft on the following Monday. Weatherford
failed to contact BeCraft, as agreed. When Becraft was finally
able to contact Weatherford, the latter told Becraft that he was
not going to "do the job." Blair expended approximately
$602,719.00 in having its own personnel and those of other
contractors perform this work.

We recently stated the following principles which govern our
resolution of this appeal:

"[T]he elements of a cause of action for constructive
fraud are a showing by clear and convincing evidence that a false
representation of a material fact was made innocently or
negligently, and the injured party was damaged as a result of his
reliance upon the misrepresentation. Evaluation Research Corp.
v. Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390 (1994); accord
Nationwide Mut. Ins. Co. v. Hargraves, 242 Va. 88,
92, 405 S.E.2d 848, 851 (1991); Kitchen v. Throckmorton,
223 Va. 164, 171, 286 S.E.2d 673, 676 (1982). Additionally, ‘[a] finding of . . . constructive fraud requires clear and
convincing evidence that one has represented as true what is
really false, in such a way as to induce a reasonable person to
believe it, with the intent that the person will act upon this
representation.’ Alequin, 247 Va. at 148, 439 S.E.2d at
390." Mortarino v. Consultant Eng. Services,
251 Va. 289, 295, 467 S.E.2d 778, 782 (1996).

Additionally, "fraud must relate to a present or a
pre-existing fact, and cannot ordinarily be predicated on
unfulfilled promises or statements as to future events." Patrick
v. Summers, 235 Va. 452, 454, 369 S.E.2d 162, 164 (1988)
(quoting Soble v. Herman, 175 Va. 489, 500, 9
S.E.2d 459, 464 (1940)); accord Mortarino, 251 Va.
at 293, 467 S.E.2d at 781. We explained the reason for this
requirement in Lloyd v. Smith, 150 Va. 132, 145,
142 S.E. 363, 365 (1928):
"[A]n action based upon fraud must aver the
misrepresentation of present pre-existing facts, and cannot
ordinarily be predicated on unfulfilled promises or statements as
to future events. Were the general rule otherwise, every breach
of contract could be made the basis of an action in tort for
fraud."

Blair contends that it established a prima facie case of
constructive fraud. Blair argues that it presented clear and
convincing evidence that Weatherford "made a false
representation to Blair — that being his present intent to
construct the Abbott building for $260,150.00." Continuing,
Blair says that its evidence indicates: Weatherford initiated
contact with Blair; Weatherford submitted an extraordinarily low
bid and assured Blair that Weatherford would perform for that
price; Weatherford had extensive discussions with BeCraft about
the progress of the project and never expressed any hesitancy
about performing the work; and when Weatherford "knew it
would be virtually impossible for Blair to find anyone else to
perform the job, Weatherford demanded $75,000.00 more
money." Blair asserts that "[s]urely the finder of fact
could infer from all this that [Weatherford] had no intention of
performing his original promise to construct this job for
$260,150.00 but rather getting the job [and] then bleeding Blair
for more funds."

We disagree with Blair’s contentions. We are of opinion that
Blair ignores the differences between actual fraud and constructive
fraud, which are two separate and distinct causes of action, only
one of which was pled in this case. Blair’s sole allegation of
constructive fraud differs from actual fraud because in an action
for constructive fraud, "the misrepresentation of material
fact is not made with the intent to mislead, but is made
innocently or negligently although resulting in damage to the one
relying on it." Evaluation Research Corp., 247 Va. at
148, 439 S.E.2d at 390. Here, Blair pled a cause of action for constructive
fraud and, thus, at trial Blair was required to present clear and
convincing evidence to establish that Weatherford’s statements or
actions constituted a "misrepresentation of material fact
. . . made innocently or negligently." Id.
The record is devoid of such evidence.

Next, Blair says that "misrepresentation of one’s present
state of mind to do or not do an act can constitute a material
misrepresentation sufficient to support a cause of action for
constructive fraud." Blair cites Lloyd v. Smith,
150 Va. 132, 142 S.E. 363 (1928), Sea-Land Service, Inc.
v. O’Neal, 224 Va. 343, 297 S.E.2d 647 (1982), and Colonial
Ford Truck Sales, Inc.
v. Schneider, 228 Va. 671, 325
S.E.2d 91 (1985), in support of this contention.

Blair’s reliance upon these cases is misplaced. Once again,
Blair fails to recognize the distinctions between actual
fraud and constructive fraud. Each of the cases that Blair
cites involves actual fraud, not constructive
fraud. For example, in Colonial Ford, we stated:

"While failure to perform an antecedent promise may
constitute breach of contract, the breach does not amount to
fraud. But the promisor’s intention — his state of mind — is a
matter of fact. When he makes the promise, intending not to
perform, his promise is a misrepresentation of present
fact, and if made to induce the promisee to act to his detriment,
is actionable as an actual fraud. Lloyd v. Smith,
150 Va. 132, 145-47, 142 S.E. 363, 365-66 (1928); accord Sea-Land
Service, Inc.
v. O’Neal, 224 Va. 343, 351, 297 S.E.2d
647, 651-52 (1982)." 228 Va. at 677, 325 S.E.2d at 94
(emphasis added).

The record does not contain clear and convincing evidence that
would permit a jury to find that Weatherford committed acts of
constructive fraud when he submitted his bid to Blair.
Weatherford’s bid, along with his subsequent telephone
conversation with BeCraft in which Weatherford confirmed his low
bid, do not constitute statements of present facts, but rather
promises to perform the work in the future for a specific price.

For the foregoing reasons, we will affirm the judgment of the
trial court.

Affirmed.

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