Home / Fulltext Opinions / Supreme Court of Virginia / TATE et al. v. COLONY HOUSE BUILDERS, INC. et al.

TATE et al. v. COLONY HOUSE BUILDERS, INC. et al.


TATE et al.

v.

COLONY HOUSE BUILDERS, INC.
et al.


January 8, 1999
Record No. 980166

OSCAR W. TATE, ET AL.

v.

COLONY HOUSE BUILDERS, INC., ET AL.

FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
John W. Scott, Jr., Judge
Present: All the Justices
OPINION BY JUSTICE LEROY R. HASSELL, SR.


In this appeal, we consider whether a seller’s
statements to purchasers of real property constitute statements
of fact sufficient to support a cause of action for constructive
fraud and, if so, whether that action is barred by Code
Sect. 8.01-250, a statute of repose.

Appellants, Oscar W. Tate and Frances J. Tate,
filed their motion for judgment in 1996 against Colony House
Builders, Inc., Thomas P. Sagun, and Hilda R. Sagun. The
plaintiffs alleged, in their motion, the following relevant
facts.

Colony House Builders, Inc., a Virginia
corporation engaged in the construction and sales of new
residential homes in Spotsylvania County, built a new dwelling in
the Bloomsbury subdivision. In 1990, the plaintiffs, who are
husband and wife, purchased the property from Colony House
Builders for the sum of $345,000.

Before agreeing to purchase the property, the
plaintiffs allegedly relied upon the following material facts and
representations made by Thomas P. Sagun (Sagun), president of
Colony House Builders: "the new dwelling house was free from
structural defects; . . . the new dwelling house was
constructed in a workmanlike manner; . . . the new
dwelling house was fit for habitation; . . . the new
dwelling house was competently designed commensurate with the
consideration of $345,000.00 [and]; . . . the Tates
would enjoy quiet possession in the sense that apart from minor
corrective work, no significant work would be required by way of
restoration, rebuilding, or extensive repair." Before
closing, Sagun accompanied the plaintiffs throughout the house
and "pointing out many aspects of the construction,
illustrated the design and construction as being of the highest
quality, and further gilded the representations in reassuring the
Tates that he intended the structure to be a model home of the
finest designs and construction and a superior
product. . . ."

The plaintiffs alleged that "[t]he
representations were made by Thomas P. Sagun as President of
Colony House Builders . . . and with the authority and
consent of Hilda M. Sagun, also record owner of the premises with
the intent that the plaintiffs would rely on each and every
representation." Plaintiffs alleged that they later learned
that there was physical damage throughout the house that had been
concealed and "rotting within the walls" of the house.
"In order to preserve the premises[,] the plaintiffs were
required to retain contractors to begin the process of removing
all areas of destruction and deterioration, replacing major areas
through new construction including but not limited to wall
framing and roofing." The plaintiffs also alleged that the
defendants’ purported misrepresentations constituted constructive
fraud and sought damages in the amount of $150,000 plus interest
and costs.

The defendants filed responsive pleadings,
including a special plea in which they asserted that Code
Sect. 8.01-250 limits actions for recovery for injury to
property resulting from defective construction of improvements to
real property to a period of five years from the completion of
construction, that the plaintiffs’ action was filed more than
five years from the date of construction and, thus, their claims
were barred. The defendants also filed a motion for summary
judgment and asserted that the representations Sagun purportedly
made to the plaintiffs were statements of opinion which were not
sufficient to support a cause of action for constructive fraud.
The circuit court agreed with the defendants and entered judgment
sustaining the special pleas and granting the motion for summary
judgment. Plaintiffs appeal.

The plaintiffs argue that the alleged
fraudulent misrepresentations are statements of fact which are
sufficient to support a cause of action for constructive fraud.
The defendants respond that the alleged misrepresentations were
merely opinions.

The plaintiffs and defendants correctly observe
that expressions of opinion cannot form the basis of an action
for fraud:

"It is well settled that a
misrepresentation, the falsity of which will afford ground
for an action for damages, must be of an existing fact, and
not the mere expression of an opinion. The mere expression of
an opinion, however strong and positive the language may be,
is no fraud. Such statements are not fraudulent in law,
because . . . they do not ordinarily deceive or
mislead. Statements which are vague and indefinite in their
nature and terms, or are merely loose, conjectural or
exaggerated, go for nothing, though they may not be true, for
a [person] is not justified in placing reliance upon
them." Saxby v. Southern Land Co., 109 Va.
196, 198, 63 S.E. 423, 424 (1909).

Accord Mortarino v. Consultant
Eng’g Servs.
, 251 Va. 289, 293, 467 S.E.2d 778, 781 (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)).

The plaintiffs, relying upon Packard
Norfolk, Inc.
v. Miller, 198 Va. 557, 95 S.E.2d 207
(1956), argue that the statements Sagun purportedly made to them
constitute facts which support a cause of action for constructive
fraud. In Packard Norfolk, H. J. Miller filed a suit
in equity against Packard Norfolk, Inc., alleging that he had
been induced to purchase a Packard automobile in reliance upon
fraudulent and material misrepresentations made by Packard’s
agents. Miller, who had unsatisfactory experiences with Packard
cars, informed Packard’s salesmen that he was reluctant to
acquire another car "of the same make." Later, when
Packard’s agent met with Miller seeking to convince him to
purchase another Packard automobile, Miller told the agent that
Miller wanted "the car to be absolutely in as good running
condition as it can, with everything perfect and thoroughly
checked." Id. at 559, 95 S.E.2d at 209.

The agent assured Miller that the car "was
an improvement over previous models, [that it] would have more
power, [and] more pickup." The agent also informed Miller
that he could rest assured that motors in this particular model
had "been tested for six months prior to any car being put
on the market . . . [,] that [Miller] should not fear
trouble, and to rest assured that [Miller] would have no further
trouble with anything else, that the car would be in perfect
condition, . . . thoroughly checked, . . .
gone over carefully, . . . [and] in as good running
condition as it could be when it was delivered . . .
[Miller] told [the agent] that only under those circumstances
would [Miller] even consider buying another Packard car." Id.

Rejecting Packard Norfolk’s contention that its
agent’s statements constituted opinions which could not form the
basis of a constructive fraud action, we stated:

"There is no certain rule by the
application of which it can be determined when false
representations constitute matters of opinion or matters of
fact, but each case must in a large measure be adjudged on
its own facts, taking into consideration the nature of the
representation and the meaning of the language used as
applied to the subject matter and as interpreted by the
surrounding circumstances.

"It is not always an easy matter to
determine whether a given statement is one of fact or
opinion. The relative knowledge of the parties dealing, their
intentions and all of the surrounding circumstances, which
can only be gathered from the evidence, affect the
interpretation which the courts put upon representations in
determining whether they be of fact or opinion.

 . . . .

"A statement asserting the then
perfect condition of a new car is a representation as to the
present quality or character of the article and is clearly a
representation of fact and not a promise as to something to
be done in the future. Whether or not a car is in the
condition represented is factual, not promissory." Id.
at 562-63, 95 S.E.2d at 211 (citations omitted).

Accord Blair Const., Inc. v. Weatherford,
253 Va. 343, 346-47, 485 S.E.2d 137, 139 (1997); Mortarino,
251 Va. at 293-94, 467 S.E.2d at 781.

Applying the aforementioned principles, we hold
that some of the statements that Sagun purportedly made to the
plaintiffs are statements of fact sufficient to support their
cause of action for constructive fraud. Sagun’s statements that:
"the new dwelling house was free from structural defects;
. . . the new dwelling house was constructed in a
workmanlike manner and; . . . the new dwelling house
was fit for habitation" are representations of the present
quality or character of the property and, thus, are statements of
fact and not mere expressions of opinion.
[1] The issue
whether the house was actually in the condition represented can
be determined factually.

Sagun’s alleged representation that the
plaintiffs "would enjoy quiet possession in the sense that
apart from minor corrective work, no significant work would be
required by way of restoration, rebuilding, or extensive
repair" cannot support an action for constructive fraud.
Generally, representations predicated upon future events or
promises cannot form the basis of an action for constructive
fraud. Patrick, 235 Va. at 454, 369 S.E.2d at 164. Even
though there are exceptions to this rule, those exceptions are
not implicated in this action. See Lloyd v. Smith,
150 Va. 132, 145-46, 142 S.E. 363, 365-66 (1928).

Sagun’s alleged statements that "the new
dwelling house was competently designed commensurate with the
consideration of $345,000.00" and "the design and
construction [of the dwelling were] of the highest quality"
are more in the nature of puffing or opinion and cannot form the
basis of an action for constructive fraud. Commendatory
statements, trade talk, or puffing, do not constitute fraud
because statements of this nature are generally regarded as mere
expressions of opinion which cannot rightfully be relied upon, at
least where the parties deal on equal terms. Henning v. Kyle,
190 Va. 247, 252, 56 S.E.2d 67, 69 (1949).

Code Sect. 8.01-250 states in relevant
part:

"No action to recover for any injury
to property, real or personal, or for bodily injury or
wrongful death, arising out of the defective and unsafe
condition of an improvement to real property, nor any action
for contribution or indemnity for damages sustained as a
result of such injury, shall be brought against any person
performing or furnishing the design, planning, surveying,
supervision of construction, or construction of such
improvement to real property more than five years after the
performance of furnishing of such services and
construction."

The plaintiffs contend that Code
Sect. 8.01-250 does not bar their constructive fraud action
because their alleged cause of action does not involve an injury
to real property. We agree.

We have stated that "Code
Sect. 8.01-250 is a redefinition of the substantive rights
and obligations of the parties to any litigation ‘arising out of
the defective and unsafe condition of an improvement to real
property.’ . . . [T]he lapse of the statutory period
was meant to extinguish all the rights of a plaintiff, including
those which might arise from an injury sustained later
and to
grant a defendant immunity from liability for all the torts
specified in the statute." Hess v. Snyder Hunt
Corp.
, 240 Va. 49, 52, 392 S.E.2d 817, 819 (1990) (quoting School
Bd. of the City of Norfolk
v. U.S. Gypsum, 234 Va. 32,
37-38, 360 S.E.2d 325, 328 (1987)). However, as we observed in Hess,
Code Sect. 8.01-250 is only applicable to those torts
specified in the statute. Fraud is not a tort specified in the
statute because, as we have stated, the wrongful act involved in
fraud is "aimed at the person." Pigott v. Moran,
231 Va. 76, 81, 341 S.E.2d 179, 182 (1986). We also stated in J.F.
Toner & Son
v. Staunton Prod. Credit Assoc., 237
Va. 155, 158, 375 S.E.2d 530, 531 (1989), that because
"fraud invariably acts upon the person of the victim, rather
than upon property, its consequence is personal damage rather
than injury to property." Accordingly, we hold the circuit
court erred in sustaining the defendants’ special pleas in bar.

In summation, the circuit court correctly held
that the defendants’ alleged representations that the plaintiffs
would enjoy quiet possession in their new house, the house was
designed competently commensurate with the consideration of
$345,000, and the design and construction of the dwelling were of
the highest quality are not sufficient to support an action of
constructive fraud and, therefore, that portion of the circuit
court’s judgment dismissing the plaintiffs’ claim based upon
these statements will be affirmed. The alleged representations
that the house was free from structural defects, constructed in a
workmanlike manner, and fit for habitation are factual statements
which are sufficient to support a cause of action for
constructive fraud and, therefore, with respect to these alleged
statements, the judgment of the circuit court will be reversed.
That portion of the circuit court’s judgment which sustained the
defendants’ special pleas in bar will also be reversed. We will
remand this case for further proceedings consistent with the
views expressed in this opinion.

Affirmed in part, reversed in part,and
remanded
.

 

 

 

FOOTNOTES:

[1] The defendants, relying upon Kuczmanski
v. Gill, 225 Va. 367, 302 S.E.2d 48 (1983), assert that
all Sagun’s purported statements are mere opinions. Kuczmanski,
however, is factually distinguishable from the present case.
There, purchasers of a house filed a motion for judgment against
the sellers, alleging that one of the sellers assured the
purchasers that the house was in "excellent condition."
We held that the seller’s general statement that the house was in
excellent condition was mere sales talk and could not support an
action for fraud. Id. at 370, 302 S.E.2d at 50. Here,
unlike Kuczmanski, Sagun allegedly made specific
representations of the present quality or character of the new
house.

 

Scroll To Top