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Statement About Staffer Not Fraud

An environmental staffing company’s representation to a subcontractor on an asbestos abatement project, that the staffing company had “exactly what you are looking for,” in reference to the resume of an abatement supervisor it submitted to the sub, does not support the sub’s fraud claims against the staffing company, says a Portsmouth Circuit Court.

Defendant B&R Construction Management Inc., a Virginia corporation, entered into a contract with Cornerstone Jeffry Wilson LLC to be the general contractor for Portsmouth Redevelopment & Housing Authority’s project to demolish Jeffry Wilson Housing. B&R then contracted with defendant/counterclaim plaintiff Beamon Enterprises Inc., also a Virginia corporation, for environmental abatement and demolition during performance of the project. Beamon in turn contracted with plaintiff/counterclaim defendant Environmental Staffing Acquisition Corporation (En-Staff), a North Carolina corporation, to provide labor for asbestos abatement.

En-Staff claims it provided qualified staff to Beamon and fully performed under the contract and Beamon owes full payment for services provided by En-Staff. Beamon alleges in its counterclaim that En-Staff did not provide qualified staff because the asbestos supervisor did not know what to do on the job and was not familiar with a substantial amount of the equipment and procedures used in asbestos abatement work. Beamon alleges that representations by one of En-Staff’s employees and a resume sent to Beamon before the signing of the proposal were misleading and amounted to fraud.

There is no bright line test to ascertain whether false representations constitute matters of opinion or statements of fact. Each case must in large measure be judged 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. There are rare cases where an opinion can be the basis of a claim for fraud.

In this case, En-Staff introduces an additional wrinkle in the law of fraud, focusing on the element of reliance by the plaintiff. When a plaintiff fails to investigate ordinary and accessible means of information, a claim of fraud is precluded. When a plaintiff does make his own investigation, whether complete or not, into the subject matter at hand, he may not say that he relied on the representations of another.

Beamon, on the other hand, emphasizes the part of the passage in DeJarnett v. Thomas Brooks Lumber Co., 199 Va. 18 (1957), that states the doctrine is inapplicable if concealment of a material fact is made or attempted. Specifically, a seller must not say or do anything to throw the purchaser off his guard or to divert him from making the inquiries and examination which a prudent man ought to make.

In the present case, there must be some specific fact alleged that would, if proved, suggest that the defendants did not have the present intention to perform when the promise was made.

The focus of this analysis is whether the statement by Bannett, an employee of En-Staff, that “I have exactly what you are looking for,” subsequent statements that Spangler was qualified and the delivery of Spangler’s resume to Beamon in response to Beamon’s request for a qualified asbestos abatement supervisor, may be the basis for a claim of fraud.

The court agrees with En-Staff that the facts alleged do not evince a present intent to perform the contract by purposely or recklessly providing unqualified workers to Beamon. Specifically, Beamon does not allege any fact suggesting that any En-Staff employee had any reason to believe that Mr. Spangler was not qualified or that the resume provided to Beamon was false in any way. The counterclaim instead states that En-Staff knew that Beamon needed someone in a hurry and it thought it had someone who was qualified. Fraudulent intent simply cannot be inferred from these allegations.

It appears that all Beamon alleges is En-Staff’s failure to provide qualified personnel. This amounts to a breach of contract and nothing more, and a simple breach of contract is not the type of deception that the law of fraud was intended to punish.

In addition to Beamon’s omission of any fact that could prove a present intent not to perform the contract, the actual statements are not ones that can provide the basis for a claim of fraud. Here, the court assumes arguendo that the basis of the claim for fraud is not En-Staff’s present intent to perform the contract in the future, but rather En-Staff’s present-time assertions that Spangler was qualified to perform the work. The issue then becomes whether a statement about one’s qualifications in the manner stated by Bannett, “I have exactly what you are looking for,” is a statement of fact or opinion. If it is one of opinion, then it is not actionable.

It appears to the court that Bannett’s assertion is no more than sales talk along the lines of a vehicle being in “excellent condition” or the building design being of the “highest quality.” Further, Bannett’s statements that Spangler was qualified during contract negotiations is merely a statement of opinion about how the product would perform in the future. En-Staff’s “product” in this case is Spangler’s expertise in asbestos personnel supervision. Beamon was provided this “product” for review during contract negotiations by way of a resume.

In contrast, a doctoring of the resume could be considered a misrepresentation of the present quality or character of the product, as En-Staff would be misrepresenting Spangler’s qualifications. Here, however, there is absolutely no allegation that the resume was false in any way. Rather, Bannett’s statements are matters of opinion in that they pertain to how Spangler may perform in the future when employed by Beamon.

The court sustains En-Staff’s demurrer to counts I and II for fraud in Beamon’s second amended counterclaim.

Environmental Staffing Acquisition Corp. v. Beamon Enters. Inc. (Melvin) No. CL 09-2688, Feb. 22, 2011; Portsmouth Cir.Ct; Marshall A. Winslow Jr., Christopher G. Hill, Lindsey Flaherty for the parties. VLW 011-8-069, 13 pp.

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