Builder has standing to file counterclaim

Where plaintiff condominium buyer sued the developer and the seller for claims arising from alleged water damage, faulty repairs and construction, the developer has standing to file a counterclaim, which alleges that plaintiff breached the sales agreement by suing the developer.

However, the counterclaim does not sufficiently state a breach of contract, nor does it properly plead damages. Plaintiff’s demurrer is granted. Defendants may file an amended pleading.

Background

Van Metre Condominium Manager, Inc. builds and sells homes, including the condominium unit plaintiff purchased in the Villages at Broadlands Condominium Community LLC. Van Metre is also a member of Broadlands. Van Metre and Broadlands, collectively, are the defendants in this case.

Plaintiff bought an individual condo unit from Broadlands. The sale closed on Feb. 20, 2015. In her complaint, plaintiff alleged that about three weeks later, water leaked into her unit from “an active leak upstairs.” Van Metre performed repairs but plaintiff complained of a “foul odor.” Plaintiff alleged that testing revealed mold and other health risks, which made the unit “not fit for habitation.”

Defendants answered and filed a counterclaim, to which plaintiff has demurred. The counterclaim and plaintiff’s demurrer are before the court.

Discussion

“The basis of the Counterclaim is that Plaintiff breached the parties’ Sales Agreement by filing her actions against the Defendants. … Specifically, the Defendants allege that the Sales Agreement governs the Plaintiffs relationship with Broadlands and includes certain provisions limiting Broadlands’ liability. …

“Plaintiff’s Demurrer challenges Van Metre’s standing to bring a claim of breach of contract against her. She raises this challenge because Van Metre was not a party to the Sales Agreement that forms the basis of the alleged breach of contract. …

“The Defendants have not squarely addressed this argument in their pleadings, nor did they do so in argument, but appear to take the position that Van Metre is an intended third-party beneficiary of the Sales Agreement. Namely, they noted that … the Sales Agreement precludes Plaintiff’s claims against Van Metre. Therefore, they posited that Van Metre should be entitled the protections provided for in the Sales Agreement (namely attorney fees and costs).

“The Court agrees with the Defendants’ apparent argument. It is clear that the Sales Agreement precluded Van Metre from liability thereunder. As such, Van Metre holds the position of an intended third-party beneficiary. …

“Next, Plaintiff attacks the sufficiency of the Counterclaim’s pleading of the element of breach in two ways. First, she takes the position that the Counterclaim does not allege the Defendants gave her notice of her supposed default prior to closing and that her closing on the Property dispels any claim of her breach. Second, she contends that the Sales Agreement does not bar her from seeking relief under the Statutory Warranty or for wrongs committed after closing, both of which would be outside the contemplation of the Sales Agreement. …

“It is clear from the language of the Agreement that failure to close is not the only manner in which Plaintiff could default or breach.” The sale agreement gave Broadlands the right to seek remedies in the event of “‘Defaults occurring after Settlement … (emphasis added).’” The agreement also imposes certain post-closing obligations, such as a limited 10-year warranty.

“It is clear from the language of the Agreement that failure to close is not the only manner in which Plaintiff could default or breach.

“Turning to Plaintiff’s second argument, while the Sales Agreement refers to the Statutory Warranty, there is no language in the provision stating that the Sales Agreement supersedes or alters the Statutory Warranty. … Indeed, Code § 55.1-1902 prohibits any such variation. For that reason, the Sales Agreement cannot, by law, prohibit Plaintiff from bringing a claim against Defendants for violation of the Statutory Warranty.

“Therefore, Plaintiff’s claim of violation of the Statutory Warranty has not been brought in violation of the Sales Agreement and cannot constitute a breach.

“Plaintiff’s remaining claims for nuisance and negligent repair pertain to the repairs undertaken by the Defendants after Plaintiff closed on the Property. The Sales Agreement does not provide any other obligation (other than the Statutory Warranty) for the Defendants to undertake the repairs. Thus, logically, those causes of action arose separately from the Sales Agreement.

“As a result, Plaintiff’s causes of action are distinct from the Sales Agreement and any limitations of liability contained therein have no bearing Plaintiff’s claims. In turn, because the limitations of liability have no bearing on the Plaintiff’s pending claims, she did not breach the Sales Agreement by bringing them. For these reasons, the Court finds that Defendants’ Counterclaim does not allege a cognizable breach. …

“Plaintiff contends that the Counterclaim fails to allege a factual basis for the damages, let alone that they were proximately caused by her purported breach.” The court finds that defendants “have drawn a causal connection between the breach and the damages.

“With that being said, however, the allegation of damages is extraordinarily vague.” Defendants do not say whether they seek general or special damages. General damages are those expected when a plaintiff contracts and pays for a good that is never delivered. Damages would include the purchase price. The counterclaim asserts plaintiff breached a contract by bringing claims “which she ought not to have. There is no direct correlation of damages one would expect to arise from these facts.”

Defendants seek relief of $200,000 but the counterclaim “is void of any further facts or allegations with respect to those damages.”

Conclusion

“Van Metre has standing to bring its Counterclaim and that the Defendants have sufficiently pled a basis for their claim for attorney fees under the VCA [Virginia Condominium Act]. However, because they have not sufficiently alleged a breach of the Sales Agreement or properly pled their damages, the Court sustains the Plaintiffs Demurrer and grants Defendants leave to file an amended pleading[.]”

Kaplan v. Van Metre Condominium Manager, Inc., et al., Case No. CL00107382-00, Oct. 19, 2020, 20th  Cir. Ct. (Irby). David Hilton Wise, Edward W. Cameron for the parties. VLW 020-8-118, 11 pp.