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Claims narrowed in dispute between homeowner and contractor

Where a homeowner alleged a contractor violated the Virginia Consumer Protection Act and that resulting damages are nondischargeable, but she failed to plead facts supporting her claims, they were dismissed. And where the contractor counterclaimed against the homeowner for breach of contract, but the alleged breaches did not correspond with a contractual duty in either contract, his claim was dismissed.

Background

After James Alexander C. Carr filed a petition under chapter 7 of the Bankruptcy Code, Anne Defot-Sido filed the original nine-count adversary complaint against Mr. Carr and Veronica M. Carr seeking damages for alleged violations of the Virginia Consumer Protection Act, fraud, as well as asserting fraudulent conveyance actions under Virginia law, among other requests for relief. The amended complaint arose out of two contracts for a renovation of Ms. Defot-Sido’s residence. Now before the court are multiple motions.

Count One-Four

Counts One, Two, Three and Four of the amended complaint seeks (i) damages Ms. Defot-Sido asserts were caused by Mr. Carr’s alleged violations of Virginia Code and (ii) a determination that such damages are nondischargeable.

The court finds that the amended complaint does not plead a knowingly false representation nor does it plead the remaining elements; instead it merely recites allegations relating to the alleged violations. The amended complaint then, in conclusory fashion, proclaims that the claim should be nondischargeable under 523(a)(2). Because the amended complaint fails to plead the required elements of these causes of action and the court finds that amendment would be futile, the court has no choice but to dismiss Counts One, Two, Three and Four with prejudice.

Counts Five-Six

Count Five seeks to avoid a 2019 transfer of defendant’s home from Mr. and Mrs. Carr as tenants by the entirety to Mrs. Carr individually. Ms. Defot-Sido has not adequately pled these counts because she has not alleged that she held a joint debt of Mr. and Mrs. Carr at the time of the transfer. Indeed, Ms. Defot-Sido makes clear that her claims were against Mr. Carr alone. Because the court finds that any attempt to cure this count through an amendment would be futile, the court will dismiss Counts Five and Six with prejudice.

Count Seven

Count Seven seeks a determination or declaration that Mr. Carr, individually, continues to own the 528 Highland Street NW property. The court notes that it has already dismissed Counts Five and Six. Moreover, the amended complaint does not assert a legitimate basis for otherwise voiding the 2017 and 2019 deeds.

Ms. Defot-Sido takes the position that real property cannot be transferred subject to a deed of trust and that therefore, any transfers following the grant of a deed of trust were void. The court rejects the argument because it is not the law.

Ms. Defot-Sido argues that Virginia Code § 55.1-400 allows for avoidance of a transfer that was made with the intent to defraud a future or subsequent creditor. However the amended complaint alleges that Ms. Defot-Sido was an existing creditor of Mr. Carr (not of both spouses) when the 2019 deed was signed. Other than a conclusory statement that Mr. Carr intended to injure creditors, the complaint provides no allegations of Mr. Carr’s fraudulent intent as it would relate to subsequent creditors.

Motion to dismiss counterclaim

Mr. Carr’s counterclaim against Ms. Defot-Sido, for breach of the contracts, seeks $150,000 in damages. Ultimately the counterclaim only alleges one purported contractual duty that was breached by Ms. Defot-Sido: “Ms. Defot-Sido had a contractual duty to allow the Counterplaintiff to complete work in a reasonable manner and environment, consistent with the express purpose of the Contracts.”

None of the alleged breaches correspond with a contractual duty in either contract. In addition, because the counterclaim is predicated upon a ruling that there was a contract with Mr. Carr, and because the only surviving count sounds in fraud and expressly contemplates that the contracts at issue are unenforceable, the count will be dismissed with prejudice.

Partial motion to dismiss complaint granted. Motion to dismiss counterclaim granted.

Defot-Sido v. Carr, Case No. 22-01007, Nov. 28, 2022. EDVA Bankr. at Alexandria (Kindred). VLW No. 022-4-028. 16 pp.

VLW 022-4-028

Virginia Lawyers Weekly