Virginia Lawyers Weekly//September 25, 2023
Virginia Lawyers Weekly//September 25, 2023//
Where an equine transport company was sued for its alleged negligence in the death of a show horse, and the horse’s owner alleged that the company made material misrepresentations about its “superior insurance coverage for equine transport,” the company was liable for its constructive fraud.
A show horse named Elton, who was owned by plaintiff Alexa Lowe LLC, was injured while being transported in a trailer being pulled by a truck driver employed by DMS Equine Transport LLC. The accident occurred when defendant John Etheridge, driving a separate vehicle, violently rear-ended the trailer. Ultimately, Elton had to be euthanized because of his injuries.
DMS was properly served in this case, both with the original complaint and the fourth amended complaint, but it has not appeared, either through counsel or otherwise, nor has it filed any documents in the case. After the clerk entered default against DMS, Alexa Lowe LLC moved for default judgment.
The court concludes that facts deemed true by default — DMS’s regular transaction of business in the commonwealth, its contracting with Alexa Lowe LLC and the resulting accident in Virginia — are sufficient to confer jurisdiction under Virginia’s long-arm statute. Thus, personal jurisdiction is not a barrier to entry of default judgment.
A party that requests default judgment must show the following: “(1) when and against what party the default was entered; (2) identification of the pleading to which default was entered; (3) whether the defaulting party is an infant or incompetent person; (4) that the defendant is not in the military; and (5) that notice has been served on the defaulting party, if required by Rule 55(b)(2).”
Alexa Lowe LLC has shown default was entered against DMS and when, and it has identified the pleading to which default was entered, the fourth amended complaint. DMS is a limited liability company and thus is not an infant, incompetent person or in military services. Moreover, because DMS has not appeared, Rule 55(b)(2) did not require any notice to be served on DMS. Nonetheless, plaintiff’s counsel has certified that a copy of the motion for default judgment was mailed to DMS’s registered agent.
The court must determine whether the alleged facts set forth a legitimate cause of action. Here, because there are three separate claims against DMS and because the damages under any of them would be the same, the court only need determine that one of the causes of action is supported by the facts.
Under Virginia law, a claim for constructive fraud requires 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 representation,” as well as “evidence that [defendant] 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.”
The facts here satisfy all of these elements. Whether innocently or negligently, DMS made statements in its advertising about its superior insurance coverage for equine transport, when it in fact had none. Thus, “a false representation of a fact was made either innocently or negligently.” That fact was material, as Alexa Lowe LLC would not have contracted with DMS had it known of DMS’s lack of insurance. Instead, Alexa Lowe LLC relied on that misrepresentation and suffered economic damages as a result.
As set forth in the attached affidavit of Ms. Lowe, the court finds Elton’s value, at the time of his death, to be $750,000, which is the replacement value of a horse of similar breeding and training. Accordingly, the court concludes that DMS shall be liable to Alexa Lowe LLC for that amount, less a set-off for sums paid by other settling defendants as referenced in Ms. Lowe’s affidavit. The total amount of the judgment against DMS will be $694,975.00.
Alexa Lowe LLC’s motion for default judgment against DMS granted.
Alexa Lowe LLC v. Etheridge, Case No. 5:20-cv-00054, Sept. 1, 2023. WDVA at Harrisonburg (Dillon). VLW 023-3-531. 7 pp.