Fraud – Home purchasers sue seller for fraudulent inducement

Where the purchasers of a residential home plausibly alleged the seller made false and material statements to induce the sale, thus violating Virginia’s Consumer Protection Act, the seller’s motion to dismiss was denied.

Background

This case arises out of the sale of a home in Winchester, Virginia, that allegedly suffered from several concealed defects. Glenn and Anja Walker filed suit against the seller, Moises Hernandez Sanchez; the listing agent and her brokerage, Janet Pichon Cersley and New Millennium RE LLC; the selling agent and her brokerage, Elizabeth
Jane Yesford and E Venture LLC, and the home inspector, Marlon Moore. Several defendants have filed motions to dismiss

Sanchez

Sanchez argues that Virginia’s source-of-duty rule bars several of the Walkers’ allegations from supporting their fraud claims. But the Walkers allege that Sanchez
made these promises with a present intention not to perform them. “[W]here the alleged fraud was perpetrated before a contract between the parties came into existence, it cannot logically follow that the duty allegedly breached was one that finds its source in the contract.” The Walkers so allege that Sanchez’s fraud was perpetrated before he contracted with the Walkers.

Rule 9(b) requires plaintiffs to plead “the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” The Walkers’ complaint satisfies Rule 9(b)’s particularity requirements. And while the Walkers don’t allege specific facts showing Sanchez’s knowledge of the falsity of his statements, Rule 9(b) permits the Walkers to “generally allege that [Sanchez] knowingly and intentionally made these false statements and did so with no intention to perform in accordance with those statements.”

Sanchez moves to dismiss the Walkers’ claims by arguing that their sought-after remedy of rescission is inappropriate. The Walkers respond that a Rule 12(b)(6) motion cannot be used to dismiss a specific remedy. The court agrees with the Walkers.

Finally, while Sanchez argues that, under Virginia’s caveat emptor rule, purchasers are responsible for “discover[ing] defects in the property which a reasonable inspection would have disclosed,” when the seller “say[s] or do[es] 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,” an exception applies. Here, the Walkers’ allegations fall, at least, under this exception.

Sanchez argues the Walkers’ constructive fraud claim is barred by the economic loss rule. Just as with the source of duty analysis above, however, the Walkers’ “constructive fraud claims are for more than disappointed economic expectations sounding in contract.” Accordingly, the economic loss rule does not bar the Walkers’ constructive fraud claim against Sanchez at this stage.

Sanchez argues that the Walkers’ Virginia Consumer Protection Act, or VCPA, claim must fail for three reasons:
(1) the sale of the property does not constitute a “consumer transaction” under the act; (2) Sanchez does not meet the statutory definition of a “supplier” and (3) the VCPA does not apply to residential home sales involving the seller’s private residence. But each of Sanchez’s arguments fail at this stage.

Cersley/New Millennium

Cersley and New Millennium assert that New Millennium is not an appropriate party to this action, as “[t]here are no factual allegations asserted against NMRE”—only Cersley. But the Walkers bring claims against New Millennium under a theory of vicarious liability.

However because the operative allegations against Cersley are for concealment—and because the Walkers do not adequately allege that Cersley had a duty to reveal such concealed facts—the court will dismiss the Walkers’ fraud in the inducement claims against Cersley and New
Millennium. Similarly, the Walkers’ operative claims against Cersley consist solely of intentional concealment allegations. For this reason, the court will dismiss the Walkers’ constructive fraud claim against Cersley and New Millennium.

Yesford/E Venture

E Venture argues that because it is a separate legal entity from Yesford, the Walkers cannot “pierce the corporate veil” of E Venture.But the Walkers are not proceeding under a veil-piercing theory. Rather, they seek to hold E Venture vicariously liable for the tortious acts of its agent, Yesford.

The court next finds that the Walkers may allege fraud in the inducement for contract performance, not merely formation; that the Walkers’ pre-contract fraud claims adequately state damages and allege fraud with adequate specificity and that Yesford and E Venture had a duty to disclose certain concealed facts.

Turning to constructive fraud, because Yesford’s alleged misrepresentation about Moore’s inspection results was a “representation[] of the present quality or character of the property,” this representation could “rightfully be relied upon.” However the Walkers do not plausibly allege the existence of an oral contract.

Civil Conspiracy

“Without any allegation as to ‘specific communications’ between the alleged conspirators or ‘the manner in which any such communications were made,’” the Walkers’ “complaint fails to plead an essential element of conspiracy.”

Walker v. Sanchez, Case No. 5:25-cv-00052, March 26, 2026. WDVA at Harrisonburg (Yoon). VLW 026-3-139. 33 pp.

Full-Text Opinion

VLW 026-3-139
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