PRESENT: ALL THE JUSTICES
MICHAEL G. HANSEN, ET AL.
OPINION BY
v. Record No. 022591 JUSTICE G. STEVEN AGEE
SEPTEMBER 12, 2003
STANLEY MARTIN COMPANIES, INC.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
R. Terrence Ney, Judge
Michael G. Hansen and Nancy E. Randa (the "Homeowners")
appeal the judgment of the Fairfax County Circuit Court granting
summary judgment to Stanley Martin Companies, Inc. ("Stanley
Martin") on all claims against it. For the reasons discussed
below, we will affirm the judgment of the trial court in part,
and reverse it in part, and the case will be remanded.
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
On February 22, 1997, the Homeowners entered into a sales
contract for the construction of a new home with Stanley Martin,
the builder. The Homeowners claim that, prior to executing the
sales contract, Stanley Martin's sales agent told them that the
stucco cladding to be used on their home would need "little to
no maintenance," was not the type of stucco cladding used in
North Carolina, and would not have the performance problems
found on some North Carolina stucco homes.
The home, located in the Potomac Regency subdivision in
Potomac, Maryland, was constructed using a synthetic stucco
product known as "Exterior Insulation and Finish System," or
EIFS. Although the Homeowners anticipated that the house would
be built with "conventional" or "real" stucco, Stanley Martin
informed them prior to execution of the sales contract that the
home would be clad with an artificial stucco product. Stanley
Martin substantially completed construction of the home by
August 1997, and the closing for transfer of title to the
Homeowners occurred on August 29, 1997.
The closing documents confirmed in writing that the
cladding on the home was EIFS and not conventional stucco.
Other closing documents included a warranty book, which the
Homeowners received and read, that informed them they were
required to inspect the home every three months for water
infiltration of the EIFS and that they were responsible for
maintaining the caulk seal around the home. The Homeowners felt
they had been misled because the home contained EIFS that
required regular maintenance.
On November 15, 1997, the Homeowners submitted a "60 Day
Warranty Service Request" form to Stanley Martin. Among the
five pages of items listed by the Homeowners as requiring
maintenance or not having been completed prior to closing
("punch list" type items) was an entry for "baseboard
discoloration under window in master bathroom." Stanley Martin
attempted to repair the leak under the window on at least three
occasions. In the months after the closing, the Homeowners
2
repeatedly requested that Stanley Martin give them a booklet,
promised at closing, containing information on maintenance of
the EIFS.
On November 7, 1998, the Homeowners read an article in the
Washington Post newspaper discussing water leakage problems
associated with synthetic stucco which featured Stanley Martin's
response to those problems on houses in the Potomac Regency
neighborhood. The Homeowners "found certain information in the
Washington Post article . . . disturbing" including this
passage: "The building industry first realized there was a
problem with synthetic stucco in 1994 and 1995, when hundreds of
almost-new houses in North Carolina turned out to have serious
water damage."
In October 1998, Stanley Martin inspected and made repairs
to the EIFS on the Homeowners' home. Thereafter, the Homeowners
received a report from an EIFS consultant Stanley Martin hired
to inspect houses it constructed with artificial stucco. The
report is dated November 16, 1998, and states that Stanley
Martin has "repaired noted defects and moisture related
problems."
In 1999, the Homeowners learned that other homeowners in
their neighborhood were experiencing problems with EIFS. On
October 29, 1999, the Homeowners hired their own consultant,
Stucco Pro, to inspect the EIFS on their home. The Homeowners
3
contend they were unaware of the problems caused by the EIFS
used by Stanley Martin on their home until they received the
Stucco Pro report. In early 2000, the Homeowners attended a
meeting with other homeowners and an officer of Stanley Martin
to discuss the EIFS problems. After the meeting, the Homeowners
and others affected by the EIFS problems decided to communicate
with Stanley Martin through an attorney.
On November 17, 2000, the Homeowners filed a motion for
judgment in the Circuit Court of Fairfax County asserting five
causes of action against Stanley Martin in separate counts for
breach of contract, fraud, negligence, negligent
misrepresentation, and violation of the Maryland Consumer
Protection Act ("MCPA") (Md. Code Ann., Commercial Law § 13-301
et seq.). On July 25, 2002, Stanley Martin filed a motion for
summary judgment alleging that the counts for breach of
contract, fraud, negligent misrepresentation, and violation of
the MCPA were barred by the applicable statutes of limitations. 1
The trial court granted the motion by order dated August 9,
1
The parties apparently agree that the Homeowners' cause of
action for negligence was dismissed with prejudice on Stanley
Martin's demurrer, though no order granting the demurrer appears
in the record. In any event, that count was not made the
subject of an assignment of error.
4
2002, and dismissed the Homeowners' suit with prejudice. 2 We
granted the Homeowners this appeal.
II. STANDARD OF REVIEW
A trial court may appropriately grant summary judgment in
cases where no material facts are genuinely in dispute. Rule
3:18; Thurmond v. Prince William Prof'l Baseball Club, Inc., 265
Va. 59, 64, 574 S.E.2d 246, 250 (2003); Majorana v. Crown Cent.
Petroleum Corp., 260 Va. 521, 525, 539 S.E.2d 426, 428 (2000).
However, "the decision to grant a motion for summary judgment is
2
In granting Stanley Martin's motion for summary judgment,
the trial court opined from the bench as follows:
[T]hat by the date of settlement on
their house namely, October [sic] 29, 1997
and certainly in no event later than
November 7, 1998 — they knew they had not
gotten stucco, but had gotten the artificial
stucco, EIFS; and that this was the same
EIFS that had caused problems with regard to
other houses in other states.
The statute of limitations in Maryland
for filing the fraud based claims or
negligence based claims is two years, and
this suit was filed more than two years from
either of those dates.
Insofar as the breach of contract claim
is concerned, it is clear that, even
adopting the Maryland discovery rule, the
plaintiffs knew or should have known no
later than November 15, 1997, at the time
their 60 day warranty list was completed,
that the product that they were unhappy with
receiving on August 29, 1997 was, in fact,
failing to perform as they had believed
either it should have if it was not the,
quote, North Carolina EIFS, unquote, or
certainly not real stucco.
5
a drastic remedy." Slone v. General Motors Corporation, 249 Va.
520, 522, 457 S.E.2d 51, 52 (1995) (quoting Turner v. Lotts, 244
Va. 554, 556, 422 S.E.2d 765, 766 (1992)). In the case at bar
our review of the record is limited to the parties' pleadings,
requests for admission, and interrogatories. 3 Therefore, we will
accept as true “those inferences from the facts that are most
favorable to the nonmoving party, unless the inferences are
forced, strained, or contrary to reason.” Dudas v. Glenwood
Golf Club, Inc., 261 Va. 133, 136, 540 S.E.2d 129, 131 (2001)
(quoting Dickerson v. Fatehi, 253 Va. 324, 327, 484 S.E.2d 880,
882 (1997)); see also Carson v. LeBlanc, 245 Va. 135, 139-40,
427 S.E.2d 189, 192 (1993).
III. Analysis
The focus in this case is the application of the statutes
of limitations to the Homeowners' causes of action pled in their
motion for judgment. The parties are in agreement as to the
applicable substantive and procedural law which governs our
decision with the exception of the MCPA count. Under the sales
contract, Maryland law governs the "interpretation, validity and
construction of the terms and conditions of the contract";
3
In its brief to this Court, Stanley Martin asserts that
the Homeowners improperly included deposition transcripts and
other documents in the Joint Appendix. Because our decision in
this case is not dependent on that material, we need not address
Stanley Martin's objection in this regard.
6
however, matters of procedure are governed by the situs of the
proceedings, so the Virginia statutes of limitation apply. See
Jones v. R. S. Jones & Assocs., 246 Va. 3, 5, 431 S.E.2d 33, 34
(1993) (stating the well-settled rule that "the lex loci will
govern as to all matters going to the basis of the right of
action itself, while the lex fori controls all that is connected
merely with the remedy") (quoting Maryland v. Coard, 175 Va.
571, 580-81, 9 S.E.2d 454, 458 (1940)). With these principles
in mind, we examine the trial court's rulings as to each of the
Homeowners' causes of action.
A. Breach of Contract
The Homeowners make alternative claims to establish a
breach of contract. First, they allege the sales contract was
breached because it required the house be constructed with
conventional stucco instead of EIFS. Second, the Homeowners
allege Stanley Martin failed to install the EIFS in accordance
with the building code as the contract required.
Code § 8.01-246(2) establishes a five-year statute of
limitations for actions under a written contract in Virginia.
The Homeowners' motion for judgment would be timely under this
statute; however, Code § 8.01-247 limits actions on contracts
governed by the law of another state to the limitations period
of that state if its time limit is more restrictive than
Virginia's. Under Maryland law, a contract action must be
7
brought "within three years from the date it accrues." Md. Code
Ann., Courts and Judicial Proceedings § 5-101 (2002).
Accordingly, the shorter three-year Maryland statute of
limitations applies to the Homeowners' breach of contract
claims.
While a breach of contract claim under Code § 8.01-230 is
deemed to accrue "when the breach of contract occurs", Maryland
law deems the claim to accrue under a discovery rule "when the
contract is breached and when the breach was or should have been
discovered." Poffenberger v. Risser, 431 A.2d 677, 680 (Md.
1981). As required by Code § 8.01-247, we apply Maryland's
three-year statute of limitations and its discovery rule to
determine when the statute of limitations commences to run on
the breach of contract claims. Further, the effective discovery
date under Maryland law is that date upon which, in the exercise
of due diligence, there was "knowledge of circumstances which
ought to have put a person of ordinary prudence on inquiry
[thus, charging the individual] with notice of all facts which
such an investigation would in all probability have disclosed if
it had been properly pursued." Poffenberger, 431 A.2d at 681.
Using these legal yardsticks, we measure each of the
Homeowners' breach of contract claims to determine whether any
material facts were genuinely in dispute concerning the issues
upon which the trial court granted summary judgment.
8
1. Construction with conventional stucco.
Entry of summary judgment was clearly correct on this
portion of the Homeowners' breach of contract claim. The
Homeowners admit they knew that the house was to be clad with
EIFS when they signed the contract of sale on February 22, 1997,
almost three years and eight months before the motion for
judgment was filed. Moreover, the Homeowners admit they
received notice in writing at closing on August 29, 1997, that
the house was clad with EIFS and not conventional stucco, still
over three years before the motion for judgment was filed.
Under these admitted facts, no genuine issue of material fact
was in dispute that the Homeowners' claim for contractual
entitlement to conventional stucco accrued more than three years
before November 17, 2000. Therefore, the Homeowners failed to
timely file their motion for judgment on these grounds and we
will affirm the trial court's grant of summary judgment as to
this claim.
2. Failure to Comply with the Building Code.
The Homeowners' also allege a breach of contract by
asserting that Stanley Martin failed to install the EIFS,
sealants, windows and flashing in conformity with the applicable
building code. The trial court apparently ruled this claim
accrued as of November 15, 1997, the date of the sixty-day
warranty list submitted by the Homeowners reflecting baseboard
9
discoloration under the master bathroom window. Under the trial
court's analysis, the three-year statute of limitations period
expired on November 15, 2000, two days before the Homeowners
filed their motion for judgment.
In the five pages of items the Homeowners enumerated for
repair or completion in the warranty list is the entry:
"Baseboard discoloration under window in master bathroom." No
further information elaborating on this item appears in the
record. Neither the trial court nor this Court knows whether
the discoloration was a one-inch spot or a three-foot stain. No
indication is given in the record as to whether the cause of the
discoloration was defective EIFS, a cracked window, or if the
Homeowners left the window open during a rainstorm. For summary
judgment purposes, our review is limited to the record for a
determination whether reasonable persons could differ regarding
a genuine issue of material fact. Whether this single notation
created a due diligence requirement upon the Homeowners is an
issue of fact that remains unresolved.
We hold that there is simply insufficient evidence in the
record to adjudge, as a matter of law, that no material fact
remains in dispute as to whether the Homeowners were, or should
have been, on notice of a building code violation by virtue of a
vague description of a single leak of unknown size and duration.
The record, at this point in the proceedings, does not contain
10
evidence which conclusively settles whether the single baseboard
discoloration had any causal connection to the alleged building
code violation. While evidence, yet to be adduced, may show
that the Homeowners, in the exercise of due diligence, should
have been put on notice to investigate the cause of the
baseboard discoloration, reasonable persons could disagree over
whether the limited facts in the record reach that threshold.
In such a circumstance, summary judgment does not lie since the
issue is properly one for resolution by the trier of fact upon
the taking of evidence. "[Rule 3:18] was adopted to provide
trial courts with authority to bring litigation to an end at an
early stage . . . but it does not substitute a new method of
trial where an issue of fact exists." Turner v. Lotts, 244 Va.
554, 557, 422 S.E.2d 765, 766-67 (1992) (quoting Leslie v. Nitz,
212 Va. 480, 481, 184 S.E.2d 755, 756 (1971)).
Accordingly, we hold that the trial court erred in granting
summary judgment as to this portion of the breach of contract
claim.
B. Fraud and Negligent Misrepresentation
The Homeowners' motion for judgment contains counts of
fraud and negligent misrepresentation on four identical grounds:
a. The exterior of the house would be clad with
"stucco" (claim "a");
11
b. That the cladding used on Plaintiffs' home would
not have the performance problems experienced by
homes in North Carolina since the problems in
North Carolina were due to weather and improper
installations (claim "b");
c. That the stucco to be utilized on the
[Homeowners'] house was not the same as that used
in North Carolina (claim "c");
d. That the cladding of the home would need little
to no maintenance (claim "d").
We consider the fraud and negligent misrepresentation counts
together because our ratio decidendi is the same in resolving
the application of summary judgment.
Since both counts sound in fraud, 4 the two-year statute of
limitations of Code § 8.01-243(A) applies and begins to run from
the date the fraud or negligent misrepresentation "is discovered
or by the exercise of due diligence reasonably should have been
discovered." Code § 8.01-249(1). We, therefore, review the
trial court's grant of summary judgment to determine whether a
genuine issue of material fact remained in dispute as to whether
the statute of limitations began to run before November 17,
4
Negligent misrepresentation is the essence of a claim for
constructive fraud in Virginia. See e.g., Richmond Metro. Auth.
v. McDevitt St. Bovis, Inc., 256 Va. 553, 559, 507 S.E.2d 344,
347 (1998).
12
1998, two years before the plaintiffs filed their motion for
judgment.
1. Failure to clad the home with stucco: Claim "a".
For the reasons previously explained regarding the breach
of contract claim asserting a right to a home clad with
conventional stucco, we hold that the trial court was also
correct in granting summary judgment under the fraud and
negligent misrepresentation counts as to claim "a". The statute
of limitations accrued no later than the closing date, August
29, 1997, which means the limitation period expired by August
29, 1999, over a year before the Homeowners filed suit. We will
affirm the grant of summary judgment as to claim "a" of both
counts.
2. No Maintenance: Claim "d".
We also hold that the trial court correctly granted summary
judgment as to claim "d" in both counts alleging representations
that the cladding of the home would need little or no
maintenance. At the August 29, 1997 closing, over three years
before their motion for judgment was filed, the Homeowners admit
they received the following written warranty notice:
It is imperative that the homeowner check the exterior
of the home every three months to assure that water
cannot infiltrate the house and get behind the
E.I.F.S. The homeowner is responsible for maintaining
the caulk seal around all the entire house, including
all windows, doors, etc.
13
The Homeowners admit they felt misled about the necessary
level of maintenance which had been represented to them when
they received this information. It is thus clear in the record
that no genuine issue of fact remained to be determined on the
issue whether the Homeowners knew, as of August 29, 1997, that
they were required to perform a high level of maintenance. The
Homeowners' failure to act within two years of that date, by
August 29, 1999, forecloses a claim against Stanley Martin on
the basis of claim "d" in both counts. We will approve the
grant of summary judgment as to claim "d" of both counts.
3. North Carolina Representations:
Claims "b" and "c".
The Homeowners allege in claims "b" and "c" that Stanley
Martin represented that the stucco on their house was not the
type used in North Carolina and would not have the performance
problems which had been experienced there. The trial court
granted summary judgment on these claims, apparently finding
that the statute of limitations began to run on November 7,
1998, the date the Homeowners read the Washington Post article.
Under this analysis, the Homeowners were required to file their
motion for judgment by November 7, 2000, ten days before suit
was actually filed in this case. We disagree with the trial
court's conclusion.
14
The Washington Post article informed the Homeowners that
Stanley Martin, their builder, was inspecting and repairing
homes it had constructed in their area which were clad with
synthetic stucco. The newspaper article noted that synthetic
stucco was usually referred to as EIFS, and recounted the fact
that houses built with EIFS in North Carolina had many water
intrusion problems. The article identified at least two types
of EIFS: barrier EIFS, which apparently has water intrusion
problems; and drainable EIFS which apparently does not have such
problems. The newspaper story did not identify the type of EIFS
used by Stanley Martin, the type used on the homes in the
Homeowners' neighborhood or the type used on their house. The
article did not indicate whether Stanley Martin made
representations that its EIFS was the same as the North Carolina
EIFS or whether the problems experienced by Stanley Martin's
homes were the same problems found in North Carolina homes clad
with synthetic stucco.
While the Washington Post article is probative, we cannot
say, as a matter of law, that it put the Homeowners on actual or
implied notice that the information they allege Stanley Martin
represented to them: that it did not use the type of stucco used
in North Carolina and that the stucco they did have would not
have the North Carolina problems — was false. The Washington
Post article raised questions, but we cannot say that reasonable
15
persons would not disagree about the conclusions to be drawn
from it. While some reasonable persons might reach the
conclusion advanced by Stanley Martin, and accepted by the trial
court, it is not unreasonable to conclude otherwise. Nothing in
the Washington Post article identifies the cladding on the
Homeowners' home, or the other homes built by Stanley Martin, to
be the same as that used in North Carolina. Neither does the
article specify that the North Carolina water intrusion problems
were the same problems experienced by the Homeowners. The
Washington Post article does not identify whether Stanley Martin
used barrier EIFS, drainable EIFS, or some other EIFS variation
in cladding the Homeowners' dwelling.
While further evidence, not yet adduced, may establish the
facts more conclusively, the record before us is not conclusive.
We hold that reasonable persons could disagree over the
knowledge imparted, or implied, to the Homeowners by the
Washington Post article. Therefore, the issue whether the
Homeowners were put on notice and required to act with due
diligence after reading the Washington Post article is for
resolution by the trier of fact upon a hearing of the evidence
and not for summary judgment at this time on this record.
We hold that the trial court erred in granting summary
judgment on claims "b" and "c" in the fraud and negligent
16
misrepresentation counts. We will reverse the trial court's
judgment in that regard.
C. MCPA
The Homeowners pled in a separate count of their motion for
judgment that Stanley Martin violated the MCPA in the sale and
construction of their home. The trial court's bench ruling and
written order granting summary judgment did not identify a
reason for dismissing this claim. Nonetheless, as with the
other claims previously examined, our inquiry is whether the
record reflects any material issues of fact were genuinely in
dispute as to whether the statute of limitations on the MCPA
count expired before the Homeowners' motion for judgment was
filed.
The parties agree that the applicable statute of
limitations for this count is Code § 8.01-248, sometimes called
the catch-all statute, which provides a two-year limitation
period. Citing our decision in Parker-Smith v. Sto Corp., 262
Va. 432, 551 S.E.2d 615 (2001), Stanley Martin contends that the
Homeowners' MCPA action accrued at the time of injury under
§ 8.01-230. Therefore, Stanley Martin argues that the statute
of limitations began to run at closing, August 29, 1997, and
thus expired on August 29, 1999. The Homeowners contend that
the MCPA is different from the Virginia statute at issue in
Parker-Smith and that "the nature of the cause of action at
17
issue should be analyzed when determining whether the 'catch-
all' limitation period in Code § 8.01-248 applies." Id. at 439,
551 S.E.2d at 619. The Homeowners then argue that the MCPA
claim sounds in fraud sufficiently to require use of the
discovery date for purposes of accrual under Code § 8.01-249(1).
We resolve this conflict, for purposes of this case only,
on the basis of the parties' representations in submitting the
motion for summary judgment to the trial court for decision. In
its motion for summary judgment, Stanley Martin made this
specific representation to the trial court:
"Though defendant contends that the MCPA is governed
by the two-year catch-all statute, Virginia Code
§ 8.01-248, defendant will concede, for purposes of
this motion only, that the discovery rule applies to
this claim as well."
As the only matter before this Court on appeal is the
summary judgment motion, Stanley Martin is bound here by the
same representation it made to the trial court. Having invited
the trial court to use a "discovery rule" for determining the
accrual date of the MCPA claim, Stanley Martin cannot now argue
for the application of a different rule on appeal. "No litigant
. . . will be permitted to approbate and reprobate — to invite
error, as the defense did here, and then to take advantage of
the situation created by his own wrong." Fisher v.
Commonwealth, 236 Va. 403, 417, 374 S.E.2d 46, 54 (1988) (citing
18
Sullivan v. Commonwealth, 157 Va. 867, 878, 161 S.E. 297, 300
(1931)).
Therefore, for purposes of our review of the grant of the
summary judgment motion on the MCPA claim, we apply the
discovery rule in accordance with the parties' framing of the
issue before the trial court. In that light, the analysis of
the trial court's grant of summary judgment is the same for the
MCPA count as for the fraud-based claims "b" and "c" under the
fraud and negligent misrepresentation counts. The salient claim
of knowledge imputed to the Homeowners comes from the Washington
Post article of November 7, 1998. We previously determined that
the information in that article was not a sufficient basis for
summary judgment based on the record before us. We similarly
hold that, with respect to the Homeowners' MCPA claim,
reasonable minds could differ as to what notice the Washington
Post article gave to the Homeowners. Therefore, we hold that
the trial court erred in granting summary judgment on this count
because the determination is more appropriately one to be made
by the trier of fact upon the hearing of the evidence. We will
reverse the trial court's judgment in this regard.
IV. Conclusion
For the reasons set forth above, we will affirm the trial
court's grant of summary judgment as to the breach of contract
count regarding the conventional stucco claim and reverse the
19
judgment as to the building code claim. We will affirm the
grant of summary judgment as to claims "a" and "d" of the fraud
and negligent misrepresentation counts, but we will reverse the
judgment as to claims "b" and "c" of both counts. As to the
MCPA count, we will reverse the trial court's grant of summary
judgment. The case will be remanded for further proceedings
consistent with this opinion.
Affirmed in part,
reversed in part,
and remanded.
JUSTICE KINSER, dissenting in part and concurring in part.
I agree with the majority opinion except with regard to its
analysis of claims “b” and “c” as asserted in the fraud and
negligent misrepresentation counts, and the claim brought under
the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann.,
Commercial Law § 13-301 et seq. In my view, the November 7,
1998 Washington Post newspaper article provided sufficient
information, as a matter of law, to put Michael G. Hansen and
Nancy E. Randa (the “Homeowners”) on actual or implied notice
that the alleged representations by Stanley Martin Companies,
Inc. (“Stanley Martin”), that it did not use the same type of
stucco product that builders had utilized in North Carolina and
that the stucco on the Homeowners’ house would not have the
North Carolina problems, were false.
20
A cause of action for fraud is deemed to accrue “when such
fraud, mistake, or undue influence is discovered or by the
exercise of due diligence reasonably should have been
discovered.” Code § 8.01-249(1). The term “due diligence” is
defined as “ ‘[s]uch a measure of prudence, activity, or
assiduity, as is properly to be expected from, and ordinarily
exercised by, a reasonable and prudent [person] under the
particular circumstances; not measured by any absolute standard,
but depending on the relative facts of the special case.’ ” STB
Marketing Corp. v. Zolfaghari, 240 Va. 140, 144, 393 S.E.2d 394,
397 (1990) (quoting Black’s Law Dictionary 411 (5th ed. 1979)).
Upon reading the Washington Post article, the Homeowners,
through the exercise of due diligence, should have discovered
Stanley Martin’s alleged fraud. See Pigott v. Moran, 231 Va.
76, 81, 341 S.E.2d 179, 182 (1986) (discovery of fraud occurred
when plaintiffs received certain information, not when the
information was later confirmed as accurate).
The majority concludes that “[n]othing in the Washington
Post article identifies the cladding on the Homeowners’ home, or
the other homes built by Stanley Martin, to be the same as that
used in North Carolina . . . [or] specif[ies] that the North
Carolina water intrusion problems were the same problems
experienced by the Homeowners.” This conclusion is correct.
However, the question is not whether the article imparted actual
21
knowledge to the Homeowners regarding the stucco on their house,
but whether, with the information presented in the article,
Stanley Martin’s alleged fraud should have been discovered
through the exercise of due diligence. See Code § 8.01-249(1).
I conclude that it should have been.
In addition to the information summarized by the majority,
the article also states that industry specialists and builders,
including Steven Alloy, President of Stanley Martin, were
recognizing that the water intrusion problems “weren’t a
geographic freak,” and that “[i]n almost any region where the
systems have been used, there are possible problems.” Quoting a
North Carolina building inspector, the article continues, “I’m
finding the same things up in Fairfax that we found [in North
Carolina], and just as extensive.” The article recites that
Stanley Martin is inspecting all its synthetic stucco homes for
water problems, and Alloy expressed his wish that other
“builders and homeowners would face up to the situation.” The
article quotes Alloy as saying that “[i]t’s going to be a fiasco
if people just walk away and let it get worse until it’s like
what happened in North Carolina.”
The Washington Post article also relates that, because of
the problems with “barrier EIFS, manufacturers have introduced a
new type of synthetic stucco, called drainable or water-managed
EIFS.” Even if Stanley Martin had used the new drainable EIFS
22
on the Homeowners’ house, the fact that it was inspecting every
house clad with synthetic stucco in the Homeowners’ neighborhood
should have placed the Homeowners on notice that their home
might have the barrier type EIFS and thus the same water
intrusion problems as the homes in North Carolina. In fact, the
article advises people to determine whether their home is clad
with synthetic stucco, perhaps by asking the builder, and if so,
to have their home inspected to determine whether there is a
water intrusion problem.
Citing Hughes v. Foley, 203 Va. 904, 907, 128 S.E.2d 261,
263 (1962), the Homeowners acknowledge on brief that they had
the burden to show that they acted with due diligence. With the
publication of the Washington Post article that the Homeowners
admitted they read and found disturbing, the Homeowners should
have discovered Stanley Martin’s alleged fraud. At that point,
they were required to act with due diligence and to inquire
further about the stucco on their home. But, they failed to so
do within the applicable statute of limitations.
The Homeowners, nevertheless, argue that any fears the
Washington Post article raised were calmed after they received a
November 16, 1998 report from a company hired by Stanley Martin
to inspect their home. This report stated that Stanley Martin
had “repaired noted defects and moisture related problems.” The
report, however, did not specify the type of synthetic stucco
23
used on the Homeowners’ house or the cause of the moisture
problems that were repaired. Although, as the Homeowners claim,
the report may have temporarily eased their fears, they were
still concerned enough to hire an independent company to perform
another inspection less than a year after the Stanley Martin
inspection. Despite the Homeowners’ claim that they did not
know of the problems caused by the EIFS used by Stanley Martin
on their home until they received this second report, that
report merely confirmed information first imparted to the
Homeowners when they read the Washington Post article. The
statute of limitations commenced to run when the alleged fraud
should have been discovered with the exercise of due diligence,
not when the moisture problems in the Homeowners’ house were
finally verified. See Pigott, 231 Va. at 81, 341 S.E.2d at 182.
For these reasons, I conclude, as a matter of law, that
claims “b” and “c” were barred by the applicable statute of
limitations. Since the majority utilized the same analysis to
reverse the trial court’s judgment regarding the MCPA claim, I
further conclude, for the reasons stated, that the applicable
statute of limitations also barred that claim. Thus, I
respectfully dissent, in part, and would affirm the judgment of
the circuit court granting summary judgment on claims “b” and
“c” of the fraud and negligent misrepresentation counts and the
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MCPA count. I also respectfully concur, in part, and agree with
the majority's disposition of the other counts.
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