PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Koontz, and
Kinser, JJ., and Stephenson, Senior Justice
ANASTASIA ECONOMOPOULOS, ET AL.
OPINION BY
v. Record No. 991245 SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
April 21, 2000
ANDREW M. KOLAITIS
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Stanley P. Klein, Judge
This case involves claims of constructive fraud,
conversion, "intentional interference with inheritance," and
unjust enrichment. In this appeal, the plaintiffs have assigned
twelve errors, and the defendant has assigned one cross-error.
These alleged errors present three principal issues, viz.:
1. Whether the trial court erred in finding the existence
of a confidential relationship between a father and son.
2. Whether the trial court erred in striking the
plaintiffs' constructive fraud claim.
3. Whether the trial court erred in striking the
plaintiffs' claims of conversion, "intentional interference with
inheritance," and unjust enrichment.
I
By separate four-count motions for judgment, Anastasia
Economopoulos, Aphroditi Kolaitis, and Fereniki Kolaitis (the
Plaintiffs) sued Andrew M. Kolaitis (the Defendant). Each
Plaintiff sought to recover $262,500 in compensatory damages and
$50,000 in punitive damages arising from the redemption of
certain Treasury bills. The Plaintiffs alleged conversion and
misappropriation in Count I, constructive fraud in Count II,
unjust enrichment in Count III, and "tortious interference with
inheritance" in Count IV. The Plaintiffs also sought certain
equitable relief, including the imposition of a constructive
trust.
By an agreed order, the actions were transferred to the
chancery side of the court, and the trial court consolidated
them for trial. At the conclusion of the Plaintiffs' case-in-
chief, the trial court struck the Plaintiffs' evidence as to all
counts and entered judgment in favor of the Defendant. This
appeal ensued.
II
Michael A. Kolaitis died on April 21, 1997. He had four
children, Anastasia Economopoulos, Aphroditi Kolaitis, Fereniki
Kolaitis, and Andrew M. Kolaitis.
Michael had been a businessman in Arlington County, and,
from the mid-1960's until 1980, he operated the Parkington Sleep
Center. In 1966, Andrew began working at the business on a
part-time basis, and, upon his graduation from college in 1973,
he became a full-time employee. About 1980, Andrew took over
the business from his father, although Michael continued to work
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part-time, and the two remained co-owners of the real property
upon which the business was located.
Andrew operated the business until 1990, when the business
property and several adjoining properties, also co-owned by
Michael and Andrew, were sold to Arlington County for about $3
million. As a result of the sale, Michael and Andrew's business
relationship terminated, and, as co-owner of the properties,
Michael netted $956,502.91.
Michael invested $900,000 of his portion of the sale
proceeds in five Treasury bills: three $200,000 bills, each
titled jointly with a daughter; a $50,000 bill titled jointly
with Andrew; and a $250,000 bill titled solely in Michael's
name. The Treasury bills were deposited in Michael's bank
account, and Michael told his three daughters that he had
invested $200,000 for each of them.
From April 1990 until May 1996, Michael renewed the
Treasury bills quarterly. In 1994, Michael executed a codicil
to his 1992 will, directing his executor (Andrew) to divide into
three equal shares $600,000 of the Treasury bill funds and to
pay the shares to his three daughters.
From about 1991 until 1996, Andrew and Michael engaged the
same accountant, Larry D. Spring. Spring prepared their
personal tax returns, and each was present when the other's tax
return was discussed with Spring.
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On April 1, 1996, Michael signed a check, prepared by and
payable to Andrew, in the amount of $40,000. Andrew testified
that Michael had directed him to prepare the check and that
Michael intended the sum as four gifts of $10,000 each to
Andrew, Andrew's wife, and Andrew's two sons.
On April 3, 1996, Andrew, at Michael's request, was added
as a signatory on Michael's First Union Bank account. Andrew,
however, wrote no checks on that account.
In March 1996, at age 82, Michael was diagnosed with kidney
disease, and he was hospitalized for renal failure several times
between March and June of that year. During this period,
Michael's health steadily declined. In late June 1996, Michael
began thrice-weekly dialysis treatments, which continued until
his death. About the same time, Michael's wife, Theresa, also
was experiencing serious medical problems. She was diagnosed
with cancer and underwent treatment until her death in January
1997.
In May 1996, Michael, during one of his hospitalizations,
directed Andrew to retrieve Michael's NationsBank checkbook from
his house. On May 16, Andrew brought the checkbook to the
hospital, and Michael instructed Andrew to prepare a check,
which Michael signed, payable to Andrew and in the amount of
$300,000. At that time, Michael's account did not contain
sufficient funds to cover the check.
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On May 17, 1996, while Michael was hospitalized, Andrew
went to Michael's home and retrieved Michael's mail, including
renewal notices for the Treasury bills. Michael, however, had
decided to redeem all of the Treasury bills so that he would
have control over his funds. Consequently, Michael directed
Andrew to hold the $300,000 check until June 27, 1996, the day
the Treasury bills were to be redeemed and the funds deposited
in Michael's NationsBank account. Michael also directed Andrew
to place the funds represented by the check in an account in
Andrew's name and to hold the funds until further notice.
Andrew did as directed.
In early July 1996, Michael told Andrew that he wanted
$140,000 of the $300,000 returned to him and that the $160,000
balance was a gift to Andrew. Consequently, at Michael's
direction, Andrew drew two checks, payable to Michael, each in
the amount of $70,000. Thereupon, Michael deposited one of the
checks in a new Signet Bank account, and he deposited the other
$70,000 check in his existing account at Chevy Chase Bank. The
funds remained in these two accounts, subject to Michael's
control, until his death. Upon Michael's death, the funds were
paid to Andrew.
On July 11, 1996, Michael executed a new will by which he
divided his residuary estate equally among his four children.
By his new will, Michael also revoked all prior wills and
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codicils. This will was admitted to probate upon Michael's
death.
Throughout 1996, Michael exercised control of his various
bank accounts and made financial decisions on his own. In
addition to the gifts to Andrew, Michael wrote checks to
Anastasia in July 1996 for expenses she incurred on a trip to
Virginia to visit him. Michael also made separate gifts to each
of Anastasia's two children, as well as a $4,000 gift to
Anastasia.
In November 1996, Michael learned that Fereniki had altered
a check he had drawn by changing its face amount. Up to that
time, Fereniki had filled out many of Michael's checks for his
signature. Upon learning of the altered check, Michael took
steps to ensure that Fereniki no longer had access to his
checkbooks.
In January 1997, Michael directed Andrew to take his
financial information to Spring so that Spring could prepare
Michael's tax returns. Andrew took the information to Spring
and advised Spring of the gifts that Michael had made to him in
1996. Spring then prepared gift tax returns that Michael
subsequently signed.
III
Initially, we consider the effect to be given to Andrew's
testimony resulting from his having been called and examined by
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the Plaintiffs as an adverse party. It is well established
that, when an adverse party is called and examined by an
opposing party, the latter is bound by all of the former's
testimony that is uncontradicted and is not inherently
improbable. Brown v. Metz, 240 Va. 127, 131, 393 S.E.2d 402,
404 (1990); Crabtree v. Dingus, 194 Va. 615, 622, 74 S.E.2d 54,
58 (1953); Saunders v. Temple, 154 Va. 714, 726, 153 S.E. 691,
695 (1930). Also, under such circumstances, Code § 8.01-397
(the so-called "Deadman's Statute") does not apply. Brown, 240
Va. at 131-32, 393 S.E.2d at 404; Balderson v. Robertson, 203
Va. 484, 488, 125 S.E.2d 180, 184 (1962).
In the present case, Andrew's testimony about the events in
issue is uncontradicted and is not inherently improbable.
Nevertheless, the Plaintiffs contend that these longstanding
evidentiary rules do not apply in matters regarding confidential
relationships or claims of fraud. They cite no authority for
this proposition, and we are not aware of any. We see no reason
to create this exception to these rules, and, therefore, we
reject the Plaintiffs' contention.
IV
A
We now consider the issue raised by Andrew's assignment of
cross-error; that is, whether the trial court erred in finding
the existence of a confidential relationship between Andrew and
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Michael. The existence of such a relationship would give rise
to a presumption of fraud and shift to Andrew the burden to
prove the bona fides of the transactions at issue. Nicholson v.
Shockey, 192 Va. 270, 277-78, 64 S.E.2d 813, 817 (1951).
A parent-child relationship, standing alone, is
insufficient to create a confidential or fiduciary relationship.
Nuckols v. Nuckols, 228 Va. 25, 36-37, 320 S.E.2d 734, 740
(1984); Carter v. Carter, 223 Va. 505, 509, 291 S.E.2d 218, 221
(1982). On the other hand, we have found a confidential
relationship to exist in a familial relationship that is
accompanied by an attorney-client relationship, Nicholson, 192
Va. at 276-77, 64 S.E.2d at 817, or by a principal-agent
relationship, Creasy v. Henderson, 210 Va. 744, 749-50, 173
S.E.2d 823, 828 (1970). We also have recognized a confidential
relationship where one family member provides financial advice
to or handles the finances of another family member. Jackson v.
Seymour, 193 Va. 735, 740-41, 71 S.E.2d 181, 184-85 (1952).
In the present case, the Plaintiffs, in claiming that a
confidential relationship existed between Michael and Andrew,
rely strongly on Michael and Andrew's seventeen-year business
association. While this association existed, such a
relationship may have arisen. However, the business association
ended in 1990, approximately six years before the time of the
events at issue in this case. Therefore, Michael and Andrew's
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former business association cannot serve as a basis for a
confidential relationship at the time of the events at issue.
The Plaintiffs further assert that, after 1990, Andrew
advised and assisted Michael in his business affairs. Although
Andrew did assist his father in his latter years, the undisputed
evidence shows that Michael had complete and exclusive control
of his financial affairs up to the time of his death.
We conclude, as a matter of law, that the evidence fails to
establish a confidential relationship between Michael and
Andrew, and the trial court erred in finding otherwise.
Consequently, the transactions at issue were not presumptively
fraudulent, and the burden to prove fraud remained on the
Plaintiffs.
B
Next, we consider whether the trial court erred in striking
the Plaintiffs' evidence with respect to their constructive
fraud claim. Fraud, whether actual or constructive, must be
proved by clear and convincing evidence. Henderson v.
Henderson, 255 Va. 122, 126, 495 S.E.2d 496, 499 (1998).
A finding of constructive fraud requires proof
that a false representation of a material fact was
made, innocently or negligently, and that the injured
party suffered damage as a result of his reliance on
the misrepresentation. . . . In addition, the
evidence must show that the false representation was
made so as to induce a reasonable person to believe
it, with the intent that the person would act on this
representation.
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Id. (citations omitted).
When the sufficiency of a plaintiff's evidence is
challenged by a motion to strike, a trial court must resolve all
reasonable doubt as to the evidence's sufficiency in the
plaintiff's favor and deny the motion unless it is conclusively
apparent that the plaintiff has proved no cause of action.
Higgins v. Bowdoin, 238 Va. 134, 141, 380 S.E.2d 904, 908
(1989); Williams v. Vaughan, 214 Va. 307, 309, 199 S.E.2d 515,
517 (1973). When a trial court strikes a plaintiff's evidence,
an appellate court, in reviewing the ruling, must view the
evidence and all reasonable inferences to be drawn therefrom in
the light most favorable to the plaintiff. West v. Critzer, 238
Va. 356, 357, 383 S.E.2d 726, 727 (1989).
As previously stated, there is no presumption of fraud in
the present case because Michael and Andrew did not have a
confidential relationship at the time of the events at issue.
Consequently, when we view the Plaintiffs' evidence in the light
most favorable to them, absent a presumption of fraud, we are
compelled to conclude that the Plaintiffs failed to present a
prima facie case of constructive fraud. To the contrary, the
Plaintiffs' uncontradicted evidence shows that Michael intended
to give Andrew the $160,000 and that Michael also intended to
redeem the Treasury bills. Moreover, the Plaintiffs do not
contend that Michael was enfeebled in mind or subjected to undue
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influence, and, indeed, the evidence clearly shows that he was
fully capable of managing his financial affairs and did so until
the time of his death. We hold, therefore, that the trial court
did not err in striking the Plaintiffs' evidence relating to
their claim of constructive fraud.
V
The Plaintiffs also contend that the trial court erred in
striking their claims of conversion, unjust enrichment, and
"tortious interference with inheritance." We do not agree.
Conversion is the wrongful assumption or exercise of the
right of ownership over goods or chattels belonging to another
in denial of or inconsistent with the owner's rights. Credit
Corp. v. Kaplan, 198 Va. 67, 75-76, 92 S.E.2d 359, 365 (1956).
An action for conversion can be maintained only by the person
having a property interest in and entitled to the immediate
possession of the item alleged to have been wrongfully
converted. United Leasing Corp. v. Thrift Ins. Corp., 247 Va.
299, 305, 440 S.E.2d 902, 906 (1994).
In the present case, the Plaintiffs were not entitled to
the immediate possession of the Treasury bills at the time they
allegedly were wrongfully converted. Moreover, as the trial
court correctly noted, "the failure to renew the Treasury bills
cannot be a conversion because, even assuming that Andrew
Kolaitis was involved in the fact that they were not renewed,
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the monies from the T-bills went into an account in Michael
Kolaitis' name."
Additionally, as previously noted, the uncontradicted
evidence shows that Michael intended to redeem the Treasury
bills and to make the $160,000 gift to Andrew. In the face of
that evidence, there could be no conversion, even if we assume
that the Plaintiffs had standing to institute the action.
The same analysis is applicable to the Plaintiffs' claim of
unjust enrichment. The uncontradicted evidence of Michael's
intent respecting the redemption of the Treasury bills and the
gift to Andrew runs counter to any such claim.
We also agree with the trial court that a cause of action
for "tortious interference with inheritance" is not recognized
in Virginia. A person who is mentally competent and not subject
to undue influence may make any disposition of his property he
chooses during his lifetime or by will at his death. Moreover,
the Plaintiffs had only an expectancy in the Treasury bills
while Michael was alive and in control of them.
VI
In sum, we hold the following:
1. A confidential relationship did not exist between
Michael and Andrew, and, therefore, there was no presumption of
fraud.
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2. The trial court did not err in striking the
Plaintiffs' constructive fraud cause of action because their
uncontradicted evidence failed to present a prima facie case of
constructive fraud.
3. The trial court did not err in striking the
Plaintiffs' claims of conversion, unjust enrichment, and
"tortious interference with inheritance."
Accordingly, the trial court's judgment will be affirmed.
Affirmed.
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