Blair Construction, Inc. v. Weatherford

Present: All the Justices

BLAIR CONSTRUCTION, INC.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 961079 April 18, 1997

RANDY WEATHERFORD,
T/A W. S. CONSTRUCTION

FROM THE CIRCUIT COURT OF CAMPBELL COUNTY
J. Michael Gamble, Judge

In this appeal, we consider whether the plaintiff presented

the necessary clear and convincing evidence to establish a prima

facie case of constructive fraud.
Blair Construction, Inc., a general contractor, filed its

motion for judgment against Randy Weatherford, t/a W. S.

Construction, alleging that Weatherford breached its subcontract

with Blair and that Weatherford had also engaged in acts of

constructive fraud against Blair. At the conclusion of Blair's

evidence, the trial court granted Weatherford's motion to strike

the constructive fraud claim, and the jury returned a verdict in

favor of Weatherford on the breach of contract claim. Since

Blair appeals only that portion of the trial court's judgment

granting Weatherford's motion to strike the constructive fraud

claim, we will recite the evidence and all reasonable inferences

deducible therefrom in the light most favorable to Blair.

Abbott Laboratories, Ross Products Division, a national

pharmaceutical manufacturer, decided to construct a warehouse in

Altavista. Blair was one of the five general contractors from

whom Abbott solicited proposals. Kenneth V. BeCraft, a Blair

vice-president and project manager, solicited bids from

subcontractors to perform various aspects of the construction
work, including erection of structural steel elements of the

building. BeCraft received a bid of $438,400.00 to perform the

structural steel erection subcontract from Pro-Erectors, Inc., a

steel erection company.

Weatherford, who had not been solicited by BeCraft, called

him on December 29 or 30, 1993, and informed him that Weatherford

intended to submit a bid to perform the steel erection work. On

January 3, 1994, BeCraft received a one-page facsimile from

Weatherford which contained a bid to perform the steel erection

work for a base price of $253,000.00.
Considering the amount of the bid to be "low," BeCraft spoke

with Weatherford on the telephone "to make sure . . . the price

was okay." Weatherford stated "[h]e knew it was [a low] price"

and "that this would not be an out of town job for his men and it

. . . would allow him to have a job where they could commute back

and forth to the job site without having to stay in motels."

After informing Weatherford that it was computing and

submitting its bid to Abbott in reliance upon Weatherford's bid,

Blair submitted its bid to Abbott Laboratories. Between January

31, 1994 and April 8, 1994, Weatherford had numerous

conversations, both in person and on the telephone, with BeCraft,

and Weatherford indicated no reluctance to perform the steel

erection work. After Abbott awarded Blair the contract to

construct the warehouse, Blair mailed its standard confirmation

form to Weatherford and requested that he acknowledge that he

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would perform the steel erection work for $260,150.00 by signing

and returning the form. Weatherford did not return the

confirmation form.

Since a significant quantity of steel was scheduled to

arrive at the construction site on May 9, 1994, BeCraft scheduled

a meeting for April 27, 1994 with Weatherford and Everett Grady,

Abbott's site engineer and project representative, to discuss the

steel erection work. During this meeting, Weatherford and Grady

discussed Abbott's contractors' safety guide. Grady responded in

the negative to Weatherford's inquiry whether Abbott would

require him to utilize safety precautions in excess of those

standards required by the Occupational Safety and Health

Administration (OSHA). Weatherford expressed no further concern

about this issue at this meeting.
However, two days later, Weatherford sent a facsimile to

BeCraft which stated in part, "[b]ased on the stric[t] safety

guidelines relating to the above referenced job, we will have

[an] increase for quote of [January 3, 1994] by $75,000.00.

These are extra costs that were not taken into consideration on

the bid day. Thank you!" BeCraft called Weatherford by

telephone and informed him that BeCraft was "shocked" by the

request for additional money and told Weatherford that BeCraft

needed a "better justification" before requesting an additional

$75,000.00 from Abbott Laboratories.

This conversation occurred on a Friday afternoon, and

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Weatherford agreed to contact BeCraft on the following Monday.

Weatherford failed to contact BeCraft, as agreed. When Becraft

was finally able to contact Weatherford, the latter told Becraft

that he was not going to "do the job." Blair expended

approximately $602,719.00 in having its own personnel and those

of other contractors perform this work.

We recently stated the following principles which govern our

resolution of this appeal:
"[T]he elements of a cause of action for constructive
fraud are 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
misrepresentation. Evaluation Research Corp. v.
Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390 (1994);
accord Nationwide Mut. Ins. Co. v. Hargraves, 242 Va.
88, 92, 405 S.E.2d 848, 851 (1991); Kitchen v.
Throckmorton, 223 Va. 164, 171, 286 S.E.2d 673, 676
(1982). Additionally, '[a] finding of . . .
constructive fraud requires clear and convincing
evidence that one 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.' Alequin, 247 Va.
at 148, 439 S.E.2d at 390." Mortarino v. Consultant
Eng. Services, 251 Va. 289, 295, 467 S.E.2d 778, 782
(1996).

Additionally, "fraud must relate to a present or a pre-

existing fact, and cannot ordinarily be predicated on unfulfilled

promises or statements as to future events." Patrick v. Summers,

235 Va. 452, 454, 369 S.E.2d 162, 164 (1988) (quoting Soble v.

Herman, 175 Va. 489, 500, 9 S.E.2d 459, 464 (1940)); accord

Mortarino, 251 Va. at 293, 467 S.E.2d at 781. We explained the

reason for this requirement in Lloyd v. Smith, 150 Va. 132, 145,

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142 S.E. 363, 365 (1928):
"[A]n action based upon fraud must aver the
misrepresentation of present pre-existing facts, and
cannot ordinarily be predicated on unfulfilled promises
or statements as to future events. Were the general
rule otherwise, every breach of contract could be made
the basis of an action in tort for fraud."

Blair contends that it established a prima facie case of

constructive fraud. Blair argues that it presented clear and

convincing evidence that Weatherford "made a false representation

to Blair -- that being his present intent to construct the Abbott

building for $260,150.00." Continuing, Blair says that its

evidence indicates: Weatherford initiated contact with Blair;

Weatherford submitted an extraordinarily low bid and assured

Blair that Weatherford would perform for that price; Weatherford

had extensive discussions with BeCraft about the progress of the

project and never expressed any hesitancy about performing the

work; and when Weatherford "knew it would be virtually impossible

for Blair to find anyone else to perform the job, Weatherford

demanded $75,000.00 more money." Blair asserts that "[s]urely

the finder of fact could infer from all this that [Weatherford]

had no intention of performing his original promise to construct

this job for $260,150.00 but rather getting the job [and] then

bleeding Blair for more funds."
We disagree with Blair's contentions. We are of opinion

that Blair ignores the differences between actual fraud and

constructive fraud, which are two separate and distinct causes of

action, only one of which was pled in this case. Blair's sole

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allegation of constructive fraud differs from actual fraud

because in an action for constructive fraud, "the

misrepresentation of material fact is not made with the intent to

mislead, but is made innocently or negligently although resulting

in damage to the one relying on it." Evaluation Research Corp.,

247 Va. at 148, 439 S.E.2d at 390. Here, Blair pled a cause of

action for constructive fraud and, thus, at trial Blair was

required to present clear and convincing evidence to establish

that Weatherford's statements or actions constituted a

"misrepresentation of material fact . . . made innocently or

negligently." Id. The record is devoid of such evidence.

Next, Blair says that "misrepresentation of one's present

state of mind to do or not do an act can constitute a material

misrepresentation sufficient to support a cause of action for

constructive fraud." Blair cites Lloyd v. Smith, 150 Va. 132,

142 S.E. 363 (1928), Sea-Land Service, Inc. v. O'Neal, 224 Va.

343, 297 S.E.2d 647 (1982), and Colonial Ford Truck Sales, Inc.

v. Schneider, 228 Va. 671, 325 S.E.2d 91 (1985), in support of
this contention.

Blair's reliance upon these cases is misplaced. Once again,

Blair fails to recognize the distinctions between actual fraud

and constructive fraud. Each of the cases that Blair cites

involves actual fraud, not constructive fraud. For example, in

Colonial Ford, we stated:
"While failure to perform an antecedent promise
may constitute breach of contract, the breach does not
amount to fraud. But the promisor's intention -- his

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 state of mind -- is a matter of fact. When he makes
the promise, intending not to perform, his promise is a
misrepresentation of present fact, and if made to
induce the promisee to act to his detriment, is
actionable as an actual fraud. Lloyd v. Smith, 150 Va.
132, 145-47, 142 S.E. 363, 365-66 (1928); accord Sea-
Land Service, Inc. v. O'Neal, 224 Va. 343, 351, 297
S.E.2d 647, 651-52 (1982)." 228 Va. at 677, 325 S.E.2d
at 94 (emphasis added).

The record does not contain clear and convincing evidence

that would permit a jury to find that Weatherford committed acts

of constructive fraud when he submitted his bid to Blair.

Weatherford's bid, along with his subsequent telephone

conversation with BeCraft in which Weatherford confirmed his low

bid, do not constitute statements of present facts, but rather

promises to perform the work in the future for a specific price.
For the foregoing reasons, we will affirm the judgment of

the trial court.

Affirmed.

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