Economopoulos v. Kolaitis

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.


                                   3
        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.


                                   4
     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


                                  5
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


                                   6
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


                                 7
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


                                  8
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


                                10
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,


                                11
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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