Hansen v. Stanley Martin Companies, Inc.

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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