Present: All the Justices
SUNRISE CONTINUING CARE, LLC
OPINION BY
v. Record No. 072501 JUSTICE LEROY F. MILLETTE, JR.
January 16, 2009
JAMES F. WRIGHT, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Robert W. Wooldridge, Jr., Judge
In this appeal, we consider whether the trial court erred
in allowing a jury to calculate damages arising from an alleged
breach of a continuing care services contract when the
plaintiffs’ claims for rescission of the contract and for fraud
were dismissed, and the plaintiffs presented no evidence of
compensatory damages in support of their sole remaining claim
for breach of contract.
BACKGROUND
On November 13, 2003, Colonel James F. Wright, Jr., then
age 82, and wife Marion C. Wright, then age 76 (collectively,
the Wrights), moved into apartment 404 at The Fairfax, a
continuing care facility for retired military officers owned by
Sunrise Continuing Care, LLC (Sunrise). Three weeks later, the
Wrights experienced the first in a series of roof leaks that
persisted for several years. The existence of recurrent roof
leaks in apartment 404 is uncontested. Almost three years
after they moved in and while they continued to live at The
Fairfax, the Wrights filed a three-count complaint against
Sunrise, consisting of count I – rescission, count II – fraud,
and count III – breach of contract. *
The contract the Wrights alleged had been breached by
Sunrise was a continuing care agreement that set out the terms
of the Wrights’ residence at The Fairfax and the parties’
respective obligations. Although the Wrights were offered
options including a 50 percent refundable or 95 percent
refundable contract, they chose a non-refundable contract. The
Wrights paid a non-refundable entrance fee of $204,084.00.
Under the agreement, the Wrights were also required to pay a
monthly fee as additional consideration for medical and non-
medical services provided to the residents at The Fairfax.
These services included 24-hour security, a daily main meal,
weekly housekeeping service, scheduled transportation, 24-hour
nurse on duty, an assisted living and skilled nursing care
facility, a wellness clinic, an emergency call system,
concierge service, scheduled recreational programs, full-time
administrative staff, maintenance of residence and community
grounds, and utilities. A wide array of amenities was also
offered, including fine dining and monthly wine tasting events.
Additionally, in exchange for the entrance fee and continued
*
Counts I and II were dismissed at trial and are not at
issue in this appeal.
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payment of the monthly fees, the Wrights were entitled to live
at The Fairfax for the rest of their lives.
Colonel Wright testified that apartment 404 was
represented to Mrs. Wright and him as “[t]he best available,
high class, first class.” The Wrights expected to receive
“[a]n apartment that was like new and one that [they] could
live in safely and keep [their] furniture in, and go off if
[they] wanted to, lock the door and go away for a week or so,
without having [their] apartment on [their] mind.” They
anticipated “peace, quiet, no need to do the chores that go
with owning a house, and camaraderie of other people [at The
Fairfax and] social events that people with the same background
would enjoy sharing with each other.”
The Wrights contended that apartment 404 was less than
“first class” due to the roof leaks and, therefore, Sunrise
materially breached the agreement. Colonel Wright testified
regarding damages:
[W]e had to spend a lot of our time in the
apartment instead of doing the things that we
wanted to do, and we felt as though we were a
hostage to a faulty apartment. We couldn’t go
out to do the things we liked to do, and simply
shopping and things like that where you −
depending upon the weather, we’d decide that one
of us had better stop and stay in the apartment.
And it was three, going on four, years of the
worst years of our retirement.
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As damages for breach of contract, the Wrights claimed
$382,535.93, representing their payment of the $204,084.00
entrance fee plus monthly fees paid up to the date of the trial
amounting to $178,451.93.
A jury trial was held, while the Wrights continued to live
at The Fairfax. After the Wrights completed the presentation
of their evidence, Sunrise moved to strike the evidence and for
entry of judgment in its favor. Sunrise argued that although
the Wrights had the burden to prove damages, they “put on no
evidence to demonstrate anything other than full
reimbursement.” Sunrise further argued that rescission was an
inappropriate remedy because rescission requires extraordinary
circumstances in which the entire purpose of the contract
between the parties is defeated. Sunrise analogized the
extraordinary circumstances required for rescission of the
contract with constructive eviction in a landlord/tenant case.
In addition, Sunrise contended it had taken extraordinary
measures to repair the leaks.
Arguing against Sunrise’s motion to strike, the Wrights
asserted that the series of leaks constituted a material breach
of the contract and they were therefore entitled to rescission
to be returned to the “status quo” and to reimbursement of, at
a minimum, the entrance fee. In addition, the Wrights sought
compensation for the amount the monthly fee was “devalued” by
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the alleged breach. The Wrights conceded, however, that “at
this point in the case, the only thing that’s been proven was
what [the Wrights have] paid in” and, having presented their
case-in-chief, that they had not put on any evidence of
compensatory damages. The Wrights argued, “we are entitled to
our money back because of a material breach of the contract,”
and if Sunrise sought restitution for the services it provided
to the Wrights, “the burden shifts to [Sunrise]” as “to any
kind of quantum meruit that [it] can prove.”
The trial court granted Sunrise’s motion to strike the
rescission and fraud claims, but took the motion to strike the
breach of contract claim under advisement. Sunrise presented
its case, after which Sunrise renewed its motion to strike the
breach of contract claim. The trial court continued to take
the motion to strike the breach of contract claim under
advisement. At the conclusion of the Wrights’ rebuttal
evidence, Sunrise renewed its motion to strike for a second
time, which was again taken under advisement. The case was
submitted to the jury on the Wrights’ breach of contract claim.
The jury returned a verdict in favor of the Wrights and
assessed their damages at $279,000. The trial court denied
Sunrise’s outstanding motion to strike and entered final
judgment. This appeal followed.
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DISCUSSION
Sunrise contends that the trial court erred in denying its
motion to strike the Wrights’ claim for breach of contract.
Sunrise further contends the trial court erred in awarding
final judgment to the Wrights.
Sunrise argues that the Wrights never claimed compensatory
damages in their lawsuit or proved any compensatory damages at
trial. According to Sunrise, the sole remedy the Wrights
sought was rescission, with a repudiation and subsequent
cancellation of the contract; and a total refund of all monies
they had paid to Sunrise, less any offset that Sunrise could
prove to the jury for the value of services the Wrights had
received.
Sunrise contends that even though the Wrights had resided
in their apartment at The Fairfax for almost four years and
received substantial services and enjoyed amenities provided by
Sunrise, the Wrights presented no evidence to allow the jury to
determine the amount the Wrights should recover if the jury
found Sunrise had materially breached the contract. Sunrise
argues that without any evidence of the difference between the
services the Wrights claimed they were entitled to receive
pursuant to the contract and the services they did receive, the
jury could only speculate in assessing damages. Sunrise
asserts that since the Wrights did not prove their damages,
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they failed to establish a prima facie claim for breach of
contract.
In response, the Wrights argue that because Sunrise
committed a material breach, the Wrights were entitled to
repudiate and cancel the contract. The Wrights also contend
they were entitled to receive as damages the difference in
value between the benefits under the contract if they had been
“first class” as contracted for and the value of the “actual”
benefits the Wrights received.
The Wrights argue that the jury was provided with evidence
of the agreed upon contract value of the “first class” benefits
the Wrights were supposed to receive. According to the
Wrights, they presented evidence regarding the deficient nature
of these benefits, which were of such character that no precise
evidence of value or lack of value could be ascertained. Thus,
the Wrights contend that a precise determination of loss or
reduction in value was not possible. In support of their
position, the Wrights argue that plaintiffs are not required to
prove their damages to a mathematical certainty, and that
juries are allowed to consider probable and inferential proof
and to rely upon their general knowledge in awarding damages.
“[W]here the trial court has declined to strike the
plaintiff’s evidence or to set aside a jury verdict, the
standard of appellate review in Virginia requires this Court to
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consider whether the evidence presented, taken in the light
most favorable to the plaintiff, was sufficient to support the
jury verdict in favor of the plaintiff.” Bitar v. Rahman, 272
Va. 130, 141, 630 S.E.2d 319, 325-26 (2006) (citation and
internal quotation marks omitted). “The elements of a breach
of contract action are (1) a legally enforceable obligation of
a defendant to a plaintiff; (2) the defendant’s violation or
breach of that obligation; and (3) injury or damage to the
plaintiff caused by the breach of obligation.” Filak v.
George, 267 Va. 612, 619, 594 S.E.2d 610, 614 (2004). The
plaintiff bears the burden to establish the element of damages
with reasonable certainty. Nichols Construction Corp. v.
Virginia Machine Tool Co., LLC, 276 Va. 81, 89, 661 S.E.2d 467,
472 (2008). Damages that are contingent, speculative, and
uncertain are not recoverable because they cannot be
established with reasonable certainty. Shepherd v. Davis, 265
Va. 108, 125, 574 S.E.2d 514, 524 (2003); Crist v. Metropolitan
Mortgage Fund, Inc., 231 Va. 190, 195, 343 S.E.2d 308, 311
(1986).
In pursuing a breach of contract claim against Sunrise,
the Wrights are subject to well-established proof requirements
imposed on any plaintiff in a breach of contract action. The
Wrights failed as a matter of law to establish damages
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resulting from the difference in the “first class” care Sunrise
agreed to provide and the care they actually received.
The Wrights’ arguments alone reveal the insufficiency of
their evidence of damages. In response to Sunrise’s original
motion to strike at the conclusion of the Wrights’ case-in-
chief, the Wrights argued that the value of the contracted-for
services was contained in the continuing care agreement:
This is pretty plain. [The continuing care
agreement] says what the entrance fee is, and it
says what the monthly service fee is for the
services. And so if what we are looking at is
the value of the services, then that’s what
we’ve got.
(Emphasis added). At oral argument on appeal, the Wrights
asserted that “the measure of damages in a contract case is the
difference between what you paid for generally speaking and what
you actually received.” However, the Wrights conceded that no
evidence was presented on the value of average care or poor care
from which the jury could calculate the difference between the
value of the contracted-for services and the services actually
received.
Throughout trial, the Wrights maintained the position that
the jury had sufficient evidence to formulate an appropriate
damages award. When discussing jury instructions, the Wrights
asserted that they were “going to ask [the jury] for so much of
those amounts[, the entrance fee and monthly fees,] as [the
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jury] deem appropriate from the evidence.” The Wrights
elaborated, “[W]hat we are asking the jury to do is we were
[sic] asking the jury to allow the Wrights to cancel or
repudiate the contract and give them back so much of the money
as they have paid to [Sunrise] as [the jury] deem appropriate.”
When the trial court pointed out at this late stage in the trial
that “[the Wrights] haven’t put on evidence that would allow
compensatory damages in . . . something other than a material
breach,” the Wrights responded: “We’re not looking for
compensatory damages.”
During appellate argument, the Wrights’ counsel explained
that he was trying to say to the trial court “that the value of
what the Wrights received given the contract wasn’t worth
anything. And therefore [they] were looking for the money back
as damages.” However, at trial, the Wrights’ counsel
acknowledged: “And [the Wrights] don’t deny that they had the
benefit of those [contracted-for] services for the period of
time that they have been living . . . at The Fairfax.” On
cross-examination, counsel for Sunrise asked Colonel Wright if
the pond, flowers, and maintenance at The Fairfax were part of
his monthly fees, to which Colonel Wright replied: “Well, I
guess so, sure. That’s what we’re paying for.”
Clearly, the Wrights received services pursuant to the
continuing care services contract over nearly four years
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residing at The Fairfax. The trial court correctly granted
Sunrise’s motion to strike the Wrights’ rescission claim
specifically because there had been part performance of the
continuing care services contract “such that a rescission right
no longer exists and therefore a count for rescission does not
stand.” “[W]here a party wishes to rescind a contract on the
ground of failure of consideration, if the failure has been
partial only and a subsisting executed part performance is in
his hands, and there has been no fraud on the part of the other,
rescission will not be allowed.” Bolling v. King Coal Theatres,
Inc., 185 Va. 991, 997, 41 S.E.2d 59, 62 (1947) (internal
citations and quotation marks omitted).
Nevertheless, the Wrights pursued the remedy of rescission
under the guise of a breach of contract claim because it was the
only claim that survived Sunrise’s motion to strike. During
Sunrise’s argument on the motion to strike as to the contract
claim, the trial court stated: “We are not dealing with the
rescission count now; we are dealing with count III, which is
the breach of contract. But what you are – I understand you are
giving me a rescission argument because the remedy that they
have asked for is, in essence, rescission.” (Emphasis added).
“As a general rule, damages for breach of contracts are
limited to the pecuniary loss sustained.” Kamlar Corp. v.
Haley, 224 Va. 699, 705, 299 S.E.2d 514, 517 (1983) (quoting
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Wright v. Everett, 197 Va. 608, 615, 90 S.E.2d 855, 860
(1956)). Proof of damages is an essential element of a breach
of contract claim, and failure to prove that element warrants
dismissal of the claim. Filak, 267 Va. at 619-20, 594 S.E.2d
at 614-15. The plaintiff also has the “burden of proving with
reasonable certainty the amount of damages and the cause from
which they resulted; speculation and conjecture cannot form the
basis of the recovery.” Shepherd, 265 Va. at 125, 574 S.E.2d
at 524 (citations omitted).
The Wrights failed to present to the jury evidence of any
damages they sustained as a result of required repairs or out-
of-pocket expenditures of any type necessitated as a
consequence of Sunrise’s breach. They also failed to provide
the jury any evidence of the value of the services they
received from Sunrise during almost four years of residence,
which included not only the enumerated services they
acknowledged were always available, but also the right to
continuous care for the rest of their lives as long as they
continued to pay the monthly fee. There was simply no evidence
from which the jury could measure the difference between the
value of the services that the Wrights contracted for and the
value of the services that they received.
The Wrights were incorrect in their contention that a
material breach of the contract entitled them to an award of
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their entire entrance fee plus all the monthly fees they had
paid less any amount that Sunrise could prove it was entitled
to for its provision of services pursuant to the contract.
When a plaintiff has proved a breach of contract, the burden of
proof regarding damages does not then shift to the defendant.
The burden of proof remains with the plaintiff to prove with
reasonable certainty the measure of damages sustained. The
Wrights failed to present sufficient evidence upon which the
jury could base an award of damages without resorting to
speculation or conjecture. Thus, the Wrights failed to
establish a prima facie claim for breach of contract.
CONCLUSION
The trial court erred in denying Sunrise’s motion to
strike the breach of contract claim and in entering final
judgment in favor of the Wrights. For the reasons stated, we
will reverse the judgment of the trial court and enter final
judgment in favor of Sunrise.
Reversed and final judgment.
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