Present: All the Justices
HELEN PARKER-SMITH
v. Record No. 002184 OPINION BY JUSTICE CYNTHIA D. KINSER
September 14, 2001
STO CORPORATION, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Kathleen H. MacKay, Judge
This appeal involves claims alleging false
advertising, breach of warranty, and fraud arising out of
the application of a synthetic stucco material known as
“Exterior Insulation Finish System” (EIFS) to a residential
home. Because we conclude that the period of limitation in
Code § 8.01-248 applies to the false advertising claims, we
will affirm the circuit court’s judgment sustaining pleas
of the statute of limitations as to those counts. We
cannot, however, reach the merits of the counts alleging
breach of warranty and fraud because the circuit court had
independent grounds for dismissing those counts that were
not assigned as error. Consequently, we will also affirm
the court’s judgment dismissing those counts.
I. FACTS AND MATERIAL PROCEEDINGS
Because this case was decided by the circuit court
upon a plea of the statute of limitations, a demurrer, and
a motion for summary judgment, all without evidentiary
hearings, we will summarize the facts as alleged in the
pleadings. See Eagles Court Condo. Unit Owners Ass’n v.
Heatilator, Inc., 239 Va. 325, 327, 389 S.E.2d 304, 304
(1990) (summarizing facts as stated in pleadings when
reviewing case decided on demurrer). In doing so, we
consider the facts stated and all those reasonably and
fairly implied in the light most favorable to the nonmoving
party, Helen Parker-Smith. See Yuzefovsky v. St. John’s
Wood Apartments, 261 Va. 97, 102, 540 S.E.2d 134, 137
(2001) (applying that principle of appellate review when
case decided on demurrer); Dudas v. Glenwood Golf Club,
Inc., 261 Va. 133, 136, 540 S.E.2d 129, 130-31
(2001)(applying same principle when case decided on motion
for summary judgment).
Parker-Smith purchased a house located in Fairfax
County in July 1994. West Homes, Inc., had built that
house in 1991-1992 and sold it in 1992 to Parker-Smith’s
predecessor-in-interest. The house’s exterior was covered
with EIFS that Sto Corporation, a/k/a Sto Industries, had
manufactured.
When Sto sold its EIFS to West Homes in 1992, Sto
issued a written warranty that its EIFS would be “free from
defects in material for a period of seven (7) years from
the date of Sto’s original invoice to Sto’s supplier,
2
distributor, contractor, applicator or owner.” 1 As
reflected in the following provision of the warranty, Sto’s
liability was limited to supplying replacement materials
and labor:
Sto shall not be responsible for incidental or
consequential damages as such terms are defined in
Section 2-715 of the Uniform Commercial Code, . . .
regardless of cause. Sto’s sole responsibility and
liability under this warranty shall be to supply
replacement materials and labor for any Sto product
warranted hereunder shown to be defective within seven
(7) years from the date of Sto’s original invoice to
Sto’s supplier, distributor, contractor, applicator or
owner, as the case may be. This is the sole remedy
under this warranty to the purchaser, or other person
or entity claiming under this warranty, which shall
include the owner of the structure to which the Sto
materials were applied, as the end user of the Sto
products.
After moving into the house, Parker-Smith discovered
that her home had sustained significant damage allegedly
caused, in part, by a defect in Sto’s EIFS. According to
Parker-Smith’s averments, EIFS is designed to provide a
water-proof exterior surface. However, some water
penetrated that surface and, because of the nature and
design of the EIFS, could not escape other than to seep
through the underlying substructure of her house, causing
rotting, structural deterioration, mold, mildew, and insect
1
When West Homes sold the house at issue in this
appeal, it assigned the warranty to the buyer, who in turn
assigned it to Parker-Smith when she purchased the house in
1994.
3
infestations. Parker-Smith discovered such problems in her
home.
Consequently, she filed an action against Sto and West
Homes, seeking, among other things, damages in an amount
sufficient to demolish and rebuild her home. 2 As pertinent
to this appeal, Parker-Smith alleged, in a second amended
motion for judgment, claims for false advertising against
both Sto and West Homes. In that pleading, she also
included counts alleging breach of warranty, and actual and
constructive fraud against Sto. In response, Sto filed a
demurrer, a plea of the statute of limitations, and a
motion for summary judgment. West Homes asserted a plea of
the statute of limitations with regard to the false
advertising claim.
The circuit court subsequently issued a letter opinion
sustaining West Homes’ plea of the statute of limitations.
The court determined that a cause of action for false
advertising is subject to the “catch-all” limitation period
in Code § 8.01-248, rather than the limitation period and
accrual date applicable to a cause of action for fraud set
2
When Parker-Smith initially filed her action on
August 12, 1998, she named only Sto and four individuals as
defendants. Those four individual defendants and any
issues regarding them are not before us in this appeal.
Parker-Smith added West Homes as a defendant in her first
amended motion for judgment filed on April 7, 1999.
4
forth in Code §§ 8.01-243(A) and 8.01-249(1), respectively.
Thus, the court concluded that Parker-Smith’s false
advertising claim was time-barred. The court subsequently
entered an order incorporating its letter opinion and
dismissing the case with prejudice as to West Homes.
In a separate order, the circuit court also sustained
Sto’s plea of the statute of limitations with regard to the
false advertising claim asserted against it. As to the
fraud counts alleged against Sto, the court sustained the
demurrer on the basis that Parker-Smith had failed to plead
those counts with sufficient specificity. The court also
granted Sto’s motion for summary judgment because of lack
of reliance by Parker-Smith upon the alleged
misrepresentations.
In a second letter opinion, the circuit court
addressed Sto’s motion for summary judgment and plea of the
statute of limitations regarding the breach of warranty
claim. Relying on the decision in Luddeke v. Amana
Refrigeration, Inc., 239 Va. 203, 387 S.E.2d 502 (1990),
the court determined that, since the remedy sought by
Parker-Smith, namely demolishing and rebuilding her house,
was not within the scope of the limited warranty issued by
Sto in 1992, her claim was barred by the four-year
limitation period in Code § 8.2-725. In a subsequent order
5
incorporating the reasons stated in its letter opinion, the
court sustained Sto’s plea of the statute of limitations
and dismissed the breach of warranty claim.
In that second letter opinion, the court also
concluded that the exclusion of consequential damages from
the scope of the warranty was not unconscionable. The
court rested its holding on the fact that the warranty,
although limited to supplying replacement materials and
labor, benefited a large group of people, including
original and subsequent owners of the house, and extended
for a period of seven years. The court also noted that
Parker-Smith did not claim that there was grossly unequal
bargaining power between Sto and the beneficiaries of the
warranty when the contract was formed. Based on this
Court’s decision in Envirotech Corp. v. Halco Eng’g, Inc.,
234 Va. 583, 593-94, 364 S.E.2d 215, 220-21 (1988), the
court rejected the argument that, because the limited
warranty failed in its essential purpose, the limitation of
liability was unconscionable.
II. ANALYSIS
Parker-Smith’s five assignments of error challenge
some of the circuit court’s rulings with regard to the
counts alleging false advertising, breach of warranty, and
6
fraud. Only the assignment of error regarding the claim
for false advertising pertains to both Sto and West Homes.
A. FALSE ADVERTISING
Pursuant to Code § 59.1-68.3, “[a]ny person who
suffers loss as the result of” false advertising in
violation of Code § 18.2-216 may “bring an individual
action to recover damages.” 3 Neither Code § 59.1-68.3 nor
§ 18.2-216 contains or designates a period of time during
which the authorized cause of action must be brought after
it accrues. The issue on appeal is whether the “catch-all”
limitation period prescribed in Code § 8.01-248, 4 or the
3
In pertinent part, Code § 18.2-216 states that
[a]ny person, firm, corporation or association who,
with intent to sell or in anywise dispose of
merchandise, . . . directly or indirectly, to the
public for sale or distribution or with intent to
increase the consumption thereof, or to induce the
public in any manner to enter into any obligation
relating thereto, . . . makes, publishes,
disseminates, circulates or places before the public,
in a newspaper or other publications, . . . an
advertisement of any sort regarding merchandise, . . .
or anything so offered to the public, which
advertisement contains any promise, assertion,
representation or statement of fact which is untrue,
deceptive or misleading, or uses any other method,
device or practice which is fraudulent, deceptive or
misleading to induce the public to enter into any
obligation, shall be guilty of a Class 1 misdemeanor.
4
Code § 8.01-248 provides that “[e]very personal
action accruing on or after July 1, 1995, for which no
limitation is otherwise prescribed, shall be brought within
two years after the right to bring such action has
7
limitation period and time of accrual for a cause of action
based on fraud, see Code §§ 8.01-243(A) and –249(1),
respectively, 5 applies to an action for false advertising.
Parker-Smith argues that the “catch-all” limitation
period in Code § 8.01-248 should not be automatically
applied merely because the General Assembly failed to
designate a statute of limitations for a false advertising
claim. Instead, she contends that this Court should
determine the applicable statute of limitations by
examining the substantive nature of the claim. Using that
analytical framework, Parker-Smith asserts that a false
advertising claim sounds in fraud. Therefore, she argues
that Code §§ 8.01-243(A) and –249(1), establishing the
limitation period and accrual date for a cause of action
based on fraud, also control her cause of action for false
advertising. Continuing, Parker-Smith asserts that, since
she did not discover the defects in the EIFS until 1997,
______________________
accrued.” Prior to July 1, 1995, the period of limitation
in this statutory provision was one year.
5
In relevant part, Code § 8.01-243(A) states that
“every action for damages resulting from fraud[] shall be
brought within two years after the cause of action
accrues.” Code § 8.01-249(1) provides that a cause of
action for fraud accrues when such fraud “is discovered or
by the exercise of due diligence reasonably should have
been discovered.”
8
she timely filed the false advertising claims against Sto
and West Homes.
We agree that the nature of the cause of action at
issue should be analyzed when determining whether the
“catch-all” limitation period in Code § 8.01-248 applies.
This Court has previously done so when deciding which
statute of limitations controlled a particular cause of
action. See, e.g., Purcell v. Tidewater Constr. Corp., 250
Va. 93, 96, 458 S.E.2d 291, 293 (1995); Curley v. Dahlgren
Chrysler-Plymouth, Dodge, Inc., 245 Va. 429, 434-35, 429
S.E.2d 221, 224 (1993); Vines v. Branch, 244 Va. 185, 189-
90, 418 S.E.2d 890, 893-94 (1992); Winslow, Inc. v. Scaife,
219 Va. 997, 998, 1000, 254 S.E.2d 58, 60 (1979) (per
curiam); Hospelhorn v. Corbin, 179 Va. 348, 351, 357, 19
S.E.2d 72, 73, 76 (1942).
Utilizing that approach, we conclude, however, that a
cause of action for false advertising brought pursuant to
Code §§ 59.1-68.3 and 18.2-216 does not sound in fraud. In
reaching this conclusion, we recognize that a false
advertising claim bears some resemblance to fraud in that
Code § 18.2-216 prohibits an advertisement that “contains
any promise, assertion, representation or statement of fact
which is untrue, deceptive or misleading, or uses any other
method, device or practice which is fraudulent, deceptive
9
or misleading.” However, there are at least two important
distinctions between a cause of action for false
advertising and one for fraud.
With regard to the first distinction, a party bringing
an action alleging either actual or constructive fraud must
prove that a representation was false. Evaluation Research
Corp. v. Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390
(1994). However, a violation of Code § 18.2-216 occurs
when an advertisement contains a representation that,
although deceptive or misleading, is not necessarily false
or untrue. The phrase “untrue, deceptive or misleading” in
Code § 18.2-216 is in the disjunctive. And, “[w]hen the
General Assembly uses . . . different terms in the same
act, it is presumed to mean . . . different things. Forst
v. Rockingham Poultry Mktg. Coop., Inc., 222 Va. 270, 278,
279 S.E.2d 400, 404 (1981).
Second, in fraud, the misrepresentation must relate to
a present or pre-existing fact; it cannot be “‘predicated
on unfulfilled promises or statements as to future
events.’ ” ITT Hartford Group, Inc. v. Virginia Fin.
Assocs., Inc., 258 Va. 193, 203, 520 S.E.2d 355, 361 (1999)
(quoting Patrick v. Summers, 235 Va. 452, 454, 369 S.E.2d
162, 164 (1988)); see also Lumbermen’s Underwriting
Alliance v. Dave’s Cabinet, Inc., 258 Va. 377, 382, 520
10
S.E.2d 362, 365 (1999). In contrast, the misrepresentation
in a false advertising claim does not have to relate to a
statement of present or pre-existing fact. It can be just
a promise. See Code § 18.2-216 (“promise, assertion,
representation or statement of fact”). Again, the General
Assembly used different terms in the disjunctive. See
Forst, 222 Va. at 278, 279 S.E.2d at 404.
Because of these notable differences, we conclude that
the statutory cause of action for false advertising is not
properly analogized to a common law cause of action for
fraud. Therefore, a false advertising claim is not subject
to the limitation period in Code § 8.01-243(A) and the time
of accrual in Code § 8.01-249(1), both of which pertain to
an action for fraud. Instead, a cause of action for false
advertising is an action for which no limitation period is
prescribed. Therefore, Code § 8.01-248 is applicable, and
the circuit court correctly determined that Parker-Smith’s
claims for false advertising were barred under either the
former one-year or the current two-year limitation period
in that statutory provision. 6
6
Parker-Smith does not raise any issue regarding when
her false advertising claims accrued for purposes of
applying the limitations period in Code § 8.01-248.
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B. BREACH OF WARRANTY
In Parker-Smith’s two assignments of error regarding
her breach of warranty claim, she asserts that the circuit
court erred by failing to distinguish between the
applicability of Code §§ 8.2-719(2) and –719(3), and by
determining that Sto’s warranty, which excluded liability
for consequential damages, is not unconscionable. 7 In
making these arguments, Parker-Smith acknowledges that the
damages she seeks to recover against Sto are the costs of
demolishing and rebuilding her home, not the costs of
replacement materials and labor. In other words, she does
not contest the fact that she is not seeking the remedy
provided in the limited warranty. Based on that fact and
this Court’s decision in Luddeke, the circuit court
concluded that her breach of warranty claim is barred by
the limitation period in Code § 8.2-725. And, in its
order, the court specifically dismissed the count alleging
breach of warranty for that reason.
7
Code § 8.2-719(2) provides that “[w]here
circumstances cause an exclusive or limited warranty to
fail of its essential purpose, remedy may be had as
provided in this act.” Section 8.2-719(3) states, in
pertinent part, that “[c]onsequential damages may be
limited or excluded unless the limitation or exclusion is
unconscionable.”
12
Yet, Parker-Smith did not assign error to that
dispositive basis for the circuit court’s decision. She
assigned error only to the court’s finding regarding the
exclusion of consequential damages. Because her
assignments of error do not challenge the court’s
independent basis for its judgment sustaining the plea of
the statute of limitations on the breach of warranty count,
we do not address Parker-Smith’s arguments pertaining to
the question whether the exclusion of consequential damages
was unconscionable. Rule 5:17(c); Rash v. Hilb, Rogal &
Hamilton Co. of Richmond, 251 Va. 281, 286-87, 467 S.E.2d
791, 795 (1996).
C. FRAUD
Parker-Smith asserted claims for actual and
constructive fraud against Sto on the basis that Sto failed
to disclose to the public known defects in its EIFS. In
ruling on Sto’s challenges to those claims, the court not
only sustained the demurrer on the ground that Parker-Smith
failed to plead those counts with adequate specificity, but
also granted Sto’s motion for summary judgment because of
the lack of reliance by Parker-Smith upon the alleged
misrepresentations.
Parker-Smith’s two assignments of errors with regard
to her fraud claims address only the court’s decision
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sustaining Sto’s demurrer. Specifically, she assigned
error to the court’s determination that a manufacturer with
superior knowledge of inherent defects in its product and
the reasonably foreseeable damage that will result from
those defects has no duty to disclose such information to
the consuming public. Parker-Smith also assigned error to
the court’s conclusion that she did not plead her fraud
counts with adequate specificity. She did not assign error
to the circuit court’s separate ruling based on her lack of
reliance. Since the court had an independent basis for
dismissing the fraud counts that is not the subject of an
assignment of error, we cannot consider the arguments
advanced by Parker-Smith regarding her fraud claims. Rule
5:17(c); Rash, 251 Va. at 286-87, 467 S.E.2d at 795.
CONCLUSION
For the reasons stated, we will affirm the judgment of
the circuit court. 8
Affirmed.
8
In light of our decision, we do not reach the
assignments of cross-error.
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