Present: All the Justices
OSCAR W. TATE, ET AL.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 980166 January 8, 1999
COLONY HOUSE BUILDERS, INC., ET AL.
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
John W. Scott, Jr., Judge
In this appeal, we consider whether a seller's statements
to purchasers of real property constitute statements of fact
sufficient to support a cause of action for constructive fraud
and, if so, whether that action is barred by Code § 8.01-250,
a statute of repose.
Appellants, Oscar W. Tate and Frances J. Tate, filed
their motion for judgment in 1996 against Colony House
Builders, Inc., Thomas P. Sagun, and Hilda R. Sagun. The
plaintiffs alleged, in their motion, the following relevant
facts.
Colony House Builders, Inc., a Virginia corporation
engaged in the construction and sales of new residential homes
in Spotsylvania County, built a new dwelling in the Bloomsbury
subdivision. In 1990, the plaintiffs, who are husband and
wife, purchased the property from Colony House Builders for
the sum of $345,000.
Before agreeing to purchase the property, the plaintiffs
allegedly relied upon the following material facts and
representations made by Thomas P. Sagun (Sagun), president of
Colony House Builders: "the new dwelling house was free from
structural defects; . . . the new dwelling house was
constructed in a workmanlike manner; . . . the new dwelling
house was fit for habitation; . . . the new dwelling house was
competently designed commensurate with the consideration of
$345,000.00 [and]; . . . the Tates would enjoy quiet
possession in the sense that apart from minor corrective work,
no significant work would be required by way of restoration,
rebuilding, or extensive repair." Before closing, Sagun
accompanied the plaintiffs throughout the house and "pointing
out many aspects of the construction, illustrated the design
and construction as being of the highest quality, and further
gilded the representations in reassuring the Tates that he
intended the structure to be a model home of the finest
designs and construction and a superior product. . . ."
The plaintiffs alleged that "[t]he representations were
made by Thomas P. Sagun as President of Colony House Builders
. . . and with the authority and consent of Hilda M. Sagun,
also record owner of the premises with the intent that the
plaintiffs would rely on each and every representation."
Plaintiffs alleged that they later learned that there was
physical damage throughout the house that had been concealed
and "rotting within the walls" of the house. "In order to
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preserve the premises[,] the plaintiffs were required to
retain contractors to begin the process of removing all areas
of destruction and deterioration, replacing major areas
through new construction including but not limited to wall
framing and roofing." The plaintiffs also alleged that the
defendants' purported misrepresentations constituted
constructive fraud and sought damages in the amount of
$150,000 plus interest and costs.
The defendants filed responsive pleadings, including a
special plea in which they asserted that Code § 8.01-250
limits actions for recovery for injury to property resulting
from defective construction of improvements to real property
to a period of five years from the completion of construction,
that the plaintiffs' action was filed more than five years
from the date of construction and, thus, their claims were
barred. The defendants also filed a motion for summary
judgment and asserted that the representations Sagun
purportedly made to the plaintiffs were statements of opinion
which were not sufficient to support a cause of action for
constructive fraud. The circuit court agreed with the
defendants and entered judgment sustaining the special pleas
and granting the motion for summary judgment. Plaintiffs
appeal.
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The plaintiffs argue that the alleged fraudulent
misrepresentations are statements of fact which are sufficient
to support a cause of action for constructive fraud. The
defendants respond that the alleged misrepresentations were
merely opinions.
The plaintiffs and defendants correctly observe that
expressions of opinion cannot form the basis of an action for
fraud:
"It is well settled that a misrepresentation,
the falsity of which will afford ground for an
action for damages, must be of an existing fact, and
not the mere expression of an opinion. The mere
expression of an opinion, however strong and
positive the language may be, is no fraud. Such
statements are not fraudulent in law, because . . .
they do not ordinarily deceive or mislead.
Statements which are vague and indefinite in their
nature and terms, or are merely loose, conjectural
or exaggerated, go for nothing, though they may not
be true, for a [person] is not justified in placing
reliance upon them." Saxby v. Southern Land Co.,
109 Va. 196, 198, 63 S.E. 423, 424 (1909).
Accord Mortarino v. Consultant Eng'g Servs., 251 Va. 289, 293,
467 S.E.2d 778, 781 (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)).
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The plaintiffs, relying upon Packard Norfolk, Inc. v.
Miller, 198 Va. 557, 95 S.E.2d 207 (1956), argue that the
statements Sagun purportedly made to them constitute facts
which support a cause of action for constructive fraud. In
Packard Norfolk, H. J. Miller filed a suit in equity against
Packard Norfolk, Inc., alleging that he had been induced to
purchase a Packard automobile in reliance upon fraudulent and
material misrepresentations made by Packard's agents. Miller,
who had unsatisfactory experiences with Packard cars, informed
Packard's salesmen that he was reluctant to acquire another
car "of the same make." Later, when Packard's agent met with
Miller seeking to convince him to purchase another Packard
automobile, Miller told the agent that Miller wanted "the car
to be absolutely in as good running condition as it can, with
everything perfect and thoroughly checked." Id. at 559, 95
S.E.2d at 209.
The agent assured Miller that the car "was an improvement
over previous models, [that it] would have more power, [and]
more pickup." The agent also informed Miller that he could
rest assured that motors in this particular model had "been
tested for six months prior to any car being put on the market
. . . [,] that [Miller] should not fear trouble, and to rest
assured that [Miller] would have no further trouble with
anything else, that the car would be in perfect condition,
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. . . thoroughly checked, . . . gone over carefully, . . .
[and] in as good running condition as it could be when it was
delivered . . . [Miller] told [the agent] that only under
those circumstances would [Miller] even consider buying
another Packard car." Id.
Rejecting Packard Norfolk's contention that its agent's
statements constituted opinions which could not form the basis
of a constructive fraud action, we stated:
"There is no certain rule by the application of
which it can be determined when false
representations constitute matters of opinion or
matters of fact, but each case must in a large
measure be adjudged on its own facts, taking into
consideration the nature of the representation and
the meaning of the language used as applied to the
subject matter and as interpreted by the surrounding
circumstances.
"It is not always an easy matter to determine
whether a given statement is one of fact or opinion.
The relative knowledge of the parties dealing, their
intentions and all of the surrounding circumstances,
which can only be gathered from the evidence, affect
the interpretation which the courts put upon
representations in determining whether they be of
fact or opinion.
. . . .
"A statement asserting the then perfect
condition of a new car is a representation as to the
present quality or character of the article and is
clearly a representation of fact and not a promise
as to something to be done in the future. Whether
or not a car is in the condition represented is
factual, not promissory." Id. at 562-63, 95 S.E.2d
at 211 (citations omitted).
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Accord Blair Const., Inc. v. Weatherford, 253 Va. 343, 346-47,
485 S.E.2d 137, 139 (1997); Mortarino, 251 Va. at 293-94, 467
S.E.2d at 781.
Applying the aforementioned principles, we hold that some
of the statements that Sagun purportedly made to the
plaintiffs are statements of fact sufficient to support their
cause of action for constructive fraud. Sagun's statements
that: "the new dwelling house was free from structural
defects; . . . the new dwelling house was constructed in a
workmanlike manner and; . . . the new dwelling house was fit
for habitation" are representations of the present quality or
character of the property and, thus, are statements of fact
and not mere expressions of opinion. * The issue whether the
house was actually in the condition represented can be
determined factually.
Sagun's alleged representation that the plaintiffs "would
enjoy quiet possession in the sense that apart from minor
*
The defendants, relying upon Kuczmanski v. Gill, 225 Va.
367, 302 S.E.2d 48 (1983), assert that all Sagun's purported
statements are mere opinions. Kuczmanski, however, is
factually distinguishable from the present case. There,
purchasers of a house filed a motion for judgment against the
sellers, alleging that one of the sellers assured the
purchasers that the house was in "excellent condition." We
held that the seller's general statement that the house was in
excellent condition was mere sales talk and could not support
an action for fraud. Id. at 370, 302 S.E.2d at 50. Here,
unlike Kuczmanski, Sagun allegedly made specific
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corrective work, no significant work would be required by way
of restoration, rebuilding, or extensive repair" cannot
support an action for constructive fraud. Generally,
representations predicated upon future events or promises
cannot form the basis of an action for constructive fraud.
Patrick, 235 Va. at 454, 369 S.E.2d at 164. Even though there
are exceptions to this rule, those exceptions are not
implicated in this action. See Lloyd v. Smith, 150 Va. 132,
145-46, 142 S.E. 363, 365-66 (1928).
Sagun's alleged statements that "the new dwelling house
was competently designed commensurate with the consideration
of $345,000.00" and "the design and construction [of the
dwelling were] of the highest quality" are more in the nature
of puffing or opinion and cannot form the basis of an action
for constructive fraud. Commendatory statements, trade talk,
or puffing, do not constitute fraud because statements of this
nature are generally regarded as mere expressions of opinion
which cannot rightfully be relied upon, at least where the
parties deal on equal terms. Henning v. Kyle, 190 Va. 247,
252, 56 S.E.2d 67, 69 (1949).
Code § 8.01-250 states in relevant part:
"No action to recover for any injury to
property, real or personal, or for bodily injury or
representations of the present quality or character of the new
house.
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wrongful death, arising out of the defective and
unsafe condition of an improvement to real property,
nor any action for contribution or indemnity for
damages sustained as a result of such injury, shall
be brought against any person performing or
furnishing the design, planning, surveying,
supervision of construction, or construction of such
improvement to real property more than five years
after the performance of furnishing of such services
and construction."
The plaintiffs contend that Code § 8.01-250 does not bar their
constructive fraud action because their alleged cause of
action does not involve an injury to real property. We agree.
We have stated that "Code § 8.01-250 is a redefinition of
the substantive rights and obligations of the parties to any
litigation 'arising out of the defective and unsafe condition
of an improvement to real property.' . . . [T]he lapse of the
statutory period was meant to extinguish all the rights of a
plaintiff, including those which might arise from an injury
sustained later and to grant a defendant immunity from
liability for all the torts specified in the statute." Hess
v. Snyder Hunt Corp., 240 Va. 49, 52, 392 S.E.2d 817, 819
(1990) (quoting School Bd. of the City of Norfolk v. U.S.
Gypsum, 234 Va. 32, 37-38, 360 S.E.2d 325, 328 (1987)).
However, as we observed in Hess, Code § 8.01-250 is only
applicable to those torts specified in the statute. Fraud is
not a tort specified in the statute because, as we have
stated, the wrongful act involved in fraud is "aimed at the
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person." Pigott v. Moran, 231 Va. 76, 81, 341 S.E.2d 179, 182
(1986). We also stated in J.F. Toner & Son v. Staunton Prod.
Credit Assoc., 237 Va. 155, 158, 375 S.E.2d 530, 531 (1989),
that because "fraud invariably acts upon the person of the
victim, rather than upon property, its consequence is personal
damage rather than injury to property." Accordingly, we hold
the circuit court erred in sustaining the defendants' special
pleas in bar.
In summation, the circuit court correctly held that the
defendants' alleged representations that the plaintiffs would
enjoy quiet possession in their new house, the house was
designed competently commensurate with the consideration of
$345,000, and the design and construction of the dwelling were
of the highest quality are not sufficient to support an action
of constructive fraud and, therefore, that portion of the
circuit court's judgment dismissing the plaintiffs' claim
based upon these statements will be affirmed. The alleged
representations that the house was free from structural
defects, constructed in a workmanlike manner, and fit for
habitation are factual statements which are sufficient to
support a cause of action for constructive fraud and,
therefore, with respect to these alleged statements, the
judgment of the circuit court will be reversed. That portion
of the circuit court's judgment which sustained the
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defendants' special pleas in bar will also be reversed. We
will remand this case for further proceedings consistent with
the views expressed in this opinion.
Affirmed in part,
reversed in part,
and remanded.
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