Present: All the Justices
BLAIR CONSTRUCTION, INC.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 961079 April 18, 1997
RANDY WEATHERFORD,
T/A W. S. CONSTRUCTION
FROM THE CIRCUIT COURT OF CAMPBELL COUNTY
J. Michael Gamble, Judge
In this appeal, we consider whether the plaintiff presented
the necessary clear and convincing evidence to establish a prima
facie case of constructive fraud.
Blair Construction, Inc., a general contractor, filed its
motion for judgment against Randy Weatherford, t/a W. S.
Construction, alleging that Weatherford breached its subcontract
with Blair and that Weatherford had also engaged in acts of
constructive fraud against Blair. At the conclusion of Blair's
evidence, the trial court granted Weatherford's motion to strike
the constructive fraud claim, and the jury returned a verdict in
favor of Weatherford on the breach of contract claim. Since
Blair appeals only that portion of the trial court's judgment
granting Weatherford's motion to strike the constructive fraud
claim, we will recite the evidence and all reasonable inferences
deducible therefrom in the light most favorable to Blair.
Abbott Laboratories, Ross Products Division, a national
pharmaceutical manufacturer, decided to construct a warehouse in
Altavista. Blair was one of the five general contractors from
whom Abbott solicited proposals. Kenneth V. BeCraft, a Blair
vice-president and project manager, solicited bids from
subcontractors to perform various aspects of the construction
work, including erection of structural steel elements of the
building. BeCraft received a bid of $438,400.00 to perform the
structural steel erection subcontract from Pro-Erectors, Inc., a
steel erection company.
Weatherford, who had not been solicited by BeCraft, called
him on December 29 or 30, 1993, and informed him that Weatherford
intended to submit a bid to perform the steel erection work. On
January 3, 1994, BeCraft received a one-page facsimile from
Weatherford which contained a bid to perform the steel erection
work for a base price of $253,000.00.
Considering the amount of the bid to be "low," BeCraft spoke
with Weatherford on the telephone "to make sure . . . the price
was okay." Weatherford stated "[h]e knew it was [a low] price"
and "that this would not be an out of town job for his men and it
. . . would allow him to have a job where they could commute back
and forth to the job site without having to stay in motels."
After informing Weatherford that it was computing and
submitting its bid to Abbott in reliance upon Weatherford's bid,
Blair submitted its bid to Abbott Laboratories. Between January
31, 1994 and April 8, 1994, Weatherford had numerous
conversations, both in person and on the telephone, with BeCraft,
and Weatherford indicated no reluctance to perform the steel
erection work. After Abbott awarded Blair the contract to
construct the warehouse, Blair mailed its standard confirmation
form to Weatherford and requested that he acknowledge that he
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would perform the steel erection work for $260,150.00 by signing
and returning the form. Weatherford did not return the
confirmation form.
Since a significant quantity of steel was scheduled to
arrive at the construction site on May 9, 1994, BeCraft scheduled
a meeting for April 27, 1994 with Weatherford and Everett Grady,
Abbott's site engineer and project representative, to discuss the
steel erection work. During this meeting, Weatherford and Grady
discussed Abbott's contractors' safety guide. Grady responded in
the negative to Weatherford's inquiry whether Abbott would
require him to utilize safety precautions in excess of those
standards required by the Occupational Safety and Health
Administration (OSHA). Weatherford expressed no further concern
about this issue at this meeting.
However, two days later, Weatherford sent a facsimile to
BeCraft which stated in part, "[b]ased on the stric[t] safety
guidelines relating to the above referenced job, we will have
[an] increase for quote of [January 3, 1994] by $75,000.00.
These are extra costs that were not taken into consideration on
the bid day. Thank you!" BeCraft called Weatherford by
telephone and informed him that BeCraft was "shocked" by the
request for additional money and told Weatherford that BeCraft
needed a "better justification" before requesting an additional
$75,000.00 from Abbott Laboratories.
This conversation occurred on a Friday afternoon, and
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Weatherford agreed to contact BeCraft on the following Monday.
Weatherford failed to contact BeCraft, as agreed. When Becraft
was finally able to contact Weatherford, the latter told Becraft
that he was not going to "do the job." Blair expended
approximately $602,719.00 in having its own personnel and those
of other contractors perform this work.
We recently stated the following principles which govern our
resolution of this appeal:
"[T]he elements of a cause of action for constructive
fraud are a showing by clear and convincing evidence
that a false representation of a material fact was made
innocently or negligently, and the injured party was
damaged as a result of his reliance upon the
misrepresentation. Evaluation Research Corp. v.
Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390 (1994);
accord Nationwide Mut. Ins. Co. v. Hargraves, 242 Va.
88, 92, 405 S.E.2d 848, 851 (1991); Kitchen v.
Throckmorton, 223 Va. 164, 171, 286 S.E.2d 673, 676
(1982). Additionally, '[a] finding of . . .
constructive fraud requires clear and convincing
evidence that one has represented as true what is
really false, in such a way as to induce a reasonable
person to believe it, with the intent that the person
will act upon this representation.' Alequin, 247 Va.
at 148, 439 S.E.2d at 390." Mortarino v. Consultant
Eng. Services, 251 Va. 289, 295, 467 S.E.2d 778, 782
(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)); accord
Mortarino, 251 Va. at 293, 467 S.E.2d at 781. We explained the
reason for this requirement in Lloyd v. Smith, 150 Va. 132, 145,
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142 S.E. 363, 365 (1928):
"[A]n action based upon fraud must aver the
misrepresentation of present pre-existing facts, and
cannot ordinarily be predicated on unfulfilled promises
or statements as to future events. Were the general
rule otherwise, every breach of contract could be made
the basis of an action in tort for fraud."
Blair contends that it established a prima facie case of
constructive fraud. Blair argues that it presented clear and
convincing evidence that Weatherford "made a false representation
to Blair -- that being his present intent to construct the Abbott
building for $260,150.00." Continuing, Blair says that its
evidence indicates: Weatherford initiated contact with Blair;
Weatherford submitted an extraordinarily low bid and assured
Blair that Weatherford would perform for that price; Weatherford
had extensive discussions with BeCraft about the progress of the
project and never expressed any hesitancy about performing the
work; and when Weatherford "knew it would be virtually impossible
for Blair to find anyone else to perform the job, Weatherford
demanded $75,000.00 more money." Blair asserts that "[s]urely
the finder of fact could infer from all this that [Weatherford]
had no intention of performing his original promise to construct
this job for $260,150.00 but rather getting the job [and] then
bleeding Blair for more funds."
We disagree with Blair's contentions. We are of opinion
that Blair ignores the differences between actual fraud and
constructive fraud, which are two separate and distinct causes of
action, only one of which was pled in this case. Blair's sole
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allegation of constructive fraud differs from actual fraud
because in an action for constructive fraud, "the
misrepresentation of material fact is not made with the intent to
mislead, but is made innocently or negligently although resulting
in damage to the one relying on it." Evaluation Research Corp.,
247 Va. at 148, 439 S.E.2d at 390. Here, Blair pled a cause of
action for constructive fraud and, thus, at trial Blair was
required to present clear and convincing evidence to establish
that Weatherford's statements or actions constituted a
"misrepresentation of material fact . . . made innocently or
negligently." Id. The record is devoid of such evidence.
Next, Blair says that "misrepresentation of one's present
state of mind to do or not do an act can constitute a material
misrepresentation sufficient to support a cause of action for
constructive fraud." Blair cites Lloyd v. Smith, 150 Va. 132,
142 S.E. 363 (1928), Sea-Land Service, Inc. v. O'Neal, 224 Va.
343, 297 S.E.2d 647 (1982), and Colonial Ford Truck Sales, Inc.
v. Schneider, 228 Va. 671, 325 S.E.2d 91 (1985), in support of
this contention.
Blair's reliance upon these cases is misplaced. Once again,
Blair fails to recognize the distinctions between actual fraud
and constructive fraud. Each of the cases that Blair cites
involves actual fraud, not constructive fraud. For example, in
Colonial Ford, we stated:
"While failure to perform an antecedent promise
may constitute breach of contract, the breach does not
amount to fraud. But the promisor's intention -- his
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state of mind -- is a matter of fact. When he makes
the promise, intending not to perform, his promise is a
misrepresentation of present fact, and if made to
induce the promisee to act to his detriment, is
actionable as an actual fraud. Lloyd v. Smith, 150 Va.
132, 145-47, 142 S.E. 363, 365-66 (1928); accord Sea-
Land Service, Inc. v. O'Neal, 224 Va. 343, 351, 297
S.E.2d 647, 651-52 (1982)." 228 Va. at 677, 325 S.E.2d
at 94 (emphasis added).
The record does not contain clear and convincing evidence
that would permit a jury to find that Weatherford committed acts
of constructive fraud when he submitted his bid to Blair.
Weatherford's bid, along with his subsequent telephone
conversation with BeCraft in which Weatherford confirmed his low
bid, do not constitute statements of present facts, but rather
promises to perform the work in the future for a specific price.
For the foregoing reasons, we will affirm the judgment of
the trial court.
Affirmed.
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