Richmond Metropolitan Authority v. McDevitt Street Bovis, Inc.

The parties appeared on defendant McDevitt Street Bovis, Inc.’s motion for summary judgment, and memoranda were received and argument was heard. The motion for summary judgment is based upon the pleadings and plaintiff Richmond Metropolitan Authority’s responses to interrogatories. For purposes of foe motion for summary judgment, McDevitt asks foe court to accept as true foe factual allegations in foe motion for judgment and in foe answers to interrogatories.

Richmond Metropolitan Authority (RMA) is foe owner of “foe Diamond,” Richmond’s AAA baseball stadium which was designed and constructed by McDevitt in 1984-85 pursuant to a written contract. During inspections in 1996, RMA discovered that McDevitt foiled to comply with foe plans and specifications. RMA was required to make extensive repairs and seeks damages for those repairs.

The motion for judgment contains three counts. Count I for broach of contract has been dismissed as barred by Va. Code Ann. § 8.01-250, foe statute of repose for claims under construction contracts. Count II alleges a *469cause of action for actual fraud, and Count in alleges a claim for constructive fraud. McDevitt’s motion for summary judgment is based on the theory that no cause of action lies in tort for fraud where tire facts supporting die misconduct are nothing more or less than die failure of McDevitt to comply with the terms of its contract. RMA argues that the conduct described includes all of toe elements of a cause of action for actual or constructive fraud, and in essence it is permitted to proceed under either theory.

McDevitt’s design for toe Diamond included several concrete structural members which supported toe upper seating levels and toe roof. These concrete members surrounded steel rods which were encased in tubes. After erection of toe members, toe steel rods were post-tensioned. Grout was then to be injected into toe rod tubes, surrounding toe rods and permitting them to strengthen toe member by bonding with toe concrete. The grout was also supposed to protect toe rods from corrosion.

hi 1996, some eleven years after completion of toe construction, RMA determined that McDevitt had failed to inject toe grout and that some of toe rods were corroding. RMA had also discovered some cracking which indicates that toe members did not possess their design strength. RMA had toe members grouted and repaired. In Counts II and HI of its motion for judgment RMA claims that McDevitt committed actual or constructive fraud upon it and it seeks compensatory and punitive damages.

RMA claims several misrepresentations which form toe basis of its fraud claims. The misrepresentations are of two types. The first are:

(a) toe submission of plans and specifications which describe how toe structural members were to be built;

(b) toe submission of "as built” drawings detailing how the mentes were built — these show that toe grout had been injected into toe grout tubes;

(c) McDevitt’s submission of applications for progress payments in which it represented compliance with toe plans and specifications and on which RMA relied to make payments;

(d) toe submission of toe certificate of substantial completion for final payment in which it was represented that toe completed structure was constructed in accordance with toe plans and specifications.

The second type of misrepresentation is that McDevitt concealed toe fact thabitcut off and sealedtoe grouttubesduring theconstruction phase,ieading RMA to believe that toe grout was in place when, in fact, it was not

Without question, RMA has pleaded facts which support a cause of action for fraud; i.e., intentional or innocent misrepresentation of material facts upon which RMA relied to its detriment.

*470Analysis of toe misrepresentations reveal that, had toe contract been complied with, there would have been no misrepresentations; i.e., toe misrepresentations and a failure to perform toe contract are one and toe same. The Supreme Court of Virginia has held that while Mure to perform an antecedent promise may constitute a breach of contract, toe breach does not amount to fraud. Colonial Ford Truck Sales, Inc. v. Schneider, 228 Va. 671, 677, 325 S.E.2d 91, 94 (1985) (citing with approval Lloyd v. Smith, 150 Va. 132, 145-147, 142 S.E. 363, 365-366 (1928)). Here in its contract McDevitt promised to inject toe grout, promised to submit accurate certificates for progress payments, promised to submit an accurate certificate of final completion and “as built” drawings, and promised to fill toe grout tubes before cutting them off and sealing toe tubes. McDevitt’s Mure to perform each and every one of these promises was a breach of its contract, not fraud, even though toóse breaches in other contexts might have formed toe elements for fraud.

The only exception to this principle is where, at the time toe promise is made, toe promisor held toe intention that toe promise would not be performed; i.e., the distinction between fraud in toe inducement versus fraud in toe performance. In toe first instance there is a cause of action tor fraud; in toe second, tone is none. See Colonial Ford, 228 Va. at 677, 325 S.E.2d at 94. RMA does not make such a claim here.

In Kamlar Corp. v. Haley, 224 Va. 699, 299 S.E.2d 514 (1983), toe Stq>reme Court held that a breach of contract, even when accompanied by an ulterior motive, malice, or even willful intent to injure, does not support punitive damages. Such damages are within the province of tort law, not contract law. To recover a tort measure of damages, there must be facts amounting to an independent tort beyond toe breach of contract Notably, Justice Compton’s dissent discussed toe dichotomy between causes of action based in contract from those based in tort He argued that prior to Kamlar, tort damages could be awarded in contract cases in which toe conduct of toe breaching party was tort-like. Id. at 708, 299 S.E.2d at 519. The majority eliminated that distinction by requiring facts proving boto a breach of contract and an independent tort. Id. at 711, 299 S.E.2d at 520. There is no independent tort unless toe duty breached is a “common law duty, not one existing between toe parties solely by virtue of the contract” Foreign Mission Board v. Wade, 242 Va. 234, 241, 409 S.E.2d 144, 148 (1991) (citations omitted).

Although Kamlar Corp. and Foreign Mission Board admittedly deal with punitive damages, boto are grounded on the principle that where a duty arising in contract is breached, toe cause of action lies in contract and not in *471tort notwithstanding the contractual breach with scienter. There is no logical basis to distinguish the principles which control the decision in (his case. The duties that McDevitt breached were those solely arismg in contract There is no independent tort

McDevitt also argues at length that as RMA's damages are solely economic, RMA has no cause of action in tort against McDevitt, citing Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 236 Va. 419, 374 S.E.2d 55 (1988), and cases from other jurisdictions. Having given other reasons for determining that RMA has no cause of action in fraud, tire court does not reach this issue.

RMA argues that it has alleged the breach of duties which are separate and independent from McDevitt's contractual obligations; i.e., that McDevitt had a common law duty not to defraud RMA. Of course, there is a common law duty that one should not defraud another. Here, however, that duty arises from tibe contractual relationship. The particular instances of misrepresentation are duties and obligations specifically required by the contract. There is nothing which establishes that the duty breached is separate and independent from the contract RMA has alleged one set of facts which supports two legal theories of recovery. If there were no contrast then there would have been no duties owed by McDevitt to RMA. RMA is limitad to claiming damages for breach of contract which are, unfortunately for it barred by the statute of repose. Were the rule to be otherwise, the law of contract would be subsumed into the law of tort

RMA's fraud claims are not viable. The motion for summary judgment will be sustained.