Van Buren v. Earl Ronald Poston & Old Meadow, LLC, 2017 Va. Cir. LEXIS 335 (Cir. Ct. Loudoun Cnty. Nov. 30, 2017)
Louise Van Buren (“Plaintiff”) filed a Complaint against Ronald Poston and Old Meadow, LLC (collectively “Defendants”) in an action to recover damages suffered due to an alleged breach of a residential construction contract between the parties. Upon purchasing a home in April 2016, Plaintiff agreed to use Poston and his company, Old Meadow, for needed renovations and repairs to the home. Old Meadow’s estimate for extensive work on the home expressly noted that any changes would be accomplished by mutually agreed upon change orders.
Plaintiff alleged that Defendants failed to follow necessary procedures for completing the work in a workmanlike manner and performed work that deviated from and was inferior to the work expressly agreed to by the parties. Plaintiff also alleged that Defendants failed to apply for the required county building permits.
In addressing Counts I and II of the Complaint, the court found that while no single rule could be applied to determine whether piercing the limited liability company’s veil is justified, it determined that, in order to disregard the limited liability entity, a plaintiff must show that the member has controlled or used the limited liability company to evade a personal obligation, to perpetrate fraud or a crime, to commit an injustice, or to gain an unfair advantage. Accordingly, the court concluded that the mere allegation that Plaintiff wrote a few checks to Poston personally does not rise that level. Further, there was no indication in the Complaint that Old Meadow was the alter ego of Poston or that Old Meadow was a device used to disguise fraud or conceal a crime. The court found that Plaintiff had failed to state a cause of action for breach of contract or breach of implied warranty against Poston individually, and therefore sustained Poston’s Demurrer as to Counts I and II of the Complaint.
In addressing Counts III through V of the Complaint, the court noted that allegations of fraud must plead specifically in what the fraud consists, so that the defendant may have the opportunity of directing his defense accordingly, meaning fraud must be distinctly stated. The court held that, while not perfect, Plaintiff’s allegations were pled with sufficient particularity. It found the alleged false representations to constitute significant factors Plaintiff would have considered in deciding whether to enter into the agreement between the parties, and it was reasonable to believe that but for the alleged fraud consisting of Poston’s willful or negligent misrepresentations, Plaintiff would not have entered into that agreement. The court concluded that Plaintiff’s complaint effectively stated causes of action for Actual Fraud, Constructive Fraud, and a Violation of the Consumer Protection Act. Thus, the court overruled the Defendants’ Demurrers for Counts II, IV, and V.