Construction Law Insights

Viano v. THD At-Home Servs., 2020 U.S. Dist. LEXIS 62999 (E.D. Va. Apr. 9, 2020)

On October 22, 2016, John Farr (“Farr”), a sales consultant for The Home Depot At-Home Services (“Home Depot”), inspected Emilo and Vanessa Viano’s (“Vianos”) home in Arlington, Virginia and represented to the Vianos that Home Depot would be the Vianos ‘one-stop shop’ for the roofing work needed on the home. On December 22, 2016, Farr re-inspected the Vianos’ home and represented that Home Depot was competent, able to perform the work, and that Home Depot was trustworthy and maintained a good reputation with customers. On December 23, 2016, the Vianos and Home Depot entered into a home improvement contract (the “Contract”), which provided for the repair and replacement of three roofs. The Contract included a Roofing Spec Sheet

and an Insulation Spec Sheet setting forth Home Depot’s scope of work, which included the repair and replacement of three flat roofs and the removal and replacement of insulation. The Contract contained an “Additional Charges” section that contained an additional charge $59.00 per 4x8 sheet of sheathing and/or $5.00 per linear foot of dimensional lumber/fascia/planking. The Special Terms and Conditions under the Roofing Spec Sheet also noted that additional charges would apply for rotten or deteriorated wood. The Vianos believed that Home Depot’s work under the Contract included the replacement of rotten or damaged wood. The Contract also provided that Home Depot could terminate the Contract if it determined that it could not perform its obligations due to a structural problem with the home.

Home Depot subcontracted the roofing work to Pride Roofing, LLC (the “Subcontractor”), who began work on August 23, 2017. On August 24, 2017 and August 25, 2017, Norris Paige, an Installation Services Manager for Home Depot, supervised the work at the property and, when Subcontractor observed rotten and damaged wood after removing the roofing, Paige said that Home Depot would not replace the wood and that the Vianos had to find a carpenter to perform that work at the Vianos’ expense. On August 26, 2017, Home Depot ceased work on the Contract at the Vianos’ home and never resumed work. On August 16, 2019, the Vianos filed a Complaint in Arlington County Circuit Court. On September 25, 2019, Home Depot filed an answer and demurrer. On October 4, 2019, Home Depot removed the case to federal court and Home Depot’s answer and demurrer was construed and briefed as a partial Motion to Dismiss for failure to state a claim for actual fraud.

The Court granted Home Depot’s partial Motion to Dismiss in relation to Farr’s statements about Home Depot’s trustworthiness and maintaining a good reputation with customers because they are opinions, but denied Home Depot’s partial Motion to Dismiss in relation to the Vianos’ actual fraud claim. A plaintiff alleging fraud or mistake must state with particularity the circumstances constituting fraud or mistake. But malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally. The elements of actual fraud in Virginia are: (1) a false representation; (2) of a material fact; (3) made intentionally and knowingly; (4) with intent to mislead; (5) reliance by the party misled; and (6) resulting damage to the party misled. Home Depot argued that: (a) Farr’s statements were non-actionable opinions; (b) Farr’s statements are non-actionable statements regarding future events; (c) the Vianos failed to plead actual fraud with the particularity required by Rule 9(b); and (d) the Vianos failed to plead reasonable reliance. The Court agreed with Home Depot’s first argument, but rejected Home Depot’s three other arguments.

In Virginia, expressions of opinion cannot form the basis of an action for fraud, but there is no bright line test to ascertain whether false representations constitute matters of opinion or statements of fact. Farr’s statements regarding Home Depot’s competence, ability to perform, and ability to serve as a ‘one-stop shop’ for the Vianos’ roof repairs are factual representations because Farr made those statements about Home Depot’s abilities with knowledge of the Vianos’ specific roof needs. On the other hand, Farr’s remarks about Home Depot’s trustworthiness and good reputation among customers are mere commendatory statements, trade talk, or puffing. In Virginia, fraud must relate to a present or pre-existing fact and cannot ordinarily be predicated on unfulfilled promises or statements as to future events. But a promisor who makes a promise without an intention to perform on that promise makes a misrepresentation of present fact and, if made to induce the promise to act to his detriment, that promise is actionable as an actual fraud.

By alleging that Farr knowingly and intentionally made false statements and did not intend to perform in accordance with those statements, the Vianos asserted a misrepresentation of present fact regarding Farr’s intention. Furthermore, a claim for actual fraud does not lie where the parties’ contract is the sole source of any duty breached, but this principal does not bar a claim for fraud in the inducement such as the Vianos’ claim here. The Vianos adequately alleged that Farr knowingly and intentionally made misrepresentations regarding Home Depot’s ability to complete the Vianos’ roof repair project without an intent to perform to induce the Vianos to enter the Contract. Therefore, the Contract provisions cited by Home Depot did not negate the Vianos’ fraud in the inducement claim. Next, the Court held that the Vianos complaint satisfied Rule 9(b)’s particularity requirements because it alleged the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation, and what he obtained thereby. Finally, the Court rejected Home Depot’s reliance argument. To prove reliance, a plaintiff not only must show action to the plaintiff’s detriment in response to the defendant’s false representation, but also must demonstrate that its reliance upon the representation was reasonable and justified. Here, the Vianos alleged they entered into the Contract based on Farr’s representations.

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