Construction Law Insights

Watts v. 350 Church St. LLC, 103 Va. Cir. 386 (Fairfax Cnty. Cir. Ct. Nov. 19, 2019)

Following delays in the construction of their new home, homeowners terminated their building contract and demanded that the builder return their deposit. When the builder refused, the homeowners filed suit under two theories of recovery: (i) violations of the Virginia Consumer Protection Act (“VCPA”); and (ii) unjust enrichment. The defendants counterclaimed for breach of contract. The plaintiffs moved to strike the defendants’ attorneys’ fees. At the end of a bench trial, the Court granted the plaintiffs’ motion to strike defendants’ attorneys’ fees because the defendants produced no evidence during the trial of attorneys’ fees.

The Court found that both of plaintiffs’ causes of action failed. To prove fraud under the VCPA, one must show: (1) a false representation; (2) reliance; and (3) a loss suffered as a result of that reliance. The plaintiffs had ample time to review the plans and the knowledge and experience to understand the proposed plans, but proceeded with the construction. The house was larger than originally expected and the customization changes requested by the plaintiffs were accounted for in the construction plans.

As to the plaintiffs’ unjust enrichment cause of action, the Court found that the liquidated damages clause included in the contract was valid and, therefore, the defendants were entitled to keep the deposits retained, and no unjust enrichment occurred. At the time of the agreement and through phases of building the custom home, the damages were uncertain and difficult to determine. Thus, the liquidated damages provision and the retention of the deposit did not constitute unjust enrichment.

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