Cutaia v. Radius Eng'g, Int'l, Inc.
| Decision Date | 01 October 2013 |
| Docket Number | Civil Action No. 5:11cv00077 |
| Parties | RORY J. CUTAIA, Plaintiff, v. RADIUS ENGINEERING, INTERNATIONAL, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Virginia |
By: Michael F. Urbanski
United States District Court
This case concerns the alleged failure by defendants Radius Engineering International, Inc. ("Radius") and Green Eye Technology, LLC ("Green Eye") to fabricate and install, respectively, a survival shelter on plaintiff Rory J. Cutaia's ("Cutaia") property in Augusta County. This matter is currently before the court on motions for partial summary judgment filed by Radius and Green Eye (Dkt. # 195 & 196) as to Counts VI, VII, VIII, IX, X, XI, XII, XIII, XIV, and XV of the Second Amended Complaint.
Counts VI and IX were voluntarily dismissed by Cutaia. Following the hearing held on August 15, 2013, the court by oral order granted in part defendants' summary judgment motions and dismissed Counts VII, VIII, XIV and XV under the Virginia economic loss rule, which bars negligence claims for purely economic losses. See City of Richmond v. Madison Mgmt. Group, Inc., 918 F.2d 438, 446-47 (4th Cir. 1990); Sensenbrenner v. Rust, Orling & Neal, Architects, Inc., 236 Va. 419, 425, 374 S.E.2d 55, 58 (1988). Defendants' motions for partial summary judgment as to Counts X, XI, XII and XIII, alleging fraud and violations of the Virginia Consumer Protection Act ("VCPA"), remain ripe for adjudication.
For the reasons set forth herein, defendants' motions as to these remaining counts are GRANTED in part and DENIED in part. The bulk of the representations alleged in Cutaia's claims of fraud in the inducement against Radius and Green Eye are opinions and promises as to future events. As such, they are not actionable as fraud either under the common law or the VCPA. Not all of the representations fall into these categories, however, and certain limited representations allegedly made by both Radius and Green Eye as to past or presently existing facts remain actionable. As such, a narrow fraud and VCPA claim survives summary judgment as to both Radius and Green Eye.
Thus, the jury trial scheduled to begin in this case on October 7, 2013 will proceed on Counts I through V, alleging breach of contract and express and implied warranties against Radius and breach of contract against Green Eye, as well as on the pared down fraud in the inducement claims against Radius and Green Eye under Counts X, XI, XII and XIII, as will be explained below.
Under Federal Rule of Civil Procedure 56, the court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Nguyen v. CNA Corp., 44 F.3d 234, 236-37 (4th Cir. 1995). When making this determination, the court should consider "the pleadings, depositions, answers to interrogatories, and admissions on file, together with . . . [any] affidavits" filed by the parties. Celotex, 477 U.S. at 322. Whether a fact is material depends on the relevant substantive law, and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323; Nguyen, 44 F.3d at 237. If that burden has been met, the non-moving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). "All reasonable inferences drawn from the evidence must be viewed in the light most favorable to the party opposing the motion," but "[a] mere scintilla of evidence supporting a case is insufficient." Nguyen, 44 F.3d at 237.
Count X alleges fraud in the inducement against Radius. The specific misrepresentations alleged in paragraphs 115-122 of the Second Amended Complaint focus on the fiberglass foundation pan and EMP/HEMP1 protection. Paragraphs 116 and 117 concern the fiberglass foundation pan for the survival shelter. In paragraph 116, Cutaia alleges that "Radius marketed and represented to Cutaia that it had designed, engineered, and could manufacture the Ethos WMD Underground Community, specifically, the fiberglass foundation pan system, in accordance with contractual specifications and industry standards to provide Cutaia with a structurally sound, waterproof, and airtight Ethos WMD Underground Community." In paragraph 117, Cutaia alleges "[a]t the time Radius made its representations to Cutaia, Radius knew that it had not, in fact, designed and engineered the fiberglass foundation pan system and further knew that it had not determined and tested the method by which the trays comprising the fiberglass pan system would be connected to provide Cutaia with a structurally sound,waterproof, and airtight Ethos WMD Underground Community." In paragraph 118, Cutaia alleges that Radius misrepresented that the Ethos shelter "provided EMP/HEMP protection" in compliance with certain standards.
The elements of actual fraud and fraudulent inducement are effectively the same. "To state a cause of action for fraudulent inducement of contract under Virginia law, a plaintiff must allege that the defendant made 'misrepresentations [that] were "positive statements of fact, made for the purpose of procuring the contract; that they are untrue; that they are material; and that the party to whom they were made relied upon them, and was induced by them to enter into the contract."'" Enomoto v. Space Adventures, Ltd., 624 F. Supp. 2d 443, 452 (E.D. Va. 2009) (quoting Lucas v. Thompson, 61 Va. Cir. 44, 2003 WL 483831 (Va. Cir. Ct. 2003) (quoting Brame v. Guarantee Fin. Co., 139 Va. 394, 124 S.E. 477 (1924))).
It is well-settled that to be actionable in fraud, an alleged misrepresentation "must be of an existing fact, and not the mere expression of an opinion." Cohn v. Knowledge Connections, Inc., 266 Va. 362, 368, 585 S.E.2d 578, 582 (2003). "[T]he mere expression of an opinion, however strong and positive the language may be," is not a statement of present fact. Mortarino v. Consultant Eng'g Servs., Inc., 251 Va. 289, 293, 467 S.E.2d 778, 781 (1996). Although the rule itself is clear, "[i]t is not always an easy matter to determine whether a given statement is one of fact or opinion." Id. at 293, 467 S.E.2d at 781 (quoting Garrett v. Finch, 107 Va. 25, 28, 57 S.E. 604, 605 (1907)). "Whether a statement is a statement of fact or a statement of opinion is determined on a case-by-case basis, 'taking into consideration the nature of the representation and the meaning of the language used as applied to the subject matter and as interpreted by the surrounding circumstances.'" Sales v. Kecoughtan Housing Co., Ltd., 279 Va. 475, 481, 690S.E.2d 91 (2010) (quoting Packard Norfolk, Inc. v. Miller, 198 Va. 557, 562, 95 S.E.2d 207 (1956)).
Moreover, "[t]he general rule is that fraud must relate to a present or pre-existing fact, and cannot ordinarily be predicated on unfulfilled promises or statements as to future events." Colonial Ford Truck Sales, Inc. v. Schneider, 228 Va. 671, 677, 325 S.E.2d 91, 94 (1985) (quoting Soble v. Herman, 175 Va. 489, 500, 9 S.E.2d 459, 464 (1940)). As the court noted in Lloyd v. Smith, 150 Va. 132, 145, 142 S.E. 363, 365 (1928):
Were the general rule otherwise, every breach of contract could be made the basis of an action in tort for fraud. To permit an action for damages in favor of one who has no other ground for complaint, except an unfulfilled promise . . . , that is upon a broken contract, would ignore essential elementary distinctions, and in effect nullify the statute of frauds.
See also Abi-Najm v. Concord Condominium, LLC, 280 Va. 350, 362-63, 699 S.E.2d 483, 490 (2010); Boykin v. Hermitage Realty, 234 Va. 26, 29, 360 S.E.2d 177, 178 (1987).
Parsing Cutaia's claims of fraud in the inducement against Radius, it is clear that certain assertions are not actionable. For instance, the allegation in paragraph 116 that Radius "could manufacture the Ethos WMD Underground Community, specifically, the fiberglass foundation pan system, in accordance with contractual specifications and industry standards" is a promise as to the future and is not actionable as fraud in the inducement. Likewise, Cutaia's claim that Radius' President, Walton McCarthy, told him that Radius' fiberglass structure "would provide protection from electromagnetic pulse," Dep. of Rory J. Cutaia, May 2, 2012, at 26, 153; June 6, 2013, at 117, 123, 148, is a promise as to the future.2 See Wal-Mart Stores, Inc. v. J. A. FieldenCo., Inc., 440 F. Supp. 2d 523, 528-29 (W.D. Va. 2006) (). Plainly, the representations asserted by Cutaia concern the attributes of the yet-to-be constructed survival shelter. As such statements do not concern present or pre-existing facts, but rather are promises as to the future, they are not actionable as fraud in the inducement.
This is not a case like Tate v. Colony House Builders, Inc., 257 Va. 78, 508 S.E.2d 597 (1999), and Packard Norfolk, Inc. v. Miller, 198 Va. 557, 95 S.E.2d 207 (1956), where the Virginia Supreme Court held that statements as to the present quality of a new house and car, respectively, stated claims for fraud. The new house had been built and the car likewise existed. Thus, the court concluded that representations as to the quality of the house and car were...
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