Sunrise Continuing Care, LLC v. Wright
| Decision Date | 16 January 2009 |
| Docket Number | Record No. 072501. |
| Citation | 277 Va. 148,671 S.E.2d 132 |
| Court | Virginia Supreme Court |
| Parties | SUNRISE CONTINUING CARE, LLC v. James F. WRIGHT, et al. |
John D. McGavin (Melissa Hogue Katz; Brian C. Wilberg; Trichilo, Bancroft, McGavin, Horvath & Judkins, on brief), Fairfax, for appellant.
Robert J. Madigan (Madigan & Scott, on brief), Springfield, for appellees.
Present: All the Justices.
OPINION BY Justice LEROY F. MILLETTE, JR.
In this appeal, we consider whether the trial court erred in allowing a jury to calculate damages arising from an alleged breach of a continuing care services contract when the plaintiffs' claims for rescission of the contract and for fraud were dismissed, and the plaintiffs presented no evidence of compensatory damages in support of their sole remaining claim for breach of contract.
On November 13, 2003, Colonel James F. Wright, Jr., then age 82, and wife Marion C. Wright, then age 76 (collectively, the Wrights), moved into apartment 404 at The Fairfax, a continuing care facility for retired military officers owned by Sunrise Continuing Care, LLC (Sunrise). Three weeks later, the Wrights experienced the first in a series of roof leaks that persisted for several years. The existence of recurrent roof leaks in apartment 404 is uncontested. Almost three years after they moved in and while they continued to live at The Fairfax, the Wrights filed a three-count complaint against Sunrise, consisting of count I—rescission, count II— fraud, and count III—breach of contract.*
The contract the Wrights alleged had been breached by Sunrise was a continuing care agreement that set out the terms of the Wrights' residence at The Fairfax and the parties' respective obligations. Although the Wrights were offered options including a 50 percent refundable or 95 percent refundable contract, they chose a non-refundable contract. The Wrights paid a non-refundable entrance fee of $204,084.00. Under the agreement, the Wrights were also required to pay a monthly fee as additional consideration for medical and nonmedical services provided to the residents at The Fairfax. These services included 24-hour security, a daily main meal, weekly housekeeping service, scheduled transportation, 24-hour nurse on duty, an assisted living and skilled nursing care facility, a wellness clinic, an emergency call system, concierge service, scheduled recreational programs, full-time administrative staff, maintenance of residence and community grounds, and utilities. A wide array of amenities was also offered, including fine dining and monthly wine tasting events. Additionally, in exchange for the entrance fee and continued payment of the monthly fees, the Wrights were entitled to live at The Fairfax for the rest of their lives.
Colonel Wright testified that apartment 404 was represented to Mrs. Wright and him as "[t]he best available, high class, first class." The Wrights expected to receive "[a]n apartment that was like new and one that [they] could live in safely and keep [their] furniture in, and go off if [they] wanted to, lock the door and go away for a week or so, without having [their] apartment on [their] mind." They anticipated "peace, quiet, no need to do the chores that go with owning a house, and camaraderie of other people [at The Fairfax and] social events that people with the same background would enjoy sharing with each other."
The Wrights contended that apartment 404 was less than "first class" due to the roof leaks and, therefore, Sunrise materially breached the agreement. Colonel Wright testified regarding damages:
[W]e had to spend a lot of our time in the apartment instead of doing the things that we wanted to do, and we felt as though we were a hostage to a faulty apartment. We couldn't go out to do the things we liked to do, and simply shopping and things like that where you—depending upon the weather, we'd decide that one of us had better stop and stay in the apartment. And it was three, going on four, years of the worst years of our retirement.
As damages for breach of contract, the Wrights claimed $382,535.93, representing their payment of the $204,084.00 entrance fee plus monthly fees paid up to the date of the trial amounting to $178,451.93.
A jury trial was held, while the Wrights continued to live at The Fairfax. After the Wrights completed the presentation of their evidence, Sunrise moved to strike the evidence and for entry of judgment in its favor. Sunrise argued that although the Wrights had the burden to prove damages, they "put on no evidence to demonstrate anything other than full reimbursement." Sunrise further argued that rescission was an inappropriate remedy because rescission requires extraordinary circumstances in which the entire purpose of the contract between the parties is defeated. Sunrise analogized the extraordinary circumstances required for rescission of the contract with constructive eviction in a landlord/tenant case. In addition, Sunrise contended it had taken extraordinary measures to repair the leaks.
Arguing against Sunrise's motion to strike, the Wrights asserted that the series of leaks constituted a material breach of the contract and they were therefore entitled to rescission to be returned to the "status quo" and to reimbursement of, at a minimum, the entrance fee. In addition, the Wrights sought compensation for the amount the monthly fee was "devalued" by the alleged breach. The Wrights conceded, however, that "at this point in the case, the only thing that's been proven was what [the Wrights have] paid in" and, having presented their case-in-chief, that they had not put on any evidence of compensatory damages. The Wrights argued, "we are entitled to our money back because of a material breach of the contract," and if Sunrise sought restitution for the services it provided to the Wrights, "the burden shifts to [Sunrise]" as "to any kind of quantum meruit that [it] can prove."
The trial court granted Sunrise's motion to strike the rescission and fraud claims, but took the motion to strike the breach of contract claim under advisement. Sunrise presented its case, after which Sunrise renewed its motion to strike the breach of contract claim. The trial court continued to take the motion to strike the breach of contract claim under advisement. At the conclusion of the Wrights' rebuttal evidence, Sunrise renewed its motion to strike for a second time, which was again taken under advisement. The case was submitted to the jury on the Wrights' breach of contract claim.
The jury returned a verdict in favor of the Wrights and assessed their damages at $279,000. The trial court denied Sunrise's outstanding motion to strike and entered final judgment. This appeal followed.
Sunrise contends that the trial court erred in denying its motion to strike the Wrights' claim for breach of contract. Sunrise further contends the trial court erred in awarding final judgment to the Wrights.
Sunrise argues that the Wrights never claimed compensatory damages in their lawsuit or proved any compensatory damages at trial. According to Sunrise, the sole remedy the Wrights sought was rescission, with a repudiation and subsequent cancellation of the contract; and a total refund of all monies they had paid to Sunrise, less any offset that Sunrise could prove to the jury for the value of services the Wrights had received.
Sunrise contends that even though the Wrights had resided in their apartment at The Fairfax for almost four years and received substantial services and enjoyed amenities provided by Sunrise, the Wrights presented no evidence to allow the jury to determine the amount the Wrights should recover if the jury found Sunrise had materially breached the contract. Sunrise argues that without any evidence of the difference between the services the Wrights claimed they were entitled to receive pursuant to the contract and the services they did receive, the jury could only speculate in assessing damages. Sunrise asserts that since the Wrights did not prove their damages, they failed to establish a prima facie claim for breach of contract.
In response, the Wrights argue that because Sunrise committed a material breach, the Wrights were entitled to repudiate and cancel the contract. The Wrights also contend they were entitled to receive as damages the difference in value between the benefits under the contract if they had been "first class" as contracted for and the value of the "actual" benefits the Wrights received.
The Wrights argue that the jury was provided with evidence of the agreed upon contract value of the "first class" benefits the Wrights were supposed to...
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