Thomas D. Horne, Chief Judge
Peter C. Grenier, Esquire
Anne R. Noble, Esquire
1150 Connecticut Avenue, N.W.
Ninth Floor
Washington, D.C. 20036-4192 John J. McKenna, Jr. Esquire
Jordan M. Samuel, Esquire
William F. Gibson, Esquire
Christopher A. Taggi, Esquire
1301 Connecticut Avenue, N.W.
Sixth Floor
Washington, D.C. 20036 Dear Counsel:
In these preliminary proceedings, the defendants in Preister, et. al. v. Small, et.al., At Law No. 26541, have for a second time mounted a challenge to plaintiff's complaint. On May 10, 2003, the Court entered an Order memorializing earlier findings with respect to plaintiff's Motion for Judgment. These findings reflect decisions articulated orally and in written form. Among other things, the Court sustained demurrers as to the allegations against the defendants Small, Schwartz, Andonov, and Lastner with leave for the plaintiffs to file and amended motion for judgment as to such persons.
In an amended motion for judgment in Preister, et. al. v. Small, et.al., At Law No. 26541, plaintiffs have restated claims against Messrs. Small, Schwartz, Andonov, and Lastner for fraud, constructive fraud, and aiding and abetting. As before, defendants responded with a demurrer challenging the legal sufficiency of this pleading. A related proceeding against the corporate defendant, Preister, et. al. v. Renaissance at River Creek Village, Inc., et. al., At Law No. 26520, with whom these defendants are employed has survived, in large part, a similar procedural challenge and has not been amended.
These two cases, as yet, have not been consolidated. However, they have been treated as one for hearing preliminary procedural matters, and have been set for trial on the same date.
In determining the merits of a claim on demurrer, the Court must, "...take as true all material facts properly pleaded and all inferences drawn from those facts." Koffman v. Garnett, 265 Va. 12, 14 (2003). In a fifty-six page pleading containing nine numbered counts, plaintiffs outline their case. Each of the individual defendants is charged with fraud, constructive fraud, and aiding and abetting in connection with plaintiffs acquisition of a new home. Plaintiffs seek rescission of the deed of conveyance for their new home and restitution based upon defendants' fraud. In addition, they ask for compensatory and punitive damages in connection with such fraud claims.
While fraud must be plead with specificity, plaintiffs need only plead such facts as are necessary to clearly inform the defendants of the true nature of their action. Tuscarora v. R.V.A., 218 Va. 849 (1978) ; Va. Sup. Ct. R. #1: 4(d). The Amended Motion for Judgment contains sufficient allegations, both stated and reasonably inferred to withstand demurrer. As to each defendant, the nature of the fraudulent misrepresentation or concealment has been stated; and the individual defendant is identified as having approved and ratified, or aided and abetted such actions by others.
Defendants seek to revisit the legal sufficiency of the claim for civil aiding and abetting. Much of their argument seeks to draw upon the law of principles that is peculiar to the criminal law. Within the context of civil proceedings, it is the resultant damage that is the aegis of the action and not punishment for assisting the person who acted as a principle in the first degree in committing a crime. For the reasons previously stated, the demurrer will be overruled as to the availability of such a cause of action to the plaintiffs.
Accordingly, the demurrer to the Amended Motion for Judgment is overruled.
As an alternative to its demurrer, the defendants have moved for an order compelling plaintiffs to elect either to pursue their equitable remedy for rescission and restitution or tort recovery at law. Plaintiffs assert that their amended pleading merely sets forth alternative theories of recovery. Va. Code Ann. §8.01-281 (Michie 2003); Va. Sup. Ct. R. # 1:4(k). It is their contention that the damages flow not only from a contractual duty but also from a duty of truthfulness imposed upon the defendants by law. The Court does not agree with the position of the plaintiffs and finds that they should be put to an election.
It is asserted that defendants participated in a fraudulent scheme to sell plaintiffs a home for which they did not bargain. Furthermore, after settlement, it is suggested that as a result of the continuation of the fraudulent scheme, plaintiffs suffered damage for which they seek compensation. While both pre and post contractual fraud is alleged, the Court must determine the source of the duty to "abstain from making the fraudulent representation[s]". Yuzefovsky v. St. John's Wood Apartments, 261 Va. 97, 112 (2001).
While there may have been fraud in the inducement to enter into the contract to purchase the property and later proceed with settlement, any reliance upon statements made by the defendants after the execution of the contract was in accordance with the expectancies memorialized in the agreement. Any damages recovered after the contract was signed would be limited to a breach of the agreement. Contract damages have not been asked for against Messrs. Small, Schwarz, Andonov, or Lastner. Thus, the fraud and aiding and abetting for which damages may be recovered occurred prior to the execution of the contract. An election is required in accordance with familiar principles.
To the extent the plaintiffs seek to rescind a contract fraudulently induced and the related restitution, they are barred from affirming the contract and recovering damages arising from its breach. They are put to an election as to such claim. Millboro Company v. Augusta Corp., 140 Va. 409, 421 (1924).
Plaintiffs' filed an "emergency sur-reply" that was the subject of considerable argument. It is unnecessary to address this pleading in order to decide the instant demurrer and motion to elect. The Court will reserve ruling on various issues raised by counsel for the defendants at a later time.
Accordingly, the Court will direct that by September 10, 2003, plaintiffs elect as to whether they wish to continue to seek rescission and restitution or elect to have the matter proceed at law as an action for damages only.
Ms. Noble may draw an order consistent with this opinion to which counsel may note their exception.
Very truly yours,
Thomas D. Horne, Chief Judge