Meng v. Drees Co.

Thomas D. Horne, Judge

MEMORANDUM OPINION AND ORDER

This action for damages and for equitable relief arises out of a contract for the construction and purchase of a home. Plaintiffs are Paul and Wendy Meng and their daughter, Emma. Mr. and Mrs. Meng acquired a home located in the Tall Cedar Estates Development from the defendant, The Drees Company. Settlement occurred on November 11, 2005. It is alleged that the plaintiffs, prior to settlement, were assured that observed water leaks in the home had been repaired, and that the work done on the home was done in a good and workmanlike fashion.

The following allegations of fact are contained in the amended complaint and are relevant to an understanding of theories of recovery relied upon by the plaintiffs. For purposes of ruling on the demurrer, the allegations of fact are taken as true as are any facts reasonably inferred or implied from such allegations.

In February of 2006, Wendy Meng began to experience migraine headaches followed by heart palpitations, tachycardia, a loss of memory, an inability to concentrate, and a loss of energy. Emma began to complain of headaches the following June, and thereafter, began to experience nosebleeds. An inspection that was done in November of 2006 revealed leaks in windows and a door in the basement. Mr. and Mrs. Meng would learn in January 2007, that the leaks had not been repaired as represented, at the time of settlement on the home.

Initial testing conducted by Mr. Meng in January of 2007, revealed the presence of harmful molds in the home. Later, laboratory testing confirmed these findings. The defendant acknowledged that the mold had made Mrs. Meng ill and in February 2007, made assurances that the mold would be removed. The defendant refused to remove the mold or compensate the Mengs for the costs in dealing with the removal of the mold.

As a result of the presence of the mold, the plaintiffs were required to vacate the home and move to a rented townhouse.

Eight of the nine counts set forth in the complaint that seek relief are challenged on demurrer:

¦ Count I (Paul Meng). Negligence:

This count of the Amended Complaint alleges negligent construction of the home and resultant personal injury and property damages. In addition to $1,000,000.00 in compensatory damages, plaintiffs seek recovery of $350,000.00 in punitive damages. The punitive damage claim is predicated upon the reckless indifference shown by the defendant in proceeding with construction and undertaking remedial measures despite knowledge that they would be ineffectual in preventing future leaks and the attendant accumulation of dangerous mold.
Defendant challenges the legal sufficiency of Count I based upon the contractual limitation period set forth in the sales contract. Paragraph 14 of the sales contract provides as follows:

LIMITATION OF LIABILITY
a) PURCHASER UNDERSTANDS AND AGREES THAT SELLLER'S LIABILITY, WHETHER IN CONTRACT, IN TORT, UNDER ANY WARRANTY, IN NEGLIGENCE OR OTHERWISE IS LIMITED TO THE REMEDY PROVIDED IN THE SELLER'S LIMITED WARRANTY. Purchaser may not bring any legal proceedings or other action arising from the transactions of or underlying this Agreement more than one year after the cause of action has occurred.
b) FURTHER SELLER EXPRESSLY DISCLAIMS LIABILITY, AND PURCHASER EXPRESSLY WAIVES ANY AND ALL CLAIMS FOR PROPERTY DAMAGE AND/OR PERSONAL INJURY RESULTING FROM NATURALLY OCCURRING SUBSTANCES OR ENVIRONMENTAL CONDITIONS, INCLUDING BUT NOT LIMITED TO RADON GAS, NATURALLY OCCURING ASBESTOS, AND FORMALDEHYDE.

With respect to contractual limitation periods, the Supreme Court of Virginia has noted:

[p]arties to a contract properly may agree that a claim under the contract must be enforced within a shorter time limit than that fixed by statute if the contractual provision is not against public policy and if the agreed time is not unreasonably short….Such reduced time limits often have been sustained in insurance policies.
Board of Supervisors v. Sampson
, 235 Va. 516, 520- 521 (1988).

In contrast to limitations proscribed by statute, contractual periods governing the commencement of actions might arguably, in an appropriate case, be raised on demurrer. Cf. Va. Code Ann. §8.01-225. This is not such a case.
As counsel for the plaintiff has observed, the language of the agreement is ambiguous as to when the cause of action for breach, injury, or discovery "occurred" for purposes of the commencement of the limitation period. In addition, the pleadings raise other facts that may serve to bar defendant's assertion of the contractual limitation on demurrer. Lastly, the Court makes no finding at this time as to the enforceability of the contractual limitation at this time.
Accordingly, the demurrer to Count 1 of the Amended Complaint is overruled.

¦ Count II (Wendy Meng). Negligence:

Defendant's demurrer to this count of the Amended Complaint is based upon the limitation period contained in the contract for purchase. For the reasons set forth above, the demurrer is overruled as to Count 2.

¦ Count III (Emma Meng by Paul Meng as Father and Next Friend). Negligence:

Defendant has not demurred to this Count.

¦ Count IV (Paul and Wendy Meng). Actual Fraud Seeking Rescission and damages:

This is an independent claim for fraud in the inducement that does not arise out of the contract, and is not bound by the contractual period of limitations. The demurrer predicated upon the contractual limitation is overruled.

¦ Count V (Paul and Wendy Meng). Actual Fraud for Damages for Fraud in the Inducement:

To the extent this demurrer is dependent upon the contractual limitation, it is overruled for the reasons set forth above.

¦ Count VI (Paul and Wendy Meng). Constructive Fraud Seeking Rescission:

For the reasons set forth above, the demurrer of the defendants based upon the contractual limitation is overruled.

¦ Count VII (Paul and Wendy Meng). Constructive Fraud for Damages for Fraud in the Inducement:

For the reasons set forth above, the demurrer of the defendants based upon the contractual limitation is overruled.

¦ Count VIII (Paul and Wendy Meng). Violation of the Virginia Consumer Protection Act:

As plaintiffs' counsel has observed, a cause of action under the Va. Code Ann. §59.1-200(A)(10) (VCPA), is not dependent upon the terms of the contract, and arises independently of the contractual limitation agreed upon by the parties. By its terms, the VCPA applies to consumer real estate transactions. Va. Code Ann. §59.1-198. Defendant suggests that the instant transaction is exempted from recovery under the VCPA, because the instant sale is one regulated by the Federal Consumer Protection Act, 15 U.S.C. §1601 et seq.; Va. Code Ann. §59.1-199 (C). This case involves repairing leaks in a home and does not involve an extension of credit. The demurrer is overruled as to Count 8.

¦ Count IX (Paul and Wendy Meng). Breach of contract:

Defendant raise the following provision of the contract is support of its demurrer to Count 9:

33. MOLD: Mold is a naturally occurring micro-organism that commonly exists in the indoor and outdoor air….The Builder does not claim any expertise regarding the identification, remediation or possible health consequences of mold. The residence is neither constructed nor warranted to be free from mold at the time of closing or anytime thereafter. As a homeowner, Purchaser is responsible for periodically inspecting the residence for plumbing leaks, visible evidence of excessive moisture or mold growth and performing routine maintenance on the residence in order to keep the residence in good repair and condition. Purchaser should contact Builder immediately if it appears that abnormal amounts of moisture are accumulating in the residence, if a water leak is discovered or mold is found. If mold is found, Purchaser shall immediately consult with a qualified expert regarding mold remediation or other questions pertaining to mold.

Plaintiffs' contract claim is predicated on the failure of the builder to construct the home in a good and workmanlike fashion. Mold and its attendant effects on health was a contemplated consequence of a breach at the time the parties entered into the contract. Paragraph 33 imposes no bar to recovery where the breach involves the workmanlike way in which the work was performed. However, the Court notes that insofar as a contractual breach of an implied covenant of good faith and fair dealing is concerned, no such cause of action is recognized in Virginia. Ward's Equipment v. New Holland North America, 254 Va. 379 (1997). The demurrer is overruled.

¦ Count 9 (sic). (Paul and Wendy Meng) Breach of Warranty:

Paragraphs 13(a) and 14(a) set forth limitations on the warranties [13(a)] and liability [14 (a)] of the builder. Specifically, in the instant case, the parties agreed to be bound by the express limited warranty provided by the builder and to waive all warranties provided by Va. Code Ann. §55-70.1. The provision with respect to the waiver of such implied warranties is executed in compliance with statutory mandate. The demurrer is sustained with respect to the warranty claims.

Counsel for the plaintiffs may draw and Order consistent with this opinion to which counsel may note their exception.

Entered this 10th day of April 2008

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Thomas D. Horne, Judge