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Constructive Fraud Cases Summarized By Injury Lawyer

 This page within Virginia Tort Case Law is a compilation of cases reported by the Virginia Supreme Court and summarized by Brien Roche dealing with the topic of Fraud Constructive and the related topic of intentional torts.   For more information about fraud see the pages on Wikipedia.

Fraud Constructive-Cases

2008 Super Value, Inc. v. Johnson, 276 Va. 356, 666 S.E.2d 335.

Plaintiff alleged various business torts against defendants. As to a constructive fraud claim, under no circumstances will a promise of future action support such a claim. The allegations here were that defendants promised to provide future financial support. That was insufficient to support the claim.

2004 Filak v. George, 267 Va. 612, 594 S.E.2d 610.

In this action for breach of contract and constructive fraud against insurance agent for failure to procure policy with certain provisions, the court said that claim for constructive fraud is not actionable when such a claim essentially alleges negligent performance of contractual duties. Loss suffered as a result of breach of duty assumed only by agreement, rather than a duty imposed by law, remains the sole province of the law of contracts. This is the so-called economic loss rule.

2003 Cohn v. Knowledge Connections, Inc., 266 Va. 362, 585 S.E.2d 578.

Employment case where plaintiff alleged constructive fraud. Claim fails because plaintiff’s evidence did not support her theory of the case on causation.

2003 Eden v. Weight, 265 Va. 398, 578 S.E.2d 769.

Plaintiffs claimed constructive fraud relating to proposed sale of stock. To establish constructive fraud, plaintiff must show that defendants innocently or negligently made false statements of material fact upon which plaintiffs rely to their detriment by clear and convincing evidence. The misrepresentations must relate to present or preexisting fact and not statements involving promises or future events unless the evidence shows an intent not to fulfill such promise when made. Plaintiffs in this case claimed that they were placed under the false impression that there were certain restrictions on the sale of stock. Evidence was that as of July 15, which is operative date, plaintiffs had significant distrust of at least one defendant and that they knew that the shares could probably be sold to outside investors and to current shareholders. In addition, plaintiff failed to present evidence of damage during pertinent time since evidence was, as of July 15, they knew that shares could be conveyed. Evidence relating to alleged damage dealt with periods of time subsequent to July 15. Verdict in favor of plaintiff was properly set aside by trial court.

2000 Economopoulos v. Kolaitis, 259 Va. 806, 528 S.E.2d 714.

Confidential relationship did not exist between father and son due to 17-year business association which had ended six years prior to events in question. Evidence in this case showed that Michael intended to give Andrew $160,000 in question and that Michael intended to redeem treasury bills. As such, motion to strike constructive fraud claim denied.

1999 Lumbermen’s Underwriting Alliance v. Dave’s Cabinet, Inc., 258 Va. 377, 520 S.E.2d 362.

Dave’s Cabinet, Inc. alleged that it had been mislead by carrier to believe that worker’s compensation premiums would be less if Dave’s Cabinet purchased this policy that required employer to report all worker’s compensation claims even those involving minor injuries and further, to send all employees with injuries to hospital for medical care. Statements that carrier wanted Dave’s Cabinet to report even minor work related injuries and to have employees who sustained such injuries treated at hospital were not misrepresentations of material fact. They were instead statements regarding carrier’s policy requirement. Promise that this practice would produce lower premiums was merely unfulfilled promise as to future event not statement concerning existing or preexisting fact. Therefore, no fraud.

1999 Prospect Dev. Co. v. Bershader, 258 Va. 75, 515 S.E.2d 291.

Plaintiffs were purchasers of building lot and new home to be constructed on lot. They were expressly told by builder that adjacent lot was not buildable lot and would be preserved. Plaintiffs paid premium for their lot being adjacent to this non-buildable lot. Constructive fraud must be shown by clear and convincing evidence that false representation has been made of material fact that was made innocently or negligently and that injured party was damaged as result of his reliance upon misrepresentation. In this case, defendants made clear misstatements as to percolation of adjacent lot and that such tests were not successful and therefore, this lot could not be built upon. Those statements are not opinions nor are they statements of future events.

1999 Tate v. Colony House Builders, Inc., 257 Va. 78, 508 S.E.2d 597.

In this constructive fraud claim, plaintiffs allege misrepresentations of material existing facts by home builder as to condition of house. Statements made by defendant were that house was free from structural defects, constructed in workmanlike manner, and was fit for habitation were statements of present fact and therefore, could form basis for constructive fraud claim. Defendants’ statements, that plaintiff would enjoy quiet possession in sense that, apart from minor corrective work, no significant work would be required by way of restoration, rebuilding, or extensive repair, are representations predicated upon future events or promises, therefore, they could not form the basis for constructive fraud. Statements by defendant that house was competently designed commensurate with consideration of $345,000 and that design and construction were of highest quality are more in nature of opinion, therefore, they cannot form basis for constructive fraud. This claim is not barred by the statute of repose found in Va. Code § 8.01-250 because the constructive fraud claim does not involve injury to real property.

1998 Henderson v. Henderson, 255 Va. 122, 495 S.E.2d 496.

By deed of gift Earl Henderson conveyed to his granddaughter Terry Henderson a parcel of land. At time of conveyance grandfather was 92 years old. Grandfather thereafter filed Bill of Complaint seeking rescission of deed of gift on grounds of undue influence and constructive fraud. Fraud, whether actual or constructive, must be strictly proved by clear and convincing evidence that a false representation of material fact was made, innocently or negligently, and that injured party suffered damage as a result of reliance on misrepresentation and that false representation was made to induce reasonable person to believe it. Here grandfather sought to prove that Terry falsely represented that there would not be any taxes due as result of conveyance. Grandfather’s own testimony, however, was that Terry told him there would be small income tax due. Therefore grandfather’s testimony fails to support misrepresentation alleged. In this case grandfather did not offer any clarification or explanation of his testimony, and therefore this constitutes judicial admission under Massie v. Firmstone.

1997 Blair Construction v. Weatherford, 253 Va. 343, 485 S.E.2d 137.

Plaintiff sued for breach of contract and constructive fraud. Plaintiff alleges that misrepresentation of one’s present state of mind to do or not to act can constitute material misrepresentation sufficient to establish constructive fraud. This may establish actual fraud but not constructive fraud.

1996 Mortarino v. Consultant Eng’g Servs., 251 Va. 289, 467 S.E.2d 778.

Constructive fraud requires clear and convincing evidence of false representation of material fact made innocently or negligently wherein injured party was damaged as result of reliance upon misrepresentation. Statements in this question related to whether or not property contained wetlands. These were statements of fact and not statements of opinion.

1991 Nationwide Mut. Ins. Co. v. Hargraves, 242 Va. 88, 405 S.E.2d 848.

Constructive fraud differs from actual fraud in that misrepresentation of material fact is not made with intent to mislead but is made innocently or negligently although resulting in damage.

1991 Ring v. Poelman, 240 Va. 323, 397 S.E.2d 824.

Motorist stopped in traffic waved to another motorist indicating that he would yield to that other motorist who wished to cross three lanes of traffic westbound, in order to make left turn and proceed eastbound. Other motorist proceeded and was then struck by plaintiff who was lawfully proceeding in third westbound lane. Court noted that one who assumes to act, even though gratuitously, may thereby become subject to duty of acting carefully, if he acts at all. Jury question concerning driver’s negligence in giving such signal is not presented where signal could not reasonably have been interpreted as signal to proceed across lanes of oncoming traffic. In this case, motorist entering highway expressly said that he did not interpret signal of first motorist as signal to proceed across lanes of oncoming traffic. As such, first motorist may have been negligent but his negligence clearly was not proximate cause of collision.

1989 Bergmueller v. Minnick, 238 Va. 332, 383 S.E.2d 722.

Elements of constructive fraud: (1) material false representation; (2) hearer believed it; (3) it was meant to be acted upon; (4) it was acted upon; (5) damage sustained. Standard of proof is clear and convincing evidence.

1985 Nationwide Ins. Co. v. Patterson, 229 Va. 627, 331 S.E.2d 490.

To establish constructive fraud plaintiff must establish by clear and convincing evidence: material false representation; he believed it to be true; it was meant to be acted on; it was acted on; damage was sustained. One cannot by fraud and deceit induce another to enter contract to his disadvantage then escape liability by saying party to whom misrepresentation was made was negligent in failing to learn truth. In this insurance contract case, even expressions of opinion about meaning of contract may be actionable if parties are on unequal terms.

1984 Knuckols v. Knuckols, 228 Va. 25, 320 S.E.2d 734.

Plaintiffs are required to prove their case of constructive fraud or undue influence by clear, cogent, and convincing evidence.

1982 Kitchen v. Throckmorton, 223 Va. 164, 286 S.E.2d 673.

Constructive fraud is breach that law declares fraudulent because of its tendency to deceive others. Neither actual dishonesty of purpose nor intent to deceive is essential element.

1980 Nolde Bros. v. Wray, 221 Va. 25, 266 S.E.2d 882.

Co-defendant’s hand signal for defendant to proceed with left turn was not actionable since co-defendant not in position to determine if defendant could proceed safely.

1956 Packard Norfolk v. Miller, 198 Va. 557, 95 S.E.2d 207.

Statement by salesman that car was in perfect running condition was statement of fact rather than opinion; statement was material because it induced Miller to enter into contract. Where material misrepresentation is acted upon, there is constructive fraud even if made innocently.

1952 Jackson v. Seymour, 193 Va. 735, 71 S.E.2d 181.

Constructive fraud is breach of legal or equitable duty which, irrespective of moral guilt of fraud feasor, law declares fraudulent because of its tendency to deceive others, to violate public or private confidence, or to injure public interests. Neither actual dishonesty of purpose nor intent to deceive is essential element of constructive fraud. Gross inadequacy of consideration which shocks conscience is evidence of constructive fraud.

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Constructive Fraud Cases Summarized By Injury Lawyer

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