Devine, Donald v. Buki ( 2015 )

PRESENT: Lemons, C.J., Goodwyn, Millette, Mims, McClanahan, and
Powell, JJ., and Lacy, S.J.
DONALD M. DEVINE, JR.
OPINION BY
v. Record No. 140301 JUSTICE CLEO E. POWELL
JANUARY 8, 2015
CHARLES Z. BUKI, ET AL.
FROM THE CIRCUIT COURT OF NORTHUMBERLAND COUNTY
Harry T. Taliaferro, III, Judge
Donald M. Devine, Jr. (“Donald”) appeals the judgment of
the trial court rescinding the sale of the property known as
Rock Hall to Charles Z. Buki (“Buki”) and Kimberly A. Marsho
(“Marsho”). He further appeals the trial court’s award of
consequential damages and attorney’s fees. Buki and Marsho
assign cross-error to the trial court’s denial of their claim
under the Virginia Consumer Protection Act (“VCPA”), Code §
59.1-196, et seq., and their request for attorney’s fees.
I. BACKGROUND
Rock Hall is a wood frame house that is more than 200 years
old. The main structure of the house is supported by a large
wood beam (the “foundation sill”) resting on a masonry wall. In
March, 2004, Rock Hall was bought by Acorn Properties, a company
owned by Donald. In January, 2005, Acorn Properties transferred
ownership of Rock Hall to Donald and his wife, Nancy W. Devine
(“Nancy”).
Donald subsequently began the process of renovating and
restoring Rock Hall. Donald performed some of the work by
himself and hired contractors to do the rest. In June, 2005,
Shannon Swindell (“Swindell”) was hired by Donald to remove the
aluminum siding and re-paint the original wooden siding found
underneath. According to Swindell, all of the siding appeared
to be old and there were no new boards on the bottom of the
house. Donald also hired Danny Beall (“Beall”) to perform a
number of tasks, including rebuilding the front and rear
porches; reframing, insulating and rehanging sheetrock on the
interior walls; repainting the living room; installing three new
bathrooms and a kitchen; and some masonry work. Beall did not
do any work on the wooden siding or corner posts of Rock Hall.
In December, 2006, Donald decided to sell Rock Hall to
generate the cash necessary to purchase another property.
Donald listed Rock Hall for sale with Rebecca Lemmon (“Lemmon”),
a local realtor. Lemmon, with Donald’s input, created
promotional literature that was given to potential buyers,
including Buki and Marsho. The promotional literature stated:
• Rock Hall had been “completely restored;”
• Rock Hall’s foundation had been restored;
• Rock Hall was “completely renovated and restored
between 2004 and 2005 from the wood plank floors and
molding to the portico, and from the brick foundations
to the roof and chimney.”
2
The promotional literature also cautioned that the information
was provided by the seller and deemed accurate, but it was not
guaranteed.
On January 22, 2007, Buki and Marsho signed a contract
agreeing to purchase Rock Hall for $590,000 (the “Real Estate
Contract”). The Real Estate Contract included a “Disclaimer
Statement” which stated that the owners made no representations
or warranties as to the condition of the property and the
purchaser would be receiving the property “‘as is’ . . . with
all defects which may exist, if any, except as otherwise
provided in the real estate purchase contract.”
On February 2, 2007, William Knight (“Knight”), a home
inspector, inspected the property with Buki and Marsho present.
He noticed that some of the window frames were warped, allowing
air to enter. As a result, Knight determined that the windows
and siding were only in “marginal” condition, meaning that they
were “functional” but required “immediate maintenance” and
likely would need to be replaced within five years.
Additionally, he found a water stain and mold forming on the
living room ceiling. Knight also noted some moisture damage in
the basement and some evidence of boring insect damage to the
rear sill. Overall, however, he “told [Buki and Marsho] that he
found nothing that would cause him to tell a potential purchaser
not to buy Rock Hall.”
3
Due to Knight’s report, Buki and Marsho had Jeffrey T. Cox,
Sr. (“Cox”), perform a subsequent inspection on the property,
focusing primarily on the insect damage. Cox also noted the
moisture and insect damage in the basement. However, according
to Cox, the termite damage was limited to one basement window
and a baseboard. Cox stated that, based on what he could see at
the time, there was no evidence of termite damage anywhere else
in the house or that there was an active termite infestation in
the home. Regarding the moisture damage, Cox stated that it was
not out of the ordinary for that area.
On February 4, 2007, an addendum was added to the Real
Estate Contract. In the addendum, Buki and Marsho requested a
number of repairs based on the results of the home inspection.
Referring to the stain on the living room ceiling, Buki and
Marsho requested that Donald and Nancy “find [the] source of
[the] moisture and repair/replace. Treat mold and
paint/repair.” Lemmon informed Buki and Marsho’s agent that the
stain on the living room ceiling was caused by a window being
left open during Hurricane Ernesto, which struck the area on
September 1, 2006. The stain was repaired and painted.
The real estate closing occurred on March 9, 2007. Shortly
thereafter, Buki and Marsho noticed water leaking from the east
wall and the east- and south-facing windows when there was wind-
driven rain from the east or south. They also noticed water
4
leaking from the living room ceiling. Buki and Marsho hired Tom
Brown (“Brown”) to install new windows. Brown discovered mold
and sheet rock damage around all of the windows on the east
wall. According to Brown, the damage was not from a single
event, but likely had been on-going for some time.
Additionally, Brown discovered that the exterior siding had
significant cracks and recommended that it be replaced. He
recommended another contractor, Bruce Stanley (“Stanley”).
On September 4, 2007, Brown and Stanley inspected the
siding of Rock Hall. They noticed that the lower courses of
siding, as well as portions of the corner posts, had been
replaced with new material. After removing the lower courses,
they discovered that the foundation sill and corner boards were
substantially damaged by rot and termite damage. As a result,
the structural integrity of the house was significantly
compromised.
On December 6, 2007, Buki and Marsho brought suit against
Donald and Nancy. Buki and Marsho alleged that Donald and Nancy
fraudulently induced them to enter into the Real Estate Contract
and to close on Rock Hall by misrepresenting and concealing the
true condition of Rock Hall. Initially, they only sought
rescission of the Real Estate Contract or, in the alternative,
compensatory damages for replacement of the windows and repairs
5
to the sill. In their second amended complaint, they added a
claim under the VCPA.
The trial court referred the matter to a commissioner in
chancery. After holding an evidentiary hearing, the
commissioner found that Buki and Marsho had been fraudulently
induced into entering the Real Estate Contract and closing on
Rock Hall. He further determined that Buki and Marsho were
entitled to rescission of the Real Estate Contract and damages
in the amount of $163,099.79, representing the cost of the
replacement windows ($27,970.38), the interest Buki and Marsho
paid on their first ($106,936) and second ($17,667) mortgages on
the property, the property insurance expended by Buki and Marsho
($4,301.41), and the real estate taxes Buki and Marsho paid on
the property ($6,225). Finding that the fraud was a willful
violation of the VCPA, the commissioner doubled the damages
pursuant to Code § 59.1-204(A) and awarded attorney’s fees and
costs pursuant to Code § 59.1-204(B). As the damages were
doubled under the VCPA, the commissioner declined to award
punitive damages.
Donald and Nancy filed several exceptions to the
commissioner’s report. After considering the matter, the trial
court determined that there was sufficient evidence to find that
Donald had fraudulently induced Buki and Marsho to buy Rock
Hall. The trial court focused on the false statements in the
6
promotional literature, the concealment of the damage to the
sill and misrepresentation as to the source of the living room
ceiling stain.
However, the trial court also found that Buki and Marsho
had failed to allege or prove that Nancy had committed any
fraudulent acts. The trial court noted that there was no
evidence that Nancy took any part in the fraud, aside from
signing the Real Estate Contract and the other documents
pertaining to the sale of Rock Hall. The trial court pointed
out that the commissioner made no findings with regard to Nancy
or attributed any fraud, misrepresentation or concealment to
her. The trial court determined that, at most, Nancy “reaped
the benefit” of the sale of Rock Hall.
Ultimately, the trial court granted rescission of the Real
Estate Contract. Although it found that there was no evidence
Nancy committed any fraud, the trial court determined that it
would be fair and equitable to require her “to be responsible
jointly and severally with her husband for the repayment of the
purchase price” of Rock Hall. The trial court noted that, upon
repayment, Donald and Nancy would receive Rock Hall and,
therefore, be returned to the status quo ante. In conjunction
with awarding rescission, the trial court also awarded
prejudgment interest on the purchase price of Rock Hall, running
from the date of closing.
7
The trial court also affirmed, in large part, the
commissioner’s decision to award consequential damages.
However, the trial court determined that Buki and Marsho should
not be reimbursed for the replacement windows. According to the
trial court, by replacing the windows instead of immediately
bringing an action for rescission, Buki and Marsho were limited
to seeking actual damages for the money they expended on the
windows. The trial court noted that Buki and Marsho had dropped
their claim for actual damages, therefore, the trial court
decided it would be inequitable to award consequential damages
for the window replacement. Furthermore, in light of the fact
that there was no evidence that Nancy had committed any wrong,
the award of consequential damages was only a judgment against
Donald.
The trial court initially affirmed the commissioner’s
decision to double the consequential damages and award
attorney’s fees under the VCPA. However, upon a motion for
reconsideration, the trial court reasoned that the damages
contemplated by the VCPA did not include the consequential
damages awarded in this case because the consequential damages
were awarded as part of the award of rescission. The trial
court further noted that Buki and Marsho did not actually
incorporate the consequential damages sought in their rescission
claim as part of their VCPA claim. Therefore, the trial court
8
reversed its decision as to the VCPA claim. Similarly, the
trial court reversed the award of attorney’s fees under the
VCPA. However, it reinstated those fees “based on fraud and not
pursuant to the VCPA.”
In response to the trial court’s denial of damages under
the VCPA, Buki and Marsho moved the trial court to reconsider
the commissioner’s ruling on punitive damages. After hearing
argument on the matter, the trial court affirmatively stated
that it considered the matter, but stood by its decision to not
grant punitive damages.
On November 21, 2013, the trial court entered its final
order on the matter. The trial court
• Ordered Donald and Nancy to refund the “purchase price
of $590,000 with interest at the statutory rate from
the date of closing (March 9, 2007) until fully paid;”
• Ordered Buki and Marsho to reconvey the property to
Donald and Nancy upon refund of the purchase price;
and
• Entered judgment against Donald in the amount of
$135,129.41 “for consequential damages together with
interest . . . plus attorney’s fees and related
expenses in the amount of $98,575.66.”
This appeal followed.
II. ANALYSIS
On appeal, Donald contends that the trial court lacked
jurisdiction to enter a decree against him. He further argues
that Buki and Marsho failed to prove that he fraudulently
9
induced them to purchase Rock Hall and that the trial court
erred in awarding consequential damages, attorney’s fees and
prejudgment interest. In their assignments of cross-error, Buki
and Marsho assert that the trial court erred in dismissing their
VCPA claim and in not awarding punitive damages.
A. JURISDICTION
Donald’s first argument concerns the trial court’s
“equitable jurisdiction.” Specifically, Donald argues that,
because Buki and Marsho failed to prove that Nancy committed any
fraud, the trial court lost its jurisdiction to award the
equitable remedy of rescission against him. In making this
argument, Donald primarily relies on Larkey v. Gardner, 105 Va.
718, 54 S.E. 886 (1906), where this Court held:
Where the bill alleges proper matter for the
jurisdiction of a court of equity, so that a
demurrer will not lie, if it appears on the
hearing that the allegations are unfounded,
and that such matter does not in fact exist,
the result must be the same as if it had not
been alleged, and the bill should be
dismissed for want of jurisdiction.
Id. at 722, 54 S.E. at 887.
Donald, however, takes this holding out of context. We
have explained that Larkey only stands for the limited notion
that a circuit court lost “equitable jurisdiction” when it was
revealed that the equitable remedy sought was merely a pretext
to bring an action at law in a chancery court. See Iron City
10
Sav. Bank v. Isaacsen, 158 Va. 609, 626, 164 S.E. 520, 525
(1932). We note, however, that with the abolition of “sides of
court” and repeal of former Code § 8.01-270, the jurisdiction
question at issue in Larkey does not arise in the same fashion
today. See 2005 Acts ch. 681. There is also no evidence in the
record, nor does Donald argue, that the relief sought by Buki
and Marsho was a pretext to bring an action at law in a court of
chancery. Therefore, Larkey is simply inapposite to the present
case. Moreover, Donald has not cited, nor can we locate, any
authority supporting the notion that, when a plaintiff seeks
equitable relief against two defendants but only makes out a
case for relief against one, the trial court somehow loses
jurisdiction over the matter or would be barred from entering
relief against the party as to whom proper grounds for relief
was established. 1
Furthermore, we have recognized that, in awarding
rescission, “[i]t is immaterial that the status quo cannot be
literally restored.” Millboro Lumber Co. v. Augusta Wood
Products Corp., 140 Va. 409, 421, 125 S.E. 306, 310 (1924).
1
Donald’s reliance on Hurst v. Williams, 157 Va. 124, 160
S.E. 24 (1931), is similarly unavailing. In Hurst, this Court
confirmed that, in the absence of a showing of fraudulent
conduct by the wife, “there could be no personal judgment
against [her].” Id. at 130-31, 160 S.E. at 27. However, the
Court then returned the case to the trial court so that
appropriate decrees could be imposed against the husband. Id.
at 131, 160 S.E. at 27.
11
Rather, the trial court need only “be able substantially to
restore the parties to the position they occupied before
entering into the contract.” Id. (emphasis added). Thus, when
awarding rescission, “the aim of equity is to award complete,
just and equitable relief, with a view to restoring the parties
to the status quo and equitably adjusting their interests under
the circumstances of the case.” Newton v. Newton, 199 Va. 654,
660, 101 S.E.2d 580, 585 (1958) (emphasis added).
Ultimately, the fact that Donald and Nancy originally owned
Rock Hall as tenants by the entirety has no bearing on whether a
remedy can be granted as to Donald alone. Indeed, as far as
equity is concerned, their ownership as tenants by the entirety
was extinguished when they executed the Real Estate Contract.
See Ferry v. Clarke, 77 Va. 397, 407 (1883) (“[A]s soon as a
contract is made for the sale of an estate, equity considers the
buyer as the owner of the land, and the seller as the trustee
for him.”).
Additionally, the rescission of the Real Estate Contract
does not restore the tenancy by the entirety. We have long
recognized that the title to real property is transferred by the
deed, whereas the contract preceding the execution of the deed
merely requires that the deed be delivered. See Miller v.
Reynolds, 216 Va. 852, 855, 223 S.E.2d 883, 885 (1976) (“A deed
is a mere transfer of title, a delivery so to speak of the
12
subject-matter of the contract.”). Once the deed is conveyed,
the provisions of the underlying contract governing the transfer
of the property are extinguished. See Beck v. Smith, 260 Va.
452, 455, 538 S.E.2d 312, 314 (2000) (“Under the doctrine of
merger, provisions in a contract for sale are extinguished and
merged into the deed, an instrument of higher dignity.”). Thus,
because the provisions governing the transfer of ownership have
been extinguished and merged into the deed, rescission of the
underlying contract does not automatically transfer ownership of
real property back to the original owners. In other words,
ownership of Rock Hall did not automatically revert to Nancy and
Donald as tenants by the entirety when the trial court granted
rescission.
Rather, it is through the trial court’s exercise of
discretion in fashioning its award that ownership is
transferred. In exercising such discretion, this Court has
recognized that a trial court can adjust the interests of the
parties as the circumstances of the case demand, see Newton, 199
Va. at 660, 101 S.E.2d at 585, and “fashion a remedy that would
eliminate or lessen the hardship imposed upon a party by a
particular decision.” Frank Shop v. Crown Cent. Petroleum
Corp., 264 Va. 1, 7, 564 S.E.2d 134, 137 (2002). Accordingly,
the fact that Buki and Marsho failed to prove their claim
against Nancy does not remove the trial court’s jurisdiction
13
over Donald; it simply prevents the trial court from entering an
award against Nancy. It is still within the trial court’s
discretion to “adjust” the interests of the parties such that
Donald, as the sole wrongdoer, is solely responsible for
refunding the purchase price in return for his sole ownership of
Rock Hall.
B. FRAUDULENT INDUCEMENT
Donald next argues that the trial court erred in awarding
rescission because Buki and Marsho failed to properly plead or
prove that Donald fraudulently induced them to purchase Rock
Hall. Donald contends that his statements about the stain on
the living room ceiling were made pursuant to a contractual
obligation and, therefore, they could only be the basis of a
breach of contract action, not a fraud claim. He further claims
that the advertisements Buki and Marsho allegedly relied on in
purchasing Rock Hall do not serve as a legitimate basis for a
fraud claim because Buki and Marsho did not and could not, as a
matter of law, have relied on those advertisements. Finally,
Donald asserts that he had no duty to reveal the damage to the
foundation because the Disclaimer Statement in the Real Estate
Contract specifically informed Buki and Marsho that they were
buying Rock Hall “‘as is,’ that is, with all defects which may
exist.” We disagree with this last argument and, therefore,
need not address the first two arguments.
14
In the present case, Donald does not dispute the trial
court’s finding that he concealed the damage to the foundation
sill. Rather, his argument focuses on the fact that Buki and
Marsho did not allege that his concealment induced them to enter
into the contract, only to go to closing. 2 He contends that, at
that point, Buki and Marsho had already entered into the Real
Estate Contract, therefore, the Disclosure Statement absolved
him of any duty to inform them of the condition of the
foundation sill. We disagree.
In Ware v. Scott, 220 Va. 317, 320, 257 S.E.2d 855, 857
(1979), we recognized that “[a]n action for fraudulent
inducement need not . . . be limited to formation of the
contract.” Accordingly, we held that “performance of an
executory contract may be fraudulently induced.” Id. (emphasis
omitted). We also specifically recognized that “fraudulent
inducement to perform may arise when one party induces the other
to perform by concealing some fact which excuses performance by
the latter.” Id. at 320, 257 S.E.2d at 857 (collecting cases)
(emphasis added). Furthermore, as the present case
demonstrates, the concealment that induces a party to perform
may exist prior to the contract being performed. Regardless of
2
In their complaint, Buki and Marsho alleged that they
“changed their position as a result of [Donald’s] concealment
and fraud regarding the deteriorated sill to their detriment by
closing on the property.” (Emphasis added.)
15
when the concealment occurs (i.e., before or after the contract
has been entered into), the wrong is still the same. Therefore,
unlike fraudulent inducement to contract, where the concealment
must necessarily precede the formation of the contract, the
concealment at issue in a fraudulent inducement to perform claim
may occur either before or after the contract has been entered
into.
As with a fraudulently induced contractual agreement, where
the performance of a contractual agreement is fraudulently
induced, “the entire instrument -- the whole contract -- is
rendered voidable at the instance of the defrauded party.”
Packard Norfolk, Inc. v. Miller, 198 Va. 557, 564, 95 S.E.2d
207, 212 (1956). Furthermore, “[a] seller may not rely upon and
claim the benefits of a contract and at the same time through
that instrument contract against and relieve himself of the
consequences of his fraud that induced the other party.” Id.
In other words, the entire contract is rescinded including any
language indicating that the sale was made “as is.” See George
Robberecht Seafood, Inc. v. Maitland Bros. Co., 220 Va. 109,
112, 255 S.E.2d 682, 683 (1979) (“A buyer can show that a
contract of sale was induced by the seller's fraud,
notwithstanding the fact the sale was made ‘as is.’”). This is
because such disclaimer language “‘stands no higher than the
16
contract which is vitiated by the fraud.’” Id. (quoting Packard
Norfolk, 198 Va. at 565, 95 S.E.2d at 213).
Here, as previously noted, Donald concealed the condition
of the foundation sill. “If a party conceals a fact that is
material to the transaction, knowing that the other party is
acting on the assumption that no such fact exists, the
concealment is as much a fraud as if the existence of the fact
were expressly denied, or the reverse of it expressly stated.”
Clay v. Butler, 132 Va. 464, 474, 112 S.E. 697, 700 (1922).
Accordingly, the trial court did not err in granting rescission
based on Donald’s fraudulent concealment of the damage to the
foundation sill.
C. MONETARY DAMAGES
Donald argues that the trial court erred in awarding
consequential damages and attorney’s fees in addition to
granting rescission. Specifically, Donald takes issue with the
trial court’s decision to reimburse Buki and Marsho for the
interest they paid on the mortgages they took out on the
property, the taxes they paid on the property and the property
insurance they had on the property. He further claims that the
trial court should not have awarded Buki and Marsho their
attorney’s fees.
17
1. CONSEQUENTIAL DAMAGES
Addressing the consequential damages first, Donald argues
that the trial court’s monetary award, in addition to granting
rescission, was erroneous. Donald notes that, under the facts
of this case, the purpose of the consequential damages was to
reimburse Buki and Marsho for expenses they paid to third
parties and not for any benefits they bestowed upon him.
Therefore, he contends that the award of consequential damages
goes above and beyond the award of rescission sought by Buki and
Marsho. We agree.
Rescission is the abrogation or annulling of a contract.
See Chamberlaine v. Marsh, 20 Va. (6 Munf.) 283, 287 (1819).
“If rescission is granted, the contract is terminated for all
purposes, and the parties are restored to the status quo ante.”
McLeskey v. Ocean Park Investors, Ltd., 242 Va. 51, 54, 405
S.E.2d 846, 847 (1991). As previously stated, rescission only
requires that the parties be restored to “substantially” the
same position they occupied before entering into the contract.
Millboro Lumber, 140 Va. at 421, 125 S.E. at 310.
[W]here, on account of the act of the
adverse party, complete restitution cannot
be had, rescission will not be denied and
the court will, so far as practicable,
require the party profiting by the fraud to
surrender the benefit he has received in the
transaction.
Id. (collecting authorities) (emphasis added).
18
Thus, we have expressly limited the amount of restitution
to the amount of benefit received by the adverse party. A party
seeking restitution beyond that amount is required to bring a
separate cause of action for damages resulting from the
fraudulent inducement. Indeed, we have specifically recognized
that, in a suit for rescission of real estate, “‘[i]nterest on
the amount paid by the plaintiffs is recoverable only as damages
for the wrongful detention of the money by the defendant.’” Lee
v. Laprade, 106 Va. 594, 602, 56 S.E. 719, 722 (1907) (quoting
Talbot v. Bank, 129 Mass. 67, 70 (1880)) (emphasis added).
In the present case, there is no evidence that Donald
received any benefit from Buki and Marsho beyond the sale price
of Rock Hall. Obviously, he did not receive any benefit from
Buki and Marsho paying interest on their mortgages or from their
payment of their property taxes and property insurance. These
payments were not made to him, but to unrelated third parties.
Further, the consequential damages awarded to Buki and
Marsho relate to matters that, under the facts of this case, are
only indirectly related to the trial court’s award of
rescission. The trial court’s award only voided the Real Estate
Contract; it had no bearing on the mortgages taken out by Buki
and Marsho. The mortgages still exist and, therefore, Buki and
Marsho are still required to pay interest on them.
Additionally, the effect of the trial court’s order was not to
19
immediately void the Real Estate Contract; rather, Buki and
Marsho will continue to own Rock Hall until Donald pays them the
purchase price plus interest. Only then will Rock Hall be
reconveyed. During the interim, Buki and Marsho will still be
required to pay taxes on the property. They will also likely be
required to carry insurance on the property. Thus, the
consequential damages are not restitution related to the
rescission; rather, they are more akin to an award of
compensatory damages. As Buki and Marsho abandoned their claim
for such damages, it was error for the trial court to have
awarded them such damages in the form of consequential damages.
2. ATTORNEY’S FEES
Donald next claims that the trial court erroneously awarded
attorney’s fees pursuant to the Real Estate Contract. According
to Donald, Buki and Marsho only requested attorney’s fees “as
provided by the [Real Estate Contract].” Donald asserts that
the Real Estate Contract cannot serve as a valid basis for the
award of attorney’s fees because it was ultimately rescinded.
If Buki and Marsho’s request for attorney’s fees was limited to
the Real Estate Contract, Donald’s argument would likely be
correct. See Bank of Giles County v. Mason, 199 Va. 176, 180,
98 S.E.2d 905, 907 (1957) (holding that “no relief should be
granted that does not substantially accord with the case as made
in the pleading”). However, Donald overlooks the fact that Buki
20
and Marsho did not only request attorney’s fees pursuant to the
Real Estate Contract. Rather, Buki and Marsho also requested
attorney’s fees independent of any individual claim. 3
This Court has repeatedly recognized that, “in a fraud
suit, a chancellor, in the exercise of his discretion, may award
attorney’s fees to a defrauded party.” Prospect Dev. Co. v.
Bershader, 258 Va. 75, 92, 515 S.E.2d 291, 301 (1999). Here,
the trial court was clearly exercising its discretion when it
stated that it was awarding attorney’s fees “based on fraud.”
Donald has made no showing that the trial court abused its
discretion. Accordingly, the trial court did not err in
awarding attorney’s fees.
D. PREJUDGMENT INTEREST
Donald contends that the trial court erred in awarding
prejudgment interest because Buki and Marsho failed to
specifically request it in their pleadings. We agree.
Code § 8.01-382 4 authorizes a trial court to award
prejudgment interest. This Court has recognized that Code §
3
Specifically, in the prayer for relief in their second
amended complaint, Buki and Marsho requested that the trial
court provide, “with regard to any count, for a recovery of
their reasonable attorney’s fees incurred herein.”
4
Code § 8.01-382 states, in relevant part:
In any . . . action at law or suit in
equity, the final order, verdict of the
jury, or if no jury the judgment or decree
of the court, may provide for interest on
21
8.01-382 “leaves the assessment of interest in the discretion of
the fact-finder.” J.W. Creech, Inc. v. Norfolk Air Conditioning
Corp., 237 Va. 320, 325, 377 S.E.2d 605, 608 (1989). However,
although the award of prejudgment interest is discretionary, it
is still “part of the actual damages sought to be recovered.”
Dairyland Ins. Co. v. Douthat, 248 Va. 627, 631, 449 S.E.2d 799,
801 (1994) (internal quotation marks omitted) (collecting
cases). As such, prejudgment interest, like other damages, must
be requested in a pleading before it can be awarded by a trial
court. See Davis v. Beury, 134 Va. 322, 354, 115 S.E. 527
(1923) (“[I]nterest prior to verdict or decree, if recoverable
at all, would be recoverable as special damages, and hence would
have to be specially alleged in order to be recoverable.”).
In the present case, Buki and Marsho’s second amended
complaint contains no request for prejudgment interest. As “a
plaintiff cannot recover more than he sues for,” Powell v.
Sears, Roebuck & Co., 231 Va. 464, 469, 344 S.E.2d 916, 919
(1986), the trial court erred in awarding prejudgment interest
on the sale of Rock Hall.
any principal sum awarded, or any part
thereof, and fix the period at which the
interest shall commence.
22
E. CROSS ERROR
In their assignments of cross-error, Buki and Marsho take
issue with the trial court’s refusal to multiply the
consequential damages under the VCPA and its denial of punitive
damages. With regard to their VCPA claim, Buki and Marsho
contend that the trial court erred in determining that
consequential damages were not a form of loss that could be
doubled under the VCPA. However, in light of our above decision
reversing the award of consequential damages, this issue is
moot.
Buki and Marsho next argue that the trial court erred in
failing to award punitive damages after it struck their VCPA
claim. According to Buki and Marsho, “it was clear error for
the trial court to fail to impose equivalent damages on [Donald]
as punitive damages.” We disagree.
“A punitive damages award is generally left to the
[factfinder’s] discretion because there is no set standard for
determining the amount of punitive damages.” Coalson v.
Canchola, 287 Va. 242, 249, 754 S.E.2d 525, 528 (2014). As such
an award is entirely discretionary, Buki and Marsho are required
to demonstrate the trial court abused its discretion in failing
to award punitive damages. Here, Buki and Marsho fail to raise
any argument indicating that such an abuse of discretion
23
occurred. Accordingly, we will not reverse the decision of the
trial court on this issue.
III. CONCLUSION
For the foregoing reasons, we will affirm the judgment of
the trial court granting rescission of the Real Estate Contract
and its award of attorney’s fees. Furthermore, no abuse of
discretion has been shown regarding the circuit court's refusal
to award punitive damages in this case. However, we will
reverse the trial court’s award of consequential damages and
prejudgment interest. Accordingly, we will remand the matter to
the trial court for further proceedings not inconsistent with
this opinion or the opinion expressed in the companion case of
Nancy W. Devine v. Charles Z. Buki, et al., ___ Va. ___, ___
S.E.2d ___ (2015) (this day decided).
Affirmed in part,
reversed in part,
and remanded.
JUSTICE McCLANAHAN, concurring in part and dissenting in part.
While agreeing with Parts II.B. through E. of the majority
opinion, I disagree with the analysis and conclusions regarding
the issue of rescission in Part II.A. I would affirm the
circuit court in fully rescinding the subject real estate
contract, and ordering repayment of the purchase price by Donald
24
and Nancy Devine in exchange for the reconveyance of the subject
property by the appellees.
The Devines, as husband and wife, acquired the property "as
tenants by the entirety with right of survivorship as at common
law." Accordingly, it was in that capacity that they
subsequently conveyed the property to the appellees under the
terms of the contract. Upon the circuit court finding in this
case that Donald fraudulently induced the appellees to both
enter into the contract to purchase the property and to close on
the sale, the court ordered, inter alia, the following: (i) the
contract was rescinded, (ii) the Devines "shall refund to the
[appellees] their purchase price," and (iii) upon "receipt of
such refund," the appellees "shall reconvey the property to
Donald W. Devine, Jr. and Nancy W. Devine, husband and wife, as
tenants by the entireties with the right of survivorship as at
common law."
The majority opinion purports in its conclusion to affirm
the circuit court's rescission of the contract. In Part II.A.,
however, the majority makes clear that it is only approving
partial rescission, i.e., rescission of the contract "as to
Donald alone"; that the property is to be reconveyed "sole[ly]"
to Donald; and that Donald is "solely responsible for refunding
the purchase price." These holdings arise from the majority's
determination that ownership of the property did not
25
"automatically revert to Nancy and Donald as tenants by the
entirety" upon rescission of the contract - or indeed to Nancy
at all. I disagree.
In holding title to the property as tenants by the
entirety, Donald and Nancy were deemed in this "unity" of
marital ownership to have possessed the property as "one."
Rogers v. Rogers, 257 Va. 323, 326, 512 S.E.2d 821, 822 (1999)
(quoting Jones v. Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64
(1984)) (internal quotation marks omitted). This, of course, is
the essential and centuries old feature of a tenancy by the
entirety. See 7 Richard R. Powell, Powell on Real Property §§
52.01[2] & 52.02[1] (Michael Allen Wolf ed., 2014). The
transfer of the property by Donald and Nancy to the appellees
was therefore a unitary conveyance, and not accomplished through
individual conveyances, as neither of them was capable of
conveying any part of the property by acting alone. Hausman v.
Hausman, 233 Va. 1, 3, 353 S.E.2d 710, 711 (1987); Vasilion v.
Vasilion, 192 Va. 735, 740, 66 S.E.2d 599, 602 (1951).
Furthermore, absent evidence to the contrary, the purchase
proceeds Donald and Nancy received from their sale of the
property, "which [they] had owned as tenants by the entireties,
were likewise owned and held by them as tenants by the
entireties." Oliver v. Givens, 204 Va. 123, 127, 129 S.E.2d
26
661, 663 (1963); see Pitts v. United States, 242 Va. 254, 260-62
408 S.E.2d 901, 904-06 (1991) (applying Oliver).
This Court has repeatedly stated that "[i]f rescission is
granted, the contract is terminated for all purposes, and the
parties are restored to the status quo ante." McLeskey v. Ocean
Park Investors, Ltd., 242 Va. 51, 54, 405 S.E.2d 846, 847
(1991); see also Schmidt v. Household Fin. Corp., 276 Va. 108,
115, 661 S.E.2d 834, 837-38 (2008). Thus, in rescinding the
contract in this case, the circuit court correctly ordered the
return of ownership of the property to Donald and Nancy as
tenants by the entirety. Because they acquired and sold the
property in this unitary capacity, Donald's fraud did not enable
the court to transform their tenancy into something different,
much less exclude Nancy altogether from the reconveyance.
Rather, the taint of Donald's fraud upon their tenancy rendered
both Donald and Nancy liable for repayment of the purchase price
in exchange for both regaining ownership of the property as
originally possessed.
In an effort to avoid this result, the majority advances a
non sequitur. The majority asserts that because the contract
merged into the deed from Donald and Nancy to the appellees,
thereby "extinguishing" the contract (citing Beck v. Smith, 260
Va. 452, 455, 538 S.E.2d 312, 314 (2000)), the subsequent
rescission of the contract somehow obviated the requirement of
27
restoring the parties to the status quo ante. But just the
opposite is true. By definition, rescission of the parties'
previously "extinguished" contract necessarily placed them in
the position they occupied before the execution and delivery of
the deed - as the "unmaking" of the contract, of course, also
nullified the deed to the appellees. Black's Law Dictionary
1149 (10th ed. 2014) (defining rescission). Consequently, the
circuit court did not have the discretion, as the majority
asserts, to order the reconveyance of the property other than to
Donald and Nancy as tenants by the entirety in conjunction with
the satisfaction of their joint obligation to repay the purchase
price to the appellees.
For these reasons, I dissent with respect to Part II.A. of
the majority opinion, but concur with respect to the other
parts.
28