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You can't negligently misrepresent your own intentions

By Steven R. Minor

I don't remember if I knew this or not, but in the case that was tried in July and continues on, one thing that I wrote about was the Virginia Supreme Court has concluded it is impossible to state a constructive fraud claim based on a misrepresentation about one's intention to do something in the future:

"Under no circumstances ... will a promise of future action support a claim of constructive fraud." Supervalu, Inc. v. Johnson, 276 Va. 356, 368, 666 S.E.2d 335, 342 (2008). Supervalu cites and is based on the Court's prior statements in Richmond Metro. Auth. v. McDevitt Street Bovis, Inc., 256 Va. 553, 560, 507 S.E.2d 344, 348 (1998); Blair Constr. v. Weatherford, 253 Va. 343, 347, 485 S.E.2d 137, 139 (1997); and Colonial Ford Truck Sales v. Schneider, 228 Va. 671, 677, 325 S.E.2d 91, 94 (1985), all of which recognize a distinction between actual and constructive fraud in connection with promises of future conduct. In a footnote, the Supervalu majority specifically overruled a statement in Eden v. Weight, 265 Va. 398, 578 S.E.2d 769 (2003), "[t]o the extent that this statement implies that an action for constructive fraud may lie if the evidence demonstrates a present intent not to fulfill a promise of future action."

The federal courts have observed this distinction in deciding like cases. See RBA Capital, LP v. Anonick 2009 WL 960090, *4 (E.D. Va.) ("Since '[u]nder no circumstances, however, will a promise of future action support a claim of constructive fraud,' and the Anonick's basis for the fraud claim involves a promise of future action, their allegations clearly will not support a claim for constructive fraud") (granting motion to dismiss, quoting Supervalu); Barrigan v. Elite Funding, 2009 WL 54514, *4 (E.D. Va.) ("an unfulfilled promise of future action . . . cannot form the basis for a successful constructive fraud claim.") (granting summary judgment, citing Supervalu, McDevitt, and Colonial Ford); White v. Potocska, 589 F. Supp.2d 631, 656 (E.D. Va. 2008) ("there is no claim of constructive fraud under the 'present intention' theory of fraud") (granting summary judgment, citing Supervalu); GIV, LLC v. International Business Machines Corp., 2007 WL 1231443, *5 (E.D. Va.) ("Such a misrepresentation, however, is not actionable as a constructive fraud," emphasis in the original) (granting motion to dismiss, citing Blair Constr.).

Full post as published by Southwest Virginia Law Blog on August 03, 2009 (boomark / email).