Virginia and Fourth Circuit Case Summaries

01/18/2019 by James B. Rixey

In PNC Bank N.A. v. Dominion Energy Mgm’t Inc., 2018 U.S. Dist. LEXIS 62577 (E.D. Va. April 12, 2018), the Eastern District of Virginia held that an individual has the opportunity and capacity to read loan documents cannot avoid liability by claiming fraudulent inducement based on oral statements allegedly made by bank representatives different from the loan documents’ terms.  PNC loaned funds and extended lines of credit to Dominion and its president, Gerald Mwangi. Mr. Mwangi also personally guaranteed Dominion’s obligations. After a default on the loans and lines of credit, PNC filed suit for breach of contract. Mr. Mwangi argued that he should not be held personally liable under the loan documents because he claimed PNC representatives fraudulently induced him into signing the loan documents and misrepresented his personal liability regarding them. The Eastern District of Virginia disagreed, holding that that the terms of the loan documents unequivocally established his personal liability, and Mr. Mwangi had the opportunity and capacity to read the loan documents prior to signing. Therefore, Mr. Mwangi was not justified in relying on the PNC representatives’ alleged misrepresentations. As a result, Mr. Mwangi’s fraudulent inducement claim failed, and he remained liable under the loan documents.

In M&C Hauling & Constr. Inc. v. Wilbur Hale, 2018 Va. Cir LEXIS 114 (Fairfax County Circuit Court, June 28, 2018), the Fairfax Circuit Court held that the five-year statute of limitations applied to an unsigned written contract, regardless of the lack of signatures.  In this case, the material terms of the parties’ agreement were written on daily sales tickets and on a final invoice setting forth the number of hours of service performed. The parties unconditionally assented to these terms, and they did not make their signatures a condition of the contract being a written one. In its decision, the Fairfax Circuit Court clarified that the definition of written contract provided in Dixon v. Hassell & Folkes, P.C., 283 Va. 456 (2012), allows for an unsigned written contract to be a valid written contract, regardless of the lack of signature. Therefore, despite defendant’s argument that the contract was unwritten and/or unsigned (and thus subject to the lesser three-year statute of limitations for oral contracts, making the plaintiff’s claim untimely), the Fairfax Circuit Court held that the contract constituted a written contract, subject to the longer five-year statute of limitations for enforcement.

In J&R Enterprises v. Ware Creek Real Estate Corp., 2018 Va. Unpub. LEXIS 21 (October 4, 2018), Ware Creek executed a real estate listing agreement with J&R, granting Ware Creek the exclusive right to sell certain property owned by J&R for a period of six and one-half months, with a ninety day “protection period” thereafter. If the property was “sold or exchanged” during the term of the listing agreement, Ware Creek was to receive a 10% commission. During the term of the listing agreement, J&R entered into a contract to sell the property; however, the sale fell through. More than a year later, J&R entered into another contract to sell the property with the same buyer. After the closing, Ware Creek filed suit to recover its 10% commission, in the amount of $30,000. The circuit court entered judgment in favor of Ware Creek, which was then appealed.  The Supreme Court of Virginia took the appeal and reversed the circuit court’s decision to award the commission, concluding that the property was not “sold or exchanged” under the initial contract during the term of the listing agreement.  Rather, the Court held that the property was sold under a new and materially different contract which was executed outside of the term of the listing agreement, and therefore, Ware Creek was not entitled to a commission under its listing agreement.

In City of Fairfax v. Wards Inc., 98 Va. Cir. 320 (Fairfax County, April 12, 2018), the Fairfax Circuit Court held that in a proceeding to sell tax-delinquent real estate, the value of all liens against the property being sold must be determined at or before the time of the entry of a decree of confirmation of sale. The court rationalized its holding on the basis that such a requirement promotes the interests of creditors, debtors, and owners by encouraging a fair and transparent bidding process in order to obtain the highest sale price under the circumstances.

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