WILLIAM P. WASHINGTON, ET AL.
THE CIRCUIT COURT OF PRINCE GEORGE COUNTY James F.
D'Alton, Jr., Judge Designate
All the Justices
ELIZABETH A. McCLANAHAN, JUSTICE.
purchasing a lot at a tax sale, appellee Ravi Prasad
mistakenly made improvements to a house on a nearby lot owned
by appellants, William P. and Elnora T. Washington, without
their knowledge or approval. The Washingtons challenge the
circuit court's imposition of a constructive trust on
their lot in favor of Prasad for the collection of a money
judgment in the amount he expended on the house, along with a
lien against the lot. Based upon long-standing common law
principles regarding notice imputed to purchasers of real
property, we reverse the judgment of the circuit court.
material facts in this case are undisputed. Prasad received
notice of a public auction from the County listing a number
of properties to be sold at a tax sale. Prior to the sale,
Prasad accessed the County assessor's records and
reviewed the property card for one of the listed properties
identified as Tax Parcel 580-07-008C ("Parcel
8-C"). The property card correctly showed the street
address for this parcel as 17211 Shands Road. The photograph
on the property card, however, incorrectly showed as the
structure located on Parcel 8-C, a house owned by the
Washingtons. The Washingtons' house is on a lot located
two lots north of Parcel 8-C and designated as Tax Parcel
580-07-00-009-A ("Parcel 9-A"). The street address
for the Washingtons' house is 17201 Shands Road, but the
street address was incorrectly marked as 17211 Shands Road on
both the front of the house and the mailbox at the street.
William P. Washington ("Washington") testified that
17211 was the address assigned to the property when it was
owned by his mother. When he purchased the property in 2004,
Washington learned the address had been changed to 17201, but
he never changed the fourth digit on the house or mailbox. At
all times relevant to this case, the house remained vacant.
viewed Parcel 9-A prior to the tax sale, believing it to be
Parcel 8-C. Although he obtained a tax map showing the
physical location of both Parcel 8-C and Parcel 9-A, Prasad
drove to the house pictured in the photograph-the house
located on Parcel 9-A owned by the Washingtons. Prasad
submitted an $11, 000.00 bid for Parcel 8-C at the County tax
sale. His bid was ultimately approved and his deed was
thereafter, Prasad mistakenly began renovating the
Washingtons' house on Parcel 9-A. Approximately two
months later, after expending more than $23, 500 on the
renovations, Prasad received a letter from the
Washingtons' attorney directing Prasad to vacate the
premises. Prasad's work on the house was done without the
Washingtons' knowledge or approval.
filed a two-count complaint against the Washingtons after
they refused to pay him for the work he procured for their
house. In Count I, Prasad asked the circuit court to impose a
constructive trust on the Washingtons' lot, and to effect
its sale, based on allegations that they had been
"unjustly enriched as a result of the fraud perpetrated
by [them]" through misrepresenting the address of the
house. In Count II, Prasad asked the court for an award of
damages in the amount he had expended on the house based on
an implied contract in law theory.
the bench trial, Prasad testified that, in purchasing Parcel
8-C at the tax sale, he did not think it was necessary to be
represented by a lawyer, or to obtain a title search and/or a
survey of the property. Prasad began "flipping"
houses after retiring from his job as a chemical engineer, he
further explained, and "[o]ut of the 20 or 30 properties
I have purchased, I have never taken title insurance, because
I trust the courts and I trust the County." He
nonetheless acknowledged that his contract of sale was for
Parcel 8-C and that the contract stated, "this property
is offered for sale as-is, with all faults and without any
warranty, either expressed or implied." When asked
whether he looked at his deed to Parcel 8-C, Prasad
responded, "[w]hen this whole thing blew up, I looked at
every line of every page, yes, sir. But not before."
Washingtons presented at trial, among other things, a copy of
a plat in Prasad's chain of title to Parcel 8-C, which
is, in fact, referenced in his deed to this property. The two
lots comprising Parcel 8-C and 9-A (as well as the
intervening lot) are shown on the plat and match the
depiction of their physical location on the County's tax
map of the area. As shown on both the plat and tax map,
Parcel 8-C is located along the curve of the street on which
it fronts, unlike Parcel 9-A, which fronts a straight stretch
of the street two lots north of Parcel 8-C.
close of the evidence, Prasad argued that, while no fraud on
the part of the Washingtons had been shown, he was not
required to prove fraud in order to be entitled to the relief
requested. He claimed the Washingtons were still
"unjustly enriched" because they displayed the
wrong address for their house, upon which both he and the
County "obviously" relied. Thus, he asserted, based
on "equity and good conscience, " his expenditures
on the house "ought to be refunded" under a
contract implied in law, as recognized under Virginia law.
Under such theory, Prasad continued, an obligation of
"due diligence" in the purchase of real property
does not apply; but, if it does apply, a title search would
not have revealed his mistake in the identity of the location
of Parcel 8-C.
response, the Washingtons argued that Prasad was not entitled
to prevail on a theory of implied contract in law on the
grounds that the Washingtons had been unjustly enriched. That
was because Prasad did not meet one of the essential elements
for such a cause of action: that "[t]he defendant knew
of the benefit and should reasonably have expected to repay
the plaintiff." Here, there was no such knowledge or
expectation on the part of the Washingtons. In addition, the
Washingtons argued that had Prasad undertaken the due
diligence required for a purchaser of real property, he would
have determined the correct location of the lot he purchased
at the tax sale, and knowledge of the same was imputed to
him, citing Kian v. Kefalogiannis, 158 Va. 129, 163
S.E. 535 (1932), and Morris v. Terrell, 23 Va. (2
Rand.) 6 (1823). Thus, the Washingtons concluded,
Prasad's claims for a constructive trust and an implied
contract were without merit.
announcing its decision in favor of Prasad from the bench,
the circuit court rejected the Washingtons' argument that
Prasad's claims were negated by his failure to undertake
due diligence in his purchase of Parcel 8-C. Due diligence,
the court opined, was not relevant "in an equitable
situation." The court, however, also rejected
Prasad's implied contract claim. The court based its
decision, instead, on Faulknier v. Shafer, 264 Va.
210, 563 S.E.2d 755 (2002), where this Court held that the
plaintiff stated a cause of action for imposition of a
constructive trust on life insurance proceeds paid to the
recipient in breach of the decedent's separation
agreement with the plaintiff. Id. at 217, 563 S.E.2d
at 759. This Court reached that decision, as the circuit
court explained, because (quoting id. at 215, 563
S.E.2d at 758) it would have been "'contrary to the
principles of equity'" for the recipient to retain
the proceeds, even though she acquired them without any
"'fraud or improper means'" on her part.
Accordingly, in its final order, the circuit court imposed ...