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Tingler v. Graystone Homes, Inc.

Supreme Court of Virginia

October 31, 2019



          PRESENT: Lemons, C.J., Goodwyn, Mims, Powell, Kelsey, and McCullough, JJ.



         The pleadings in this case allege that George and Crystal Tingler entered into a construction contract in 2009 with a home builder, Graystone Homes, Inc., to construct a new home on property owned by a family-run company, Belle Meade Farm, LLC. After the house had been built, rain water leaked into the house and mold developed. Graystone tried, but failed, to fix the leaks and to remediate the mold.

         The Tinglers and their four children[1] abandoned the home due to the mold and sued Graystone, seeking tort remedies for personal injuries, property damage, and economic losses. The Tinglers and Belle Meade separately sued Graystone, seeking contract remedies for property damage and economic losses. Sustaining Graystone's demurrers, the circuit court dismissed all claims in each of the complaints. We affirm in part and reverse in part.



         "Because this appeal arises from the grant of a demurrer, we accept as true all factual allegations expressly pleaded in the complaint and interpret those allegations in the light most favorable to the plaintiff." A.H. ex rel. C.H. v. Church of God in Christ, Inc., 297 Va. ___, ___, 831 S.E.2d 460, 465 (2019) (citation omitted). "'To survive a challenge by demurrer,' however, factual allegations 'must be made with "sufficient definiteness to enable the court to find the existence of a legal basis for its judgment."'" Id. (citation omitted).[2] "A plaintiff may rely upon inferences to satisfy this requirement but only 'to the extent that they are reasonable.'" Id. (emphasis in original) (citation omitted). "Distinguishing between reasonable and unreasonable inferences is 'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense' guided by the principle that 'a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable.'" Id. (citations omitted).


         In 2015, the Tingler family and Belle Meade filed a single complaint alleging 24 contract, tort, and statutory claims against Graystone. On the ground of misjoinder, the circuit court entered a consent order requiring the plaintiffs to file separate complaints. The order specified that the Tinglers and their four children must file separate complaints asserting "each of their personal injury claims." J.A. at 4. The order further directed that the Tinglers and Belle Meade must file a single complaint asserting "any non-personal injury claims." Id.

         After the plaintiffs had refiled seven separate complaints pursuant to the court's directions, the court sustained Graystone's demurrers to all counts and dismissed each complaint with leave to amend. The court held that, under the source-of-duty rule, no negligence claim could prevail because "Graystone's alleged misdeeds consist[] of its failure to perform or fully perform its contractual duties." Id. at 452-53. The court dismissed Belle Meade's contract claims, holding that Belle Meade was not a party to the agreement and thus had no standing to bring the claims. The court dismissed the Tinglers' contract claims because the Tinglers had no standing given that the home had become a fixture of the land owned by Belle Meade, not by the Tinglers.[3]

         In response to the circuit court's ruling on the demurrers, the Tinglers and Belle Meade filed a second amended complaint, [4] which amplified their contract claims that were based upon agency and third-party-beneficiary principles. They also asserted negligence claims for various forms of property damage: real and personal as well as tangible and intangible.[5] The Tinglers and their children each filed amended complaints that attempted to bolster their tort claims for personal injuries. The Tingler family also claimed to have sustained property damage to the home and its contents and to have incurred unspecified expenses. Graystone responded with another round of demurrers to each of the complaints. The court sustained the demurrers, finding that its earlier reasoning applied equally to all the amended complaints. In its final orders, the court dismissed all claims in each of the cases with prejudice.


         With a few exceptions, the amended complaints assert a common set of factual allegations. We repeat these allegations as if they were true, but, of course, we only presume them to be so given the procedural posture of the case.


         In 2009, Graystone entered into a construction contract with the Tinglers to build a new home with a purchase price of $495, 000. The first paragraph of the contract states: "This agreement is made this date between George and Crystal Tingler (hereinafter referred to as 'Owner') and Graystone Homes, Inc. (hereinafter referred to as 'Contractor') for the purpose of erecting a new home." Id. at 99 (emphasis omitted). At the end of the contract, under the heading "Owner," the Tinglers signed their names. Id. at 106 (altering capitalization). Under George Tingler's signature appears the title "Owner Representative." Id.

         The contract does not mention Belle Meade or expressly state that the Tinglers were executing the contract in any agency capacity. At the time of construction, however, Belle Meade was the title owner of the farm land on which the home was built. The address listed for the location of the new home was "21416 Belle Meade Farm Road." Id. at 82, 123, 136, 149, 161, 174, 186; see id. at 99, 107, 121. The second amended complaint asserts that Graystone knew that Belle Meade would and did make all payments due under the contract. Graystone further understood that "Belle Meade Farm and the Tinglers intended in the future to partition the real property on which the Home was located from the rest of the farm land . . . and transfer ownership of both the real property and the completed Home to the Tinglers." Id. at 83. Based upon these allegations, the Tinglers claim that they entered into the contract on behalf of their principal, Belle Meade, and thus, that Belle Meade was in privity of contract with Graystone and could sue to enforce the contract. In the alternative, they claim that Belle Meade was an intended third-party beneficiary of the contract with Graystone.

         The second amended complaint avers that in early 2010, "[a]t the time of the 30-day inspection of the Home" permitted under the contract, the Tinglers discovered leaks at the patio French doors in the dining room and reported the leaks to Graystone. Id. at 84. Graystone responded by applying additional sealants and by replacing damaged hardwood flooring. In early 2011, the Tinglers discovered and reported another leak in the dining room. Graystone responded by installing additional flashing and by replacing hardwood flooring. On neither occasion did Graystone specifically look for mold.

         After experiencing medical symptoms in early 2014, the Tinglers hired an inspector who discovered mold in the basement underneath the dining room where the leaks had occurred, elevated levels of airborne mold spores throughout the home, and elevated levels of moisture in the dining and kitchen areas near the patio French doors. In October 2014, Graystone removed and reinstalled the patio French doors, windows, and hardwood flooring. Graystone also installed drain pans underneath the patio French doors. When the patio French doors continued to leak rainwater thereafter, Graystone installed additional sealants around the patio French doors. Graystone also applied an anti-microbial solution, attempting to clean up the mold and to prevent its growth. At that time, however, Graystone did not inspect for mold behind the drywall in this area.

         Later that month, a reinspection of the home revealed elevated moisture levels in the dining and kitchen areas near the patio French doors. A Graystone employee met the inspector at the home. The Graystone employee cut a hole in the dining room drywall and removed from the wall cavity "a large section of wet, moldy" insulation. Id. at 86, see also id. at 125-26, 138-39, 152, 164, 176, 188. The employee dropped the insulation on the floor and cleaned up the mess with the Tinglers' vacuum cleaner. Before the Graystone employee performed this work, Crystal Tingler had asked whether the personal property and furniture in the area should be covered, but the Graystone employee said that such action was not necessary and did not place a containment barrier around the work site.

         After removing the mold-laden insulation, the Graystone employee covered the drywall hole with a black garbage bag. In November 2014, Graystone placed containment sheeting in the dining room at the Tinglers' request. A little over a week later, the Tingler family vacated the home because of continued physical symptoms that they attributed to mold exposure. After the Tinglers had vacated the home, a remediation contractor concluded that Graystone's containment sheeting had been improperly placed, and another inspector visited the home and found elevated levels of mold spores and moisture.


         In their second amended complaint, the Tinglers and Belle Meade allege that Graystone breached the contract during the construction process by failing to supervise its workers and by failing to construct the home as promised - "skillfully, carefully, diligently, in a good, workman-like manner, and in compliance with all applicable laws, ordinances, and building codes." Id. at 90. They also allege that Graystone breached its contractual warranty by not building the home in accordance with industry standards, by not fixing the original defects, and by not remediating the mold that occurred as a result. They add various negligence claims as well, alleging theories of negligent construction, negligent repair, and negligence per se.[6]

          In the amended personal-injury complaints, the Tinglers and their children each allege that Graystone negligently constructed the home, negligently attempted to repair it, and committed negligence per se by violating building codes. All of the amended complaints at issue in this appeal allege various examples of Graystone's poor workmanship with a list of 24 items. Of those 24 items, 15 begin with the phrases "[f]ailure to" or "[f]ailing to" do a particular contractual task, including inter alia:

• "[f]ailure to construct the Home so that it had a weather-resistant exterior wall envelope";
• "[f]ailure to provide a means to drain water which entered the building components of the Home";
• "[f]ailure to install the manufactured stone veneer siding ('MSV') with drainage provisions";
• "[f]ailing to sufficiently fasten the vinyl siding"; and
•" [f] ailing to properly install doors, and corner seal pads and weather stripping with or adjacent to the doors, in the Home to prevent water intrusion[.]"

Id. at 87-89, 127-29, 140-42, 153-55, 165-67, 177-79, 189-91.

         Of those 24 items, 8 state and 1 implies that Graystone "[i]ncorrectly" or "[i]mproperly" performed some contractual task. Id. Examples include "[i]ncorrectly taping the weather resistant barrier" and "[i]mproperly installing or not installing required flashing." Id. at 88, 128, 141, 154, 166, 178, 190. These allegations are repeated verbatim in the second amended complaint as specific instances in which Graystone breached its contractual duty to construct the home in a workmanlike manner and to competently repair any later-discovered defects pursuant to the warranty provisions of the contract.

         In the negligence counts, each complaint alleges that "Graystone breached this duty . . . by failing to use proper workmanship in the construction of the Home; failing to use due care in the inspection of the Home; and failing to use due care in the supervision of the work of others on the Home." Id. at 95, 130, 142, 155, 168, 180, 192. Each complaint also alleges in the negligent-repair counts that "Graystone breached this duty . . . by failing to use proper workmanship in the repair of the Home, failing to use due care in the inspection of the Home, and failing to use due care in the remediation of mold growth of the Home." Id. at 96, 131, 143, 156, 168, 181, 193. Based upon these allegations, the complaints contend, it was reasonably foreseeable that the poor workmanship in the construction and repair of the home would allow rain water into the home, that the water would cause mold, and that the mold would make the Tingler family ill and would damage their property.

         The Tingler family alleges that they suffered "personal injury" by being "exposed to the unhealthy conditions that developed in the Home." Id. at 130-31, 143, 156, 168-69, 180-81, 192-93. The Tinglers and two of their children, the complaints assert, have been "diagnosed with mold toxin syndrome as a result of [their] exposure to the conditions in the Home," id. at 126, 140, 153, 165, and the entire Tingler family remains under continuing medical care for their symptoms, see id. at 126, 139, 152, 164, 177, 189. The Tinglers and two of their children each seek $5 million in damages for their personal injuries, while the remaining two Tingler children each seek $200, 000 in damages for their personal injuries.


         This appeal focuses on two arguments. First, the Tingler family contends that their personal-injury and property-damage claims should have survived demurrer because the source-of-duty rule does not preclude tort remedies for Graystone's negligence. Second, the Tinglers and Belle Meade contend that their contract claims also should have survived demurrer because they pleaded that the Tinglers had served as agents for Belle Meade when they had entered into the contract and, in the alternative, that Belle Meade was an intended third-party beneficiary of the contract.

         A. Negligence Tort Claims Arising Out of a Contractual Relationship

         1. General Principles

         In Virginia, "'[t]he question of liability for negligence cannot arise at all until it is established that the man who has been negligent owed some duty to the person who seeks to make him liable for his negligence." Dudley v. Offender Aid & Restoration of Richmond, Inc., 241 Va. 270, 277 (1991) (quoting Le Lievre v. Gould [1893] 1 Q.B. 491 at 497 (Eng.) (opinion of Esher, M.R.)). The ultimate question "[w]hether a legal duty in tort exists is a pure question of law to be reviewed de novo." Brown v. Jacobs, 289 Va. 209, 215 (2015) (citation omitted).[7]

         When we look for an answer to that "pure question of law," id. (citation omitted), we begin with the axiom that "there is no such thing as negligence in the abstract, or in general, or as sometimes is said, in vacuo." Kent v. Miller, 167 Va. 422, 425-26 (1937).[8] The history of our common law, Justice Holmes reminded us, has made "clear that the featureless generality, that the defendant was bound to use such care as a prudent man would do under the circumstances, ought to be continually giving place to the specific one, that he was bound to use this or that precaution under these or those circumstances." Oliver Wendell Holmes, Jr., The Common Law 111 (1881). "From the time of Alfred to the present day, statutes and decisions have busied themselves with defining the precautions to be taken in certain familiar cases; that is, with substituting for the vague test of the care exercised by a prudent man, a precise one of specific acts or omissions." Id. at 112.

         Following in that tradition, we do not ask simply whether Graystone's actions or inactions could have foreseeably caused water leaks, mold growth, and resultant personal injuries, property damage, and economic losses. We ask instead whether, under our common-law precedents, tort liability may be imposed upon a home builder who negligently fails to weatherproof the home as required by a construction contract. This question takes us to the very definition of a tort:

The word "tort" has a settled meaning in Virginia. "A tort is any civil wrong or injury; a wrongful act (not involving a breach of contract) for which an action will lie."
"Tort" is also defined as the violation of some duty owing to the plaintiff imposed by the general law or otherwise. Generally, the "duty must arise by operation of law and not by mere agreement of the parties." Stated differently, a "tort" is a "legal wrong committed upon the person or property independent of contract."

Glisson v. Loxley, 235 Va. 62, 67 (1988) (citations omitted), superseded by statute on other grounds, 1993 Acts ch. 928 (codified as amended at Code § 8.01-581.2). See generally J.F. Clerk & W.H.B. Lindsell, The Law of Torts 1 (1889) ("A tort may be described as a wrong independent of contract, for which the appropriate remedy is a common law action."); Thomas M. Cooley, The Elements of Torts 2 (1895) ("A tort, then, is any wrong not consisting in mere breach of contract, for which the law undertakes to give to the injured party some appropriate remedy against the wrong-doer.").[9] By its very nature, tort law imposes duties upon the otherwise unwilling. Consent concepts that are inherent in contract law offer no solace to tortfeasors.

         "In determining whether a cause of action sounds in tort, contract, or both, 'the source of the duty violated must be ascertained.'" MCR Fed., LLC v. JB&A, Inc., 294 Va. 446, 458 (2017) (citation omitted). In making this determination, we examine the specific nature of the allegations of negligence:

If the cause of complaint be for an act of omission or non-feasance which, without proof of a contract to do what was left undone, would not give rise to any cause of action (because no duty apart from contract to do what is complained of exists) then the action is founded upon contract, and not upon tort. If, on the other hand, the relation of the plaintiff and the defendants be such that a duty arises from that relationship, irrespective of the contract, to take due care, and the defendants are negligent, then the action is one of tort.

Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 256 Va. 553, 558 (1998) (emphases added) (citation omitted); accord Atlantic & Pac. Ry. v. Laird, 164 U.S. 393, 399 (1896); Burks, supra note 9, § 234(1), at 406.[10]

         We have also emphasized that "the mere fact that [a] plaintiff has sought recovery for pain and suffering does not, standing alone, convert [a] contract claim into an action in tort." Glisson, 235 Va. at 69. No matter the alleged harm, tort liability cannot be imposed upon a contracting party for failing to do a contractual task when no common-law tort duty would have required him to do it anyway - and thus, as the maxim restates, "in order to recover in tort, the duty tortiously or negligently breached must be a common law duty, not one existing between the parties solely by virtue of the contract, '" MCR Fed., LLC, 294 Va. at 458 (citation omitted); see Holles v. Sunrise Terrace, Inc., 257 Va. 131, 136 (1999).[11] Framed this way, the source-of- duty rule attempts to mark off the boundaries of civil liability and to protect our jurisprudence from the modern trend that is intent on "turning every breach of contract into a tort," MCR Fed., LLC, 294 Va. at 458 (citation omitted), a goal pursued through the "'more or less inevitable efforts of lawyers" seeking extra-contractual remedies, Kamlar Corp. v. Haley, 224 Va. 699, 706 (1983) (citation omitted).

         While we recognize that "[t]he borderland of tort and contract, and the nature and limitations of the tort action arising out of a breach of contract, are poorly defined," it is equally true that "the very uncertainty of the rules has permitted a degree of flexibility which has advantages of its own." William Lloyd Prosser, Selected Topics on the Law of Torts 452 (reprt. ed. 1982) [hereinafter Prosser, Selected Topics]. This flexibility is reason enough, we believe, to resist the modern "Contort" trend toward amalgamating contract and tort law into a grand legal "syncretism." Grant Gilmore, The Death of Contract 98 (Ronald K.L. Collins ed., 2d ed. 1995).

         Professor Costello once described the source-of-duty rule as "charmingly simple." John L. Costello, Virginia Remedies § 21.05[6][d], at 21-43 (4th ed. 2011). Critics of the rule say that the charm wears off as soon as one tries to apply it. Yet, apply it we must. And in this application, as in so many areas of jurisprudence, we cannot be stymied "by the question where to draw the line. That is the question in pretty much everything worth arguing in the law," Irwin v. Gavit, 268 U.S. 161, 168 (1925). To be sure, the truism that a particular outcome often "depends upon differences of degree" is no great discovery because "[t]he whole law does so as soon as it is civilized." Daniels v. Williams, 474 U.S. 327, 334-35 (1986) (citation omitted).

         The source-of-duty rule finds its most secure roots in the historical distinction between the escalating degrees of blameworthiness recognized by the common-law doctrines of "omission or non-feasance" on the one hand, Richmond Metro. Auth., 256 Va. at 558 (citation omitted), and "misfeasance" or malfeasance on the other, Prosser, Selected Topics, supra, at 387 & n.37. This distinction developed "quite early" in English common law. Id. at 387. Nonfeasance is "[t]he failure to act when a duty to act exists." Black's Law Dictionary 1265 (11th ed. 2019). Misfeasance is "[a] lawful act performed in a wrongful manner," or, "[m]ore broadly, a transgression or trespass." Id. at 1197. And malfeasance is ...

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