February 2020 Third Example Ten-point Answers to Virginia Essay Questions
February 2020 - QUESTION 9 – VIRGINIA BAR EXAMINATION
On May 1, 2017, Susan and Walter Wilson (the “Wilsons”), visited a new residential real estate development called Powhite Park in Sussex County, Virginia. While at the site, the Wilsons met with Terry, the sales agent for Powhite Park Development Company (the “Development Company”). The Wilsons informed Terry that they are naturalists and birdwatchers and that they wanted to purchase a home on a lot with a natural woodland environment.
Terry showed the Wilsons Lot 8 on a cul-de-sac shown on a plat map as being on the edge of “Phase I” of the development plan of Powhite Park. The plat map showed, behind Lot 8, a tract of open, wooded land owned by the Development Company and described on the plat as “conservation area.” Terry informed the Wilsons that the designation “conservation area” meant that the Development Company had no intention of developing it.
Two weeks later, the Wilsons returned to discuss with Terry the signing of a contract to purchase Lot 8, and the Wilsons again stressed the importance to them that the land behind Lot 8 remain in its natural condition. Terry again assured them that the Development Company definitely had decided not to develop the “conservation area” in any manner. Based on this assurance, the Wilsons signed a contract on June 1, 2017, to purchase Lot 8 and for the Development Company to build them a residence, all for a purchase price of $650,000. Neither the contract nor the deed that conveyed Lot 8 to the Wilsons said anything about the “conservation area.” Powhite Park completed construction of the Wilsons’ home. The Wilsons closed on the purchase on April 15, 2018, and moved into their new home the next day.
In fact, the Development Company had intended all along to construct more residences in the “conservation area” behind Lot 8. A separate plat map, not shown to the Wilsons, was called “Phase II” and included lots in the “conservation area” behind Lot 8.
At a homeowner’s association meeting on June 1, 2018, the Development Company’s Director of Sales, Manny Otter, displaying the Phase II plat, informed those present, including the Wilsons, that the Development Company was ready to begin development of Phase II. Despite objections from the Wilsons and several neighbors, Manny informed everyone that the development was a “done deal” and that the attendees were welcome to purchase the Phase II lots if they wished to preserve the natural buffer behind their homes.
On May 15, 2019, the Wilsons filed suit in the Circuit Court of Sussex County, Virginia, asserting that the Development Company’s conduct conferred upon them equitable rights with respect to the “conservation area” behind Lot 8. The suit contained three counts: (1) breach of contract, (2) fraud, and (3) a request for a permanent injunction to prevent the Development Company from developing the area behind their home. They also seek an award of attorney’s fees.
You may assume that the Development Company committed fraud in this case.
|(a)||Have the Wilsons timely filed suit? Explain fully.|
|(b)||Do the Wilsons have an interest in the lots behind their home that would entitle them to prevent Powhite Park from developing the lots, and, if so, what is that interest, and should the Court:
|(c)||Can the Court properly award the Wilsons attorney’s fees if they prevail in their suit? Explain fully.|
February 2020 - QUESTION 9 – EXAMPLE ANSWER #1
A. Timeliness of the Suit
The Wilsons' suit was timely filed. The issue is whether the statute of limitations had run on their breach of contract and fraud claims. In Virginia, a breach of contract claim has a statute of limitations period for five years. The statute begins to run from the date the contract was entered. In this case, the Wilsons signed the contract for the purchase of Lot 8 on June 1, 2017. Therefore, the statute of limitations began to run on June 1, 2017 and has five years until it has run out. Since five years have not passed since that date when they filed on May 15, 2019, it has not expired. For claims of fraud, the statute of limitations is two years to bring the claim. The statute of limitations for fraud claims begins to run at the time the fraud is discovered, not when the fraudulent act is committed. In this case the fraudulent act was not discovered until June 1, 2018, when the Wilsons learned for the first time of the intentions to develop the lot. Thus, because they brought the suit within two years of discovering the fraud, they suit was timely filed. A permanent injunction is equitable relief, and traditionally, in Virginia, there is no statute of limitations for equitable claims. Therefore, the entire suit was timely filed.
B. Wilsons' Interest in the Lots Behind their Home
The Wilsons do have an interest in the lots behind their homes. The court is likely to order an award for an injunction and not for breach of contract damages.
In Virginia, a Court will only order a permanent injunction under the following conditions 1) Plaintiff has suffered a harm 2) a remedy of monetary damages are inadequate 3) the injunction would be in the public's interest 4) the balance of hardships between the Plaintiff and the Defendant favors the Plaintiff 5) the injunction would be enforcable 6) Defendant has no defenses in equity. In this case, the Wilsons were harmed because they purchased the home in reliance of the Development Company's false misreprestations that they conservation area would remain undeveloped. Monetary damages in this case are debatably inadequate. A court would have a difficult time placing a dollar value on how much the conservation area was worth to the Wilsons. Thus, due to this speculative nature, the Court should find that monetary damages are inadequate. When deciding to issue an injunction, the balance of hardships refers to the idea that Plaintiff's benefit should outweigh Defendant's burden. In this case, it does not appear that there has been a substantial step taken in the development of the propety. Nor do the facts indicate that the Development Company has sold off any of the plots in the conservation area. Thus, the Court would likely find that the balance of hardships favors the Wilsons. Further, an injunction would be in the public interest. The fact pattern demonstrates that that the Wilsons and "several neighbors" objected to the Development Company's presentation of the plan. Although the Development Company may argue that the land has a more valuable purpose developed, and in the hands of new buyers, there is currently no facts provided that would support this. Nowhere in the fact pattern does it say that this will increase the value of the property of current lot holders nor does it say that any lot holders spoke out in favor of it at the meeting. Thus the public interest is served in keeping the land undeveloped. The Development Company has no equitable defenses. The Development Company may raise a defense of laches, that the Wilsons' were too late in bringing this suit and that they would be prejudiced to stop the plan now. However, as mentioned in Part A., the Wilsons' timely brought this suit upon the discovery that the Development Company had made fraudulent misrepresentations. Therefore, an injunction is likely to be awarded.
If an injunction is awarded, it is unlikely that contract damages will be awarded. As stated above, monetary damages would be difficult for the Court to speculate in this case, since there is no way of valuating the conservation area to the Wilsons. Further, the fact that the conservation area remain undeveloped was never in the land sale contract intself. Without having this term in the contract, the Wilsons would have a difficult time proving to the Court that this was the basis of the bargain. The Wilsons could attempt to assert that they relied on the false misrepresentations of the Development Company, to their detriment, and would not have entered into the land sale contract but for this unilateral mistake of fact. The facts indicate that the Wilsons entered into this contract based under the assurance that the conservation area remain undeveloped. However, although the Development Company fraudulently lied to the Wilsons, nowhere in the contract does it state that they relied on the undevelopment as a basis of the bargin. Further, under the parol evidence rule, outside negotiations prior to the contract will not be considered by the court if the parties never intended those words to be integrated. The Wilsons' stressed the importantance of the conservation area to them, but a judge would be unlikely to rescind the contract on this fraudulent misrepresentation alone. Thus, the court is unlikely to give contract damages, but will grant the permanent injunction.
C. Award of Attorney's Fees
The Court may award attorney's fees in they prevail in the suit. Generally, in Virginia, each party is responsible for paying their own attorney's fees, and the court will not order otherwise. However, in special cases, such as a finding of fraud, the Court may offer that attorney's fees be paid to the vitor. Therefore, if the Wilson's are successful, they are likely receive this award.
February 2020 - QUESTION 9 – EXAMPLE ANSWER #2
A) The Wilsons have timely filed suit on the counts of breach of contract and fraud.
In Virginia, the statute of limitation for the breach of a written contract for property is five years. In Virginia, the statute of limitations for fraud is two years. However, the date of accrual begins not at the time of the fraud but when the party knew or should have known of the fraud.
Here, the Wilson's signed the contract for the property on June 1, 2017. The Wilson's filed this action on May 15, 2019. Thus, the Wilsons filed this action well within the five year statute of limitation (it would have run until June 1, 2022). While the Wilsons' signed the contract for the property on June 1, 2017, they did not know of the fraud until the homeowner's assocaition meeting on June 1, 2018. The Wilsons filed the fraud claim within the two year statute of limitations (it could have run until June 1, 2020).
The Wilsons have timely filed suit on the counts of breach of contract of property and of fraud because it is well within the statute of limiations for both cases.
B) The Court will likely find that the Wilsons have a constructive negative easement on the use of lot 8 as a conservation area and the Court will likely grant an injunction.
i) An easement is an interest to either do or not do something to property. An affirmative easement is an easement which allows you to do something to land such as walk through someones land or use it in some way you choose. A negative easement is one which you cannot do something. Negative easements relate to the land, sky, water, and mineral rights. A constructive easement is one created by a court (of equity) in which the court creates an easement because one relied on the promise of another with consideration that such an interest was created.
Here, the Wilsons were told to their detriment that Lot 8 would be used as a conservation area by Terry. The Wilson again stated that they were buying the property because of the conservation area on Lot 8 before signing the contract and was told by Terry that that the Development Company decided not to develop the conservation area in any manner. However, the Wilsons were later told at the homeowner's association meeting that Lot 8 was to be used for commercial purposes which had been planned the whole time. Based on this information, the Court will likely find a constructive negative easement was created because the Wilsons were told to their detriment that Lot 8 was to be used as a conservation area with the intention of inducing them to buy the property, knowing it was for commercial use. The Court will likely find the Wilson paid consideration when buying the property that Lot 8 would not be developed thus the Court would be creating a constructive negative easement.
ii) A Court will grant a legal remedy unless there is no legal remedy at law in which an equitable one will be granted. This is where the damages cannot be adquately measured. To grant an injunction, the party must show there is no legal remedy. The party must show: 1) not granting the injunction will cause irreparable harm, 2) the asking party will likely prevail, 3) the benefit of granting the injunction will outweigh the burden on the other party, and 4) the injunction will not go against public policy.
Here, granting the legal remedy of damages for breach of contract will not provide a legal remedy for the Wilsons. The Wilsons bought the property under the guise that Lot 8 is to be used as a conservation area. Granting damages cannot be adequately measuered due to not putting price on the enjoyment of the conservation area by the Wilsons. An equitable remedy then necessary because a legal one is not. The Court will likely find that an injunction is the correct remedy because 1) the Wilsons will be irreparably harmed if the conservation area is destroyed, 2) the Wilsons will likely prevail because they can show breach and fraud, 3) the conservation area can be enjoyed by all including the Wilsons and the burden will not be too heavy on the Developing Company because no actions have been taken to develop, and 4) public interest is in ensuring parties do not commit fraud or breach contracts.
The Court will likely find that the Wilsons have a constructive negative easement and the Court will find that an injunction is necessary remedy in this case.
C) The Court will grant attorney's fees in this matter due to the fraud claim and request for them being cited in the complaint.
In cases which the elements of fraud can be proven, attorney's fees may be awarded. However, the party must request attorney's fees in the complaint.
Here, the Wilsons pled fraud as one of the count and correctly asked for attorney's fees in their complaint thus they are entitled to them if they prevail on the merits of this case.