Case Title: Parker-Smith v. Sto Corp.

Citation: 

Docket Number: 002184

State: virginia

Court: Virginia Supreme Court

Date: 2001-09-14T00:00:00Z

Document:
Present:  All the Justices 
 
HELEN PARKER-SMITH 
 
v. Record No. 002184  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
September 14, 2001 
STO CORPORATION, ET AL. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Kathleen H. MacKay, Judge 
 
 
This appeal involves claims alleging false 
advertising, breach of warranty, and fraud arising out of 
the application of a synthetic stucco material known as 
“Exterior Insulation Finish System” (EIFS) to a residential 
home.  Because we conclude that the period of limitation in 
Code § 8.01-248 applies to the false advertising claims, we 
will affirm the circuit court’s judgment sustaining pleas 
of the statute of limitations as to those counts.  We 
cannot, however, reach the merits of the counts alleging 
breach of warranty and fraud because the circuit court had 
independent grounds for dismissing those counts that were 
not assigned as error.  Consequently, we will also affirm 
the court’s judgment dismissing those counts. 
I. FACTS AND MATERIAL PROCEEDINGS 
Because this case was decided by the circuit court 
upon a plea of the statute of limitations, a demurrer, and 
a motion for summary judgment, all without evidentiary 
hearings, we will summarize the facts as alleged in the 
pleadings.  See Eagles Court Condo. Unit Owners Ass’n v. 
Heatilator, Inc., 239 Va. 325, 327, 389 S.E.2d 304, 304 
(1990) (summarizing facts as stated in pleadings when 
reviewing case decided on demurrer).  In doing so, we 
consider the facts stated and all those reasonably and 
fairly implied in the light most favorable to the nonmoving 
party, Helen Parker-Smith.  See Yuzefovsky v. St. John’s 
Wood Apartments, 261 Va. 97, 102, 540 S.E.2d 134, 137 
(2001) (applying that principle of appellate review when 
case decided on demurrer); Dudas v. Glenwood Golf Club, 
Inc., 261 Va. 133, 136, 540 S.E.2d 129, 130-31 
(2001)(applying same principle when case decided on motion 
for summary judgment). 
Parker-Smith purchased a house located in Fairfax 
County in July 1994.  West Homes, Inc., had built that 
house in 1991-1992 and sold it in 1992 to Parker-Smith’s 
predecessor-in-interest.  The house’s exterior was covered 
with EIFS that Sto Corporation, a/k/a Sto Industries, had 
manufactured. 
When Sto sold its EIFS to West Homes in 1992, Sto 
issued a written warranty that its EIFS would be “free from 
defects in material for a period of seven (7) years from 
the date of Sto’s original invoice to Sto’s supplier, 
 
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distributor, contractor, applicator or owner.”1  As 
reflected in the following provision of the warranty, Sto’s 
liability was limited to supplying replacement materials 
and labor: 
 
Sto shall not be responsible for incidental or 
consequential damages as such terms are defined in 
Section 2-715 of the Uniform Commercial Code, . . . 
regardless of cause. Sto’s sole responsibility and 
liability under this warranty shall be to supply 
replacement materials and labor for any Sto product 
warranted hereunder shown to be defective within seven 
(7) years from the date of Sto’s original invoice to 
Sto’s supplier, distributor, contractor, applicator or 
owner, as the case may be.  This is the sole remedy 
under this warranty to the purchaser, or other person 
or entity claiming under this warranty, which shall 
include the owner of the structure to which the Sto 
materials were applied, as the end user of the Sto 
products. 
 
After moving into the house, Parker-Smith discovered 
that her home had sustained significant damage allegedly 
caused, in part, by a defect in Sto’s EIFS.  According to 
Parker-Smith’s averments, EIFS is designed to provide a  
water-proof exterior surface.  However, some water 
penetrated that surface and, because of the nature and 
design of the EIFS, could not escape other than to seep 
through the underlying substructure of her house, causing 
rotting, structural deterioration, mold, mildew, and insect 
                     
1 When West Homes sold the house at issue in this 
appeal, it assigned the warranty to the buyer, who in turn 
assigned it to Parker-Smith when she purchased the house in 
1994. 
 
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infestations.  Parker-Smith discovered such problems in her 
home. 
Consequently, she filed an action against Sto and West 
Homes, seeking, among other things, damages in an amount 
sufficient to demolish and rebuild her home.2  As pertinent 
to this appeal, Parker-Smith alleged, in a second amended 
motion for judgment, claims for false advertising against 
both Sto and West Homes.  In that pleading, she also 
included counts alleging breach of warranty, and actual and 
constructive fraud against Sto.  In response, Sto filed a 
demurrer, a plea of the statute of limitations, and a 
motion for summary judgment.  West Homes asserted a plea of 
the statute of limitations with regard to the false 
advertising claim. 
The circuit court subsequently issued a letter opinion 
sustaining West Homes’ plea of the statute of limitations.  
The court determined that a cause of action for false 
advertising is subject to the “catch-all” limitation period 
in Code § 8.01-248, rather than the limitation period and 
accrual date applicable to a cause of action for fraud set 
                     
2 When Parker-Smith initially filed her action on 
August 12, 1998, she named only Sto and four individuals as 
defendants.  Those four individual defendants and any 
issues regarding them are not before us in this appeal.  
Parker-Smith added West Homes as a defendant in her first 
amended motion for judgment filed on April 7, 1999. 
 
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forth in Code §§ 8.01-243(A) and 8.01-249(1), respectively.  
Thus, the court concluded that Parker-Smith’s false 
advertising claim was time-barred.  The court subsequently 
entered an order incorporating its letter opinion and 
dismissing the case with prejudice as to West Homes. 
In a separate order, the circuit court also sustained 
Sto’s plea of the statute of limitations with regard to the 
false advertising claim asserted against it.  As to the 
fraud counts alleged against Sto, the court sustained the 
demurrer on the basis that Parker-Smith had failed to plead 
those counts with sufficient specificity.  The court also 
granted Sto’s motion for summary judgment because of lack 
of reliance by Parker-Smith upon the alleged 
misrepresentations. 
In a second letter opinion, the circuit court 
addressed Sto’s motion for summary judgment and plea of the 
statute of limitations regarding the breach of warranty 
claim.  Relying on the decision in Luddeke v. Amana 
Refrigeration, Inc., 239 Va. 203, 387 S.E.2d 502 (1990), 
the court determined that, since the remedy sought by 
Parker-Smith, namely demolishing and rebuilding her house, 
was not within the scope of the limited warranty issued by 
Sto in 1992, her claim was barred by the four-year 
limitation period in Code § 8.2-725.  In a subsequent order 
 
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incorporating the reasons stated in its letter opinion, the 
court sustained Sto’s plea of the statute of limitations 
and dismissed the breach of warranty claim. 
In that second letter opinion, the court also 
concluded that the exclusion of consequential damages from 
the scope of the warranty was not unconscionable.  The 
court rested its holding on the fact that the warranty, 
although limited to supplying replacement materials and 
labor, benefited a large group of people, including 
original and subsequent owners of the house, and extended 
for a period of seven years.  The court also noted that 
Parker-Smith did not claim that there was grossly unequal 
bargaining power between Sto and the beneficiaries of the 
warranty when the contract was formed.  Based on this 
Court’s decision in Envirotech Corp. v. Halco Eng’g, Inc., 
234 Va. 583, 593-94, 364 S.E.2d 215, 220-21 (1988), the 
court rejected the argument that, because the limited 
warranty failed in its essential purpose, the limitation of 
liability was unconscionable. 
II. ANALYSIS 
Parker-Smith’s five assignments of error challenge 
some of the circuit court’s rulings with regard to the 
counts alleging false advertising, breach of warranty, and 
 
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fraud.  Only the assignment of error regarding the claim 
for false advertising pertains to both Sto and West Homes. 
A. FALSE ADVERTISING 
Pursuant to Code § 59.1-68.3, “[a]ny person who 
suffers loss as the result of” false advertising in 
violation of Code § 18.2-216 may “bring an individual 
action to recover damages.”3  Neither Code § 59.1-68.3 nor 
§ 18.2-216 contains or designates a period of time during 
which the authorized cause of action must be brought after 
it accrues.  The issue on appeal is whether the “catch-all” 
limitation period prescribed in Code § 8.01-248,4 or the 
                     
3 In pertinent part, Code § 18.2-216 states that  
 
[a]ny person, firm, corporation or association who, 
with intent to sell or in anywise dispose of 
merchandise, . . . directly or indirectly, to the 
public for sale or distribution or with intent to 
increase the consumption thereof, or to induce the 
public in any manner to enter into any obligation 
relating thereto, . . . makes, publishes, 
disseminates, circulates or places before the public,  
in a newspaper or other publications, . . . an 
advertisement of any sort regarding merchandise, . . . 
or anything so offered to the public, which 
advertisement contains any promise, assertion, 
representation or statement of fact which is untrue, 
deceptive or misleading, or uses any other method, 
device or practice which is fraudulent, deceptive or 
misleading to induce the public to enter into any 
obligation, shall be guilty of a Class 1 misdemeanor. 
 
4 Code § 8.01-248 provides that “[e]very personal 
action accruing on or after July 1, 1995, for which no 
limitation is otherwise prescribed, shall be brought within 
two years after the right to bring such action has 
 
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limitation period and time of accrual for a cause of action 
based on fraud, see Code §§ 8.01-243(A) and –249(1), 
respectively,5 applies to an action for false advertising. 
Parker-Smith argues that the “catch-all” limitation 
period in Code § 8.01-248 should not be automatically 
applied merely because the General Assembly failed to 
designate a statute of limitations for a false advertising 
claim.  Instead, she contends that this Court should 
determine the applicable statute of limitations by 
examining the substantive nature of the claim.  Using that 
analytical framework, Parker-Smith asserts that a false 
advertising claim sounds in fraud.  Therefore, she argues 
that Code §§ 8.01-243(A) and –249(1), establishing the 
limitation period and accrual date for a cause of action 
based on fraud, also control her cause of action for false 
advertising.  Continuing, Parker-Smith asserts that, since 
she did not discover the defects in the EIFS until 1997, 
______________________ 
accrued.”  Prior to July 1, 1995, the period of limitation 
in this statutory provision was one year. 
 
5 In relevant part, Code § 8.01-243(A) states that 
“every action for damages resulting from fraud[] shall be 
brought within two years after the cause of action 
accrues.”  Code § 8.01-249(1) provides that a cause of 
action for fraud accrues when such fraud “is discovered or 
by the exercise of due diligence reasonably should have 
been discovered.” 
 
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she timely filed the false advertising claims against Sto 
and West Homes. 
We agree that the nature of the cause of action at 
issue should be analyzed when determining whether the 
“catch-all” limitation period in Code § 8.01-248 applies.  
This Court has previously done so when deciding which 
statute of limitations controlled a particular cause of 
action.  See, e.g., Purcell v. Tidewater Constr. Corp., 250 
Va. 93, 96, 458 S.E.2d 291, 293 (1995); Curley v. Dahlgren 
Chrysler-Plymouth, Dodge, Inc., 245 Va. 429, 434-35, 429 
S.E.2d 221, 224 (1993); Vines v. Branch, 244 Va. 185, 189-
90, 418 S.E.2d 890, 893-94 (1992); Winslow, Inc. v. Scaife, 
219 Va. 997, 998, 1000, 254 S.E.2d 58, 60 (1979) (per 
curiam); Hospelhorn v. Corbin, 179 Va. 348, 351, 357, 19 
S.E.2d 72, 73, 76 (1942). 
Utilizing that approach, we conclude, however, that a 
cause of action for false advertising brought pursuant to 
Code §§ 59.1-68.3 and 18.2-216 does not sound in fraud.  In 
reaching this conclusion, we recognize that a false 
advertising claim bears some resemblance to fraud in that 
Code § 18.2-216 prohibits an advertisement that “contains 
any promise, assertion, representation or statement of fact 
which is untrue, deceptive or misleading, or uses any other 
method, device or practice which is fraudulent, deceptive 
 
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or misleading.”  However, there are at least two important 
distinctions between a cause of action for false 
advertising and one for fraud. 
With regard to the first distinction, a party bringing 
an action alleging either actual or constructive fraud must 
prove that a representation was false.  Evaluation Research 
Corp. v. Alequin, 247 Va. 143, 148, 439 S.E.2d 387, 390 
(1994).  However, a violation of Code § 18.2-216 occurs 
when an advertisement contains a representation that, 
although deceptive or misleading, is not necessarily false 
or untrue.  The phrase “untrue, deceptive or misleading” in 
Code § 18.2-216 is in the disjunctive.  And, “[w]hen the 
General Assembly uses . . . different terms in the same 
act, it is presumed to mean . . . different things.  Forst 
v. Rockingham Poultry Mktg. Coop., Inc., 222 Va. 270, 278, 
279 S.E.2d 400, 404 (1981). 
Second, in fraud, the misrepresentation must relate to 
a present or pre-existing fact; it cannot be “‘predicated 
on unfulfilled promises or statements as to future 
events.’ ”  ITT Hartford Group, Inc. v. Virginia Fin. 
Assocs., Inc., 258 Va. 193, 203, 520 S.E.2d 355, 361 (1999) 
(quoting Patrick v. Summers, 235 Va. 452, 454, 369 S.E.2d 
162, 164 (1988)); see also Lumbermen’s Underwriting 
Alliance v. Dave’s Cabinet, Inc., 258 Va. 377, 382, 520 
 
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S.E.2d 362, 365 (1999).  In contrast, the misrepresentation 
in a false advertising claim does not have to relate to a 
statement of present or pre-existing fact.  It can be just 
a promise.  See Code § 18.2-216 (“promise, assertion, 
representation or statement of fact”).  Again, the General 
Assembly used different terms in the disjunctive.  See 
Forst, 222 Va. at 278, 279 S.E.2d at 404. 
Because of these notable differences, we conclude that 
the statutory cause of action for false advertising is not 
properly analogized to a common law cause of action for 
fraud.  Therefore, a false advertising claim is not subject 
to the limitation period in Code § 8.01-243(A) and the time 
of accrual in Code § 8.01-249(1), both of which pertain to 
an action for fraud.  Instead, a cause of action for false 
advertising is an action for which no limitation period is 
prescribed.  Therefore, Code § 8.01-248 is applicable, and 
the circuit court correctly determined that Parker-Smith’s 
claims for false advertising were barred under either the 
former one-year or the current two-year limitation period 
in that statutory provision.6
 
                     
6 Parker-Smith does not raise any issue regarding when 
her false advertising claims accrued for purposes of 
applying the limitations period in Code § 8.01-248. 
 
 
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B. BREACH OF WARRANTY 
In Parker-Smith’s two assignments of error regarding 
her breach of warranty claim, she asserts that the circuit 
court erred by failing to distinguish between the 
applicability of Code §§ 8.2-719(2) and –719(3), and by 
determining that Sto’s warranty, which excluded liability 
for consequential damages, is not unconscionable.7  In 
making these arguments, Parker-Smith acknowledges that the 
damages she seeks to recover against Sto are the costs of 
demolishing and rebuilding her home, not the costs of 
replacement materials and labor.  In other words, she does 
not contest the fact that she is not seeking the remedy 
provided in the limited warranty.  Based on that fact and 
this Court’s decision in Luddeke, the circuit court 
concluded that her breach of warranty claim is barred by 
the limitation period in Code § 8.2-725.  And, in its 
order, the court specifically dismissed the count alleging 
breach of warranty for that reason. 
                     
7 Code § 8.2-719(2) provides that “[w]here 
circumstances cause an exclusive or limited warranty to 
fail of its essential purpose, remedy may be had as 
provided in this act.”  Section 8.2-719(3) states, in 
pertinent part, that “[c]onsequential damages may be 
limited or excluded unless the limitation or exclusion is 
unconscionable.” 
 
 
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Yet, Parker-Smith did not assign error to that 
dispositive basis for the circuit court’s decision.  She 
assigned error only to the court’s finding regarding the 
exclusion of consequential damages.  Because her 
assignments of error do not challenge the court’s 
independent basis for its judgment sustaining the plea of 
the statute of limitations on the breach of warranty count, 
we do not address Parker-Smith’s arguments pertaining to 
the question whether the exclusion of consequential damages 
was unconscionable.  Rule 5:17(c); Rash v. Hilb, Rogal & 
Hamilton Co. of Richmond, 251 Va. 281, 286-87, 467 S.E.2d 
791, 795 (1996). 
C. FRAUD 
Parker-Smith asserted claims for actual and 
constructive fraud against Sto on the basis that Sto failed 
to disclose to the public known defects in its EIFS.  In 
ruling on Sto’s challenges to those claims, the court not 
only sustained the demurrer on the ground that Parker-Smith 
failed to plead those counts with adequate specificity, but 
also granted Sto’s motion for summary judgment because of 
the lack of reliance by Parker-Smith upon the alleged 
misrepresentations. 
Parker-Smith’s two assignments of errors with regard 
to her fraud claims address only the court’s decision 
 
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sustaining Sto’s demurrer.  Specifically, she assigned 
error to the court’s determination that a manufacturer with 
superior knowledge of inherent defects in its product and 
the reasonably foreseeable damage that will result from 
those defects has no duty to disclose such information to 
the consuming public.  Parker-Smith also assigned error to 
the court’s conclusion that she did not plead her fraud 
counts with adequate specificity.  She did not assign error 
to the circuit court’s separate ruling based on her lack of 
reliance.  Since the court had an independent basis for 
dismissing the fraud counts that is not the subject of an 
assignment of error, we cannot consider the arguments 
advanced by Parker-Smith regarding her fraud claims.  Rule 
5:17(c); Rash, 251 Va. at 286-87, 467 S.E.2d at 795. 
CONCLUSION 
For the reasons stated, we will affirm the judgment of 
the circuit court.8
Affirmed. 
                     
8 In light of our decision, we do not reach the 
assignments of cross-error. 
 
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