Title: McMillion v. Dryvit Systems Inc.

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
CHARLES MCMILLION, ET AL. 
 
v. Record No. 002802  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
 September 14, 2001 
DRYVIT SYSTEMS, INC. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Marcus D. Williams, Judge 
 
 
 
This appeal involves claims of false advertising and 
fraud arising out of an allegedly defective product known 
as “Exterior Insulation Finish System” (EIFS).  Because we 
conclude that the limitation period in Code § 8.01-248 
applies to a cause of action for false advertising, we will 
affirm the circuit court’s judgment sustaining a plea of 
the statute of limitations.  We will also affirm the 
court’s judgment sustaining a demurrer to the fraud counts 
for two reasons.  In a pleading filed after the court 
sustained a demurrer, the plaintiffs did not re-plead fraud 
based on the defendant’s failure to disclose known defects 
in its product to the public.  As to fraud based on the 
defendant’s affirmative misrepresentations, the plaintiffs 
did not allege misrepresentations of existing facts. 
I. FACTS AND MATERIAL PROCEEDINGS 
The circuit court decided this case upon a plea of the 
statute of limitations and a demurrer without an 
evidentiary hearing.  Thus, we will summarize the facts as 
alleged in the pleadings.  Eagles Court Condo. Unit Owners 
Ass’n v. Heatilator, Inc., 239 Va. 325, 327, 389 S.E.2d 
304, 304 (1990).  In doing so, we consider the facts stated 
and all those reasonably and fairly implied in the light 
most favorable to the nonmoving parties, Charles McMillion 
and Suzanne McMillion.  Yuzefovsky v. St. John’s Wood 
Apartments, 261 Va. 97, 102, 540 S.E.2d 134, 137 (2001). 
The McMillions commenced building a house in 1993.  
During the construction, they contacted a contractor who 
was familiar with and installed a style of stucco exterior 
finish that the McMillions wished to use on their house.  
That contractor advised the McMillions that the finish 
about which they were inquiring was a synthetic stucco 
product known as EIFS.  The contractor then gave the 
McMillions some advertising brochures and other promotional 
materials issued by Dryvit Systems, Inc. (Dryvit), a 
manufacturer of EIFS.  Those brochures contained a variety 
of information and representations about the product and 
its characteristics.  The McMillions subsequently selected 
the EIFS manufactured by Dryvit for use on their home.  The 
house was completed in September 1993. 
Five years later, in September 1998, the McMillions 
allowed a television news crew who was preparing a story 
about EIFS to inspect their home.  The inspection revealed 
 
2
that water had become trapped behind the EIFS, causing 
rotting and deterioration of the house’s structure, mold 
growth, and insect infestations.  These problems were not 
visible on the exterior of the McMillions’ house. 
According to the McMillions’ averments, EIFS is a 
defective product.  EIFS is supposed to provide a 
waterproof exterior surface.  However, some water allegedly 
intruded behind the exterior surface on the McMillions’ 
house and could not drain out or evaporate because of the 
design of the EIFS.  The McMillions contend that this 
trapped moisture permeated and damaged the porous 
structural elements of their home to the extent that the 
house could not be repaired without removing the EIFS, 
repairing the structural damage, and replacing the EIFS 
with an alternative exterior finish. 
Because of the damage to their home, the McMillions 
filed an action against Dryvit and seven other defendants 
on September 22, 1998, seeking, among other damages, the 
costs of having their home repaired.1  As pertinent to this 
appeal, the McMillions asserted against Dryvit, in both 
their first and second amended motions for judgment, claims 
                     
1 The McMillions have not appealed any ruling of the 
circuit court with regard to these other defendants.  Thus, 
we will not identify those defendants or address any issue 
concerning them. 
 
3
of false advertising pursuant to Code §§ 59.1-68.3 and 
18.2-216, and actual and constructive fraud.2  In the fraud 
counts, the McMillions alleged, among other things, that 
Dryvit knew or should have known of inherent defects in the 
EIFS and its incompatibility with certain other products; 
that Dryvit should have disclosed such defects to the 
McMillions; that, by failing to make such disclosures, 
Dryvit misrepresented material facts to the McMillions; and 
that they relied upon such misrepresentations to their 
detriment.  In response to the second amended motion for 
judgment, Dryvit filed a plea of the statute of limitations 
and a demurrer. 
After considering the parties’ briefs and hearing 
argument, the circuit court sustained the plea of the 
statute of limitations as to the count alleging false 
advertising.  The court determined that the limitation 
period prescribed in Code § 8.01-248 applies to a claim for 
false advertising.  The court also sustained the demurrer 
to the counts for actual and constructive fraud on the 
basis that the McMillions had failed to plead those counts 
with sufficient particularity, but granted leave to amend 
those claims. 
                     
2 The circuit court sustained Dryvit’s demurrer to the 
first amended motion for judgment but granted the 
 
4
 
Subsequently, the McMillions filed a third amended 
motion for judgment, asserting claims of actual and 
constructive fraud against Dryvit.  In that pleading, they 
did not allege that Dryvit failed to disclose defects in 
its EIFS.  Instead, the McMillions asserted only that 
Dryvit made certain affirmative, material 
misrepresentations about its product upon which the 
McMillions relied to their detriment. 
As before, Dryvit filed a demurrer and a plea of the 
statute of limitations in response to the third amended 
motion for judgment.  The circuit court sustained the 
demurrer and dismissed the action with prejudice as to 
Dryvit. 
II. ANALYSIS 
The McMillions filed eight assignments of error.  
However, the following three questions are dispositive of 
this appeal: (1) whether the limitation period prescribed 
in Code § 8.01-248 applies to a claim for false 
advertising; (2) whether this Court can address the merits 
of the fraud counts based on Dryvit’s alleged failure to 
disclose defects in its product; and (3) whether the 
McMillions pled misrepresentations of existing facts, 
                                                             
McMillions leave to amend. 
 
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rather than mere opinions as to future events, in their 
fraud counts based on affirmative misrepresentations. 
A. STATUTE OF LIMITATIONS FOR FALSE ADVERTISING 
The McMillions claim that the circuit court erred in 
determining that the statute of limitations applicable to a 
cause of action for false advertising is the “catch-all” 
limitation period set forth in Code § 8.01-248, rather than 
the limitation period and accrual date for fraud found in 
Code §§ 8.01-243(A) and 8.01-249(1), respectively.  Today, 
this Court holds in Parker-Smith v. Sto Corp., 262 Va. ___, 
___, ___ S.E.2d ___, ___ (2001), that a cause of action for 
false advertising, brought pursuant to Code §§ 59.1-68.3 
and 18.2-216, is subject to the limitation period 
prescribed in Code § 8.01-248.3  Thus, the circuit court did 
not err in sustaining Dryvit’s plea of the statute of 
limitations with regard to the McMillions’ claim for false 
advertising.4
B. FRAUD BASED ON FAILURE TO DISCLOSE PRODUCT DEFECTS 
                     
3 In 1993, the limitation period in Code § 8.01-248 was 
one year.  An amendment to that statute, effective July 1, 
1995, enlarged the limitation period to two years. 
 
4 The McMillions do not raise any issue regarding the 
date on which their cause of action for false advertising 
accrued.  Therefore, we do not address that question in 
this appeal. 
 
6
The McMillions argue that the circuit court erred as a 
matter of law in determining that a manufacturer with 
superior knowledge of inherent defects in its product and 
the reasonably foreseeable damage resulting from those 
defects has no duty to disclose such information to the 
consuming public.  Because the McMillions did not re-plead 
fraud based on a failure to disclose in the third amended 
motion for judgment, we cannot reach the merits of this 
issue. 
In the second amended motion for judgment, the 
McMillions based their fraud counts on both Dryvit’s 
failure to disclose and its affirmative misrepresentations.  
However, they did not include allegations concerning 
Dryvit’s failure to disclose product defects in the third 
amended motion for judgment, nor were such allegations 
incorporated by reference to any prior pleadings.  Instead, 
the fraud counts in the third amended motion for judgment 
addressed only affirmative misrepresentations contained in 
Dryvit’s advertising brochures.5
                     
5 In the second amended motion for judgment, the 
McMillions stated in Count VI, alleging actual fraud, and 
in Count VII, alleging constructive fraud, that “[b]y 
failing to disclose such inherent defects and 
incompatibility to [the] McMillion[s], [Dryvit] 
misrepresented material facts . . . .”  However, in those 
two counts in the third amended motion for judgment, the 
McMillions alleged only that Dryvit made representations 
 
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On brief, the McMillions state that the circuit 
court’s order sustaining Dryvit’s demurrer to the second 
amended motion for judgment did not specify which form of 
fraud the court was addressing, but that Dryvit and the 
McMillions understood that the court dismissed with 
prejudice the “failure to disclose” form of fraud and did 
not allow that kind of fraud to be re-pled in the third 
amended motion for judgment.  Dryvit took the same position 
in a memorandum that it filed in support of its demurrer to 
the third amended motion for judgment.  In that memorandum, 
Dryvit stated that the circuit court sustained with 
prejudice Dryvit’s demurrer to the McMillions’ allegations 
of fraud based on nondisclosure in the second amended 
motion for judgment and that the McMillions consequently 
deleted such allegations in their third amended motion for 
judgment.  A copy of one page from a transcript of a 
hearing held in the circuit court on October 26, 1999, 
which Dryvit attached to its memorandum, reflects that the 
                                                             
about EIFS that it knew or should have known were false, 
and that the McMillions relied upon those 
misrepresentations to their detriment. 
In paragraph 30 of the third amended motion for 
judgment, the McMillions discussed Dryvit’s failure to warn 
the public or the McMillions about the potential for water 
damage such as that sustained by the McMillions’ house.  
Even though the fraud counts incorporated preceding counts 
and paragraphs in the third amended motion for judgment, 
 
8
circuit court agreed with a suggestion by Dryvit’s counsel 
that the McMillions be granted leave to file a third 
amended motion for judgment only with regard to affirmative 
misrepresentations allegedly made by Dryvit.6
However, despite what the parties may have understood 
to be the court’s ruling, the circuit court’s order 
sustaining Dryvit’s demurrer to the second amended motion 
for judgment did not limit the kind of fraud that the 
McMillions could re-plead in the third amended motion for 
judgment.  The court specifically stated the following in 
its order:7
 
 
Dryvit’s demurrers to Counts VI and VII of the 
Plaintiffs’ Second Amended Motion for Judgment, 
alleging Dryvit’s actual and constructive fraud, are 
SUSTAINED, as plaintiffs failed to plead those counts 
with the required particularity. . . . Plaintiffs are 
granted leave to file amended claims for actual and 
constructive fraud. 
 
This Court has said on numerous occasions that trial 
courts speak only through their written orders and that 
such orders are presumed to reflect accurately what 
transpired.  See, e.g., Waterfront Marine Constr., Inc. v. 
                                                             
the McMillions did not base those fraud counts on a failure 
to disclose defects to the public. 
6 The entire transcript from that hearing is not part 
of the record on appeal. 
 
7 In that order, the circuit court did not incorporate 
its remarks from the bench contained in the transcript page 
from the October 1999 hearing. 
 
9
North End 49ers Sandbridge Bulkhead Groups A, B and C, 251 
Va. 417, 427 n.2, 468 S.E.2d 894, 900 n.2 (1996); Stamper 
v. Commonwealth, 220 Va. 260, 280-81, 257 S.E.2d 808, 822 
(1979).  Furthermore, in Delk v. Columbia/HCA Healthcare 
Corp., 259 Va. 125, 129, 523 S.E.2d 826, 829 (2000), this 
Court held that “[w]hen a circuit court sustains a demurrer 
to an amended pleading which is complete in itself and 
fails to incorporate by reference allegations in earlier 
pleadings, we will consider only the allegations contained 
in the amended pleading that was the subject of the 
demurrer sustained by the judgment appealed from.”  See 
also Bell Atlantic-Virginia, Inc. v. Arlington County, 254 
Va. 60, 63 n.2, 486 S.E.2d 297, 299 n.2 (1997); Norfolk & 
W. Ry. Co. v. Sutherland, 105 Va. 545, 549-50, 54 S.E. 465, 
466 (1906).  Consequently, we consider only the allegations 
in the McMillions’ third amended motion for judgment, 
which, as previously stated, did not include claims of 
actual or constructive fraud based on Dryvit’s failure to 
disclose defects in its EIFS.  Therefore, we cannot address 
the merits of the question whether a manufacturer’s failure 
to disclose known defects in its product to the public can 
form the basis of a claim for fraud. 
C. FRAUD BASED ON AFFIRMATIVE MISREPRESENTATIONS 
 
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The McMillions’ third question on appeal combines five 
assignments of error that collectively challenge the 
various possible grounds upon which the circuit court may 
have sustained Dryvit’s demurrer to the claims for actual 
and constructive fraud in the third amended motion for 
judgment.  Unfortunately, the circuit court did not 
articulate the basis for that decision but stated in its 
order only that Dryvit’s demurrer to Counts VI and VII in 
the third amended motion for judgment, alleging actual and 
constructive fraud, was sustained.  However, under the 
provisions of Code § 8.01-273, the circuit court could 
consider only those grounds specifically stated by the 
demurrant.  Likewise, our consideration of the demurrer on 
appeal is limited to the grounds raised by Dryvit.  See 
Chippenham Manor, Inc. v. Dervishian, 214 Va. 448, 451, 201 
S.E.2d 794, 796 (1974).  One of the grounds asserted by 
Dryvit in its demurrer to the third amended motion for 
judgment, which we find dispositive, was that the 
McMillions failed to allege “that Dryvit made false and 
material representations of pre-existing facts.”8
On this issue, the McMillions argue that the circuit 
court erred as a matter of law by finding that the 
                     
8 This ground is the subject of one of the assignments 
of error included in the third question. 
 
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fraudulent misrepresentations identified by the McMillions 
were mere unfulfilled promises as to future events.  On 
brief, they identify two alleged misrepresentations, 
asserted in the third amended motion for judgment, that 
were, according to the McMillions, “misrepresentations of 
current performance characteristics” upon which they relied 
and which directly caused the damages to their home.  Those 
alleged misrepresentations, which appeared in Dryvit’s 
advertising brochure, are:9
 
 
Damaging water penetration is avoided.  Rain 
finds its way into the wall structure when insulation 
is placed inside.  Conventional insulation absorbs 
water over a period of time and eventually becomes 
inefficient.  With Outsulation, there are not routes 
for water to enter. . . . The entire wall remains dry 
and insulation values stay constant; . . . Interior 
finishes remain stable. 
 
 
 
Allows necessary water vapor transmission which 
helps prevent condensation in the wall assembly. 
 
We disagree with the McMillions’ position that these 
alleged misrepresentations are statements of present facts. 
“ ‘[F]raud must relate to a present or a pre-existing 
fact, and cannot ordinarily be predicated on unfulfilled 
promises or statements as to future events.’ ”  Patrick v. 
Summers, 235 Va. 452, 454, 369 S.E.2d 162, 164 
                     
9 The McMillions listed other alleged 
misrepresentations in the third amended motion for judgment 
but acknowledged on brief that those additional 
 
12
(1988) (quoting Soble v. Herman, 175 Va. 489, 500, 9 S.E.2d 
459, 464 (1940)).  This Court stated in Mortarino v. 
Consultant Eng’g Servs., Inc., 251 Va. 289, 293, 467 S.E.2d 
778, 781 (1996)(citing Saxby v. Southern Land Co., 109 Va. 
196, 198, 63 S.E. 423, 424 (1909)), that 
[i]t is well settled that a misrepresentation, the 
falsity of which will afford ground for an action for 
damages, must be of an existing fact, and not the mere 
expression of an opinion.  The mere expression of an 
opinion, however strong and positive the language may 
be, is no fraud.  Such statements are not fraudulent 
in law, because . . .they do not ordinarily deceive or 
mislead.  Statements which are vague and indefinite in 
their nature and terms, or are merely loose, 
conjectural or exaggerated, go for nothing, though 
they may not be true, for a [person] is not justified 
in placing reliance upon them. 
 
“We have not, however, established a bright line test 
to ascertain whether false representations constitute 
matters of opinion or statements of fact.”  251 Va. at 293, 
467 S.E.2d at 781.  Instead, “each case must in a large 
measure be adjudged upon its own facts, taking into 
consideration the nature of the representation and the 
meaning of the language used as applied to the subject 
matter and as interpreted by the surrounding 
circumstances.”  Packard Norfolk, Inc. v. Miller, 198 Va. 
557, 562, 95 S.E.2d 207, 211 (1956). 
                                                             
misrepresentations did not directly cause the damages for 
which they sought relief. 
 
13
In the present case, we hold that the alleged 
misrepresentations identified by the McMillions, when taken 
in context, see id., are merely statements of opinion about 
how Dryvit’s EIFS would perform in the future if utilized 
in constructing a home.  See Lumbermen’s Underwriting 
Alliance v. Dave’s Cabinet, Inc., 258 Va. 377, 382, 520 
S.E.2d 362, 365 (1999) (insurer’s false representation that 
certain insurance policy would reduce insured’s premiums 
was unfulfilled promise as to future event).  To illustrate 
the difference between a statement of opinion and one of 
existing fact, we point to another representation in 
Dryvit’s advertising brochure.  On the same page of the 
brochure upon which the second alleged misrepresentation 
appeared, Dryvit stated that it uses only 100 percent 
acrylic polymer formula in its finish coating.  That 
statement, if false, would be a misrepresentation of 
existing fact because it pertains to the present quality or 
character of Dryvit’s EIFS.  See Tate v. Colony House 
Builders, Inc., 257 Va. 78, 83-84, 508 S.E.2d 597, 600 
(1999) (statement that house was free from structural 
defects was representation of present quality or character 
of property and, thus, statement of fact; whereas, 
statement that no significant work would be required by way 
of restoration or repair was representation predicated upon 
 
14
future events, and could not form basis of action for 
fraud); Mortarino, 251 Va. at 294, 467 S.E.2d at 781 
(statement that wetlands were not present on tract of real 
estate was representation of fact regarding property’s 
present quality and character).  Thus, for this reason 
alone, the circuit court did not err in sustaining Dryvit’s 
demurrer to the McMillions’ claims for actual and 
constructive fraud based on affirmative 
misrepresentations.10
CONCLUSION 
For the reasons stated, we will affirm the judgment of 
the circuit court. 
Affirmed. 
                     
10 In light of our decision, we do not need to address 
any other assignments of error encompassed in the third 
question.  Nor do we reach the fourth question on appeal, 
whether an allegation of fraud in the inducement of a 
contract is an attempt to convert a contract action into 
one based on tort. 
 
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