Court Opinion

ID: 2805600
Source: CourtListenerOpinion
Date Created: 2015-06-04 14:16:05.613919+00
Date Added: 2024-06-11T12:05:01.394503
License: Public Domain

PRESENT: All the Justices

DEBRA A. BALLAGH
                                            OPINION BY
v.   Record No. 141248                JUSTICE WILLIAM C. MIMS
                                           June 4, 2015
FAUBER ENTERPRISES, INC., ET AL.

           FROM THE CIRCUIT COURT OF THE CITY OF LYNCHBURG
                       F. Patrick Yeatts, Judge

        In this appeal, we consider the standard of proof a

plaintiff must satisfy to prevail upon claims alleging

violations of the Virginia Consumer Protection Act, Code §§

59.1-196 to -207 (the “VCPA”).

            I.   BACKGROUND AND MATERIAL PROCEEDINGS BELOW

        In May 2010, Debra A. Ballagh bought a parcel of real

property from Fauber Enterprises, Inc. (“Fauber”).     Soon

thereafter, the basement of the house flooded when it rained.

        In March 2012, Ballagh filed a complaint against Fauber,

Fauber’s real estate agent, and others.     She alleged that the

basement flooded when it rained at least three times while

Fauber owned the parcel.     She alleged that Fauber obtained

estimates to waterproof the basement but did not have the work

done.    Rather, she alleged, it simply repaired the water

damage.

        Ballagh further alleged that she had specifically asked

about water leaks in the basement before buying the parcel.
She alleged that Fauber’s real estate agent assured her,

through her agent, that there were no leaks or water damage.

She alleged that although she waived a professional home

inspection, she and a friend viewed the property and did not

observe any defects in the basement because Fauber had

affirmatively concealed them.    She alleged that a professional

home inspection would not have revealed the defects in any

event.

     Among other things, Ballagh’s complaint included claims

alleging violations of the VCPA.     Specifically, Ballagh claimed

that the defendants had “misrepresented that goods, including

real property, were of a particular standard or quality,” in

violation of Code § 59.1-200(A)(6), and had “used ‘deception,

fraud, false pretense, false promise, or misrepresentation in

connection with a consumer transaction,’” in violation of Code

§ 59.1-200(A)(14).

     The case proceeded to jury trial.    At its conclusion, the

parties offered competing jury instructions as to the standard

of proof required for the VCPA claims.    Ballagh asserted that

the VCPA requires a plaintiff to prove a violation by only a

preponderance of the evidence.   The defendants asserted that

because Ballagh’s claims involved alleged misrepresentations,

she was required to prove them by clear and convincing evidence

as required for claims of common law fraud.

                                 2
     After a hearing, the circuit court agreed with the

defendants.   It rejected the jury instructions Ballagh proposed

and gave those proposed by the defendants.   The jury returned a

defense verdict.   Ballagh moved for a new trial, arguing that

the instructions on the standard of proof were incorrect.

After a hearing, the court denied her motion.   It thereafter

entered final judgment on the jury’s verdict.

     We awarded Ballagh this appeal.

                          II.   ANALYSIS

     In her sole assignment of error, Ballagh asserts that the

circuit court erred by instructing the jury that she was

required to prove her VCPA claims by clear and convincing

evidence, rather than by a preponderance of the evidence.    She

argues that the VCPA creates a new, statutory cause of action

that is distinct from and in addition to common law fraud.    She

argues that a preponderance of the evidence is the default

standard of proof for statutory causes of action unless the

General Assembly expressly provides for a higher standard.    She

argues that the preponderance standard is especially warranted

here because the express language of the statute states that

the General Assembly enacted it with a remedial purpose, and

remedial legislation is to be construed and applied liberally

by the courts.

                                 3
     Questions relating to burden of proof, including the

standard of proof and which party bears the burden to meet it,

are questions of law reviewed de novo.    Mulford v. Walnut Hill

Farm Group, LLC, 282 Va. 98, 111, 712 S.E.2d 468, 476 (2011).

     We agree that the VCPA creates a new, statutory cause of

action distinct from and in addition to common law fraud.

Owens v. DRS Auto. Fantomworks, Inc., 288 Va. 489, 497, 764
S.E.2d 256, 260 (2014) (“[T]he legislative purpose underlying

the VCPA was, in large part, to expand the remedies afforded to

consumers and to relax the restrictions imposed upon them by

the common law. . . .   Therefore, [it] extends considerably

beyond fraud.”).   The elements of the two claims are different.

Wilkins v. Peninsula Motor Cars, 266 Va. 558, 562-63, 582
S.E.2d 581, 587 (2003).   In fact, although a plaintiff may not

recover double damages by claiming both a VCPA violation and

common law fraud, he or she may present both claims in the same

action and elect between the damages awarded if both are

proven.   Id.

     We also agree that “the ordinary burden in civil actions

[is] preponderance of the evidence.”    Wyatt v. McDermott, 283
Va. 685, 700, 725 S.E.2d 555, 563 (2012).   Accordingly, we

presume that when the General Assembly creates a new, statutory

cause of action, it intends the preponderance standard to apply

unless it expressly states otherwise.

                                4
     The defendants argue that there are several indicators

within the VCPA showing that the General Assembly intended a

higher standard of proof to apply, but none of them are express

statements of such intent.

     First, the defendants argue that when enacting the VCPA,

the legislature deviated from the language in the model Uniform

Deceptive Trade Practices Act.    They cite examples where it

chose to use the words “fraudulent” and “misrepresenting” in

the VCPA in lieu of the phrases “deceptive” and “causes

likelihood of confusion or misunderstanding as to” used in the

model act.   Compare Unif. Deceptive Trade Practices Act § 2(a),

9A U.L.A. 14 (Supp. 1967) with Code § 59.1-200(A).      They

contend that these deviations from the model act express

legislative intent to conform the statute’s standard of proof

to the standard for common law fraud.    We disagree.

     The principal source from which to determine the General

Assembly’s intent in enacting a statute is the language it used

in the statute itself.   Virginia Dep't of Health v. Kepa, Inc.,

___ Va. ___, ___, 766 S.E.2d 884, 889 (2015).    When that

language is not sufficiently clear, we also may consider why

the statute was enacted.     Copeland v. Todd, 282 Va. 183, 193,

715 S.E.2d 11, 16 (2011).

     The legislature seldom chooses to expressly direct the

courts how to apply a statute.    When it does so we must pay

                                  5
special attention to that choice and ensure that it is given

full effect.    The General Assembly chose to include such

direction in the VCPA.    It declared that the VCPA “shall be

applied as remedial legislation to promote fair and ethical

standards of dealing between suppliers and the consuming

public.”   Code § 59.1-197.   We construe remedial legislation

liberally, in favor of the injured party.    E.I. du Pont de

Nemours & Co. v. Eggleston, 264 Va. 13, 17, 563 S.E.2d 685, 687

(2002).

     Thus, the General Assembly’s decision to define the

elements of the VCPA using terms of art already familiar to the

bench and bar from common law fraud is insufficient to express

an intent that plaintiffs must prove claims of VCPA violations

by clear and convincing evidence.    Despite the defendants’

argument, any light the adoption of such terms may shed on the

standard of proof is eclipsed by the legislature’s express

direction that we apply the VCPA as remedial legislation.      That

language supports a conclusion that it intended that we apply

the lower, preponderance standard more favorable to the injured

plaintiff.

     Next, the defendants note that Code § 59.1-207 provides an

affirmative defense in certain circumstances, and expressly

provides a preponderance of the evidence standard of proof for

that defense.    They argue that this provision would be

                                 6
superfluous or redundant if the preponderance standard applied

to the whole VCPA, and such a result would contravene our

canons of statutory construction.   See Owens, 288 Va. at 497,

764 S.E.2d at 260.

     Although this is a plausible argument, the General

Assembly’s decision to expressly provide a preponderance

standard of proof for a defendant’s affirmative defense is not

an express statement that it intended a clear and convincing

evidence standard to apply to a plaintiff’s VCPA claims.    The

implication that the higher standard applies to the plaintiff

because the lower standard applies to the defendant is again

simply too subtle, especially in the face of both the general

presumption that the preponderance standard applies to civil

actions and the rule that remedial legislation is construed in

favor of the injured party.

     The defendants also argue that a statute is presumed not

to alter the common law unless the legislature has expressly

indicated otherwise.   They argue that allowing a plaintiff to

prove a misrepresentation for the purposes of the VCPA by a

preponderance of the evidence would alter the common law

without such express indication by the General Assembly.

However, as noted above, the VCPA creates a new, statutory

cause of action in addition to common law fraud.   It does not

replace or in any way narrow the tort of common law fraud.

                                7
Accordingly, applying the preponderance standard to allegations

of VCPA violations does not alter the common law.

     The defendants also argue that the VCPA provides

extraordinary relief, including the possibility of treble

damages, which they contend shows the General Assembly intended

a higher standard of proof to apply.   However, many statutes

include similar provisions without imposing a higher standard

of proof.   See, e.g., Code §§ 8.01-27.2 (authorizing treble

damages for giving a bad check for rent), 8.01-27.4

(authorizing treble damages for failure to apply insurance

proceeds to unpaid balances for professional services), 18.2-

190.8 (authorizing treble damages for using an unlawful

electronic communication device for commercial advantage or

financial gain), 55-216 (authorizing treble damages for waste

by a tenant of real property), and 56-5 (authorizing treble

damages for damage to property of a public service

corporation).   Accordingly, the measure of damages allowed by

the VCPA does not dictate the standard of proof a plaintiff is

required to satisfy.

     The defendants also argue that applying the preponderance

standard for VCPA violations would make common law fraud

obsolete because plaintiffs would allege VCPA violations

instead to benefit from the lower standard of proof.    However,

as noted above, plaintiffs may, and do, bring claims for a VCPA

                                8
violation and common law fraud in the same complaint.   Wilkins,
266 Va. at 559, 587 S.E.2d at 582.    While the standard of proof

may be higher for common law fraud, a plaintiff who satisfies

that higher burden and proves punitive damages may recover far

more than merely three times his or her actual damages.     See,

e.g., id. at 559, 563, 587 S.E.2d at 582, 584 (upholding a jury

award of $100,000 punitive damages, 56.68 times the award of

$1862.86 in actual damages on a claim of common law fraud).

Accordingly, plaintiffs will pursue claims for common law fraud

despite the lower standard of proof for VCPA violations, where

the evidence supports such claims.

     Finally, we note that the highest courts of several states

have concluded that the preponderance standard applies under

their own states’ similar statutes.   See, e.g., Aguilar v.

Atlantic Richfield Co., 24 P.3d 493, 521 (Cal. 2001); Service

Rd. Corp. v. Quinn, 698 A.2d 258, 265 (Conn. 1997); Avery v.

State Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 856 (Ill.

2005); Kelly v. Vinzant, 197 P.3d 803, 812-13 (Kan. 2008);

State v. Price-Rite Fuel, Inc., 24 A.3d 81, 87 (Me. 2011); Hair

Excitement, Inc. v. L'Oreal U.S.A., Inc., 965 A.2d 1032, 1038

(N.H. 2009); Liberty Mut. Ins. Co. v. Land, 892 A.2d 1240,

1247-48 (N.J. 2006); State ex rel. Spaeth v. Eddy Furn. Co.,

386 N.W.2d 901, 903 (N.D. 1986); State ex rel. Redden v.

Discount Fabrics, Inc., 615 P.2d 1034, 1038-39 (Or. 1980);

                               9
Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex. 1980); Poulin v.

Ford Motor Co., 513 A.2d 1168, 1172 (Vt. 1986).   The principles

guiding those courts are persuasive.

                        III.   CONCLUSION

     For these reasons, we conclude that a plaintiff must prove

a violation of the VCPA by a preponderance of the evidence

rather than by clear and convincing evidence.   Accordingly, we

will reverse the judgment of the circuit court and remand the

case for further proceedings consistent with this opinion.

                                            Reversed and remanded.

                                10