313 Freemason v. Freemason Assocs., Inc.

59 Va. Cir. 407, 2002 Va. Cir. LEXIS 365
CourtVirginia Circuit Court
DecidedAugust 30, 2002
DocketCase Nos. (Law) CL 00-1339, CL 01-1341, CL 01-1342, CL 01-1343, CL 01-1344
StatusPublished
Cited by6 cases

This text of 59 Va. Cir. 407 (313 Freemason v. Freemason Assocs., Inc.) is published on Counsel Stack Legal Research, covering Virginia Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
313 Freemason v. Freemason Assocs., Inc., 59 Va. Cir. 407, 2002 Va. Cir. LEXIS 365 (Va. Super. Ct. 2002).

Opinion

By Judge John C. Morrison, Jr.

This issue comes before the Court on Defendants Freemason Associates, Inc., Conley Hall, and Thomas Dana’s Motion for Partial Summary Judgment. For the reasons stated below, the Court overrules the motion in part and sustains the motion in part.

hi Virginia, a trial court may enter summary judgment only if no material fact is genuinely in dispute. Sup. Ct. Rules, Rule 3:18. In considering a Motion for Summary Judgment, a trial court must adopt those inferences from the facts that are most favorable to the nonmoving party, unless the inferences are forced, strained, or contrary to reason. Dickerson v. Fatehi, 253 Va. 324, 327 (1997). Summary Judgment is authorized only where the moving party is entitled to judgment as a matter of law. Id.; Michie’s Jur., Judgments and Decrees, § 217.3, at 338 and 344.

[408]*408I. Defendants Hall and Dana seek to have Counts I and II of 313 Freemason’s suit against them struck because they were not the declarants of the condominium and, at all relevant times, were acting on the behalf of Freemason Associates, Inc. ■

Count I of Plaintiff 313 Freemason’s Motion for Judgment alleges that Defendants Freemason Associates, Hall, and Dana breached the warranty contained in § 55-79.79 of the Condominium Act. Count II of Plaintiff 313 Freemason’s Motion for Judgment alleges that Defendants violated § 55-79.90 ofthe Condominium Act, which requires that declarants give afull and fair disclosure of the condition of the condominium in a Public Offering Statement.

Defendants argue that only the declarant, Freemason Associates, can be liable under Counts I and II. During the June 26th hearing and in Plaintiffs Response to the Motion for Summary Judgment, Plaintiff put forth three arguments for holding the individual defendants liable for Counts I and II of 313 Freemason’s suit.

A. Hall and Dana are included in the definition of ‘Declarant” in § 55-79.41 ofthe Condominium Act.

Va. Code § 55-79.41 defines a “declarant” as “any person, or group of persons acting in concert, that .. . applies for registration of the condominium.” Section 55-79.41 defines a “person” as “a natural person, corporation, partnership, association, trust, or other entity capable of holding title to real property, or any combination thereof.” Plaintiffs argue that Hall and Dana are included in the definition of declarant alongside the corporation. Plaintiffs also argue that Hall is a declarant as a matter of fact because he signed the affidavit for registration in his own name and not in his representative capacity.

Plaintiffs have stated that the registration process began in the name of Freemason Associates. Plaintiffs have not provided evidence that Hall’s or Dana’s name appear in any of the condominium instruments except for the Hall affidavit. (Plaintiffs Response to Motion for Summary Judgment, at 4.) Accepting these assertions as true, plaintiffs’ construction of the definition of “declarant” appears to stretch the admittedly broad definition of “declarant” too far.

Every corporation is considered to be a separate and independent legal entity. The corporation must act through its officers and directors, or the corporation would not be able to conduct business. In re County Green, L.P., [409]*409438 F. Supp. 701, 705 (W.D. Va. 1977). Hall and Dana, when establishing and registering 313 Freemason, the condominium, were acting in their corporate capacity. To hold otherwise would subvert the primary purpose for the creation of a corporation, the protection of the officers and directors from personal liability for acts of the corporation. Hall and Dana should not be held to be declarants on the basis of the definition alone.

Conley Hall signed his name on the registration affidavit without indicating that he was signing in his representative capacity. Plaintiff 313 Freemason offers this as proof that Hall is a declarant in fact. However, the signed affidavit says, in part, “that he is the Declarant of the condominium project... or that he is the officer or agent authorized by the declarant to affix his signature here.” The capacity in which Hall signed the affidavit is ambiguous. Standing alone, it is not enough to establish that Conley Hall is a declarant in fact. Therefore, Plaintiff 313 Freemason’s first argument is insufficient to establish a prima facie case for holding the individual Defendants liable under Counts I and II.

B. Hall and Dana are liable as actors in the statutory violations of the corporation.

Plaintiff 313 Freemason cites PTS Corp. v. Buckman, 263 Va. 613, 622 (2002). In that case, the Virginia Supreme Court reiterated that corporate officers may be held liable for their tortious conduct and that it is inconsequential that the cause of action is based on a statutory violation rather than a common law tort. See also Town & Country Prop., Inc. v. Riggins, 249 Va. 387, 397 (1995); Miller v. Quarles, 242 Va. 343, 347-48 (1991); Sit-Set v. Universal Jet Exch., Inc., 747 F.2d 921, 929 (4th Cir. 1984). PTS Corp. must be distinguished from the case at hand.

In PTS Corp., the plaintiff brought an action against Alliance, a bail bond company, and two of its officers for violation of Va. Code § 8.01-40(A). Section 8.01-40 prohibits the unauthorized use of the name or likeness of another. The court found that the individuals were liable for the tortious conduct that resulted from violation of the statute. However, the statute was based on the common law tort of conversion. This was the common law tort basis for holding the individual officers liable for their conduct. If the statute was not based on a common law tort, there would not have been tortious conduct in the violation of the statute. In the case at bar, Count I alleges violation of the Condominium Act’s warranty provisions, Va. Code § 55-79.79. This section does not have a common law tort basis. Rather, it is based in contract law. Therefore, PTS Corp. does not inform this situation.

[410]*410Count II of the case at bar alleges that Defendants violated Va. Code § 55-79.90, which requires a full and fair disclosure of the condition of a condominium project, including all material defects. This disclosure should be in the form of a Public Offering Statement. This statute may have a basis in fraud. Therefore, Hall and Dana may be individually liable for a violation of § 55-79.90, because violation may take the form of fraudulent, and therefore tortious, conduct sufficient to meet the requirements of PTS Corp. Therefore, on the basis of this argument, Count II should remain in the suit.

C. Freemason Associates, Inc., is a sham corporation. Therefore, Plaintiff 313 Freemason seeks to pierce the corporate veil and hold the principals of the corporation, Hall and Dana, personally liable for the alleged breaches of the statutes.

A decision to pierce the corporate veil should be made reluctantly and cautiously. In re County Green, L.P., 604 F.2d 289, 292 (4th Cir. 1979). The Virginia Supreme Court has stated that the determination of whether “a corporation will be regarded as the adjunct, creature, instrumentality, device, stooge, or dummy of another corporation is usually held to be a question of fact in each case .. . and courts will disregard the separate legal identities of the corporation only when one is used to defeat public convenience, justify wrongs, protect fraud or crimes of the other.” Lewis Trucking Corp.

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Cite This Page — Counsel Stack

Bluebook (online)
59 Va. Cir. 407, 2002 Va. Cir. LEXIS 365, Counsel Stack Legal Research, https://law.counselstack.com/opinion/313-freemason-v-freemason-assocs-inc-vacc-2002.