STATION 2, LLC v. Lynch

695 S.E.2d 537, 280 Va. 166, 2010 Va. LEXIS 64
CourtSupreme Court of Virginia
DecidedJune 10, 2010
Docket091410
StatusPublished
Cited by61 cases

This text of 695 S.E.2d 537 (STATION 2, LLC v. Lynch) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
STATION 2, LLC v. Lynch, 695 S.E.2d 537, 280 Va. 166, 2010 Va. LEXIS 64 (Va. 2010).

Opinion

695 S.E.2d 537 (2010)

STATION # 2, LLC
v.
Michael LYNCH, et al.

Record No. 091410.

Supreme Court of Virginia.

June 10, 2010.

*538 Kevin E. Martingayle (Stallings & Bischoff, on brief), Virginia Beach, for appellant.

Daniel R. Warman, Norfolk; John C. Lynch, Virginia Beach (Megan E. Burns, Virginia Beach; Ventker & Warman; Troutman Sanders, on briefs), for appellees.

PRESENT: KOONTZ, KINSER, LEMONS, GOODWYN, MILLETTE, and MIMS, JJ., and CARRICO, S.J.

OPINION BY Justice WILLIAM C. MIMS.

In this appeal, we consider whether an oral agreement to allow Station # 2, LLC ("Station # 2") to install soundproofing material in a void space between the ceiling of premises leased by it and the floor of premises owned by another was made unenforceable by the statute of frauds. We also consider claims of fraudulent inducement to contract and statutory conspiracy.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

The circuit court decided this case on demurrers and a special plea in bar. *539 When an issue is decided by the circuit court on demurrer, we accept as true the facts alleged by the plaintiff, who is entitled to the benefit of all reasonable inferences that may be drawn from them. Hamlet v. Hayes, 273 Va. 437, 439, 641 S.E.2d 115, 116 (2007). We also accept the plaintiff's allegations as true when the circuit court takes no evidence on a plea in bar. Gray v. Virginia Sec'y of Transp., 276 Va. 93, 97, 662 S.E.2d 66, 68 (2008). Accordingly, we draw our facts here from the allegations made by Station # 2 as the plaintiff below.

Michael and Lisa Lynch owned a three-story building at 233 Granby Street in the City of Norfolk. They conveyed the second and third stories to 237 Granby LLC ("237 Granby"), which intended to renovate and sell them as condominiums. In December 2004 the Lynches leased the first story to Station # 2, which intended to operate a restaurant offering music and live entertainment. The lease provided that:

Tenant will insure that in conjunction with the construction of the condominiums located above the business that additional soundproofing material to be selected by the Tenant with professional sound engineering consultants will be installed between the ceiling of the Premises and the floor of the lower level of the condominiums located above the business. Tenant will use reasonable efforts to work in conjunction with the builder of the condominiums with regard to soundproofing.... The [material] is to be of sufficient sound abatement characteristic as to effectively minimize noise and vibration from the leased premises being transmitted to the condominiums and to meet Landlord's covenant of quiet enjoyment passing to the owner of the condominiums.

Prior to executing the lease, members of Station # 2 retained a sound attenuation expert and met with Michael Lynch, Frank T. Gadams, and representatives of Hourigan Construction Corp. ("Hourigan") to discuss installation of the soundproofing material. Gadams was a principal of Marathon Development Group, Inc. ("Marathon"), an agent of 237 Granby in possession of the two upper stories.[1] Marathon had hired Hourigan to renovate and develop the condominium units.

Gadams and Marathon agreed to allow Station # 2 access to the second story to install the soundproofing material in the void space between the ceiling of the first story and the floor of the second story. Nevertheless, Hourigan closed the void space without informing Station # 2's sound attenuation expert. Hourigan claimed it had done so at Gadams' and Marathon's direction. The Lynches subsequently refused to intervene on behalf of Station # 2 with Gadams and Marathon or to allow Station # 2 to install the soundproofing material in the void space through the ceiling of the first story.

The City of Norfolk began citing Station # 2 for violations of its noise ordinance in the summer of 2005. After repeated citations the City ordered Station # 2 to cease all musical performances in February 2006. Consequently, the restaurant suffered a sharp decline in regular patronage. It also was forced to cancel scheduled weddings, wedding rehearsals, and parties. Station # 2 informed Michael Lynch that it would withhold payment of rent until it was permitted to install the soundproofing material, whereupon he locked Station # 2 out of the premises. The restaurant ceased operation.

Station # 2 filed an amended complaint in the circuit court alleging breach of contract by Gadams and Marathon ("Count V"), fraudulent inducement to contract by Gadams and Marathon ("Count VI"), and statutory conspiracy among Gadams, Marathon, and the Lynches ("Count VII").[2] The defendants filed demurrers to Counts VI and VII, which the circuit court sustained. Gadams and Marathon also entered a special plea of *540 the statute of frauds to Count V. They asserted that installing soundproofing material in the void space was analogous to creating a party wall. Since an agreement to create a party wall would permit Station # 2 "to access and occupy the real property," it could not be enforced unless in writing. The circuit court sustained the plea in bar and dismissed the case. We awarded Station # 2 this appeal.

II. ANALYSIS

A. THE DEMURRERS TO COUNT VI AND VII

"A demurrer tests the legal sufficiency of facts alleged in pleadings, not the strength of proof.... Because the decision whether to grant a demurrer involves issues of law, we review the circuit court's judgment de novo." Augusta Mut. Ins. Co. v. Mason, 274 Va. 199, 204, 645 S.E.2d 290, 293 (2007) (internal citations and quotation marks omitted). Station # 2 argues that the circuit court erred in sustaining the demurrer to Count VI because the complaint alleged all elements necessary for a claim of fraud or fraudulent inducement. We disagree.

Although we clearly have stated the proposition, we often must repeat it: an omission or non-performance of a duty may sound both in contract and in tort, but only where the omission or non-performance of the contractual duty also violates a common law duty. Richmond Metro. Auth. v. McDevitt Street Bovis, Inc., 256 Va. 553, 558, 507 S.E.2d 344, 347 (1998) (citing Foreign Mission Bd. v. Wade, 242 Va. 234, 241, 409 S.E.2d 144, 148 (1991)); see also Dunn Constr. Co. v. Cloney, 278 Va. 260, 266-67, 682 S.E.2d 943, 946 (2009); Augusta Mutual, 274 Va. at 205, 645 S.E.2d at 293. The only duty Station # 2 alleged was contractual: that Gadams and Marathon had agreed to allow Station # 2 access to install the soundproofing material. Consequently, Station # 2 has not pleaded a proper claim for fraud.

Even if we assume, as Station #2 invites us to do, that Gadams' and Marathon's agreement induced Station # 2 to contract with the Lynches, and that Gadams' and Marathon's contractual duty to allow the installation did not spring from the lease between Station # 2 and the Lynches, its fraud claim fails. Station #2 contends it relied on its existing agreement with Gadams and Marathon when it leased the first story from the Lynches.

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695 S.E.2d 537, 280 Va. 166, 2010 Va. LEXIS 64, Counsel Stack Legal Research, https://law.counselstack.com/opinion/station-2-llc-v-lynch-va-2010.