Christopher G. Hill | Construction Law Musings
I have posted before regarding the intersection between the Virginia Consumer Protection Act (VCPA) and construction contracting in regard to residential construction projects. A case out of the Eastern District of Virginia District Court further discusses this intersection as it relates to design contracts that also include the procurement and installation of certain design elements post-design. The basic facts of Marcus v Dennis are as follows:
In October of 2018, Defendant Marlene Dennis, the owner of Marlene Dennis Design, LLC (“MDD”), operating out of Virginia, entered into a contract to provide design services and the procurement and installation of certain design elements for the Plaintiffs, Gregory and Jamie Marcus, at their Maryland home. The Marcuses agreed to $175 per hour to Dennis with a cap of a total of $100,000.00 for design consultation and furniture selection and procurement. The Marcuses also agreed that they would pay no more than $250,000.00 for furnishings, rugs, artwork, decorative lighting, and accessories. In November 2020, Dennis sent an invoice for $68,000.00 and informed the Plaintiffs that the total contract fees would be more than the $100,000.00 cap. After paying $124,722.41 in design fees, the Plaintiffs received an invoice for $255,5560.72 in January of 2021. Despite the cap of $250,000.00, the Plaintiffs wired $255,000.00 to Dennis while requesting the backup invoices for the material charges. After much effort and a threat of litigation, the Plaintiffs received documents from Dennis showing that Dennis inflated the costs of the materials prior to passing the costs along to the Marcuses. The Plaintiffs’ home was unfurnished and empty as of April 10, 2021, and the Marcuses had to hire and pay another design team over $85,000.00 to finish Dennis’ work. Needless to say, the Marcuses sued both Dennis and her firm for breach of contract, breach of fiduciary duty, and for violation of the VCPA. Dennis moved to dismiss the Complaint.
After analysis of the Breach of Contract and Breach of Fiduciary duty counts leading to denying the motion regarding breach of contract and granting the motion regarding the breach of duty count, the Court analyzed the VCPA count. In reviewing this claim, the Court granted the motion as to Dennis herself, but let the claim move forward against her firm. In doing so the Court reasoned that MDD was a supplier for purposes of the VCPA, that the contract constituted a consumer transaction, and that the Plaintiffs’ Complaint alleged enough facts that if true could lead to the conclusion of the use of misrepresentation in connection with that consumer transaction. However, in dismissing the VCPA count against Dennis, the Court reasoned as follows:
Virginia law prohibits shoehorning agents of a supplier into the “supplier” definition. [O]nly MDD signed the contract with Plaintiffs to provide the design services they had agreed upon. Indeed, Dennis was never named as the “Designer” in the agreement. While MDD agreed to provide the services that gave rise to the subject of this dispute, Virginia law disqualifies Plaintiffs from bringing a cause of action against Dennis in her capacity as agent of MDD. Given Dennis’ extracontractual entrustment of Plaintiffs’ monies arose only because of the aforementioned agreement with MDD, this Court will not subvert clear precedent limiting VCPA claims to the suppliers themselves and not their agents.
In short, the contract was between MDD and the Plaintiffs, and absent other facts showing fraud in the inducement or the like, the Court was not going to remove Dennis’ corporate liability protections. The Court then went on to deny the piercing of the corporate veil.
This case extends the VCPA to design services. However, the Court does not analyze whether the mere provision of design without the additional procurement and installation would have triggered the VCPA. While the VCPA defines a consumer transaction as the advertisement, sale, lease license, or offering for sale “services” among other things, I have not seen a case that defines a “service.” If you are reading this and know of one, please let me know.
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