Originally posted 2020-07-23 15:57:40.
Just so you don’t think that lawyers are exempt from this legal analysis, I point you to a recent case where a law firm sued a construction client of theirs for failure to pay legal fees. In EvansStarrett PLC v. Goode & Preferred General Contracting, the Fairfax County Circuit Court considered a motion by the Plaintiff law firm seeking to add a count of fraud to its breach of contract lawsuit. The Court considered the following facts.
The Plaintiff obtained a settlement between Defendant, Preferred, and another party. As a provision of the settlement, the judgment debtor was to wire the full arbitration award plus attorney fees to EvansStarrett’s account. Prior to that wire having been made, EvansStarrett alleged, Preferred, with the intent to mislead, requested that the full award and attorney fees (approximately $145,000) be wired instead to Preferred and that Preferred would then pay the attorney fees from its account. Needless to say, Preferred didn’t pay the fees and EvansStarrett sued and then sought to amend its Complaint to add fraud based on Preferred’s request and promise described above.
The Court denied the amendment. After a great review of the case law relating to the economic loss and source of duty rules, including cases where a deliberate false representation was made and still no fraud claim could follow, the Court stated:
Whatever monies Defendant owed Plaintiff for legal fees and costs arose wholly from their contractual relationship. The fact that there was [a] dispute about the amount owed is a contractual dispute, nothing more.
Because there would have been no duty to pay fees without the fee agreement between the parties, no fraud could be claimed.
The interactions of tort and contract can be complicated, and sometimes there are exceptions to this rule. I recommend this case for your reading and suggest that you consult an experienced Virginia construction lawyer if you have a construction claim that could involve fraud.
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