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Prince Wm. couple gets $310K for synthetic stucco problems

A Prince William County jury has returned a $310,000 verdict for a couple who contended that they were told their new home would be built with a drainable exterior insulation and finish system (EIFS).

In fact, the house was built with a barrier EIFS, and moisture got behind the barrier and much of the wood structure of the house rotted or was damaged by mildew. EIFS is the acronym for synthetic stucco building systems manufactured under such brand names as Parex and Dryvit.

Rick and Susan Garmon spent about $220,000 to repair the damage on a home that they bought for $318,000.

The Garmons did not discover that the home had been constructed with a barrier system until August 2003, more than seven years after they had signed the contract for the home, well after the five-year statute of limitations for breach of contract had expired.

Their attorney, Dave Wise of Fairfax, filed suit against the contractor, Mike Garcia Construction Inc., alleging actual and constructive fraud and a violation of the Virginia Consumer Protection Act.

Rick Garmon testified that he was aware of problems with barrier EIFS systems and would not have signed the contract if he had known the house would be built with a non-drainable system. Susan Garmon testified that she recalled a conversation with Mike Garcia, the principal in the construction company, about weep holes and drainage, and the Garmons presented a home owner’s manual Garcia had given them that included a description of EIFS as a drainage system.

Garcia admitted he intended to use a barrier system when he built the house but denied making any misrepresentation to the Garmons. His attorney, Steve Bancroft of Fairfax, contended that the damage was the result of the failure of the Garmons to properly maintain their house.

Wise presented expert testimony that the damage would not have occurred if a drainable EIFS had been installed as originally promised.

A key issue at trial was the measure of damages. Wise contended that it should be the amount that the Garmons had spent to repair the home, while Bancroft contended that it should be the difference between the value of the property at the time of the contract and the value property would have had if the misrepresentation had been true.

Judge William D. Hamblen agreed with Bancroft, and Wise argued that the measure of damages should be the amount of the construction contract. The jury’s verdict was just $8,000 short of that amount.

The jury rejected the actual fraud and VCPA claims, but found in favor of the Garmons on the constructive fraud count, defined as “an innocent or negligent misrepresentation of a material fact.”

Hamblen entered judgment on the jury verdict on July 19, but Bancroft’s post-trial motion to set it aside is pending. Bancroft said the jury submitted questions that suggested that “they just got lost trying to figure out what would be the correct measure of damages.”

Wise and Bancroft said the case probably is among the last of residential barrier EIFS cases, which were a staple of consumer and construction litigation in the 1990s. Wise said he represented hundreds of homeowners who pursued breach of contract claims when their homes sustained damage similar to that of the Garmons’, and Bancroft represented a number of contractors.

As a consequence of that damage and resulting litigation, state law now generally prohibits use of non-barrier EIFS in new residential construction, although it allows it in commercial structures and in the repair of existing homes, and the statute of limitations for has expired for contract claims.

Fraud is much more difficult to prove than breach of contract, Wise said, and the Garmon case is somewhat unusual in that it involved an allegation of an explicit distinction between barrier and drainable EIFS.

Update: After press time for this article, Judge William D. Hamblen on July 25 concluded that the testimony of the homeowners did not support the amount of damages awarded. Hamblen affirmed the finding of liability for constructive fraud and ordered a new trial on damages. Dave Wise, the attorney for the plaintiffs, said he will file a motion for reconsideration of Friday’s ruling.

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