Bank of Hampton Roads v. Powell, 292 Va. 10, 785 S.E.2d 788

June 2, 2016

Record No: 151190

(As published by the Virginia Supreme Court)
In breach of contract and fraudulent conveyance litigation, the trial court erred in imposing a constructive trust upon a subdivision lot after a developer breached a contract to convey a different property. To be entitled to the benefit of a constructive trust, a claimant’s interest must be distinctly traced to the property made subject to the trust, and here the plaintiff failed to distinctly trace her claim into that property. Her contract with the developers provided that she would receive a particular subdivision lot, but years later it was sold to a builder. After her choice of a lot, plaintiff’s interest lay with that property; its sale to others breached the contract, and she was entitled to damages. A constructive trust is an equitable remedy available under specific conditions and when legal remedies, such as monetary damages, would be insufficient. Accordingly, the trial court erred when it imposed a constructive trust upon the remaining subdivision lot of the developers, in which a bank had a secured interest. However, its award of $110,000 in damages against the developer defendants is proper. The judgment is reversed in part and final judgment is entered.

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