Present: Carrico, C.J., Lacy, Hassell, Koontz, and Kinser,
JJ., and Compton and Whiting, Senior Justices

PARAMOUNT BUILDERS, INC., ET AL.

v.   Record No. 991696       OPINION BY JUSTICE ELIZABETH B. LACY
                                         June 9, 2000
COMMONWEALTH OF VIRGINIA

        FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
                      Alan E. Rosenblatt, Judge

        In this appeal, Paramount Builders, Inc. and its

president Edward Augustine assert that the trial court should

have set aside a civil investigative order issued against

them.    We conclude, however, that the application for the

order complied with the requirements of Code § 59.1-201, and

we will affirm the judgment of the trial court refusing to set

aside the order.

        The Commonwealth's Attorney for the City of Virginia

Beach (the Commonwealth) filed an application for a civil

investigative order pursuant to § 59.1-201.    The Commonwealth

sought documents and other information from Paramount

Builders, Inc., and from Edward Augustine, individually and in

his capacity as president of Paramount Builders, Inc., in

connection with the solicitation of customers for their home

improvement business.    The ex parte application was granted by

the circuit court on January 8, 1999.

        Pursuant to § 59.1-201(C), Paramount and Augustine moved

to set aside the order and, in the alternative, moved to
modify the order and for a protective order.   Both sides filed

memoranda and, following argument of counsel, the trial court

entered an order granting the motion to set aside the

investigative order as to Augustine in his individual

capacity.   The trial court modified the terms of the civil

investigative order but refused to set it aside as to

Paramount and Augustine as president of Paramount.

     In their appeal, Paramount and Augustine (hereinafter

collectively "Paramount") assign error to the trial court's

order refusing to set aside the investigative order, asserting

that the Commonwealth and the application for the civil

investigative order failed to meet the good faith or

impracticality requirement and the reasonable cause

requirement of subsections (A) and (B) of § 59.1-201.

     Section 59.1-201 provides in relevant part:

     A. Whenever the attorney for the Commonwealth
     . . . has reasonable cause to believe that any
     person has engaged in, or is engaging in, or is
     about to engage in, any violation of § 59.1-200,
     the attorney for the Commonwealth . . . after
     making a good faith effort to obtain such
     information, is unable to obtain the data and
     information necessary to determine whether such
     violation has occurred, or that it is impractical
     for him to do so, he may apply to the circuit
     court . . . for an investigative order . . . .

     B. The circuit courts are empowered to issue
     investigative orders, . . . . An application for
     an investigative order shall identify:

     1. The specific act or practice alleged to be in
     violation of § 59.1-200;

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     2. The grounds which shall demonstrate
     reasonable cause to believe that a violation of
     § 59.1-200 may have occurred, may be occurring or
     may be about to occur;

     3. The category or class of data or information
     requested in the investigative order; and

     4. The reasons why the attorney for the
     Commonwealth. . . is unable to obtain such data
     and information, or the reason why it is
     impractical to do so, without a court order.

     Paramount argues that before a civil investigative order

can be issued, the Commonwealth must demonstrate "factual"

compliance with subsection (A) of § 59.1-201 and "formal"

compliance with subsection (B) of that section.   According to

Paramount, subsection (A) requires the Commonwealth to make a

factual showing that it had reasonable cause to believe that a

violation of § 59.1-200 of the Virginia Consumer Protection

Act, Code §§ 59.1-196 through –207 (Consumer Protection Act)

had occurred, was occurring, or would occur, and that it had

made a good faith effort to acquire the desired information

and was unsuccessful, or that it was impractical to seek the

information without a court order.   Subsection (B), Paramount

continues, requires that the application for the order comply

with the "formal" requirements listed in the subsection's

subparts.   Under Paramount's analysis, failure to comply with

either of these "factual" or "formal" requirements defeats the

request for a civil investigative demand.


                                3
         We disagree with Paramount's construction of these

provisions.     Subsection (A) describes the circumstances under

which an application for a civil investigative order is

appropriate and subsection (B) incorporates those

circumstances into conditions which must be identified in the

application before a circuit court can issue a civil

investigative order.     This statutory scheme does not, however,

impose a two-step compliance process as suggested by

Paramount.     Thus, in resolving this appeal, we are concerned

only with Paramount's allegations that the application did not

comply with the requirements of subsection (B)(1), (2), and

(4). 1

             Compliance with § 59.1-201(B)(1) and (B)(2).

         Subparagraphs (1) and (2) of § 59.1-201(B) require

identification of the alleged acts or practices which violate

the Consumer Protection Act and the grounds which demonstrate

reasonable cause to believe the alleged violations have

occurred, are occurring, or may occur.     Paragraph 6 of the

application states that "upon information and belief"

Paramount's agents, through directives from Paramount, (1)

induced consumers to execute a waiver of their "three-days

right to cancel" by certain misrepresentations such as


         1
       Paramount also complains that the trial court should
have conducted an evidentiary hearing; however, Paramount did
not assign error to this issue. Rule 5:17(c).

                                   4
obtaining a "'special price'" or other non-emergency

situations in violation of the Virginia Consumer Protection

Act, § 59.1-200(9), (14), and (19); (2) failed to leave copies

of the contracts and signed "right to cancel" waivers at

consumers' homes or failed to give such copies to consumers

upon request in a timely manner in violation of §§ 59.1-

21.4(2) and 59.1-200(19); (3) misrepresented that Paramount

was the "sole distributor" or only "locally authorized dealer

of various building supplies" in violation of § 59.1-200(3);

and (4) "made it difficult for consumers to cancel within the

three days' cancellation period" by delaying requests until

after the time period had expired and refusing to accept

delivery of notice of cancellation in violation of § 59.1-

200(19).

     To demonstrate that the Commonwealth had reasonable cause

to believe Paramount engaged in the conduct listed in

Paragraph 6, as required by § 59.1-201(B)(2), the application

stated in Paragraph 7 that 19 complaints had been received by

or referred to the Consumer Affairs Division of the

Commonwealth Attorney's Office and that affidavits by a former

employee and a former officer of Paramount recited that the

actions described in Paragraph 6 are "being authorized and

conducted in the regular course of business" by Paramount

against other consumers who may not have yet filed a


                               5
complaint.   Copies of the affidavits and two of the 19

complaints were attached as exhibits to the application.

Paragraph 8 explained the pattern of operation recited in the

exhibits which the Commonwealth believed showed a practice of

past and continuing violations of the Consumer Protection Act.

     Paramount first argues that these allegations are

insufficient because they reflect only opinions and

conclusions, not facts.   Paramount further asserts generally

that there is no evidence of any directives by Paramount or

its representatives to misrepresent Paramount's role as sole

distributor, to induce customers by false pretenses to sign a

waiver of their right to cancel, or any evidence that

Paramount agents were directed not to leave contracts or

signed waivers with the customers or to delay or make it

difficult for customers to cancel their contracts.

     Paramount maintains that the signed waivers were not part

of the sales contract required to be supplied to the customer,

that failure to provide the signed waiver was not part of a

policy to thwart consumer's efforts to cancel, and, finally,

that the waivers themselves did not violate the Home

Solicitation Act because that Act only declares such waivers

void, not in violation of that Act.   Therefore, Paramount

contends that these actions were not violations of § 59.1-200.

In summary, Paramount asserts that the actions alleged either


                                6
did not occur or that they were not violations of the Consumer

Protection Act.

     We disagree with Paramount.     The recitations in the

application and the attached exhibits indicate that

Paramount's agents, at the direction of Paramount and

Augustine, engage in a standard procedure that includes

offering "showcase home" discounts tied to the execution of

"right to cancel" waivers, failing to give copies of the

waivers to the customers, and enforcing sales contracts

regardless of the validity of the waivers.    This pattern of

action, as stated in one of the complaints attached to the

affidavit, leaves the consumer with the impression that the

waiver was valid and that the sales contract could not be

cancelled.    The application clearly alleges that these acts

and practices violate the Consumer Protection Act.

     An application for an investigative order must also show

that there is "reasonable cause to believe" that a violation

of the Consumer Protection Act has occurred, is occurring, or

will occur.   § 59.1-201(A).   The "reasonable cause" standard

requires less than the probable cause standard and does not

require a showing that a violation has in fact occurred.      As

stated by the Commonwealth, "[a]t this point in the

investigation it is not necessary for the Commonwealth to

prove that any customer has actually been deceived; that is to


                                 7
be established at trial.   Rather, what is important is that

the Commonwealth has made its prima facie case of reasonable

cause to investigate."   The totality of information presented

in the application and exhibits demonstrates that reasonable

cause exists to believe that Paramount would engage in

specific acts which violated § 59.1-200.

                  Compliance with § 59.1-201(B)(4)

     Section 59.1-201(B)(4) requires identification of the

reasons why the Commonwealth "is unable to obtain such data

and information, or the reason why it is impracticable to do

so, without a court order."   Paragraph 9 of the application

states:

     The reason why the Office of Commonwealth's
     Attorney is unable to obtain the information/items
     as listed in Exhibit "A" is that upon information
     and belief and based upon the affidavits, the
     Office of Commonwealth's Attorney believes it
     would suffer irreparable damages that should a
     mere letter, rather than a court order, be sent to
     Paramount Builders, Inc., because under
     information and belief, Paramount Builders, Inc.,
     would destroy many of the necessary documents.

Paramount argues that this statement is insufficient to

satisfy § 59.1-201(B)(4), because the application must

identify either that the Commonwealth was unable to secure the

information or that it was impractical to do so, but not both.

In this case, Paramount asserts, the Commonwealth chose to

assert that it was "unable to obtain" the data, not that it

was "impractical" to do so.   Having stated that it was unable

                                8
to obtain the information, Paramount continues, the

Commonwealth was required to but did not identify the reasons

why it could not obtain the information.   Thus, Paramount

concludes, the application fails to comply with the

requirements of § 59.1-201(B)(4).

     We agree with Paramount that § 59.1-201(B)(4) is intended

to require the application to identify one of two mutually

exclusive circumstances, either of which will support the need

for a court order.   The first circumstance is that, even

though the Commonwealth made good faith efforts, it was

"unable to obtain" the information.   The second circumstance

is that such good faith efforts to obtain the information were

not made because to do so would have been "impractical." 2

Paramount seeks to defeat the application in this case on the

theory that the Commonwealth chose the former circumstance

when it used the phrase "unable to obtain" in paragraph 9,

and, therefore, is precluded from relying on any reason of

impracticality to support the issuance of a court order.     We

disagree.

     The identification requirement set out in the statute is

that the application identify reasons why the applicant is

"unable to obtain" information "without a court order" or the


     2
       Although the intent of § 59.1-201(B)(4) is not disputed,
we nevertheless note that the specific language of the
provision does not accurately reflect that intent.

                                9
reason why "it is impracticable" to obtain such information

"without a court order."   Paragraph 9 of the application

clearly states that the "reason why" the Commonwealth's

Attorney is "unable to obtain" the information "without a

court order" is because the Commonwealth's Attorney believes

that "should a mere letter, rather than a court order, be sent

to Paramount," Paramount "would destroy many of the necessary

documents."    There is no confusion over the statement made in

the application.    It clearly identifies the reason why it

would be impractical to engage in efforts, good faith or

otherwise, to obtain the information without a court order —

because the Commonwealth's Attorney believed that the

information would be destroyed.      The reasonableness of this

belief was supported by the affidavits accompanying the

application.   Compliance with subparagraph (4) of § 59.1-

201(B) is not defeated simply because the phrase "is unable to

obtain" was used in identifying why it was impractical for the

Commonwealth to try to obtain the information by letter,

rather than court order.   Thus, we reject Paramount's claim

that the application failed to comply with the requirements of

§ 59.1-201(B)(4).

     Lastly we reject Paramount's argument that the order of

the trial court was wrong because the order was based upon "a

totally inadequate finding with respect to the good faith


                                10
requirements" of the Code.   The final order of the trial court

states "IT APPEARING that the Commonwealth complied with

§ 59.1-201 of the Code of Virginia (1950), as amended made

good faith efforts and had sufficient reasonable cause."

(Emphasis added.)   While the emphasized phrase seems to

indicate a finding of good faith efforts and reasonable cause,

the phrase is incomplete and its meaning unclear.   However,

this confusion does not invalidate the trial court's order.

The order clearly states the dispositive finding, that the

requirements of § 59.1-201 were satisfied.   There is no

requirement that a trial court's order reflect a specific

finding as to each of the conditions required to be identified

by § 59.1-201(B).

     Accordingly, for the reasons stated, we will affirm the

judgment of the trial court.

                                                       Affirmed.




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