Articles Posted in Business Law

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The Supreme Court reversed the circuit court’s judgment against Defendants as to Plaintiff’s claims for tortious interference and statutory business conspiracy, holding that the circuit court erred in ruling that Defendants were liable for tortiously interfering with their own contract and in therefore finding that their tortious interference could serve as the predicate unlawful act for statutory business conspiracy. Plaintiff, Read Properties, LLC, filed a complaint against Defendants, Francis Hospitality, Inc. and Delta Educational Systems, Inc., alleging breach of contract, intentional interference with contract, and statutory business conspiracy. The circuit court found in favor of Plaintiff on all claims. The Supreme Court affirmed as to the breach of contract claim and otherwise reversed, holding (1) Defendants could not tortiously interfere with their own contract; and (2) because Plaintiff’s underlying claims of tortious interference with a contract against Defendants failed, its claims of statutory business conspiracy must also fail. View "Francis Hospitality, Inc. v. Read Properties, LLC" on Justia Law

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The Supreme Court reversed the order of the circuit court dismissing, without prejudice, this derivative action on the ground that Plaintiff failed to first make a demand for the limited liability company (LLC) to take action, holding that the 2011 amendments to Va. Code 13.1-1042 did not abolish the futility exception to the demand requirement as established by use law preceding enactment of the statute. Plaintiff, derivatively on behalf of an LLC, filed a complaint alleging that Defendants had breached their fiduciary duties towards the LLC. Defendants filed a plea in bar and demurrer, alleging that the complaint was barred because Plaintiff had not made a proper demand as required by section 13.1-1042. The circuit court granted the plea in bar and dismissed the complaint. Plaintiff appealed, arguing that a demand was not required when doing so would be futile. Defendants responded that the 2011 amendments to section 13.1-1042 abolished the futility exception. The Supreme Court reversed, holding that the General Assembly did not abrogate the futility exception when it amended section 13.1-1042 in 2011, and therefore, the circuit court erred in dismissing Plaintiff’s complaint. View "Davis v. MKR Development, LLC" on Justia Law

Posted in: Business Law

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The Supreme Court affirmed in part, reversed in part and remanded the judgment of the circuit court dismissing La Bella Dona Skin Care, Inc.’s (LBD) civil conspiracy claims, granting summary judgment on LBD’s claim for fraudulent conveyance, and applying a clear and convincing standard of proof to LBD’s mere continuation theory of successor liability. LBD filed this complaint against eleven defendants seeking damages and injunctive relief as a result of Defendants’ involvement in a series of allegedly fraudulent conveyances designed to avoid an outstanding judgment in favor of LBD. The court held that the circuit court (1) did not err when it dismissed LBD’s civil conspiracy claims on demurrer where a fraudulent conveyance under Va. Code 55-80 cannot serve as the predicate unlawful act needed to support a claim for statutory or common law conspiracy; (2) erred in dismissing LBD’s fraudulent conveyance claim on summary judgment where a prima facie case of fraudulent conveyance may be established when the recipient is a third party creditor with a higher security interest; and (3) erred by applying a clear and convincing standard of proof to LBD’s mere continuation theory of successor liability. View "La Bella Dona Skin Care, Inc. v. Belle Femme Enterprises" on Justia Law

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At issue in this case was a contract dispute between the purchaser (Purchaser) and the seller (Seller) of a corporation pursuant to a corporative merger agreement. The agreement provided for three different liability limitations (damage caps) in the event of Seller’s breaches. Seller breached several requirements of the agreement by failing to use certain accounting principles to accurately establish the financial condition of Seller’s corporation and, accordingly, the appropriate adjustment to the consideration to be paid by Purchaser. The amount of the adjustment was controlled by the indemnity Purchaser was entitled to receive under the relevant damage caps. The circuit court entered final judgment for Purchaser. The agent for the stockholders of Seller and former stockholders of Seller appealed, arguing that the circuit court improperly construed the merger agreement as to which damage cap was controlling under the facts of the case. The Supreme Court agreed with Appellants and reversed, holding that the circuit court applied the incorrect damage cap. View "Shareholder Representative Services v. Airbus Americas, Inc." on Justia Law

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Plaintiff was an LLC formed to own, develop, and sell real estate. Defendants were two entities formed to develop and sell real estate under the management and control of two of Plaintiff’s managers. The managers transferred funds from Plaintiff to Defendants, which used the funds to develop and sell their respective properties. Plaintiff was later dissolved, and a liquidating trustee appointed by the circuit court demanded the immediate repayment of the money owed by Defendants to Plaintiff. Plaintiff then filed an amended complaint against Defendants alleging breach of contract, unjust enrichment, and breach of fiduciary duty and seeking the imposition of constructive trusts on Defendants’ respective properties and proceeds from the sale of their properties. The circuit court granted Defendants’ plea in bar and dismissed the amended complaint, concluding that the complaint was time barred. The Supreme Court affirmed, holding that Plaintiff did not prove its entitlement to the tolling of the statute of limitations. View "Birchwood-Manassas Assocs., LLC v. Birchwood at Oak Knoll Farm, LLC" on Justia Law

Posted in: Business Law, Contracts

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At issue in this case was the sale of Tails, Inc. Tails was organized as a Virginia corporation but changed its state of incorporation to Delaware as part of a Plan of Reorganization and Purchase Agreement pursuant to which all of the assets of Tails were eventually sold to Buena Suerte Holdings, Inc. Certain Minority Shareholders filed a complaint demanding shareholder appraisal rights, seeking a declaratory judgment regarding whether the transactions leading to the sale gave rise to appraisal rights for the Minority Shareholders and requesting monetary damages for violations of the alleged appraisal rights. The circuit court sustained Tails’s demurrer to the complaint, noting (1) changing the Tails corporate domicile from Virginia to Delaware did not trigger appraisal rights, and (2) the complaint failed to state facts sufficient to support the causes of action. The Supreme Court affirmed, holding (1) the domestication of Tails as a Delaware corporation did not entitle the Minority Shareholders to appraisal rights; and (2) Delaware law properly applied in determining whether the Minority Shareholders were entitled to appraisal rights, and, under Delaware law, they were not. View "Fisher v. Tails, Inc." on Justia Law

Posted in: Business Law

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Plaintiff filed an action against Defendants, alleging claims for tortious interference with a contract, tortious interference with business expectancy, and business conspiracy. The district court (1) dismissed the business conspiracy claim for failure to allege an unlawful act or purpose, and (2) dismissed Plaintiff’s remaining two tort claims as barred by the two-year statute of limitations in Va. Code Ann. 8.01-248, thus rejecting Plaintiff’s contention that his tortious interference claims constituted an injury to his property, which would be subject to a five-year statute of limitations under Va. Code Ann. 8.01-243(B). Plaintiff appealed to the Fourth Circuit Court of Appeals. The Fourth Circuit entered an order of certification requesting the Virginia Supreme Court to answer two questions of law. The Supreme Court answered by holding (1) causes of action for tortious interference with a contract and tortious interference with business expectancy qualify as the requisite unlawful act to proceed on a business conspiracy claim under Va. Code Ann. 18.2-499 and -500; and (2) the five-year statute of limitations in section 8.01-243(B) applies to claims of tortious interference with a contract and tortious interference with business expectancy because both claims involve injury to property rights. View "Dunlap v. Cottman Transmissions Sys., LLC" on Justia Law

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The Board of Supervisors of Fluvanna County filed a complaint against Davenport & Company asserting that Davenport, which served as the financial advisor to the Board, knowingly made false representations and used its fiduciary position to persuade the Board to hire Davenport as an advisor regarding the financing of the construction of a new high school. Davenport filed a demurrer to the complaint, which the circuit court granted on the basis that the separation of powers doctrine prevented the court from resolving the controversy because the court would have to inquire into the motives of the Board's legislative decision making. The Supreme Court reversed, holding that the Board effectively waived its common law legislative immunity from civil liability and the burden of litigation, and therefore the circuit court erred in sustaining Davenport's demurrer on these grounds.View "Bd. of Supervisors of Fluvanna County v. Davenport & Co. LLC" on Justia Law

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In 2008 and 2009, Dr. Raley was employed by Minimally Invasive Spine Institute, PLLC (MISI), a medical practice owned and managed by Haider. Raley claimed MISI had failed to pay him all the money he earned and filed suit in 2010, claiming breach of contract and breach of implied contract against MISI. In Count II, Raley sued MISI as well as Haider, alleging that Haider wrongfully distributed money from MISI to himself, depleting MISI of funds in violation of Code § 13.1-1035, which governs distributions made by Virginia LLCs. The trial court agreed that Raley, who was not a member of MISI, could not bring a cause of action under Code § 13.1-1035, and dismissed Raley’s Count II claim. Raley was awarded $395,428.70 plus interest against MISI., but has been unable to collect the judgment. He filed a garnishment proceeding, naming Haider as the garnishee. Raley also filed a second complaint against Haider, Minimally Invasive Pain Institute, PLLC (MIPI) and Wise, LLC (Wise). The cases were consolidated. The trial court dismissed all counts, based upon the dismissal with prejudice of Count II of the original case. The Virginia Supreme Court affirmed in part, holding that res judicata does not bar claims against MIPI and Wise and Raley’s Count I or garnishment claims against Haider, but does bar other claims against Haider. View "Raley v. Haider" on Justia Law

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Employee filed a complaint against Corporation seeking damages for breach of contract, unjust enrichment, and wrongful termination. Previous to the suit, Corporation offered Employee a severance package that Employee rejected because it would have taken away any rights to a claim for a change in control. A jury found for Employee on all counts except for wrongful termination. The trial court awarded damages and attorney's fees to Employee. The Supreme Court affirmed in part, reversed in part, and remanded, holding the circuit court did not err when it (1) refused to hold, as a matter of law, that Employee failed to present sufficient evidence to demonstrate that a change in control occurred; (2) instructed the jury to construe any ambiguities in the contracts against the drafter; (3) submitted Employee's alternative theory of mandatory severance benefits to the jury; (4) submitted Employee's claim for unjust enrichment to the jury; (5) admitted the testimony of Employee's damages expert; and (6) awarded Employee attorneys' fees and expenses for breach of the severance agreement. However, the trial court erred in determining that the severance agreement entitled Employee to recover his legal fees for claims that were not related to breach of the severance agreement. View "Online Res. Corp. v. Lawlor" on Justia Law