Justia Business Law Opinion Summaries

Norfolk Redevelopment and Housing Authority (NRHA) filed a complaint against the St. Joe Company and Advantis Real Estate Services Company alleging unjust enrichment and seeking imposition of a constructive trust and recovery of funds supplied by NRHA to its agent, Advantis, for the payment of contractors who had performed services for NRHA. St. Joe held a perfected secured interest in Advantis's operating account and exercised its rights as a secured creditor over that account to have funds from Advantis's account, including those entrusted to Advantis as NRHA's agent, transferred to a St. Joe account. The circuit court entered summary judgment in favor of NRHA. The Supreme Court affirmed, holding that the imposition of a constructive was was proper and necessary to prevent a failure of justice and unjust enrichment.

Plaintiffs, Northern Virginia Real Estate and its principal broker, Lauren Kivlighan, filed an eight-count second amended complaint against McEnearney Associates, its real estate agent Karen Martins, and David and Donna Gavin (collectively, Defendants), alleging conspiracy to harm in business, interference with contract expectancy, and defamation. The trial court eventually entered an order granting Plaintiffs' motion to nonsuit all counts and dismissing the case as to all counts and all parties. Defendants subsequently filed motions for sanctions against Plaintiffs and Plaintiffs' counsel, Forrest Walpole, seeking attorneys' fees and costs and arguing that Plaintiffs violated Va. Code Ann. 8.01-271.1 by filing the suit without any basis in fact, without support in law, and with improper purposes. The trial court granted the motions. The Supreme Court affirmed, holding (1) the trial court did not err when it imposed sanctions jointly and severally against Plaintiffs and Walpole; and (2) the trial court applied an objective standard of reasonableness in concluding that the facts of this case could not support a reasonable belief that the Plaintiffs' claims along with the damages sought were well grounded in fact or law as required by section 8.01-271.1.

Dewey Monroe, a member of a limited liability company, died. Through his will, Dewey bequeathed his entire estate to his daughter, Janet. Janet asserted that Dewey transferred his membership in the company to her. Lou Ann Monroe, the company's managing member, responded that Janet had inherited only Dewey's right to share in profits and losses of the company and to receive distributions to which he would be entitled. Janet filed a complaint in the circuit court seeking declaratory judgment that she had inherited her father's full membership in the company and that Lou Ann and Joseph Monroe, who was named in the company's operating agreement as a successor managing member, had been validly removed from their positions. The circuit court ruled that Janet was not a member of the company and thus lacked the authority to remove Lou Ann and Joseph from their positions. The Supreme Court affirmed, holding (1) the company's operating agreement lacked specific language that would constitute an exception to the rule of dissociation set forth in Va. Code Ann. 13.1-1040.1; and (2) therefore, Dewey was dissociated from the company upon his death and Janet became a mere assignee, entitled only to Dewey's financial interest.

George Christian filed petitions for temporary injunction and declaratory relief, alleging that the clerk of the State Corporation Commission (SCC) failed to provide requested public records relating to all overpayments or unused payments that the Commission's authority to order a refund had lapsed, and any complaints or grievances arising therefrom. The SCC dismissed the petition, finding (1) no controversy existed given the clerk's timely response to Christian's request for records; and (2) because no controversy existed, it was not necessary to address Christian's other arguments, including whether the Virginia Freedom of Information Act (VFOIA) was applicable to the SCC. The Supreme Court affirmed, holding (1) a live controversy persisted because Christian would be entitled to recover his costs and fees if he prevailed; (2) however, the VFOIA was inapplicable to the SCC; and (3) therefore, Christian's assignments of error were resolved or rendered moot.

A limited liability company (MIC) was formed for the purpose of building and operating a hotel. The original members of MIC were a revocable trust (the Trust), trustee Michael Siska, and Thomas, Jane, and Jason Dowdy. Later, Thomas and Jane Dowdy transferred, without the Trust's involvement, MIC's assets to Milestone Development, the Dowdy's family company. The Trust filed an amended complaint derivatively on behalf of MIC against Defendants, Milestone and the Dowdys. In its amended complaint, the Trust claimed that the transfer of assets to Milestone was not in the best interests of MIC or its members and alleging, inter alia, breach of fiduciary duty, breach of contract, unlawful distribution, and conversion, and seeking to recover damages. The Trust, however, did not join MIC as a party to the derivative action. The circuit court dismissed the Trust's amended complaint, holding that the Trust lacked standing to maintain the derivative action on behalf of MIC because the Trust could not fairly represent the interests of the Defendant shareholders. The Supreme Court reversed, holding that it would not entertain the appeal on the merits because MIC was a necessary party to the proceeding and had not been joined. Remanded.

Plaintiff Fox Rest Associates (Fox Rest) was formed to purchase Fox Rest Apartments. Defendants in this case were George Little, Fox Rest's legal counsel through his law firm, George B. Little and Associates (GBL&A), George Little's wife, and GBL&A. This action took place after Mr. Little sold the Apartments without knowledge of Fox Rest and transferred a portion of the proceeds from the sale in an account he held with Mrs. Little. Unable to satisfy a previous judgment finding Mr. Little and GLB&A liable to Fox Rest for, inter alia, malpractice and double billing, Fox Rest filed this action against Defendants, seeking to void various transactions by Mr. Little as fraudulent conveyances and voluntary conveyances. The court granted Defendants' motion to strike, finding that Fox Rest did not present sufficient evidence in its case in chief to establish a prima facie case for its claims. The Supreme Court affirmed in part and reversed in part, holding that, except for a portion of the claims relating to the sale of certain equipment, the circuit court erred in striking Fox Rest's fraudulent conveyance and voluntary conveyance claims. Remanded.

Lawton Rogers, an attorney, and three associates (Plaintiffs) formed a partnership (the Firm) by signing a partnership agreement. Each Plaintiff signed a note securing his indebtedness with his interest in the Firm. Later, all four partners joined a new firm, and the Firm remained extant but inactive. Several years later, Rogers and his wife later filed an amended complaint against Plaintiffs, demanding repayment of the notes. Plaintiffs filed a separate complaint asserting that Rogers had overdrawn his capital account by $611,147 and that this amount was owed to the Firm under the partnership agreement. Plaintiffs sought a final accounting and judgment against Rogers in favor of the Firm, the distribution of the Firm's assets equally among the partners, and the judicial dissolution of the Firm. The circuit court consolidated the two cases and ultimately ordered the judicial dissolution of the Firm without performing an accounting and settlement of the partners' accounts. The Supreme Court affirmed in part and vacated in part, (1) remanding for an accounting and settlement of the Firm's assets and liabilities, and (2) affirming the portion of the circuit court judgment awarding Rogers unpaid interest on his $150,000 capital contribution to the Firm.

After Roger Hudspeth's employment with the Bank of the Commonwealth was terminated, Hudspeth filed a complaint against the Bank, alleging the Bank failed to pay him compensation owed for his employment. The Bank filed a motion to stay and compel arbitration before the Financial Industry Regulatory Authority (FINRA), arguing (1) the Bank was a "customer" as defined by the FINRA Code of Arbitration Procedure for Customer Disputes (Customer Code), (2) Hudspeth was an associated person of a "member," and (3) because the dispute was between a customer and an associated person of a member, arbitration was mandatory under the Customer Code. The circuit court denied the Bank's motion, concluding that the Bank was not a customer under the Customer Code. The Supreme Court reversed, holding (1) the Customer Code was susceptible to an interpretation under which the Bank could be considered a customer, and (2) because under the Federal Arbitration Act any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, the circuit court erred when it denied the Bank's motion in this case. Remanded.