Virginia’s business conspiracy statute provides for civil liability and treble damages where “[a]ny two or more persons…combine, associate, agree, mutually undertake or concert together for the purpose of…willfully and maliciously injuring another in his reputation, trade, business or profession….” See Va. Code § 18.2-499, 500. The cause of action is popular among plaintiffs’ lawyers not only because of the triple-damages provision but also because a successful plaintiff can recover attorneys’ fees. To state a valid claim for statutory business conspiracy, a plaintiff must allege three key elements: that the defendants (1) engaged in concerted action, (2) with legal malice, (3) that resulted in damages. “Concerted action” refers to the requirement that the defendants combined together to effect a preconceived plan and unity of design and purpose. “Legal malice” (not to be confused with actual malice, common-law malice, or New York Times malice) requires a showing that the defendant acted “intentionally, purposefully, and without lawful justification.” The legal-malice standard allows a plaintiff to recover even if the defendant’s primary and overriding purpose in forming the conspiracy was to benefit himself rather than injure the plaintiff’s reputation, trade, or business, provided that causing such injury is at least one of the purposes of forming the conspiracy.
Late last week, Judge Moon of the Western District of Virginia allowed such a claim to go forward against Sandy Spring Bank. The plaintiff, Christopher Jaggars, was in the business of purchasing residential real estate for the purpose of renting the property to tenants and holding it as an investment so that he could later sell the property at an appreciated value. According to the allegations of his amended complaint, he was targeted as a potential victim of the DpFunder Program scheme by a company called Global Direct Sales. The scheme allegedly involved a fairly complicated money-laundering arrangement pursuant to which a small group of individuals and mortgage companies arranged to loan the plaintiff money for real estate investment, mislead the settlement agent into transferring a portion of the loan proceeds to another company, which transferred them to Global Direct, which conspired with Sandy Spring Bank to open a new account in Mr. Jaggars’ name (without his knowledge or consent) to receive the funds, all in violation of the Patriot Act. Then, the allegations continue, Global Direct issued a fraudulent Form 1099, falsely showing that it had paid $43,500 in sales commissions to Mr. Jaggars, presumably to allow Global Direct to conceal the loan proceeds and to shift tax liability from Global Direct to Mr. Jaggars.
Jaggars sued Sandy Spring Bank for its alleged role in the conspiracy, relying on Virginia’s business-conspiracy statute. The bank moved to dismiss, arguing that Jaggars failed to allege facts sufficient to demonstrate legal malice. Judge Moon, while not overly impressed with the strength of the allegations, nevertheless found them sufficient to overcome the motion to dismiss.
The court first pointed to the allegations that “Sandy Spring Bank engaged in a money laundering conspiracy with the [other] conspirators for the purpose of injuring the plaintiff Christopher Jaggars’ business of real estate investment.” The allegations also claimed that an employee of Sandy Springs Bank, “working within the scope of her employment, agreed with the [other] conspirators, and acted in concert with them, to harm the [plaintiff’s] business.” These allegations, while arguably conclusory, were sufficient to satisfy the court that, if proven to be true, Sandy Spring Bank acted in concert with other conspirators, thereby satisfying the “concerted action” element. With respect to legal malice, the court was satisfied with Jaggars’ allegations that the employee of Sandy Springs Bank acted “knowingly and in cooperation with [the other] conspirators” to perform an action “in violation of the USA Patriot Act.” Malice, the court noted, may be averred generally, so the vague allegations were deemed sufficient.
In short, the court found that the amended complaint was sufficiently specific and particular to support a reasonable inference that facts existed to support the required elements of concerted action, legal malice, and causally related injury. Therefore, the court denied the motion to dismiss and allowed Mr. Jaggars to pursue his claim for violation of the business conspiracy statute.