Contracts Category Archives — Page 8 of 8 — The Virginia Business Litigation Blog Published by Virginia and Washington, D.C. Litigation & Appeals Attorney

November 12, 2009

Quantum Meruit: A New Tool Available to Virginia Landowners

In Virginia, an action for trespass is no longer the only remedy a landowner has against a trespasser. A Norfolk judge recently held that a landowner may sue for rent even in the absence of an express or implied lease agreement. A duty to pay rent can arise under the doctrine known as quantum meruit.

In the case of City of Norfolk v. Muladhara, LLC, Norfolk managed several lots of prime commercial real estate on which the city collected rents. The Defendant, Muladhara, began conducting business on one of the lots without ever receiving permission from Norfolk. Upon discovering the trespasser, Norfolk informed Muladhara that the city managed the land and collected rent for its use. This conversation prompted the Defendant to pay the back rent the city claimed was due. However, Muladhara continued to occupy the space without any further payment.

The court held that Norfolk may base its claim for recovery on two distinct theories. First, the court found that the conversation between the city and Muladhara that led to the payment of back rent could form the basis of an implied contract. Judge Hall clearly laid out the three elements of an implied contract: offer, acceptance, and a meeting of the minds. Simply put, the city offered to overlook the previous trespass if Muladhara paid back rent, and Muladhara accepted the offer. Even though this agreement only covered Muladhara’s past occupation of the parcel, the Defendant’s payment of back rent constituted a meeting of the minds as to the rental value of the land. Should Muladhara continue to occupy the land, the meeting of the minds forms the content of the implied contract. The city, therefore, is allowed to sue for payment of rent due, and the amount will be determined by looking to the parties’ prior agreement.

October 7, 2009

How to Draft a Forum Selection Clause

by Lee E. Berlik

When entering into a contract with a party based in another state, Virginia businesses may wish to include in their agreements a clause specifying that any future disputes arising under the contract will be litigated in Virginia rather than the home state of the other party. For example, if you own and operate a Virginia business and you subcontract some IT consulting work out to a subcontractor headquartered in Idaho, you would probably want to make sure that if a dispute arises, the litigation will be brought here in Virginia rather than Idaho. It may also be important to you to have the dispute resolved in Virginia state court rather than in federal court, or vice versa. Can you select a litigation forum in advance by designating the appropriate forum in your contract? Yes, but the words you use are critical to how the courts will enforce the agreement.

Earlier today, in the course of granting a motion to dismiss I had filed on behalf of a client, Judge Payne of the Eastern District of Virginia issued a ruling demonstrating that judicial interpretation of so-called forum selection clauses can hinge on every word used in the agreement. The clause at issue stated that, in the event of a lawsuit, “the proper jurisdiction and venue of any such lawsuit shall be the courts of the Commonwealth of Virginia.” The plaintiff sued my client in federal court in Richmond. In response to our motion to dismiss for improper venue, the plaintiff took the position that the clause was not mandatory but merely permissive; that it specified Virginia state court as one of several permissible venues, rather than the only place a party could sue. The court held the clause was mandatory and dismissed the action.

The court noted that merely specifying “Virginia” as a forum for disputes does not necessarily dispose of the matter. First, inquiry must be made into whether the forum-selection clause designates geography or implicates sovereignty. For example, if the clause had referred to the courts “in” Virginia rather than “of” Virginia, the clause could be interpreted to mean any court sitting within the geographic boundaries of the Commonwealth of Virginia, which would include both state and federal courts. By referring to the courts “of” Virginia, the court interpreted the phrase to implicate courts chartered by a specified sovereign: in other words, Virginia state courts.

July 11, 2009

Virginia Court Declines to Enforce Liability Disclaimer in Business Contract

by Lee E. Berlik

Faced with an issue that has not yet been decided by the Virginia Supreme Court, a federal court sitting in Roanoke, Virginia, ruled that contracting parties may not agree in advance to exempt each other from liability resulting from future intentional misconduct. To the extent parties include in their contract a disclaimer purporting to limit liability and legal theories to exclude causes of action targeted at intentional or reckless misconduct, Virginia courts should strike them down as violative of public policy, the court held.

The case was filed in January by All Business Solutions, Inc., against NationsLine, Inc. Both companies provide telecommunications services. The parties entered into a contract providing that NationsLine would manufacture certain telecommunications products and that ABS would market and sell them for a commission. According to ABS, when one of its customers for direct inbound dialing numbers (“DIDs”) realized that ABS was also conducting business with one of its competitors, it resolved to “injure or destroy” ABS and caused NationsLine to abruptly terminate the contract.

One legal theory pursued by ABS was that of statutory business conspiracy under the Virginia Business Conspiracy Act, Va. Code § 18.2-499, -500. The business conspiracy statute is popular among plaintiffs’ attorneys due primarily to its triple-damages provision and allowance for recovery of attorneys’ fees. NationsLine moved to dismiss the claim, arguing (among other things) that the claim was barred by the limitation of liability provision in the parties’ contract.

June 19, 2009

BB&T Wins Summary Judgment in Virginia Employment Case

by Lee E. Berlik

Proving once again that no good deed goes unpunished, a former employee of BB&T Insurance Services to whom BB&T graciously paid 30 days of severance pay despite terminating his employment for cause–and apparently without requiring the employee to sign a release–sued the company for wrongful termination. On June 17, 2009, however, Judge Wilson of the Western District of Virginia in Harrisonburg had “no hesitancy” in tossing out the case on summary judgment.

The employee’s job duties involved identifying, contacting, and providing services to existing and potential new insurance customers. To assist him in performing those duties, BB&T allowed him to use a company laptop with access to confidential files on the company’s network. At the time of his termination, the employee had 8 years’ worth of sensitive client information stored on his laptop.

While traveling, the employee left the laptop unattended overnight in his vehicle while it was parked in a hotel parking lot. It was stolen. When BB&T learned of the theft, it notified those of its clients affected by the data breach and offered them a credit-monitoring service. These programs cost the company over $24,000.