The Virginia Business Litigation Blog
In Virginia, a defendant can file a “plea in bar” if a single issue or state of facts creates a bar to the plaintiff’s recovery. A defendant who raises a plea in bar has the burden of proof to prove that particular issue or state of facts. An evidentiary hearing–with or without a jury–may be permitted to allow the defendant to present that evidence. (See Hawthorne v. VanMarter, 279 Va. 566, 577–78 (2010)). Virginia practice previously allowed defendants to file a “plea of the general issue,” which was a general denial of the plaintiff’s whole declaration or an attack upon some fact the plaintiff would be required to prove in order to prevail on the merits. Such pleas are no longer permitted. (See Va. Sup. Ct. R. 3:8(a)). If a defendant files a pleading labeled as a “plea in bar” but which essentially just challenges the plaintiff to prove his case at trial, the court may find that the issue should be resolved at trial rather than at the outset of the case.
The most common applications of the plea in bar are to raise affirmative defenses like the statute of limitations, statute of frauds, res judicata, collateral estoppel, and accord and satisfaction. Another common application, however, has recently come under attack as potentially invalid as a disguised plea of the general issue. For the past ten years, Virginia courts have seen a lot of pleas in bar being raised by litigants defending against non-compete and non-solicitation clauses. Restrictive covenants like these are enforceable in Virginia only if “narrowly drawn to protect the employer’s legitimate business interest,…not unduly burdensome on the employee’s ability to earn a living, and…not against public policy.” (See Home Paramount Pest Control Companies, Inc. v. Shaffer, 282 Va. 412, 415 (2011)). Defendants used to try to get out of their non-competes by filing demurrers, claiming their noncompetes were unenforceable as a matter of law. Since the Virginia Supreme Court’s decision in Assurance Data, Inc. v. Malyevac, 286 Va. 137 (2013), defendants have been asserting pleas in bar instead. This is because the court held in Assurance Data that a factual inquiry was necessary to determine reasonableness. Defendants can present evidence on a plea in bar; they cannot on a demurrer.
But is a plea in bar an appropriate vehicle through which to raise a non-enforceability defense? Most courts permit the practice without blinking an eye, but in an opinion issued earlier this month by Judge Azcarate in Fairfax County, the court struck a defendant’s plea in bar on the ground that it was essentially a plea of the general issue in disguise.
The case is Association Resource Group, Inc. v. Lava Technology Services, LLC. The parties had a contract containing a non-disclosure clause. Association Resource Group (“ARG”) claimed one of its employees was also doing work for Lava as an independent contractor and in doing so, misappropriated its trade secrets and other proprietary information. ARG sued Lava and the former employee for misappropriation of trade secrets, breach of fiduciary duty, breach of contract, tortious interference, business conspiracy, and common law civil conspiracy. The defendants responded with a plea in bar.
The contract was not breached, the defendants argued, because the non-disclosure provisions were unenforceable as an unreasonable covenant in restraint of trade. This unenforceability constituted a single state of facts or circumstances which, if proven, could be an absolute bar to the plaintiff’s claim. Therefore, the argument continued, a plea in bar was appropriate. This argument, they noted, has been successful numerous
times in past cases and the Virginia Supreme Court has not condemned the use of pleas in bar in this context.
ARG moved to strike the plea in bar, arguing that it amounted to an improper plea of the general issue. It pointed out that a plaintiff has the burden of proof at trial to prove a restrictive covenant is reasonable, whereas a defendant has the burden to prove the issue raised in its plea in bar.
The court sided with ARG, finding that although it’s a fairly common practice to raise the issue of “unenforceable restraint” on a plea in bar, the practice hadn’t really been challenged in the past as a possible plea of the general issue. Upon close scrutiny, the court found that ARG had raised a valid point.
For one thing, the court noted, a “common through-line in Virginia Supreme Court cases” is that pleas in bar involve affirmative defenses which provide a complete bar to recovery. These are defenses for which the defendant would have borne the burden of proof at trial.
Next, the court observed that merely relying on the definition of a plea in bar was not enough to analyze the issue before it. The recognized definition of a plea in bar is a pleading that alleges a “single state of facts or circumstances…which, if proven, constitutes an absolute defense to the claim.” (See Nelms v. Nelms, 236 Va. 281, 289 (1988)). The court pointed out this definition is basically useless:
Taken literally, a thus-defined special plea in bar could be used to attack a single element of any offense. For example, if a defendant could prove a plaintiff in a negligence case suffered no damages, this would be a “single set of facts or circumstances” totally barring recovery on the negligence claim; but it is equally clear from Virginia precedent this would be an unacceptable plea of the general issue: “an attack upon some fact the plaintiff would be required to prove in order to prevail on the merits.”
See Opinion (citing Stockbridge v. Gemini Air Cargo, Inc., 269 Va. 609, 618 (2005)). The Stockbridge case established that special pleas assert a separate factual matter that totally bars the claim, while a plea of the general issue seeks to deny the entire case, or to attack some fact the plaintiff would be required to prove at trial.
This latter point was deemed significant. It would be up to ARG to prove its restraint was actually reasonable and valid. To prevail on its breach of contract claim, it will have the burden to prove (at trial) the existence of a valid and enforceable contract. By claiming the restraint was unreasonable and invalid, the defendants were simply attacking a fact that ARG would be required to prove at trial. Therefore, their “plea in bar” was really a plea of the general issue. Such pleas are not permitted, so the court granted ARG’s motion to strike.