To recover for statutory business conspiracy in Virginia, a plaintiff must show (1) concerted action between two or more people; (2) legal malice towards plaintiff’s business; and (3) resulting damage to the plaintiff’s business. Where the defendants have a principal/agent or employer/employee relationship, and the agent is acting within the scope of his or her duties, the first element is not met because the parties are not separate entities, and a single entity is not legally capable of conspiring with itself. Applying these principles, the United States District Court for the Eastern District of Virginia granted the defendants’ motion for summary judgment in Rogers v. Deane.
Prior to their separation and divorce, Edwina and Edward Rogers employed Jon Deane, a certified public accountant, for tax and accounting services. After the Rogers divorced, Mrs. Rogers sued Mr. Deane for statutory business conspiracy and other claims, contending that Mr. Deane diverted hundreds of thousands of dollars in credits and tax deductions into Mr. Roger’s tax return, that he diverted tax liability into her tax returns, and that he intentionally damaged her reputation and business.
Mrs. Rogers, faced with a motion for summary judgment, argued that her husband and Mr. Deane should be treated as two separate entities capable of forming a conspiracy because (1) there was no agency relationship, and (2) even if there was, the defendants’ actions fell outside the scope of the agency. The court disagreed.
The court had previously found that Mr. Rogers and Mr. Deane were in an agency relationship, and the only new arguments Ms. Rogers raised in her amended complaint were that Mr. Deane was an independent contractor and that he never filed a power of attorney and therefore could not contact the IRS on Mr. Rogers’ behalf. Mrs. Rogers relied on her own affidavit and did not provide any case law to support her argument that a power of attorney is required to form an agency relationship. Conversely, Mr. Rogers provided an affidavit stating that Mr. Deane was his agent for tax purposes and offered cases establishing that a person can act as both an agent and an independent contractor. He also submitted employment contracts and tax returns showing Mr. Deane as a third party designee with whom the IRS could discuss Mr. Roger’s returns.
The court found that Mr. Rogers clearly had control over the details of Mr. Deane’s work because he made decisions regarding whether to prepare joint or separate tax returns, provided all the details for the tax returns, and instructed Mr. Deane on which deductions, credits and exemptions to apply to his return. The court again held that Mr. Rogers and Mr. Deane had an agent/principal relationship such that the two couldn’t legally conspire. Furthermore, the preparation of tax returns was within the scope of that relationship.
The court granted Mr. Deane’s Motion for Summary Judgment on the statutory business conspiracy claim because Mr. Deane and Mr. Rogers were in an agency relationship such that they were one legal entity and could not legally conspire.