8.5 LEADING CASES
8.501 Allen Realty Corp. v. Holbert. 140 In this case, Allen Realty, which bought and sold real estate, hired an accounting firm to provide accounting services and tax and general business advice and to assist in Allen's liquidation. As part of the liquidation, Allen planned to sell forty parcels of real estate. While Allen's president was in the hospital, Norfolk RHA made an offer to buy the real estate. The accountant Holbert did not disclose this offer to Allen's president. Instead, the accountant presented a lesser offer from an acquaintance, which was not accepted because the acquaintance had not identified his principals.
Allen sued the accountant for suppressing the Norfolk RHA offer, interfering with his business relations, and for conspiracy. As to the conspiracy count, Holbert argued that Allen's alleged loss did not result from any actions in concert by Holbert and the acquaintance, because ultimately the sale was made to others. The court noted, however, that "[n]evertheless, Allen alleged that it would not have sold its property for the price obtained if it had known of the Authority's [Norfolk RHA's] offers, and that there was resulting specified damage." 141 The court concluded that "the conspiracy to suppress the offers, . . . whether taking the form of agreement between Holbert and Kunzman, or Holbert and Roberts, or all three, could have been the proximate cause of damage to Allen." 142 As a result, the conspiracy allegation was sufficient to withstand a demurrer.
8.502 Hechler Chevrolet, Inc. v. General Motors Corp. 143 In this case, General Motors (GM) and Hechler had a franchise agreement. GM, acting within its rights under the agreement, discontinued manufacturing heavy duty trucks and, as a result, stopped selling them through Hechler. GM also decided that from that point forward it would sell all such trucks through its GMC division and refused to give Hechler a GMC franchise.
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Hechler alleged that GM and a local GMC franchise conspired to injure its business by (i) informing Hechler's customers that it would no longer be selling heavy duty trucks; (ii) enticing key employees to leave; and (iii) failing to give Hechler a GMC franchise.
The court determined that (i) it was not unlawful for the GMC franchise to truthfully tell customers that a competitor was about to cease marketing a product; (ii) it is not unlawful for a defendant to entice an employee to resign if no wrongful means are used and the employment is at will; and (iii) GM acted lawfully in refusing to grant Hechler a franchise. Because none of GM's alleged activities were unlawful or involved a wrongful means or purpose, both the lower court and the Supreme Court concluded that a conspiracy was not properly alleged.
8.503 Greenspan v. Osheroff. 144 In this case, Osheroff, a nephrologist, hired Greenspan and then, with Greenspan's encouragement, entered a hospital for the treatment of depression. While Osheroff was hospitalized, Greenspan engaged in a series of acts designed to benefit him at Osheroff's expense.
Greenspan argued that "even if the malice [was] accepted, he should not [have been] found guilty under a criminal statute providing severe civil penalties when his motives were found to be mixed." Greenspan reasoned that "the presence of benign motives, found by the [lower] court to coexist with his malicious motive, should constitute a defense." The Virginia Supreme Court disagreed, noting that "the benign motives were not directed toward the victims, so as to ameliorate the malice directed toward them. Dr. Greenspan's intent was to benefit himself and his patients, not Dr. Osher-off." 145 The court went on to state that
when the factfinder is satisfied from the evidence that the defendant's primary and overriding purpose is to injure his victim in his reputation, trade, business or profession, motivated by hatred, spite, or ill-will, the element of malice required by 18.2-499 is established, notwithstanding any additional motives entertained by the defendant to benefit himself or persons other than the victim. 146
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Greenspan is important as the first of the malice standard cases. Its pronunciation of the "primary and overriding purpose" standard in mixed motives cases is in doubt in light of the "intentionally, purposely and without lawful justification" standard later announced in Commercial Business Systems, Inc. v. BellSouth Services, Inc. 147 and its progeny.
8.504 Tazewell Oil Co. v. United Virginia Bank. 148 In this case, credible evidence supported a finding that United Virginia Bank (UVB) acted in concert with a third party and agreed, associated, or combined for the purpose of willfully and maliciously damaging Tazewell in its trade or business. The record showed that UVB intended to forestall a Chapter 11 filing by Tazewell, which exhibited a willful disregard for Tazewell's rights. "UVB's protestations that it was 'merely attempting to collect its debts' [rang] hollow in light of the extensive and unusual actions it undertook in concert with [the third party] to eliminate any ability of Tazewell to continue operating or to file a reorganization plan under chapter 11 by removing Tazewell's access to cash flow, inventory, or other financing." 149
8.505 Commercial Business Systems, Inc. v. BellSouth Services, Inc. 150 In this case, Commercial Business Systems (CBS) had a contract to repair computers for BellSouth. Jordan, the BellSouth employee who had negotiated the contract, told CBS that the contract likely would be renewed. Jordan left BellSouth and his replacement, Waldrop, delayed renewal. Waldrop told others that he was formulating a reason not to award the contract to CBS. Waldrop awarded the contract to Halifax and set up a company as a means to do business with Halifax and receive kickbacks.
Whether Waldrop was acting within the scope of his employment was an issue for the jury, because "Waldrop's willful and malicious acts were committed while Waldrop was performing his duties as BellSouth's contract negotiator and administrator in the execution of the services for which he was employed." 151
Relying on Greenspan, BellSouth argued that CBS was required to show actual malice. The court disagreed, finding that only proof of legal malice—that the defendant acted "intentionally, purposely and without lawful
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justification,"—was required. In rejecting BellSouth's reliance on Greenspan, the court stated that its "'primary and overriding purpose' standard applied where the conspirator had both legitimate and illegitimate motives for his actions." 152 The court noted that, in this case, "all of Waldrop's motives were illegitimate, and, in any event, we do not think, as a general proposition, the conspiracy statutes require proof that a conspirator's primary and overriding purpose is to injure another in his trade or business." 153
8.506 Advanced Marine Enterprises, Inc. v. PRC, Inc. 154 In this case, PRC, Inc. had noncompete agreements with its engineering employees. Advanced Marine Enterprises (AME), a PRC competitor, agreed to hire all of PRC's marine engineering employees, and these employees resigned en masse from PRC. The court held that PRC's evidence, namely, the circumstances under which the resignations occurred, satisfied the "intentionally, purposely and without lawful justification" standard of proof.
The court also held that the chancellor properly awarded both punitive and treble damages. "When a court of equity acquires jurisdiction of a cause for any purpose, the court may retain the entire cause to accomplish complete justice between the parties." Since AME chose not to transfer the legal claims to the law side, it was bound by the chancellor's award of legal relief. 155
In addition, the court held that treble damages are not precluded under the equity provision of section 18.2-500(B) of the Virginia Code, which merely adds injunctive relief to the remedies available elsewhere and is not intended to limit the relief available in chancery. 156
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