Daily v. White

520 F.Supp.3d 835

Richard A. DAILY, Executor of the Estate of Alice M. White, deceased, Plaintiff,

v.Paul M. R. WHITE, Defendant.

Case No. 6:20-cv-00021

United States District Court, W.D. Virginia, Lynchburg Division.

Signed February 19, 2021

John Wood Francisco, Woods Rogers PLC, Lynchburg, VA, Zachary Steven Agee, Woods Rogers PLC, Roanoke, VA, for Plaintiff.

Paul Graham Beers, Phillip R. Lingafelt, Robert A. Ziogas, Glenn Feldmann Darby & Goodlatte, Roanoke, VA, for Defendant.

MEMORANDUM OPINION

NORMAN K. MOON, SENIOR UNITED STATES DISTRICT JUDGE

Plaintiff Richard A. Daily ("Richard"), executor of the estate of Alice M. White ("Alice"), deceased, filed a complaint against Paul M. R. White ("Paul") to recover for fourteen transactions between Alice and Paul over more than three years. Dkt. 1. Richard alleges that the transactions were loans and seeks to recover based on a breach of contract theory or, alternatively, a breach of promissory note theory.

Paul filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 4. The Court will grant Paul's motion with respect to the breach of promissory notes claim but deny his motion with respect to the breach of contract claim.

I. ALLEGED FACTUAL BACKGROUND

For the purposes of ruling on Paul's motion to dismiss, the Court accepts as true the following allegations set forth in the complaint and attached exhibits.

Alice died on January 29, 2019. Dkt. 1 ¶ 1. Alice and her late husband, Arthur, had four biological children, including Alice W. Daily—Richard's wife—and Paul. Id. ¶ 7–8. Richard qualified as the executor of Alice's estate on May 1, 2019. Id. ¶ 2.

On February 2, 2009, Paul wrote Alice a letter titled "Re: Loan," in which he requested a $25,000 loan to support his business, himself, and his family. Id. ¶ 9; Dkt. 1-3. In part, the letter read:

Dear Mom,

As of this date, we request a loan. This loan is to allow the survival and enhance the success of White Technologies, Inc. and the families associated.

We plan to pay interest at ±1% per month ... and we expect to begin paying this, or returning principle [sic] and a few months only worth of interest soon [...].

We expect that this loan will be short-term and hope to avoid a second amount. [...]

We request a loan amount of $25,000 at this time, please. We are working to repay immediately, but a second request may be necessary ... remaining short term & with interest. Thank you for your support.

Paul

Dkt. 1-3. The next day, Alice issued Paul a check for $25,000. Dkt. 1 ¶ 10; Dkt. 1-4.

Between February 3, 2009 and September 27, 2012, Alice loaned Paul a total of $435,000, in fourteen separate transactions. Dkt. 1 ¶ 11. Although Alice made the first two advances—totaling $45,000—from her personal checking account, she made the twelve subsequent advances—totaling $390,000—from a line of credit that Alice opened with UBS Financial. Id. ¶ 14–15. Alice pledged her stock investment portfolio at UBS Financial as collateral to secure the advances from this line of credit. Id. ¶ 14. Alice paid UBS Financial $153,000 in interest on the advances made from the line of credit. Id. ¶ 16.

On October 14, 2014, Alice sent Paul a letter detailing all fourteen loans and demanding payment of the debt as he had previously agreed. Id. ¶ 17; Dkt. 1-5. On November 6 and 10, 2014, Alice sent Paul emails requesting that he sign and date a statement in the October 14 letter confirming his agreement to repay the debt. Dkt. 1 ¶ 18. Paul replied to Alice by email on November 11, 2014. Id. ¶ 19. The email read, in relevant part:

All since the beginning of 2009, a year and a half since Dad had passed ... when I asked for a loan to sustain what we'd begun, I have answered you as I do now ... I am certain that I will be able to pay you back, with interest! ... I think I have heard you in years past decline the interest ... but, we would definitely never consider that the economics & politics of inside this market and the world to become so long and painful.

I repeat ... I am certain that I will be able to pay you back! And as I have said, I don't know how long this will take but, the Company Dad and I started will flourish again and the Company and I will pay you back!

Id. ¶ 19; Dkt. 1-6 (emphasis in original).

Alice's will also references the loans to Paul:

As of the date of this Will, I have loaned Paul Four Hundred Eighty Thousand and 00/100 Dollars ($480,000.000) (the "Second Loan") which Paul is obligated to pay to me or to my Estate upon my death. Any total remaining balance due on the Second Loan shall be allocated to and deducted from Paul's ... share of my Residuary Estate.... The then outstanding balance of the Second Loan shall be determined by my Trustee in good faith on the basis of my written records, bank statements, checks or other applicable documents. The purpose of the foregoing provisions of this paragraph ... is to effect my intention that each of my children be treated equally and that none of my other children ... be penalized by virtue of the Second Loan made from me to Paul.

Dkt. 1 ¶ 20; Dkt. 1-1 at 4. However, Alice's estate does not have sufficient assets to account for the debt Paul owes on the loans from his share of the estate. Dkt. 1 ¶ 21. In addition, upon Alice's death, UBS Financial debited Alice's investment portfolio $330,380.57 in satisfaction of the outstanding balance on her line of credit. Id. ¶ 22.

The outstanding principal on Alice's loans to Paul is $435,000. Id. ¶ 23. At a one percent interest rate, the principal and accrued interest together amount to $1,379,956. Id. ¶ 24.

Richard sued Paul for breach of contract, id. ¶¶ 26–33, or breach of promissory notes, id. ¶¶ 34–43. Richard alleges that Paul's February 2, 2009 correspondence formed a written contract when Alice issued him a $25,000 check the following day. Id. ¶ 27. Paul's additional requests and Alice's subsequent loan advances to him supplemented the contract, which Paul acknowledged in writing in his November 11, 2014 email. Id. ¶ 28. Alternatively, Richard alleges that certain emails that Paul sent acknowledging payments that Alice made to him were promissory notes. Id. ¶¶ 36–39; see Dkts. 1-3 ("Note 1"), 1-7 ("Note 2"), 1-8 ("Note 3"), 1-9 ("Note 4").

Note 1 is Paul's loan request letter to Alice, dated February 2, 2009. Dkt. 1-3.

Note 2 is a February 1, 2010 email from Paul to Alice with the subject line "RE: Good morning[!]" Dkt. 1-7. The email, after noting that "the investment is wise and will be paid back with interest ... maybe even faster than I think," states:

Loans you've made: ...

Feb. 2 / 09 ... $25,000

Apr. 16 / 09 ... $20,000

July 29 / 09 ... $25,000

...

To be a "separate issue":

Oct. 13 / 09 ... $35,000

Nov. 9 / 09 ... $33,500 Repayment with interest.

Nov. 10 / 09 ... $2,000 Additional Repayment due to Bank error.

...

Dec. 21 / 09 ... $35,000 Intending to repay from the outstanding Western Refin.

Invoice of $50,000, ... expected to be late.

Current Request discussed Saturday 1/30.10 ... $32,000.

I HAVE NOT YET COMPUTED THE INTERST [sic] THE ABOVE HAS EARNED ... to be included.

TOTAL (Including current request but, not including Interest) = $137,000.

In this span of a year, I will have borrowed this amount [....]

I fully expect to resolve this as the year develops.

May I please contact Frank Clemente regarding the transfer we've done before?

Thank you very, p.

Id. (emphasis in original).

Note 3 is a May 13, 2010 email from Paul to Alice with the subject line "RE: Wire information for May 13, 2010." Dkt. 1-8. The email, after noting that a contractor's "payment will be here by July 1," states:

... and this would be the time that we'd be able to return these funds to your account with UBS.

That figure is $24,000.00.... Hoping to receive this wire transfer as early as this afternoon as possible.

Further, with this ‘brief boost’ ... hoping ... & somewhat projecting that we may not need additionals [sic] like this, nor increasing of the total loan balance to you ... [...]

Mom, I intend on cleaning this file up for you and applying the interest ....

Thank you very much and Love, p.

Id.

Note 4 is an August 16, 2010 email from Paul to Alice with the subject line "RE: Wire information for May 13, 2010." Dkt. 1-9. The email states, in part, "This endeavor is very viable and will be providing a substantial return on your investment!" and, "The figure is $43,000 following some deliberation on the planning sheets." Id. It closes with "Love, p." Id.

Although Richard demanded payment on these notes, Paul refused to pay. Dkt. 1 ¶¶ 40–41; see Dkts. 1-10, 1-11. Richard filed this complaint on April 13, 2020. Dkt. 1.

II. LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim. The complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), with all allegations in the complaint taken as true and all reasonable inferences drawn in the plaintiff's favor. King v. Rubenstein , 825 F.3d 206, 212 (4th Cir. 2016). A motion to dismiss "does not, however, resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Id. at 214.

Although the complaint "does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ; see also Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."). A court need not "accept the legal conclusions drawn from the facts" or "accept as true unwarranted inferences, unreasonable conclusions, or...