Shannon v. Smalls

1

DAN SHANNON v. CURTIS O. SMALLS, II, SOMETIMES KNOWN AS TONY SMALLS

No. 1958-22-4

Court of Appeals of Virginia

April 16, 2024

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY David A. Oblon, Judge

Samuel A. Leven (The Baldwin Law Firm, LLC, on brief), for appellant.

No brief or argument for appellee.

Present: Judges Beales, Friedman and Callins Argued at Leesburg, Virginia

MEMORANDUM OPINION ^[*]

RANDOLPH A. BEALES, JUDGE

The Circuit Court of Fairfax County dismissed Dan Shannon's breach of contract claim involving a promissory note against Curtis O. Smalls, II (sometimes known as Tony Smalls) for lack of consideration. On appeal, Shannon challenges the circuit court's holding that lack of consideration is not an affirmative defense. Shannon then argues that the circuit court erred when it determined that Shannon bore the burden of proving that the funds he extended to Smalls were loans rather than gifts. Shannon also contends that the circuit court erred in ruling that the evidence supported its finding that the funds were gifts rather than a series of loans. Finally, Shannon challenges the circuit court's denial of his request for attorneys' fees in accordance with the terms of the promissory note, as well as the circuit court's denial of his motion to reconsider.

I. Background

"On appeal, we view the evidence and all reasonable inferences arising therefrom in the light most favorable to the prevailing party at trial." Thorsen v. Richmond Soc 'y for the Prevention of Cruelty to Animals, 292 Va 257, 280 (2016). Therefore, the evidence related to the issues raised in Shannon's assignments of error must be viewed in the light most favorable to Smalls as he was the prevailing party in the circuit court.

The parties presented evidence at trial that Shannon and Smalls met in late 2014 while the two were incarcerated at the Fairfax County Adult Detention Center. During their time imprisoned together, the two men became friends, and they continued to communicate with each other via phone and email even after Smalls was transferred to another correctional facility and Shannon was released from jail after he was acquitted of the charges against him. Shannon testified that on December 22, 2014, Smalls first asked him for money to help the mother of his children, and Shannon arranged to have $600 transferred to her. Shannon recounted that after making the initial money transfer, Smalls made more requests for more money which "slowly grew over three and a half years from occasional requests in 2015, 2016 it got pretty intense, and about once a month or twice a month he'd ask for money." Shannon testified that Smalls continued to request money, items, and other forms of assistance from Shannon, even after Smalls was released from State custody on April 29, 2019.

The record contains emails that Shannon and Smalls sent to one another via JPay, a prison messaging platform, detailing some of Smalls's requests for money and Shannon's concerns over providing additional funds. For example, in an email from Smalls to Shannon on October 19, 2015, Smalls wrote, "I could really use funds on the email account and a little on the commissary account. . . . I simply could use your help with these requests and will add to teh [sic] payback option previously discussed." In a November 28, 2015 email, Shannon responded to Smalls and explained,

Just so you know, every dollar I lend you is money I've borrowed on my credit card, so I don't have unlimited funds. And it's a big risk of whether or not I'll ever get paid back. . . . So I'm especially cautious since I've already lent you $1,049.21 and every time you promise me you won't need any more money you always come back later asking for more.

The parties executed three promissory notes while Shannon was out of jail and Smalls remained in jail. The first promissory note, titled "Promissory Note," was signed by Smalls and notarized on December 31, 2017 (the "December 2017 Note"). Shannon testified that Smalls drafted and mailed the December 2017 Note to him following their conversation about the language and terms although Smalls denies doing so. Under the terms of the December 2017 Note, Smalls promised to repay Shannon "for all outstanding loans" made "from December 14, 2014, through December 31, 2017, including ongoing accruing interest compounded daily at the published Visa Card Daily Variable Rate on the unpaid daily ending balance owed." Smalls further promised that, "beginning January 1, 2018," he would pay Shannon "a minimum of $300.00 per month until this debt is paid in full no later than December 31, 2018." Smalls also agreed "to pay any and all attorney fees and expenses to collect such outstanding loans including ongoing accruing interest and any court sanctioned penalties" in the event he failed to "repay the aforesaid loans and ongoing accruing interest." The December 2017 Note stated that the "unpaid daily balance owed as of December 31, 2017 will be $3,603.94; composed of $3,077.42 in loans and $526.50 in accrued interest."^[1]

The record shows that Smalls continued to make requests for money from Shannon in the years that followed, and Shannon continued to provide Smalls with periodic payments. In an email from Smalls to Shannon on March 1, 2017, Smalls requested money for his phone account and wrote, "So in effect, my total bill becomes what? $3525… with interest?" Nearly two years later, in an email from Smalls to Shannon on January 22, 2019, Smalls again requested money for his phone account and wrote, "We have a contrat [sic] on a loan so please just add to my loan as I have no oter [sic] resource and all is time sensitive." In an email from Smalls to Shannon on March 4, 2019, Smalls proposed the following arrangement:

Now I am sending you a notarized request for a loan that includes the $4400 I owe. Should you agree I am authorizing one of 2 methods for repayment. I will authorize WalMart Visa (Green Dot) to give you a card on my account and you already have access to take weekly amount beginning first payday for me which will be in late May or early June, or I can have the bank associated with my card do weekly payments electronically to your account? I am drafting particulars in Law Library and will send out by tomorrow for you to review and then we can discuss.

Smalls then wrote to Shannon, "I will never 'stiff you as I have no other place to turn and want to get this right!" Smalls reiterated in a March 3, 2019 email to Shannon, "Dan I am not going to stiff you on teh [sic] loan as I will need your help. . . . I will take care of my loan and need to discuss sevral [sic] things with you!"

On March 25, 2019, Smalls signed and notarized a second promissory note (the "March 2019 Note"), also titled "Promissory Note," which superseded the December 2017 Note. The March 2019 Note covered "all outstanding loans" made by Shannon to Smalls "from December 14, 2014 through April 29, 2019 including ongoing accruing interest compounded daily at the published Visa Card Daily Variable Rate on the unpaid daily ending balance owed." Under the terms of the March 2019 Note, Smalls promised that "the outstanding loan balance and all ongoing accruing interest will be paid in full no later than April 29, 2020 ." Smalls also promised that, "beginning no later than May 29, 2019," he would "pay a minimum of $83.00 per week to Dan Shannon until this debt is paid in full no later than April 29, 2020 ." The March 2019 Note stated that the "unpaid daily ending balance owed as of March 31, 2019 will be $4,310.59." In addition, the March 2019 Note provided Shannon with several methods for default payment collection, and also contained a provision obligating Smalls to pay "all attorney fees, costs and expenses to collect such outstanding loans, accruing interest and any court sanctioned fees and penalties." In an email on March 28, 2019, Smalls confirmed to Shannon, "You have my signed consent to the promissory agreement to all your terms. . . . Dan I am trying to make sure I plan for everything and be able to meet my obligations as well as repay my loan to you."

On April 13, 2019, Smalls signed and notarized a third promissory note, titled "Supplemental Promissory Note" (the "April 2019 Note"). Under the terms of the April 2019 Note, Smalls promised "to repay Dan Shannon for additional loans to pay for the actual cost of expenses related to Smalls's forthcoming release from prison, including a motel room, new clothing, a new cell phone, a new laptop, and other expenses. Smalls further promised "not to incur any additional debt in any form until payment is paid in full for that obligated by me in the March 25, 2019 Promissory Note and this Supplemental Promissory Note without the written approval of Dan Shannon; approval which will not be unreasonably withheld." In addition, Smalls promised to provide Shannon with an "accounting of all existing debts obligated or owed" by him, as well as to keep Shannon apprised of his contact information, employer information, and details of his financial accounts. The April 2019 Note expressly stated, "All terms and conditions for failure to pay on time or at all for the above loans are the same as stated in the March 25, 2019 Promissory Note."

Smalls did not make any payments to Shannon on any of the promissory notes. On May 27, 2022, Shannon brought a civil action against Smalls in the circuit court for breach of the March 2019 Note and the April 2019 Note. Shannon sought judgment in the total amount of $8,643.50, plus his reasonable costs and attorneys' fees. At trial, Shannon testified that the various amounts of money that he paid to Smalls were loans "[f]rom the very start" and that, before executing the promissory notes, he and Smalls "would,...