CVLR Performance Horses, Inc. v. Wynne

• Decision Date: 10 October 2013
• Docket Number: Case No. 6:11–CV–00035.
• Parties: CVLR PERFORMANCE HORSES, INC., Plaintiff, v. John L. WYNNE, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

977 F.Supp.2d 598

CVLR PERFORMANCE HORSES, INC., Plaintiff,

v.John L. WYNNE, et al., Defendants.

Case No. 6:11–CV–00035.

United States District Court,

W.D. Virginia,

Lynchburg Division.

Oct. 10, 2013.

Gary Michael Bowman, Gary Michael Bowman, Roanoke, VA, for Plaintiff.

Chad A. Mooney, John Ernest Falcone, Petty, Livingston, Dawson & Richards, John M. Perry, Jr., Alison Ferguson Gobble, William Earl Phillips, Edmunds & Williams PC, Lynchburg, VA, for Defendants.

MEMORANDUM OPINION

NORMAN K. MOON, District Judge.

This matter is before the court upon two motions filed in the protracted litigation between Plaintiff CVLR Performance Horses, Inc. (“Plaintiff”) and Defendant John L. Wynne and the entities associated with him (“Defendant”). Defendant has filed a motion to dismiss counts III and IV of the complaint and Plaintiff has filed a motion for leave to amend their complaint for a second time. For the following reasons I will grant Defendant's motion to dismiss in part and deny it in part and grant Plaintiff's motion for leave to amend in part and deny it as moot in part.

I. Background

The factual background on this case is extensive, and the ever-expanding complaint from CVLR does not lend itself to concise summary. I will therefore attempt to list an abbreviated discussion of the facts, focusing on those related to the purchase of the riding center, which is at the heart of the motions currently before the Court. I describe the facts as alleged by the Plaintiff, which at this stage I must accept as true.

The plaintiff, CVLR Performance Horses, Inc., is a closely held corporation owned and operated by its president, Crystal Rivers. In late 2006, Rivers responded to an advertisement of pasture land for rent posted by Jason Wynne, the primary defendant in this case. Wynne convinced Rivers to purchase a horseback riding center and stated that his company, Rivermont Consultants, Inc. (previously called The Rivermont Banking Company, Inc.) was a bank that could finance the purchase. In reality, Rivermont was not a bank and on October 12, 2007, Wynne contacted Charles Darnell, the president of Old Dominion National Bank, to inquire about a loan. Wynne falsely informed Darnell that he had contracted to purchase riding center property for $475,000. Darnell prepared a “loan presentation” indicating that Old Dominion would finance 100% of the purchase price. On October 28, 2007, Wynne obtained the signatures of the two members of S & R Farm, Ralph Beck and Shanna Lester, as well as Rivers, on a real estate contract under which S & R Farm promised to sell the riding center property to “CVLR Performance Horses or Assignee.”

The next day, Old Dominion approved the loan with the borrower listed as “an LLC to be formed” and the guarantors listed as Wynne and Rivers. Rivers believed the purchaser would be CVLR and that the LLC to be formed would be a new one that she would be a member of. Instead, Wynne had told Old Dominion that 1650 Partners, LLC, an organization under his control, would be the purchaser. On November 13, 2007, S & R Farm wrongly prepared a deed conveying the property to 1650 Partners, LLC instead of CVLR, and on the 15th the deed was executed. On November 20, 2007, the closing occurred, with Rivers mistakenly believing that CVLR was getting the property and giving a mortgage to finance it. Wynne informed Rivers that she was correct in that view.

On September 8, 2011, Plaintiff filed its original complaint. On October 25, 2011 Defendant moved to dismiss. Plaintiff requested leave to amend on November 14, 2011, and on December 19, 2011, this Court granted that leave. Plaintiff filed the amended complaint on December 21, 2011, a day after the Defendant had moved again to dismiss the case. On April 2, 2012, 852 F.Supp.2d 705, this Court granted the motion to dismiss count one of Plaintiff's claim and exercised its discretion to dismiss counts two through four, the supplemental claims. Plaintiff filed a Notice of Appeal on May 2, 2012, and on May 29, 2013, the 4th Circuit reversed this Court's finding on count one and remanded, without comment on the state law claims, for further proceedings. On July 31, 2013, the Defendant once again filed a motion to dismiss. Plaintiff filed a motion to amend the complaint a second time on September 19, 2013 and a motion for joinder to reinstate count two on September 20, 2013. On September 24, 2013, a hearing was held before this Court discussing Defendant's motion to dismiss and Plaintiff's motion to amend.

II. Standard of Review

The appropriate pleading standard for considering a motion to dismiss for failure to state a claim upon which relief can be granted is that refined by Bell Atlantic v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). See alsoFed.R.Civ.P. 12(b)(6), Fed.R.Civ.P. 8. Plaintiffs must allege facts that “state a claim to relief that is plausible on its face,” i.e., facts that “have nudged their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A claim is plausible if the complaint contains “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,” and if there is “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. The following long-held rule still stands: “In evaluating a Rule 12(b)(6) motion to dismiss, a court accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff in weighing the legal sufficiency of the complaint.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.2009) (citations omitted).¹

Federal Rule of Civil Procedure 15(a)(1) suggests that a party may amend its pleading once as a matter of course under certain circumstances. For all subsequent amendments, Rule 15(a)(2) controls, stating that “a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Leave to amend should only be denied “when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.” Nolte v. Capital One Fin. Corp., 390 F.3d 311, 317 (4th Cir.2004). “Leave to amend ... should only be denied on the ground of futility when the proposed amendment is clearly insufficient or frivolous on its face.” Johnson v. Oroweat Foods Co., 785 F.2d 503, 510 (4th Cir.1986).

III. Discussion

A. The RICO Claim

Plaintiff alleges a violation of the Civil Racketeering and Corrupt Organizations Act by John Wynne, 1650 Partners, LLC, and Rivermont Consultants, Inc. The 4th Circuit found that Plaintiff had sufficiently pleaded open-ended continuity and thus had sufficiently pleaded enough to have Count One of their complaint survive the motion to dismiss phase. CVLR Performance Horses, Inc., v. Wynne, 524 Fed.Appx. 924, 929 (4th Cir.2013).

Defendant argues that “[i]n the RICO count, Plaintiff adds allegations that are irrelevant, redundant and do not substantially or materially alter the nature of the claim.” Def.'s Opp. To Pl.'s Mot. To Amend 5 (docket no. 110). Defendant does not allege a particular reason why leave to amend for count one should not be granted, however. Clearly amendment cannot be futile when the underlying claim is sufficient. Instead, Defendant merely complains that the amendment is excessive and pointless.

I find that the proposed amendment is not clearly insufficient or frivolous on its face While Defendant may be aggravated by the need to adjust to repeated requests to amend, excessive amendment is not equivalent to the kind of bad faith or frivolousness that would be required to deny amendment under Federal Rule of Civil Procedure 15(a)'s liberal standards. Therefore, Plaintiff's motion to amend this count is GRANTED.

B. The Tortious Interference Claim

Plaintiff alleges that Wynne and 1650 Partners, LLC tortiously interfered with its contract to purchase the riding center. Under Virginia law, the elements required for a prima facie showing of tortious interference with the performance of a contract are:

(1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the interferor; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted.

Chaves v. Johnson, 230 Va. 112, 120, 335 S.E.2d 97, 102 (1985) (quoting Restatement (Second) of Torts § 766 (1979)).

Plaintiff asserts that they have sufficiently pleaded all four elements under the current version of the complaint. The complaint suggests that Wynne knew that CVLR had a “Purchase Agreement” contract to purchase the property and purchased the property instead, knowingly interfering with CVLR's interest and harming CVLR. Pl.'s Rep. to Def.'s Mot. To Dismiss 15 (docket no. 102). I agree with Plaintiff that these facts do make out a prima facie case for tortious interference with contract.

Defendant persuasively responds that the October 28, 2007 Contract to purchase the farm identified the purchaser as “CVLR Performance Horses or Assignee,” that the farm was purchased by 1650 Partners, LLC on November 20, 2007, that Rivers was a member of 1650 Partners at the time, and that Rivers signed an “Entity Authorization” form allowing 1650 Partners to purchase the farm. Def.'s Opp. To Pl.'s Mot. To Amend 5 (docket no. 110). Defendant cites Fox v. Deese, 234 Va. 412, 362 S.E.2d 699, 708 (1987) and Huizenga v. Am. Int'l Auto. Dealers Ass'n, 2005 WL 3132451, 2005 U.S. Dist. LEXIS 30972 (E.D.Va.2005) for the proposition that a person may not intentionally interfere with their own...