Gyetvay v. Hooper
| Decision Date | 20 August 2020 |
| Docket Number | CIVIL ACTION NO. 4:20-cv-78 |
| Parties | PATRICIA GYETVAY, Plaintiff, v. ROBIN HOOPER, WILLIAM HOOPER, and WILLIAMS WHARF OYSTER COMPANY, LLC, Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
Before the Court is Robin Hooper, William Hooper, and Williams Wharf Oyster Company, LLC's (collectively, "Defendants") Motion to Dismiss. ECF Nos. 10-11.
The following facts alleged in the Complaint are accepted as true. Robin Hooper ("Ms. Hooper") and William Hooper ("Mr. Hooper") are spouses and founding members of Williams Wharf Oyster Company, LLC ("Williams Wharf"), a Virginia oyster farming and distribution business. Prior to the instant suit, Ms. Hooper had a longstanding relationship with Patricia Gyetvay ("Ms. Gyetvay") and Ms. Gyetvay was an investor in Williams Wharf. In August 2019, Mr. and Ms. Hooper told Ms. Gyetvay of their desire to cultivate and sell wild oysters in India and asked Ms. Gyetvay to invest in an Indian subsidiary of Williams Wharf ("the India Venture" or "the Williams Wharf Indian subsidiary"). On September 9, 2019, Mr. and Ms. Hooper sent Ms. Gyetvay a document entitled "India Oyster Farm Project Participation" ("the Participation Form"). The Participation Form purported to offer a 5% stake in the India Venture once it was incorporated, a seat on the board of directors, and a two to one return on investment within 30 months, in exchange for $150,000. The Participation Form also promised repayment of any investment within 24 months if the India Venture failed. Ms. Gyetvay signed the Participation Form on the same day. Shortly afterward, Ms. Hooper urged Ms. Gyetvay to send money in support of the India Venture. Mr. and Ms. Hooper also travelled to India from sometime in September 2019 through the following month. During the Hoopers' trip to India, Ms. Hooper's solicitation of funds to Ms. Gyetvay intensified, along with her assurances that the India Venture would be successful. In response, Ms. Gyetvay wired a total of $150,000 into a Williams Wharf Bank account over three transactions: (1) $30,000 on September 17, 2019; (2) $45,000 on October 1, 2019; and (3) and $75,000 on October 8, 2019.
Around November 22, 2019, authorities charged Mr. Hooper with multiple serious felony offenses. Unbeknownst to Ms. Gyetvay, Mr. Hooper was already a convicted felon before he was indicted on the federal charges that remain pending against him. On November 24, 2019, Ms. Gyetvay demanded the return of the $150,000 she previously wired to the Williams Wharf account. For the next several months, Mr. and Ms. Hooper deflected when Ms. Gyetvay made overtures about the status of her investment in the India Venture and Ms. Gyetvay never received any ownership interest in a Williams Wharf Indian subsidiary, as outlined in the Participation Form. In January 2020, Ms. Hooper told Ms. Gyetvay that the India Venture had failed, and that no Williams Wharf Indian subsidiary had ever been set up under the laws of India. The Complaint alleges that Mr. and Ms. Hooper and Williams Wharf cannot account for Ms. Gyetvay's investment in the India Venture or explain how her $150,000 was used and refuse to return the money despite her demands.
Ms. Gyetvay filed her Complaint on May 28, 2020. ECF No. 1. On June 24, 2020, Defendants filed their Motion to Dismiss. ECF No. 10-11. Ms. Gyetvay responded in opposition to Defendants' Motion to Dismiss on July 7, 2020. ECF No. 13. On July 13, 2020, Defendants replied to Ms. Gyetvay's response. ECF No. 14. The parties requested oral argument on this matter on August 17, 2020. ECF No. 15. After reviewing the filings, the Court finds that oral argument is unnecessary and this matter is ripe for disposition.
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of actions that fail to state a claim upon which relief can be granted. The United States Supreme Court ("Supreme Court") has stated that in order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Specifically, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. Moreover, at the motion to dismiss stage, the court is bound to accept all of the factual allegations in the complaint as true, but is "not bound to accept as true a legal conclusion couched as a factual allegation." Id. However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Assessing the claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.
The Complaint advances the following grounds for relief: Count I, Fraud, against Ms. Hooper pursuant to Virginia common law; Count II, Constructive Fraud (pled in the alternativeto Count I), against Ms. Hooper pursuant to Virginia common law; Count III, Fraud by Omission or Concealment, against Mr. and Ms. Hooper pursuant to Virginia common law; Count IV, Conversion, against all Defendants pursuant to Virginia common law; Count V, Unjust Enrichment, against all Defendants pursuant to Virginia common law; Count VI, Securities Fraud, against all Defendants pursuant to Va. Code §§ 13.1-502 and 13.1-522. Ms. Gyetvay seeks a collective judgment on all counts against the Defendants for her $150,000 investment, the associated wire and transfer fees, $350,000 of punitive damages on Counts I, III, and IV, and attorneys fees and costs.
Before proceeding to the substantive counts in the Complaint, the Court will address the legal significance of the Participation Form. The Complaint includes the Participation Form as an exhibit informing the factual allegations within the Complaint. ECF No. 1-3. In response, Defendants contend that the Participation Form is a contract that governs the terms of Ms. Gyetvay's $150,000 investment in the India Venture and assert the source duty rule in defense against several counts of the Complaint. In simple terms, the question is whether the Participation Form is properly understood as an instrument of the alleged tortious conduct or a valid contract.
The basic elements of a contract are offer, acceptance, and consideration. Snyder-Falkinham v. Stockburger, 457 S.E.2d 36, 39 (Va. 1995). "The major consideration underlying contract law is the protection of bargained for expectations." Filak v. George, 594 S.E.2d 610, 613 (Va. 2004). There must be mutual assent of the contracting parties to terms reasonably certain under the circumstances in order to have an enforceable contract. Allen v. Aetna Cas. & Sur. Co., 281 S.E.2d 818, 820 (Va. 1981). A court should not determine contractual terms uponwhich the parties might ultimately agree. Id. An agreement to contract or negotiate at a later date, without specifying more, is not a contract. Id. at 818.
A cursory examination of The Participation Form shows that it is not a valid contract. The contents of the Participation Form did not bind Ms. Gyetvay, the Hoopers, or Williams Wharf to any specific terms. More specifically, the Participation Form did not obligate Ms. Gyetvay to purchase any shares in the India Venture once it was properly established, nor did it obligate any of the Defendants to sell Ms. Gyetvay any shares in the same. See ECF No. 1-3 at 1 () (emphasis added). Further, the Participation Agreement referred to itself as the agreement or the participation agreement, but also referred to a contract that would presumably outline the specific terms of an investment in the India Venture. Id. at 2. Most tellingly, the Participation Agreement explicitly stated that "all...subsequent discussions [shall] be conducted in accordance [with the] laws of the Commonwealth of Virginia," indicating that a final agreement on the purchase of Williams Wharf Indian subsidiary shares was not in order. Id. Because the Court cannot ascertain the number of shares Ms. Gyetvay was supposedly obligated to buy and the total price of her supposed purchase of shares from the Participation Form, that document cannot be understood as a contract. The Participation Form was simply an agreement to agree on Ms. Gyetvay's future purchase of shares in the Williams Wharf Indian subsidiary, an entity that did not exist at the time she signed the Participation Form. While the Participation Form did not preclude the parties from forming an agreement on the purchase of an ownership interest at a later date, it is not a contract standing alone. Accordingly, Defendants may not assert the source duty rule in defending against Counts I-IV.
Count I alleges that Ms. Hooper used Williams Wharf to defraud Ms. Hooper out of a $150,000 investment in an Indian subsidiary that never came to exist. The parties disagree on whether the Complaint states sufficient facts to sustain a fraud claim and whether the Williams Wharf corporate veil protects Ms. Hooper from liability.
Under Virginia law, the elements of fraud are as follows: (1) a false representation; (2) of a material fact; (3) made intentionally and knowingly; (4) with intent to mislead; (5) reliance by the party misled; and (6) resulting damage to the party misled. State Farm Mut. Auto. Ins. Co. v. Remley, 618 S.E.2d 316, 321 (Va. 2005). In order to avoid transforming every breach of contract claim into a fraud claim, courts must identify the source of the duty...
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