Nationwide Mut. Fire Ins. Co. v. Jones, Civ. A. No. 83-0063-A.

• Decision Date: 18 January 1984
• Docket Number: Civ. A. No. 83-0063-A.
• Citation: 577 F. Supp. 968
• Court: U.S. District Court — Western District of Virginia
• Parties: NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Plaintiff, v. Amos Harley JONES and Paulette Carol Jones, Defendants.

577 F. Supp. 968

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Plaintiff, v. Amos Harley JONES and Paulette Carol Jones, Defendants.

Civ. A. No. 83-0063-A.

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

January 18, 1984.

Howard C. McElroy, Abingdon, Va., for plaintiff.

Randall Eads, Lebanon, Va., for defendants.

MEMORANDUM OPINION

GLEN M. WILLIAMS, District Judge.

The plaintiff, Nationwide Mutual Fire Insurance Company, brought this action against Amos Harley Jones and his wife, Paulette Carol Jones, alleging that the defendants willfully denied their responsibility for and made false statements regarding their loss from a fire on September 24, 1982 which caused extensive damage to their home. Relying upon these statements, Nationwide paid thirty-three thousand dollars ($33,000) to the defendants under a homeowner's policy. After making payment, the plaintiff discovered the misrepresentations and now seeks restitution upon theories of money had and received, and fraud. Jurisdiction over the subject matter of this controversy is premised upon diversity of citizenship, 28 U.S.C. § 1332. Nationwide also has alleged that the defendants conspired to willfully and maliciously injure the plaintiff in its reputation, trade and business which would entitle the injured company to treble damages, costs, and attorney's fees under the Virginia Conspiracy Statute. Va.Code § 18.2-499 and -500 (Repl.Vol.1982 and Supp.1983). The court dismissed a claim of racketeering under 18 U.S.C. § 1964 and granted a preliminary injunction that prohibited the defendants and Ira S. Mullins, Jr., a witness, from threatening or endangering the lives of each other and their families and that prevented the defendants from disposing of the money received from Nationwide, or its proceeds.

A trial was held on September 20 and 21, 1983, and at the close of all the evidence, counsel for the defendants moved for a directed verdict which the court overruled at that time. A jury returned a special verdict in favor of the plaintiff on all counts and for damages of $33,667.79. In light of the jury verdict, the defendants move this court for judgment notwithstanding the verdict pursuant to Rule 50(b), Fed. R.Civ.P. This matter is ready for disposition.

The defendants contend that the court should grant their motion for a directed verdict as to the allegation of conspiracy because Nationwide failed to prove the elements of the conspiracy and actual malice. Even if the evidence shows that the defendants deliberately burned their dwelling, they argue that their intention was to collect the insurance proceeds, not to willfully harm the reputation, trade or business of Nationwide, as required under Va.Code § 18.2-499.

This claim is based upon the conspiracy statute, which provides in pertinent part: "(a) Any two or more persons who shall combine, associate, agree, mutually undertake or concert together for the purpose of willfully and maliciously injuring another in his reputation, trade, business or profession by any means whatever, ..., shall be jointly and severally guilty of a Class 3 misdemeanor ...." Va.Code § 18.2-499(a) (emphasis added). The succedent section provides for civil relief. "Any person who shall be injured in his reputation, trade, business or profession by reason of a violation of § 18.2-499, may sue therefor and recover three-fold the damages by him sustained, and the costs of suit, including a reasonable fee to plaintiff's counsel; ...." Va.Code § 18.2-500(a). A "person" under the statute means any person, firm, corporation, partnership or association. Va.Code § 18.2-501(b). In the plain meaning of these provisions, if the defendants conspired to maliciously injure the reputation, trade, business or profession of Nationwide in any manner, then Nationwide may sue and receive treble damages, costs, and attorney's fees.

Resolution of the defendant's contention involves interpreting the phrase "injure the reputation, trade, business or profession of another." Particularly, does presenting a fraudulent claim to an insurance company upon which the company pays the insured without knowledge of the misrepresentations maliciously injure its reputation, trade or business under the meaning of the statute? There is no legislative history to assist the court,¹ nor has the Virginia Supreme Court decided a case based upon these statutes. However, several federal courts have interpreted these provisions.

In the first reported case concerning the statute, a printing broker sued officers of a Virginia corporation for conspiring to injure its business and for malicious prosecution of an involuntary bankruptcy suit. The defendants moved to dismiss the action because the statute of limitations barred the adjudication. Judge Merhige held, inter alia, that the conspiracy claim was not time barred. The court interpreted the statute as providing "a remedy for wrongful conduct directed at the business." Federated Graphics Co. v. Napotnik, 424 F.Supp. 291, 293 (E.D.Va.1976). Since injuring a business damages a person's property, the five-year statute of limitations applies. The court rejected the contention that the statute codified the common law tort action of malicious prosecution, noting that the statute applies to any malicious conduct injuring business. Id. at 294 (emphasis in original). Another court developed a standard on motion to dismiss to determine whether the statute applied to a particular set of facts. Judge Clarke used a two-prong analysis: First, what is the "real nature" of the suit? Second, what monetary losses does the plaintiff incur as a result of the alleged conduct? The court concluded that the "real nature" of the action was a personal claim for libel and slander and that the plaintiff had not alleged that the conspiracy caused his damages. Consequently, the court dismissed the conspiratorial claim. Moore v. Allied Chemical Corp., 480 F.Supp. 364, 373-75 (E.D.Va.1979). In a third case averring harm to a person's reputation, the court reiterated that these statutes aim at injuries to business, trade, or profession, not at personal reputation. Ward v. Connor, 495 F.Supp. 434, 439 (E.D.Va.1980), rev'd on other grounds, 657 F.2d 45 (4th Cir.1981). A literal interpretation excludes "employment" from the scope of the act. Campbell v. Board of Supervisors, 553 F.Supp. 644, 645 (E.D.Va.1982). Moreover, the provisions are not a legal guarantee of business reputation which will create a property interest within the meaning of due process of law under the fourteenth amendment and 42 U.S.C. § 1983. Becker v. Russek, 518 F.Supp. 1040, 1045-46 (W.D. Va.1981). Thus, the federal courts generally have interpreted the statute to create an action for any malicious conduct aimed at injuring a person's business.

The court searched for other persuasive authority. As two legal scholars observed, the substantive provisions of Va.Code § 18.2-499 are identical to Wis.Stat.Ann. § 134.01 (West 1974),² except that the Virginia...