Lee v. Spoden
290 Va. 235
| Va. | 2015Background
- Paul Lee owned Strategic Health Care Company, Inc. (SHC); in 1995 he granted Lisa Spoden a 50% interest and later they divorced. A Term Sheet incorporated into the divorce decree addressed Spoden’s relinquishment of SHC ownership, employment rights, and that SHC retained a Florida property with Spoden having "direct use" and receiving sale proceeds upon sale.
- Spoden sued Lee and SHC for breach of contract and fiduciary duty in 2013, alleging breaches of the Term Sheet (restricted job duties, paycheck deductions, reimbursements, and listing/sale of the Florida Property).
- The trial court sustained defendants’ demurrer as to equitable relief and fiduciary claims, directing Spoden to pursue a rule to show cause (contempt) proceeding; Spoden did so and sought money damages in that contempt proceeding.
- The contempt proceeding resulted in a final order finding Lee had not violated the Term Sheet, explicitly stating SHC owned the Florida Property and had the right to sell it; SHC sold the property thereafter.
- Spoden’s breach‑of‑contract trial proceeded; the trial court excluded evidence of the contempt ruling, the jury awarded Spoden $138,880.50, and the trial court later denied defendants’ post‑trial motions. Defendants appealed.
Issues
| Issue | Spoden's Argument | Lee/SHC's Argument | Held |
|---|---|---|---|
| Whether breach‑of‑contract claims are barred by claim preclusion (res judicata) from contempt ruling | Spoden argued contempt proceeding was separate and that some claims were not finally adjudicated; timing of filings does not bar her claim | Lee/SHC argued the contempt proceeding was a final judgment on the same conduct and thus Rule 1:6 bars subsequent claims (and SHC is in privity with Lee) | Court: majority of claims arising from the Term Sheet are claim‑precluded; reversed trial court and entered partial final judgment for defendants on those issues |
| Whether issue preclusion (collateral estoppel) prevents relitigation of issues decided in the contempt proceeding | Spoden contended some issues (notably the actual sale conduct) were not litigated in contempt and remain viable | Lee/SHC argued prior findings bind Spoden on issues decided in contempt | Court: collateral estoppel applies to issues actually decided; the post‑ruling sale (occurring after contempt order) may survive but prior findings are binding on relevant issues |
| Admissibility of contempt ruling to show defendants’ good‑faith justification for selling the Florida Property | Spoden argued the ruling was prejudicial and would invade the jury’s province | Lee/SHC argued the ruling was highly probative of legal justification and intent to show absence of bad faith | Court: trial court abused discretion in excluding the contempt ruling; it was relevant and probative and not unfairly prejudicial; evidence should have been admitted |
| Whether verdict should be set aside as excessive because Spoden’s amended complaint lacked an ad damnum clause initially | Spoden sought leave to amend ad damnum after trial to $247,843.50; she argued amendment was timely and covered evidence | Lee/SHC argued failure to state an ad damnum limited recovery to $0 and verdict exceeded amount sued for | Court: trial court permissibly granted leave to amend (no appeal of that ruling); award of $138,880.50 is less than the amended ad damnum, so verdict not excessive; denial of motion to set aside affirmed |
Key Cases Cited
- Bates v. Devers, 214 Va. 667 (explaining preclusive effects of a final personal judgment including merger, bar, direct estoppel, and collateral estoppel)
- Taylor v. Sturgell, 553 U.S. 880 (distinguishing claim preclusion and issue preclusion categories)
- New Hampshire v. Maine, 532 U.S. 742 (describing claim preclusion scope for successive litigation)
- Bagwell v. International Union, 244 Va. 463 (contempt proceeding may award compensatory monetary damages)
- Glasco v. Ballard, 249 Va. 61 (collateral estoppel binds issues actually litigated and essential to prior judgment)
- Gamache v. Allen, 268 Va. 222 (trial court must balance probative value against unfair prejudice under Va. R. Evid. 2:403)
- Old Chief v. United States, 519 U.S. 172 (definition of "unfair prejudice" and limits on exclusion under Rule 403)
- PBM Nutritionals, LLC v. Lexington Ins. Co., 283 Va. 624 (contract interpretation is a question of law)