332 F. Supp. 3d 1007
E.D. Va.2018Background
- NorthStar USA (Delaware, based in Virginia) and its UAE parent accuse former CEO/Managing Director Alden Alberto of diverting corporate funds and assets to himself and to a startup, Vulcan Aviation, while serving as CEO and attorney-in-fact.
- Plaintiffs allege unauthorized bonus payments (totaling millions), improper withdrawals and credit-card charges, attempted transfers of equipment and an ITAR license, and outreach to vendors/employees to move business to Vulcan.
- Alberto resigned October 25, 2017; plaintiffs allege he thereafter withdrew over $664,000 and used corporate cards for Vulcan expenses.
- Plaintiffs assert claims for breach of fiduciary duty, common-law and statutory conspiracy, fraud, tortious interference, conversion, defamation, and unjust enrichment; Vulcan Aviation is also named on a statutory conspiracy claim.
- Defendants moved to dismiss under Rule 12(b)(6) and argued various claims (or portions) are time-barred and that plaintiffs failed to plead required elements; court applied Virginia choice-of-law rules and Virginia limitations periods at the motion stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | Virginia governs because injuries occurred where Alberto worked (VA) | Unclear; choice could differ with fuller record | Court applies Virginia law for now |
| Statutes of limitations / continuing violation | Earlier acts are part of a continuing violation, so timely | Many alleged acts fall outside VA limitations; continuing-violation doctrine shouldn't extend to these torts | Court rejects continuing-violation theory for these common-law torts and applies VA limitation periods; pre-limitations conduct is time-barred |
| Breach of fiduciary duty | Alberto abused authority, made unauthorized bonuses/withdrawals, sabotaged company and caused >$20M damages | Powers granted in Memorandum/POA authorized his acts; business judgment | Claim survives: pleadings sufficiently allege fiduciary duty, unauthorized acts, and damages |
| Conspiracy (statutory & common law) | Conspiracy existed among Alberto, Key, Holcombe, and Vulcan | Corporate-agent intracorporate immunity; a corporation cannot conspire with its agents; single-defendant conspiracy disallowed when same underlying torts are pled against that defendant | Conspiracy claims dismissed (Vulcan can't conspire with its agents; civil conspiracy against single defendant duplicative), but with leave to amend |
| Fraud (Rule 9(b)) | Concealment of bonus breakdown and misrepresentations to chairman support fraud | Plaintiff fails to plead time, place, content, identity with particularity; no duty to disclose breakdown | Fraud dismissed for failure to plead particularity and no adequate concealment theory; leave to amend permitted |
| Tortious interference with business expectancy | Interference with potential Kuwait sale supports claim | No sufficiently certain expectancy or existing contract | Dismissed for failure to allege reasonable probability of contract; leave to amend allowed |
| Conversion | Funds were taken from corporate bank accounts and used personally/Vulcan | Money not segregated/identifiable fund so conversion improper | Claim survives: allegations that corporate funds were misappropriated for personal use are sufficient |
| Defamation | Alberto made false statements to State Dept and UAE Armed Forces that prejudiced NorthStar's contracts | Statements were regulatory/ITAR-mandated and thus privileged | Claim survives at this stage; immunity not shown on the pleadings |
| Unjust enrichment | Alberto retained benefits (bonuses, withdrawals, payments) unjustly | POA/Memorandum authorized bonuses; statute of limitations argument | Claim survives: pleadings allege benefits retained under inequitable circumstances and recent post-resignation withdrawals support claim |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard governs Rule 12(b)(6))
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (federal courts in diversity apply forum state's choice-of-law rules)
- Quillen v. Int'l Playtex, Inc., 789 F.2d 1041 (lex loci delicti and place-of-wrong as last event making actor liable)
- Gelber v. Glock, 293 Va. 497 (civil conspiracy cannot be maintained against a single defendant where same underlying torts are alleged against that defendant)
- Grayson v. Anderson, 816 F.3d 262 (caution against judicially expanding state law causes of action)
- Mangold v. Analytic Servs., Inc., 77 F.3d 1442 (pleading standards and related doctrines cited in context of fraud/pleading)