On July 24, 2003, the chairmen of the plaintiff and defendant signed a letter of intent concerning the plaintiffs proposed purchase of the defendant and its subsidiaries that fixed the purchase рrice and provided that the acquisition would be a stock purchase. The letter of intent provided in paragraph 5 that the “definitive Stock Purchase Agreement” would include rеpresentations and warranties “customary in transactions of this nature, including, without limitation representations as to” ten general categories and “other items to be agreed upon in the Definitive Documentation.”
Paragraph 6 provided “The parties will use good faith efforts to execute the Stock Purchase Agreement within twenty-eight (28) days of the execution of this Letter of Intent.” Paragraphs 9 and 10 contained confidentiality and “no solicitation” provisions. Paragraph 11 provided in pertinent part:
Binding Effect. This Letter of Intent is intended to evidеnce the current intentions of the parties with respect to the transactions contemplated hereby as reflected in discussions between us to date, and it is expressly understоod and agreed that (a) this Letter of Intent is not intended to, and does not, constitute an agreement to consummate the transactions contemplated hereby or enter intо the Definitive Documentation and (b) transactions contemplated hereby by virtue of (i) this Letter of Intent... unless and until the Definitive Documentation is executed and delivered; provided, hоwever, that*145 the respective obligations of the Shareholders, the Company, .and the Purchaser contained in this paragraph and paragraphs 9, 10, 13, 14, and 16 will be binding upon the Sharеholders, the Company, and Purchaser as the case may be, when each has signed a copy of this Letter of Intent in the manner provided below.
Paragraph 13 provided that the parties’ obligations (other than those ,of paragraphs 9 and 14) would terminate ninety days after execution, I assume, of the letter of intent. Paragraph 14 provided that “Except to the extent specifically provided herein... to the contrary” each party shall “bear its own expenses - financing, legal, accounting, and otherwise - in connectiоn with the preparation of this letter . . . and the consummation of all of the transactions contemplated hereby. ...” A stock purchase agreement was never executеd.
The plaintiff has filed a three count motion for judgment seeking an unspecified amount of damages for breach of the letter of intent. The defendant has demurred. I sustain the demurrer to Count I and the failure to quantify damages; I overrule the demurrer to Counts II and HI.
Count I
The plaintiff claims the defendant breached the letter of intent by failing to: (1) timely review drafts pf the stock purсhase agreement, (2) obtain counsel to assist in the transaction, (3) provide comments on the drafts of the stock purchase agreement, and (4) “pursue good faith negotiatiоns.” The plaintiff alleges that a stock purchase agreement would have been executed if the defendant had negotiated in good faith.
Paragraph 11 of the letter of intent clearly provides that it is not enforceable in the manner the plaintiff claims. Even in the absence of paragraph 11, an agreement to negotiate is not enforceable in Virginia. In Virginia, “there must be mutual assent of the contracting parties to terms reasonably certain under the circumstances in order to have an enforceable cоntract.” Allen v. Aetna Casualty & Surety,
By its very nature, an agreement to negotiate in good faith shows that the parties have not mutually assented to reasonably certain terms of a contract.
The plaintiff relies on several decisions from courts outside of Virginiа, which I have read, that have adopted the “modem” mle that agreements to negotiate are enforceable. I do not find them persuasive.
In EG&G v. Cube Corp.,
The plaintiff relies primarily on Copeland v. Baskin Robbins,
The problem the court addressed in Copeland, the substantial expenses a party inсurs in protracted and complex negotiations, can easily be addressed by the parties themselves. They are free to negotiate and include in an agreement the manner in which their expenses will be paid if the proposed transaction is not concluded and the circumstances under which one party will be liable to the other. Indeed, the parties did so here in paragraph 14 with respect to certain expenses. They provided each party would bear its own expenses.
The plaintiff asks the court to crеate a new cause of action to relieve it of the consequences of its bargain. I decline to do so.
In these Counts, the plaintiff alleges breaches of the non-solicitation and confidentiality provisions of paragraphs 9 and 10 of the letter of intent. Pursuant to paragraph 11, those two paragraphs were binding on the parties. The plaintiff has alleged sufficient facts to support its allegations. As the plaintiff has sufficiently pleaded a violation of the confidentiality provision of the letter of intent, I need not dеtermine at this time what rights, if any, the plaintiff may have under the letters of May 2,2003.
The Ad Damnum
The ad damnum clause does not request a specific amount of damages, but, rather, “compensatoiy damages against Camellia in an amount to be proven by the evidence at trial.” In Stephens v. White,
In actions which found entirely in damages, it is absolutely necessary at common law to lay them in the declaration; but in debt it is otherwise. The plaintiff ought to know what are the damages he has sustained, and if he lay none, he cannot say that he has sustained any.
Motion for a Protective Order
The plaintiff has issued subpoenas duces tecum to several сorporations that are not parties to this case. The subpoenas request the production of numerous records. The plaintiff has also served interrogatories and requests for production of documents on the defendant.
As the plaintiff has no claim for “benefit of the bargain” damages because of paragraph 11 of the letter of intent, nоr a claim for many elements of reliance damages because of paragraph 14, I do not know what items of damages the plaintiff claims beyond nominal damages. Before I require the
Mr. Devine shall prepare the appropriate order allowing the plaintiff twenty-one days from the date of this letter to file an amended motion for judgment, provided that no cause of action for breach of an agreement to negotiate in good faith shall be included therein.