High-Stakes Business and Commercial Litigation

Fox & Moghul represents both plaintiffs and defendants in litigation before state and federal courts as well as in alternative dispute proceedings like mediation and arbitration. Our firm has a specialized focus in the following areas:

  • Business Partnership Disputes
  • Contract Actions
  • Defamation
  • Business Fraud
  • Business Conspiracy
  • Fiduciary Duty Litigation
  • Tortious Interference
  • Non-Compete Agreements
  • Injunctions and Temporary Restraining Orders (TROs)

 

Business Partnership Disputes 

This includes commercial disputes and litigation between and among owners of S/C corps, LLCs, LPs, etc., including derivative claims (Va. Code § 13.1-1042; and 13.1-672.1).

Our attorneys are sensitive to your business goals and well-equipped to tackle the most complex of disputes between business stakeholders. Some of the scenarios that we can help with include:

  • Limited Liability Company Intra-Member or Manager Disputes
  • Limited Partnership Disputes Among General or Limited Partners
  • Shareholder Disputes and Shareholder Derivative Action
  • Fiduciary Duty Litigation (When a member/shareholder/partner breaches his fiduciary duty to the entity or, if applicable, to the partners)
  • Breach of Company Bylaws by a Director or Officer of the Corporation
  • Embezzlement or Conversion of Business Property
  • Usurpation of Business Opportunity

 

For more information on business partnership disputes, refer to the following resources:

 

Business & Commercial Contract Disputes

Contract disputes can occur between competing businesses, suppliers, financiers/investors, insurers, contractors, partners, shareholders, employees, and customers. A commercial dispute can range from an honest miscommunication, to outright fraud. If your business is facing a legal dispute, our attorneys can secure an efficient and final resolution to the dispute, possibly without filing a paper in court.

Our business and commercial litigation team focuses on serving businesses and the people in business. Our attorneys understand you'd rather invest your time and money into your business rather than handling business lawsuits. The cheapest dispute is the one that never happens. Our legal representation can efficiently resolve existing disputes, including business contract disputes, international commercial disputes, and small business litigation, and identify potential disputes for pro-active prevention. Our attorneys serve as counsel to plaintiffs and defendants in litigating commercial disputes. We can take immediate steps to pursue action or defend against a claim.

  • Commercial Contract Disputes
  • Partnership Disputes
  • Shareholder Disputes
  • Construction Disputes
  • Arbitration and Alternative Disputes Resolution (ADR)

 

Defamation

At Fox & Moghul, our attorneys are uniquely qualified to defend Virginia businesses facing defamation, whether spoken, written, broadcast or disseminated in any other form.

Defamation is one of the most misunderstood areas of law. Just because someone says something bad about you does not mean it was libel or slander.

Simply put, a defamatory statement is a false statement that exposes the defamed person to public hatred, contempt, ridicule, humiliation, embarrassment or disgrace.

Generally speaking, in order to have a defamation case you must show the statement was published, actionable and intentional. Though in some cases you may have to prove additional elements such as that the statement was objectively false, and that the defendant knew it was false or was negligent in not determining the facts.

There are several types of defamation that affect Virginia businesses, some of which are outlined below:

  • Media defamation: Oftentimes the media publishes untrue and defamatory statements which cause irreparable damage to individuals and businesses. Under the First Amendment, the media has powerful defenses to defamation claims. If you were the target of a defamatory statement by a news organization, magazine or other media publication, it is best to work closely with an experienced law firm to get results.

 

  • Defamation from current or former employees: Disgruntled employees may reveal untrue and damaging statements about your business in an attempt to sabotage its reputation. These cases become even more destructive when multiple employees coordinate an attack on your business. Our firm thoroughly presents your case to reveal the truth and the malicious intent of these other parties.

 

  • Defamation on social media: One of the biggest mediums to publish libel is through the internet and social media. While statements on social media are often not classified as defamation, we thoroughly investigate social media defamation cases just as we do any other defamation claim. In these instances, it is best to preserve as much evidence as possible to show the validity and impact of the defamatory statement.

 

  • Offensive statements and pure opinions do not count as defamation. If someone states their opinion and you are offended, you still do not have a defamation claim. To determine whether or not you have a claim for your unique case, schedule a consultation with an experienced defamation lawyer.

For more information on Virginia defamation laws, please see:

 

Business Fraud

Our experienced Virginia Business Fraud Lawyers can explain the legal complexities surrounding the doctrine of fraud. It is a common "F" word that is often thrown around in everyday life, but its technicalities are much harder to prove in the courtroom. Suffice it to say that not every misleading statement meets the legal criteria for fraud. Remember, that if proven, a fraud claim potentially carries punitive damages against the person who committed the fraud. Virginia law defines fraud 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 him. see Van Deusen v. Snead, 247 Va. 324, 441 S.E.2d 207 (1994).

Standard of Proof: Fraud must be proven by clear and convincing evidence. see Mortarino v. Consultant Engineering Services, 251 Va. 289, 295, 467 S.E.2d 778, 782 (1996).

Va. Code § 8.01-243(A) - Statute of Limitations and the Discovery Rule. Under Virginia law, claims for fraud are subject to a two year statute of limitations period, which is subject to the discovery rule - that is, the clock does not start ticking until the fraud is discovered or by the exercise of due diligence reasonably should have been discovered. According to STB Mktg. Corp. v. Zolfaghari, 240 Va. 140, 144 (1990):

The language "by the exercise of due diligence reasonable should have been discovered," as used in Code § 8.01-249, means "such a measure of prudence, activity or assiduity, as is property to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case."

 

Types of Fraud:

  • Fraud in the inducement - this type of fraud generally occurs when one defrauds another to enter into a contract or undertake an obligation
  • Actual Fraud - this is fraud committed with the intent to deceive (i.e. scienter)
  • Constructive Fraud - "Constructive fraud differs from actual fraud in that the misrepresentation of material fact is not made with the intent to mislead, but is made innocently or negligently although resulting in damage to the one relying on it." Evaluation Research Corp. v. Alequin, 247 Va. 143, 147, 439 S.E.2d 387, 390 (1994)

For more information on the legalities of fraud in Virginia state, please see:

 

Business Conspiracy

There are two variants of conspiracy under Virginia civil law.

 

What Is A Business Conspiracy?

Virginia Code Sec. 18.2-499 defines business conspiracy as follows:

Any two or more persons who combine, associate, agree, mutually undertake or concert together for the purpose of (i) willfully and maliciously injuring another in his reputation, trade, business or profession by any means whatever or (ii) willfully and maliciously compelling another to do or perform any act against his will, or preventing or hindering another from doing or performing any lawful act, shall be jointly and severally guilty of a Class 1 misdemeanor. Such punishment shall be in addition to any civil relief recoverable under § 18.2-500.

A successful litigant can "recover three-fold the damages by him sustained, and the costs of suit, including a reasonable fee to plaintiff's counsel" under Virginia Code 18.2-500.

 

What Is Common Law Civil Conspiracy?

"Common-law conspiracy consists of two or more persons combined to accomplish, by some concerted action, some criminal or unlawful purpose or some lawful purpose by criminal or unlawful means." Commercial Bus. Sys., Inc. v. Bellsouth Servs., Inc., 249 Va. 39, 453 S.E.2d 261 (1995).

 

Fiduciary Duty Litigation

What is a fiduciary relationship?

"A fiduciary relationship is one founded upon trust or confidence reposed by one person in the integrity and fidelity of another. It is said that the relationship exists in all cases in which influence has been acquired and abused, in which confidence has been reposed and betrayed. The rule embraces both technical fiduciary relations and those informal relations, which exist whenever one man trusts in, and relies upon, another. Such a relationship might be found to exist, in appropriate circumstances, between close friends or even where confidence is based upon prior business dealings." Hoyle v. Diamond, 947 F.2d 595 (2013).”

The Virginia Stock Corporation Act, Va. Code § 13.1-673 et seq., and the Virginia Non-Stock Corporation Act, Va. Code § 13.1-853 et seq., mandate that the business of a corporation be managed under the direction of its board of directors (the "Board"). In the case of the Virginia Limited Liability Company Act, it can be Members or Managers. Therefore, directors, officers or managers of Virginia LLCs and corporations owe certain common law and statutory duties to the corporation and its shareholders in their capacities as fiduciaries. Unlike Delaware law, Virginia law does not impose fiduciary duties between shareholders or between the board and minority shareholders.

Elements of A Breach of Fiduciary Duty Claim

To state a claim for a breach of fiduciary duty under Virginia law, you must allege:

(1) the existence of a fiduciary duty;

(2) a breach of that duty; and

(3) damages.

Under Virginia law a breach of fiduciary duty claim is subject to the two-year limitations period of section 8.01-248. Fiduciary Duty claims can be sub-classified into two primary categories.

 

Fiduciary Duty of Care

Virginia's Stock Corporation Act provides that "A Director shall discharge his duties as a Director, including his duties as a member of a committee, in accordance with his good faith business judgment of the best interests of the Corporation." §13.1-690.A. The Duty of Care, thus, is the affirmative duty of a Director to make informed decisions for the Corporation, after using reasonable diligence in gathering and considering material information.

Although the duty of care is sometimes expressed in terms of a fiduciary duty, it does not rise to the standard of care required of a trustee (Williams v. Fidelity Loan & Savings Co., 142 Va. 43, 128 S.E. 615 (1925). Neither the Virginia Code nor the Model Business Corporation Act categorizes the directors' duties in terms of a fiduciary relationship. Nevertheless, the prevailing law in Virginia is clear that directors and officers must exercise some degree of care and prudence in the protection and management of corporate assets.

 

Non-Compete Agreements

 

What are Non-Compete Agreements?

Non-compete Agreements are more popular than ever before. These agreements are essentially contracts in which an employee agrees not to leave an employer and then compete against the employer. In most cases, employers insert non-compete clauses into an employment agreement that a new employee signs before being hired. As such, non-compete agreements have become somewhat common. 

Most non-compete agreements state the duration of the time the employee cannot compete against the employer. They also limit the employee’s ability to take certain customers along with him or her after leaving the company. Many non-compete agreements include geographic limitations or physical locations in which the employee cannot compete against the employer.

 

Virginia Courts Disfavor Non-Compete Agreements 

Virginia courts tend to disfavor non-compete agreements because they can restrain free commerce. As a result, the more narrowly the non-compete agreements are tailored, the better chance they have of surviving a lawsuit. When the non-compete agreement is reasonable, however, courts will enforce the terms of the agreement. Under Virginia law, non-compete agreements must do the following:

  • Protect the interest of a bona fide employer
  • Be reasonable in their terms
  • Not violate public policy considerations

Virginia courts have held that valid business interests include protecting a business from the poaching of existing customers by the former employee, keeping confidential information secret, and protecting trade secrets. Virginia recently passed a law that states that employers cannot enforce a covenant to not compete with low-wage employees. 

 

The Non-Compete Agreement Must be Reasonable

Employees have a right to make money for themselves after they leave their employers company. Judges in Virginia are less likely to affirm a non-compete agreement if it limits the employee to the point that they basically cannot find gainful employment after leaving the company where they signed the non-compete agreement. 

If you have already signed a non-compete agreement, you may be worried that your career is essentially over. However, signing a non-compete agreement is not always the end of the story. Non-compete agreements in Virginia still need to pass several legal tests in order to be valid and enforceable. Virginia non-compete agreements must meet several requirements in terms of reasonableness, including the following according to a controlling court decision in Assurance Data, Inc. v. Malyevac, 286 Va. 137, 144 (2013):

The restriction imposed by the non-compete agreement is “no greater than is necessary to protect the employer’s legitimate business interest”

The non-compete agreement is not oppressive or excessively severe when it comes to restricting the employee’s ability to make an income or find another job, and

The non-compete agreement does not violate Virginia’s public policy. 

 

The Burden is on the Employer to Show That the Agreement is Valid

If you are an employee who signed a non-compete agreement and you are concerned about finding employment in the future, the burden is on your employer to prove that the non-compete agreement is valid. Your employer must show the court that the non-compete clause or agreement meets all of the tests set forth in Virginia case law.  Virginia courts consider several factors to determine whether the agreement is reasonable enough to uphold.

First, they will examine whether the time limitations placed on the employee are reasonable. Typically, if a contract limits the employee for multiple years, or even up to a decade, the employer could have a difficult time showing that the time limits are reasonable. They will also consider the geographic limitations placed on the employee. 

If the employer limits the employee from working in the entire country, such an agreement would likely be invalid. However, suppose the employer limited the employee from working in a major city, such as Los Angeles or New York City. In that case, the employee could still have the opportunity to successfully set up a business in another major city, and the contract may be reasonable. 

Every limiting directive set forth in the non-compete agreement must protect the legitimate business interests of the employer. Courts will look to see if the language in the non-compete agreement is so overbroad that it is difficult to determine how the provision will help the employer. In other cases, non-compete Agreements are too ambiguous for the employee to understand. If you signed a non-compete agreement that is ambiguous, overly vague, or too broad, there is a good chance that Virginia courts will not enforce it. Additionally, employers cannot read images from an employee breaching a non-compete clause unless they established that they had been economically harmed. 

 

For more information on non-compete agreements, please see:

Injunctions and Temporary Restraining Orders (TROs)

 

Please contact us at 703-686-5830 or [email protected] for a consult regarding your case.

 

DISCLAIMER: The results obtained are not necessarily the results that may be obtained in a case with different facts. Every case is different and fact specific, and the results obtained will be related to the facts and merits of that particular case.