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Kamin v. U.S. Bank National Association

United States District Court, Fourth Circuit

December 9, 2013

DANIEL G. KAMIN, Plaintiff,

William R. Rakes and Michael J. Finney, Gentry Locke Rakes & Moore, LLP, Roanoke, Virginia, for Plaintiff; Constantinos G. Panagopoulos, Ballard Spahr, LLP, Washington, D.C., for Defendant.


James P. Jones United States District Judge

In this civil diversity action, the plaintiff, Daniel G. Kamin, has sued U.S. Bank National Association (“U.S. Bank”). Kamin seeks a declaratory judgment that his liability under a personal Guaranty of a commercial mortgage loan has not been triggered under the loan documents. U.S. Bank has counterclaimed that Kamin is liable for the entire debt and associated losses based upon his Guaranty. U.S. Bank also counterclaims that Kamin is liable for tortious interference with contract as well as statutory conspiracy. Kamin has moved to dismiss the two tort counterclaims, arguing that they are barred under Virginia law because they relate to an alleged breach of contract rather than independent legal duties. For the reasons set forth below, I will deny Kamin’s motion.


In considering Kamin’s Partial Motion to Dismiss Counterclaim, I must accept as fact the following allegations made by U.S. Bank.

This action arises out of the financial difficulties of Euclid Center L.P. (“Euclid”), the owner of a shopping center in Bristol, Virginia. Euclid owes $6.9 million on a mortgage loan currently held by U.S. Bank, secured by the shopping center property. The shopping center’s anchor tenant was K-VA-T Food Stores, Inc. (“KVAT”), which operated a supermarket on the premises and paid Euclid rent based in part on its gross receipts from the business. KVAT closed its supermarket and thereafter Euclid defaulted on the mortgage loan.

Euclid is a limited partnership. The Daniel G. Kamin Bristol Corporation (“Kamin Bristol Corp.”) is a general partner of Euclid, and Kamin, the plaintiff, is President of Kamin Bristol Corp.

Euclid’s mortgage loan is on a non-recourse basis to Euclid, except under certain defined circumstances. Kamin executed a Guaranty by which he in turn would be personally liable for any recourse debt if a number of specified events happened, including if Euclid breached Section 4.2 of the Deed of Trust. U.S. Bank claims that Euclid breached Section 4.2 by taking on additional debt other than trade payables, by failing to maintain adequate capital for reasonably foreseeable business obligations, and by engaging in unauthorized transactions with KVAT and Kamin.

In its counterclaim for tortious interference with contract, U.S. Bank alleges that Kamin intentionally caused Euclid to breach the terms of its loan agreement by (1) causing Euclid to take on outside debt by taking a loan from him, and (2) causing Euclid to enter into an unauthorized settlement agreement with KVAT after KVAT closed its supermarket. In the settlement agreement, Euclid agreed to reduce KVAT’s rent and KVAT agreed to pay an inflated price for other property owned personally by Kamin. U.S. Bank alleges that Kamin arranged the settlement so that he was paid instead of Euclid, thus diverting funds that could have been used to satisfy the loan. U.S. Bank also alleges that the settlement agreement was made without its knowledge or prior written consent, in contravention of the loan documents.

In its counterclaim for statutory conspiracy, U.S. Bank asserts that Kamin conspired with Euclid to harm U.S. Bank’s interest in recovering under the loan agreement by (1) facilitating the breach of Euclid’s fiduciary duty to maximize its assets for the payment of its creditors; and (2) facilitating the conversion of property subject to the loan agreement. U.S. Bank also alleges that KVAT was part of the conspiracy and party to the unauthorized settlement agreement.


A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint to determine whether the pleader has properly stated a cognizable claim. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). Federal pleading standards require that a complaint contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In order to survive a motion to dismiss, the pleader must “state[] a plausible claim for relief” that “permit[s] the court to infer more than the mere possibility of misconduct” based upon its “judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In evaluating a pleading, the court accepts as true all well-pleaded facts and construes those facts in the light most favorable to the pleader. Id. at 678.

The parties are agreed that Virginia substantive law applies to U.S. Bank’s claims. Under Virginia law, in order for a single act or occurrence to give rise to claims in both tort and contract, ‘“the duty tortiously or negligently breached must be a common law duty, not one existing between the parties solely by virtue of the contract.’” Augusta Mut. Ins. Co. v. Mason, 645 S.E.2d 290, 293 (Va. 2007) (quoting Foreign Mission Bd. of the S. Baptist Convention v. Wade, 409 S.E.2d 144, 148 (Va. 1991)). The elements for tortious interference with contract are:

(i) the existence of a valid contractual relationship or business expectancy; (ii) knowledge of the relationship or expectancy on the part of the interferor; (iii) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (iv) resultant ...

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