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Jaggars v. Sandy Spring Bank

United States District Court, W.D. Virginia, Lynchburg Division

August 28, 2014



NORMAN K. MOON, District Judge.

This matter is before me upon consideration of the second motion to dismiss filed by Defendant Sandy Spring Bank ("Defendant"). Principally, I must decide whether the claim raised by Plaintiff Christopher Jaggars ("Plaintiff") under the Virginia Business Conspiracy statutes, Virginia Code §§ 18.2-499 and 18.2-500, properly pleads the requisite legal malice. As I determine that the complaint does so, I will deny the motion to dismiss.


A. Plaintiff's Allegations

Plaintiff Christopher Jaggars was in the business of purchasing residential real estate for the purpose of renting the property to tenants and holding it as an investment so that he could later sell the property at an appreciated value. When Suzanne Johnson, who was employed at Gateway Mortgage Group, learned that Jaggars was engaged in the business of investing in residential real estate, she targeted him as a potential victim of the DpFunder Program scheme that she was promoting on behalf of Global Direct Sales, L.L.C. ("Global Direct"). Global Direct is a forfeited Maryland limited liability company owned by Ryan Hill, who also owns and operates Rycho Funding, L.L.C. ("Rycho"), also a Maryland limited liability company. Johnson marketed the DpFunder Program through her own limited liability company, LMFL Investments, L.L.C, and showed Plaintiff a PowerPoint presentation that sought to persuade him to sign a "DpFunder Residential Dealer Agreement, " pursuant to which Plaintiff would be paid sales commissions by Global Direct if he sold memberships with sham benefits to the "client associations" of Global Direct. Plaintiff declined to participate.

Thereafter, Johnson forged DpFunder forms, purchased 1510 Club Drive in Lynchburg, Virginia from Phillip Booth at a foreclosure sale for $194, 746, and then sold it to Plaintiff for $231, 234. Johnson obtained a loan for Plaintiff from Gateway Mortgage Group in the amount of $275, 000, which provided loan proceeds in excess of the purchase price. Prior to closing, Rycho falsely claimed, in a letter to the Settlement Agent, that Plaintiff owed Rycho a debt pursuant to a non-existent "Assignment of Funds." At closing, the Settlement Agent paid $49, 600 of the loan proceeds to Rycho. Rycho paid to Global Direct the funds it received pursuant to the fraudulent "Assignment of Funds, " and Global Direct opened a savings account in Plaintiff's name at Sandy Spring Bank without Plaintiff's knowledge or consent. Defendant knowing and intentionally joined this conspiracy, bypassed its normal procedures and, in violation of the Patriot Act, allowed an account to be opened in Plaintiff's name without any verification and without obtaining his consent.

On January 26, 2009, Global Direct issued a fraudulent Form 1099, falsely showing that it had paid $43, 500 in sales commissions to Plaintiff in 2008. The purpose of the form was allegedly to allow Global Direct to conceal the loan proceeds that it received from Rycho and to shift tax liability from Global Direct to Plaintiff.

B. Procedural Background

On January 22, 2014, this action was filed in the Circuit Court of the City of Lynchburg. On May 1, 2014, Defendant properly removed the case to this Court pursuant to 28 U.S.C. § 1441. Defendant filed a motion to dismiss, alleging that Plaintiff's complaint failed to state harm to a business, as opposed to a personal, interest. That motion was fully briefed and argued, and on June 25, 2014, I issued a memorandum opinion and order granting the motion to dismiss without prejudice, finding that Plaintiff's complaint failed to state harm to a business interest but granting Plaintiff leave to file an amended complaint. Plaintiff filed his amended complaint on July 9, 2014, Defendant filed a second motion to dismiss on July 17, 2014, and as the motion was argued before me on August 21, 2014, the matter is now ripe for adjudication.


The appropriate pleading standard for considering a motion to dismiss for failure to state a claim upon which relief can be granted is that refined by Bell Atlantic v. Twombly , 550 U.S. 544 (2007) and Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937 (2009). See also Fed.R.Civ.P. 12(b)(6), Fed.R.Civ.P. 8. Plaintiffs must allege facts that "state a claim to relief that is plausible on its face, " i.e. , facts that "have nudged their claims across the line from conceivable to plausible." Twombly , 550 U.S. at 570. A claim is plausible if the complaint contains "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, " and if there is "more than a sheer possibility that a defendant has acted unlawfully." Iqbal , 556 U.S. at 678, 129 S.Ct. at 1949. The following long-held rule still stands: "In evaluating a Rule 12(b)(6) motion to dismiss, a court accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff in weighing the legal sufficiency of the complaint." Nemet Chevrolet, Ltd. v., Inc. , 591 F.3d 250, 255 (4th Cir. 2009) (citations omitted).


A. Collateral Estoppel

Plaintiff argues that the motion to dismiss should be denied because Defendant's legal malice argument is precluded by collateral estoppel. Collateral estoppel is applicable only if: (1) the issue sought to be precluded is identical to one previously litigated; (2) that issue was actually determined in a prior proceeding; (3) that issue's determination was a critical and necessary part of the decision in the prior proceeding; (4) the prior judgment is final and valid; and (5) the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the previous forum. Eastern Associated Coal Co v. Dir., OWCP, 2014 U.S. App. LEXIS 12624, at *22-23 (4th Cir. 2014). Clearly, and contrary to Plaintiff's novel suggestion that any challenge to the sufficiency of the complaint was resolved during the prior proceeding, the only issue that was determined by the first motion to dismiss was whether Plaintiff's complaint sufficiently stated harm to a business, as opposed to a personal, interest. The question of whether Plaintiff's complaint ...

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