United States District Court, E.D. Virginia, Richmond Division
DANIEL BERMAN et al., as successors in interest to MainQuad Communications, Inc., Plaintiffs,
DAVIDSON MEDIA VIRGINIA STATIONS. LLC, Defendants.
John A. Gibney, Jr. United States District Judge
The plaintiffs sued Davidson Media Virginia Stations, LLC ("Davidson Virginia"), for breach of contract, and various entities including Atalaya Administrative, LLC ("Atalaya"), for tortious interference with contract. The plaintiffs argue that Atalaya acted unjustifiably to prevent Davidson Virginia from repaying a promissory note worth one million dollars. Atalaya argues that the plaintiffs have failed to state a claim because they have not pleaded enough facts, even if taken as true, to show that Atalaya tortiously interfered with their contract with Davidson Virginia. The Court agrees with Atalaya. finds that the plaintiffs have failed to state a claim, and dismisses the claim against Atalaya.
A. The 2005 Promissory Note and Subordination Agreement
The plaintiffs, successors in interests to MainQuad Communications. Inc. ("MainQuad''), have sued Davidson Virginia to enforce a Promissory Note ("'the Note") executed by Davidson Virginia in favor of MainQuad. The parties executed the Note for a principal amount of one million dollars plus seven percent interest per year along with an accompanying Subordination Agreement. The Subordination Agreement subordinated the Note to Davidson Virginia's senior debt obligations. In other words, MainQuad could not collect on the Note until Davidson Virginia satisfied its debt to its senior lenders.
B. The 2008 Suit and Settlement Agreement
MainQuad filed suit to collect the debt owed under the Note in September 2008. Davidson Virginia filed its answer admitting it had not paid the amount due on the Note, but asserting that it still had obligations to its senior lenders, so the Note remained subordinated under the Subordination Agreement. The parties settled the suit in December 2008 (the ''Settlement Agreement"). Under the Settlement Agreement. Davidson Virginia agreed to pay MainQuad $600, 000 and, as a condition precedent to the Settlement Agreement, it agreed to sell certain assets to Golden Door Broadcasting. LLC ("Golden Door"). The sale of assets to Golden Door never occurred. Accordingly, the Settlement Agreement never went into effect.
In January 2009, the corporate entities involved in Davidson Virginia, entered into a Purchase Agreement and Plan of Merger. The plaintiffs assert that, in practice, this restructuring exchanged the senior lenders" entitlement to payment of outstanding loans for equity shares in Davidson Virginia.
C. The Current Suit
After the restructuring, Davidson Virginia continued to assert that it had not paid its obligations to its senior lenders, so the Subordination Agreement prevented payment on the Note. The plaintiffs claim that sometime in late 2014 or early 2015, they learned that a Davidson affiliate, subject to the same senior debt as Davidson Virginia, made a capital expenditure of $500, 000. This led the plaintiffs to believe that the senior lenders now act as beneficial owners of Davidson Virginia, and the current chairman and president of Davidson Media Group. LLC ("Davidson Group"), the corporate parent of Davidson Virginia, simply act as proxies for the senior lenders.
On December 12 2014, almost ten years alter the parties signed the note. ACM VRF V, LLC ("ACM"), bought the loans and obligations that Davidson Virginia owed. On that same date, the required lenders gave consent to appoint Atalaya as a successor agent for the lenders. This marks Atalaya's first foray into this dispute. As part of the purchase of the loans, ACM, through Atalaya, told Davidson Virginia that it had to fulfill all of its obligations by December 31, 2014, or it would find itself in default.
On May 15, 2015, counsel for the plaintiffs wrote a letter to Davidson Virginia informing them that the plaintiffs "hereby declare the Settlement Agreement null and void." (Second Am. Compl. Ex., 11.) On May 18, 2015, the plaintiffs filed their initial complaint in this matter, which included a breach of contract claim. On June 3, 2015, Atalaya wrote a letter to Davidson Virginia informing them that they owed full payment on all the loans that ACM had purchased. In the letter, Atalaya reiterated that ACM has first priority liens and stated that '"no action prohibited to be taken under the Financing Agreement and the other Loan Documents while an Event of Default exists and is continuing may be taken until the Loans and Obligations arc paid in full, including but not limited to the making of any payment of,  that certain $ 1, 000, 000 Promissory Note dated May 13. 2005." (Second Am. Compl.. Ex. 10.) The plaintiffs argue that these actions by Atalaya constitute tortious interference with contract.
The plaintiffs Hied their Second Amended Complaint after a hearing on the defendants' motions to dismiss the plaintiffs' amended complaint. At that time, the Court granted Atalaya's motion to dismiss, but allowed the plaintiffs to re-plead their tortious interference with contract claim against Atalaya in an amended complaint. The Court warned plaintiffs that ...