United States District Court, E.D. Virginia, Norfolk Division
OPINION AND ORDER
. DAVIS UNITED STATES DISTRICT JUDGE
matter is before the Court on a motion for summary judgment,
filed by FedEx Ground Package System, Inc.,
("Defendant" or "FedEx"). ECF No. 38.
After briefing was completed on the summary judgment motion,
FedEx filed a request for oral argument. ECF No. 62. Shortly
after such request was filed, plaintiffs Orbit Corp
("Orbit") and Gary Simon ("Simon, " and
collectively with Orbit, "Plaintiffs") filed a
response to Defendant's oral argument request asking that
the Court deny the request for oral argument unless
the Court requires additional clarity regarding the issues
and arguments presented. ECF No. 63. Consistent with
Plaintiffs' request, the Court determines that oral
argument is unnecessary. Fed.R.Civ.P. 78(b); E.D. Va. Loc. R.
Factual and Procedural Background
was organized as a Virginia corporation on February 27, 2012,
with Simon as its President and sole shareholder. Def.'s
Statement of Material Undisputed Facts 110 ("Def.'s
SUF"), ECF No. 39; Pis.' Resp. to Def.'s SUF
¶ 10, ECF No. 45. Defendant FedEx is a Delaware
corporation with its principal place of business in
Pennsylvania. Second Am. Compl. ¶ 2, ECF No. 26; Answer
¶ 2, ECF No. 27.
April 25, 2012, FedEx and Orbit entered into a written
contract, referred to as the Operating Agreement
("OA"), whereby Orbit agreed to provide the final
delivery leg for FedEx packages in the 23455 Zip Code in
Virginia Beach, Virginia. Def.'s SUF ¶ 15. The OA
refers to the contractor's delivery Zip Code as its
Primary Service Area ("PSA") . OA ¶ 6, ECF No.
3-1. The OA further provides that the "initial
term" of the contract extends "one year" from
the date the OA is signed, with the OA "automatically
renew[ing] for successive terms of one year each" unless
either party provides the other with "notice of
non-renewal in writing at least 30 days prior to the
expiration" of the annual term. Id. ¶ 8.
to the disputes at issue in this case, the terms of the OA
state that Orbit is "responsible for exercising
independent discretion and judgment to achieve the business
objectives and results" necessary to fully service
Orbit's PSA, further stating that "no officer,
agent, or employee of [FedEx] shall have the authority to
prescribe hours of work, whether or when the Contractor is to
take breaks, what route the Contractor is to follow, or other
details of performance." Id. ¶ 1.14.
Moreover, Addendum 16 to the OA, which was also executed by
Simon on behalf of Orbit on April 25, 2012, states that
"Contractor agrees that neither it nor any of its
Personnel are to be treated as or considered to be
[FedEx's] employees for any purpose." Id.
August 21, 2012, four months into Orbit's tenure as a
FedEx contractor, Orbit purchased the rights to service a
second PSA in the City of Virginia Beach (Zip Code 23451)
from another company acting as a FedEx contractor. Def.'s
SUF ¶¶ 22, 24. On August 22, 2012, Orbit executed
an Addendum to the OA reflecting its acquisition of such
second PSA. Id.
February 1, 2013, Orbit received a "Contract Non-Renewal
Review Notification Letter" from FedEx indicating that
Orbit was being "considered for non-renewal." ECF
No. 40-6. On March 1, 2013, FedEx notified Simon in person
and by letter that "Orbit Corp.'s contract will not
be renewed after its current term." ECF No. 40-7;
Def.'s SUF ¶ 34.
receiving the non-renewal notice, Orbit marketed its routes
and assets to Barry Taylor, Esq. (Mr. Simon's friend and
family attorney) and to Simon's sister. Def.'s SUF
¶ 43. It is undisputed that FedEx did not approve the
transfer of Orbit's PSAs to Mr. Taylor's company, and
that FedEx did approve the transfer to a company owned by
instant civil action was initiated by the filing of a
complaint, ECF No. 1, and shortly thereafter, Plaintiffs
filed a more robust amended complaint advancing numerous
legal claims. ECF No. 3. Defendant filed a motion to dismiss
the amended complaint, which was granted in part, and denied
in part, by a detailed Memorandum Opinion issued by this
Court. ECF No. 20. Plaintiffs then filed a motion for leave
to file a second amended complaint, which was opposed by
Defendant. ECF Nos. 21, 24. By written Order, the motion for
leave to amend was granted in part, and denied in part. ECF
No. 25. Following such ruling, three grounds for relief
remained: "Count One Fraudulent Misrepresentation";
"Count Two - Violations of Overtime Provisions Under the
Fair Labor  Standards Act"; and "Count Three -
Breach of Contract." ECF No. 26.
the close of discovery, Defendant filed the now-pending
motion for summary judgment seeking a ruling in
Defendant's favor as to all three remaining grounds for
relief. ECF Nos. 38, 39. Plaintiffs submitted various filings
in opposition, ECF Nos. 45-60, to include a brief in
opposition to summary judgment and multiple exhibits. While
Plaintiffs oppose summary judgment on Counts One and Three,
they affirmatively state in written submissions to the Court
that "Count  2 the Fair Labor Standard Act claim is
hereby withdrawn." ECF No. 60. Accordingly, the Court
deems "Count Two" WITHDRAWN, and Plaintiffs are
foreclosed from pursuing further relief in this case on such
legal theory. The dispute regarding Counts One and Three
is ripe for review.
Standard of Review
Federal Rules of Civil Procedure provide that a district
court "shall grant summary judgment if [a] movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); Jacobs v. N.C. Admin. Office of the
Courts, 780 F.3d 562, 568 (4th Cir. 2015). "[T]he
mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is
that there be no genuine issue of material
fact." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986). A fact is "material" if it
"might affect the outcome of the suit, " and a
dispute is "genuine" if "the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party." Id. at 248; see
Jacobs, 780 F.3d at 568.
56(c) of the Federal Rules of Civil Procedure outlines the
applicable procedure for pursuing, and defending against,
summary judgment, explaining as follows:
(1) Supporting Factual Positions. A
party asserting that a fact cannot be or is genuinely
disputed must support the assertion by:
(A) citing to particular parts of materials in the record,
including depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the
absence or presence of a genuine dispute, or that an adverse
party cannot produce admissible evidence to support the fact.
Civ. P. 56(c) (emphasis added). Rule 56 further states that
“[i]f a party fails to properly support an assertion of
fact or fails to properly address another party's
assertion of fact as required by Rule 56(c), " the Court
has discretion to "consider the fact undisputed for
purposes of the motion." Fed.R.Civ.P. 56(e).
moving party has the initial burden to show the absence of an
essential element of the nonmoving party's case and to
demonstrate that the moving party is entitled to judgment as
a matter of law. Honor v. Booz-Allen & Hamilton,
Inc., 383 F.3d 180, 185 (4th Cir. 2004) . When the
moving party has met its burden to show that there is
insufficient evidence to support the nonmoving party's
case, the burden then shifts to the nonmoving party to
identify genuine and material factual disputes. Id.;
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986).
circumstances, the non-moving party may not rest upon the
mere allegations of the pleadings, but instead must
generally set forth specific facts, supported by documents,
affidavits, or other record materials illustrating a genuine
issue for trial. Celotex Corp. v. Catrett, 477 U.S.
317, 322-25 (1986); Butler v. Drive Auto. Indus, of Am.,
Inc., 793 F.3d 404, 408 (4th Cir. 2015) . The evidence
presented by the nonmovant must be "more than a
scintilla" of evidence and the nonmovant "cannot
create a genuine issue of material fact through mere
speculation or the building of one inference upon
another." Othentec Ltd. v. Phelan, 526 F.3d
135, 140 (4th Cir. 2008) (internal quotation marks and
citations omitted). Although the Court is prohibited from
"weighing the evidence" or making credibility
findings at the summary judgment stage, the Court is required
to review the evidence presented and "'determine
whether there is a genuine issue for trial.'"
Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014)
(quoting Anderson, 477 U.S. at 24 9) . In making
such determination, the Court considers the evidence
presented by the parties "'in the light most
favorable to the' nonmoving party." Jacobs,
780 F.3d at 568 (quoting Tolan, 134 S.Ct. at 1866).
Count One - "Fraudulent
first claim asserts that FedEx knowingly made false
representations about the parties' business relationship
in order to induce Simon/Orbit to enter into the OA. The
parties both properly acknowledge that Virginia law governs
such tort claim.
to Virginia law, "a 'false representation of a
material fact, constituting an inducement to the contract, on
which [a party] had a right to rely, is . ground for an
action for damages in a court of law.'" Augusta
Mut. Ins. Co. v. Mason, 274 Va. 199, 204 (2007) (quoting
George Robberecht Seafood, Inc. v. Maitland Bros.
Co., 220 Va. 109, 111-12 (1979)). However, in a focused
effort to "avoid turning every breach of contract into a
tort, " the Supreme Court of Virginia has adopted the
rule that "in order to recover in tort, 'the duty
tortiously or negligently breached must be a common law duty,
not one existing between the parties solely by virtue of the
contract.'" Id. at 205 (quoting Foreign
Mission Bd. v. Wade, 242 Va. 234, 241 (1991)).
Accordingly, a cause of action in fraud will generally not
lie when "each particular misrepresentation by [the
defendant] related to a duty or an obligation that was
specifically required by the . . . [c]ontract."
Id. at 205-06 (quoting Richmond Metro. Auth. v.
McDevitt St. Bovis, Inc., 256 Va. 553, 559 (1998))
(omission and second alternation in original).
addition to the requirement that a fraud claim be predicated
on a duty arising outside of the contract, a fraud claim
"must aver the misrepresentation of present pre-existing
facts, and cannot ordinarily be predicated on unfulfilled
promises or statements as to future events."
Abi-Najm v. Concord Condo., LLC, 280 Va. 350, 362
(2010) (quoting Lloyd v. Smith, 150 Va. 132, 145
(1928)). Otherwise, "every breach of contract could be
made the basis of an action in tort for fraud."
Id. (quoting Lloyd, 150 Va. at 145).
Although the general rule is that actionable fraud must be
predicated on factual misstatements, "fraud may
sometimes be predicated on promises which are made with a
present intention not to perform them"; that is,
the "false representation of an existing intention to
perform ... is the misrepresentation of a fact."
Id. at 362-63 (quoting Boykin v. Hermitage
Realty, 234 Va. 26, 29 (1987) (omission in original)
clarifying the requirement that an actionable fraud claim be
predicated on misstatements regarding "an existing fact,
" Virginia law provides:
The mere expression of an opinion, however strong and
positive the language may be, is no fraud. Such
statements are not fraudulent in law, because . they do not
ordinarily deceive or mislead. Statements which are vague
and indefinite in their nature and terms, or
are merely loose, conjectural or exaggerated, go for
nothing, though they may not be true, for a man is not
justified in placing reliance upon them.
Mortarino v. Consultant Eng'g Servs., Inc., 251
Va. 289, 293, (1996) (emphasis added) (quoting Saxby v.
Southern Land Co., 109 Va. 196, 198 (1909)).
Accordingly, "commendatory statements, trade talk, or
puffing, do not constitute fraud because statements of this
nature are generally regarded as mere expressions of
opinion." Glaser v. Enzo Biochem, Inc., 126
F.App'x 593, 600 (4th Cir. 2005) (quoting Lambert v.
Downtown Garage, Inc., 262 Va. 707, 713
(2001)). Because a fraud claim requires a misstatement of
fact, such a claim "cannot rest on a
misstatement of the legal effect of a contract, "
Wells Fargo Bank, Nat. Ass'n v. Smith,
No. 3:10cv411, 2010 WL 4622176, at *3 (E.D. Va. Nov. 5,
2010), or a misstatement regarding "what the law will or
will not permit to be done, " Hicks v. Wynn,
137 Va. 186, 196 (1923) (citation omitted).
the above, the Virginia courts have not adopted "a
bright line test to ascertain whether false representations
constitute matters of opinion or statements of fact."
Mortarino, 251 Va. at 293. "Rather, each case
must in a large measure be adjudged upon its own facts,
taking into consideration the nature of the representation
and the meaning of the language used as applied to the
subject matter and as interpreted by the surrounding
circumstances." Id. (internal quotation marks
and citation omitted).
no "bright-line" test exists for separating fact
from opinion, Tate v. Colony House Builders, Inc.,
257 Va. 78 (1999) is instructive on this point. Addressing
statements about a newly constructed house, Tate
held that statements that the house was "free from
structural defects" and was "constructed in a
workmanlike manner" were statements of fact, noting that
"whether the house was actually in the condition
represented can be determined factually." Id.
at 83-84. In contrast, the "alleged representation that
the plaintiffs 'would enjoy quiet possession in the sense
that apart from minor corrective work, no significant work
would be required by way of restoration, rebuilding, or
extensive repair'" were "representations
predicated upon future events or promises" and thus
could not support a claim for fraud. Id. at 84.
Similarly, statements that the house was
"'competently designed commensurate with the
consideration of $345, 000.00' and 'the design and
construction [of the dwelling were] of the highest
quality' are more in the nature of puffing or opinion and
cannot form the basis of an action for constructive
fraud." Id. (alteration in original).
to the actual elements of a fraud claim under Virginia law, a
Plaintiff must ultimately prove that the allegedly false
representation relates to a "material fact, " that
it was made "intentionally and knowingly" and
"with an intent to misled, " and that it was both
relied on and caused "damage to the party misled."
Evaluation Research Corp. v. Alequin, 247 Va. 143,
148 (1994) . Moreover, a plaintiff must prove fraud by
clear and convincing evidence, to include proof not
only that "one has represented as true what is really
false, " but that such representation was made "in
such a way as to induce a reasonable person to believe it,
with the intent that the person will act upon this
representation." Id. (citation omitted).
"The touchstone of reasonableness is prudent
investigation, " and "a plaintiff cannot claim that
its reliance was reasonable and justified when it makes a
partial inquiry, with full opportunity of complete
investigation, and elects to act upon the knowledge obtained
from the partial inquiry." Hitachi Credit Am. Corp.
v. Signet Bank, 166 F.3d 614, 629 (4th Cir. 1999)
(citing Harris v. Dunham, 203 Va. 760, 768 (1962)).
Plaintiffs' opposition to summary judgment relies on
three categories of fraudulent statements that Plaintiffs
assert induced Simon/Orbit to execute the OA: (1) statements
asserting that FedEx would be Orbit's "business
partner"; (2) statements asserting that Orbit would be
an "independent contractor"; and (3) statements
regarding whether Plaintiffs would be required to plan
Orbit's delivery routes using FedEx's Vehicle Route
Planning ("VRP") computer software.
Court's analysis of these claims is necessarily
predicated on a review of the record evidence through a
"clear and convincing" lens as a juror would only
be permitted to award to Plaintiffs damages in fraud if such
elevated burden was satisfied. Such elevated burden requires
proof "as will establish in the trier of fact a firm
belief or conviction" that a knowingly false
statement was made, with the intention to mislead, for the
purpose of inducing Plaintiffs to execute the OA.
Thompson v. Bacon, 245 Va. 107, 111 (1993) (emphasis
added) (citation omitted). Because such proof is lacking in
this case, summary judgment in Defendant's favor is
assert that, prior to executing the OA, FedEx made false
statements to Simon indicating that FedEx would be his
"business partner." It is somewhat unclear from
Plaintiffs' summary judgment brief, ECF No. 45, at 19-20,
as well as the evidence cited by the parties, see,
e.g., Simon Tr. 56-57, ECF No. 39-1, how Simon
purportedly interpreted such phrase at the time it was made.
Arguably, Plaintiffs advance two different theories: (1) that
FedEx falsely promised that it had a "stake" or
common "symbiotic" interest with Orbit such that
FedEx would treat Orbit as an "equal"; or (2) that
FedEx falsely promised that it would provide Orbit with
business "support" of some kind in order to assist
Orbit in satisfying Orbit/s contractual
Shared Financial Incentives
extent that Plaintiffs contend that FedEx's promises to
be a "business partner" were interpreted by
Simon/Orbit as asserting that FedEx had a business incentive
for Orbit to succeed, Plaintiffs lack evidence sufficient to
prove that such statements were false when made. To the
contrary, Plaintiffs' own summary judgment brief
affirmatively argues (and highlights evidence) in support of
the accuracy of such statements. ECF No. 45, at
19-20. Accordingly, in light of the record
evidence supporting Plaintiffs' common-sense contention
that FedEx had a financial interest in Orbit's success,
Plaintiffs have failed to point to evidence that could
support a reasonable juror in concluding, by clear and
convincing evidence, that FedEx made a knowingly false
statement, with intent to deceive, that it did in fact
deceive Plaintiffs, or ...