United States District Court, W.D. Virginia, Big Stone Gap Division
December 21, 2016
H.S. MARTIN CONSTRUCTION CORP., DBA INSURANCE CLAIMS CONSTRUCTION SERVICES, Plaintiff,
LEE COUNTY SCHOOL BOARD, ET AL., Defendants.
I. Berenshteyn and K. Justin Hutton, The Senter Law Firm,
Bristol, Tennessee, and Russell L. Egli, Egli Law and Loss
Claim Specialist, Knoxville, Tennessee, for Plaintiff
Melissa W. Robinson and Johneal M. White, Glenn Robinson
& Cathey, PLC, Roanoke, Virginia, for Defendant Risk
Management Programs Inc.; and Jennifer D. Royer, Guynn &
Waddell, P.C., Salem, Virginia, for Defendant Lee County
OPINION AND ORDER
P. Jones United States District Judge.
case invoking the court's diversity jurisdiction, the
plaintiff, H.S. Martin Construction Corp., doing business as
Insurance Claims Construction Services (“H.S.
Martin”), has asserted two breach-of-contract claims
against defendant Lee County School Board (“School
Board”), as well as a claim of bad faith breach of
contract against defendant Risk Management Programs, Inc.
(“Risk Management”), and a claim of intentional
interference with prospective economic advantage against
defendants Robinson & Associates, Inc.
(“Robinson”), Highlands Claims Services, LLC
(“HCS”), and William Curtis Prater. The School
Board and Risk Management have moved to dismiss the Amended
Complaint for failure to state any viable claims against
them. In response, H.S. Martin has moved for leave to amend
its Amended Complaint. For the reasons that follow, I will
grant the motions to dismiss and deny the Motion for Leave to
plaintiff alleges the following facts, which I must accept as
true for the purpose of deciding the pending motions.
Martin is a Tennessee corporation with its principal place of
business in Tennessee. The School Board, a public entity
located in Lee County, Virginia, owns and operates Pennington
Gap Middle School (“Middle School”) and Lee
County High School (“High School”). Risk
Management is a group self-insurance risk pool based in
Richmond, Virginia. Robinson is a Virginia corporation with a
principal place of business in Lynchburg, Virginia. HCS is a
Virginia corporation with a principal place of business in
Abingdon, Virginia. Prater, a citizen of Virginia, was a
senior claims specialist working for Robinson and HCS. He was
hired by Risk Management to work as the claims adjuster for
the School Board for claims related to damages sustained
during two separate weather incidents that occurred in 2014
and 2015. Prater was named as a defendant in this lawsuit,
but he died several months before the plaintiff filed its
original complaint in this case, and Prater's estate has
not been served with process.
27, 2014, the Middle School suffered damage due to a weather
incident. The same day, the School Board contacted H.S.
Martin and requested estimates for emergency mitigation and
reconstruction. A representative of the School Board signed
an Authorization to Pay form that stated:
I am authorizing the third party named below to be added as a
“named party” on the initial and all future
“approved” payments from the claim payable
proceeds as a result of my insurance claim arising out of
Hail damage. Claim number: 052B2014107694 I
understand that I will be named and listed on the initial and
subsequent checks, due to me being the named insured on the
policy in force and binding contract I have with you, as
being my insurance carrier.
I am invoking my right as a policy holder through the
“Terms and Conditions” portion of my policy, for
cause that if a situation arises out of the handling of my
claim, that the third party named below will be able to
discuss, negotiate, and assist in concluding my insurance
claim on my behalf.
I am giving my allocation to them as the named insured on the
policy, or appointed representative of the named insured.
This joint agreement allows third party to protect and
preserve their security interest through and by, being a
named party on the insurance proceeds, payable through
endorsed check from you as my insurance carrier and or
I also understand that my signing of this agreement does not
waive any of my rights as the named insured or policy holder.
(Compl. Ex. 6, ECF No. 1-6.) The “Third Party
Information” portion of the form was filled in with the
name, address, phone number, and tax identification number of
Martin's work at the Middle School was directed by
representatives of the School Board, Prater, and Risk
Management. On August 13, 2014, H.S. Martin contacted Prater
to request partial payment for work completed up to that
time. When it did not receive payment, H.S. Martin asked
representatives of the School Board for instruction on how to
bill for the emergency mitigation work that had been
September 10, 2014, a representative of Risk Management
informed H.S. Martin and the School Board that it would
release $250, 000 as advance payment for work completed and
would not issue any further payments until all work was
completed. On September 24, 2014, representatives of the
School Board authorized payment of $250, 000 to H.S. Martin.
On September 26, 2014, representatives of the School Board
and Risk Management discussed meeting with H.S. Martin to
reach an agreed price for the emergency mitigation work that
had been completed and the remaining repairs to be completed.
Sometime after September 27, 2014, H.S. Martin received check
number 147010 in the amount of $250, 000.
October 1, 2014, H.S. Martin contacted representatives of the
School Board and Risk Management to discuss issues of water
leaks through the temporary repairs and the use of additional
personnel to monitor barriers and keep students out of work
areas. H.S. Martin suggested spraying for airborne
contaminates, and representatives of the School Board
directed H.S. Martin to spray. On October 2, 2014, Prater
represented that Risk Management had authorized thermal
fogging and additional workers to provide on-site
supervision, and he directed H.S. Martin to complete work on
the Middle School roof as quickly as possible while also
taking every measure to avoid further leaks.
October 17, 2014, Alan Ingles, Maintenance Superintendant for
the School Board, sent an email to representatives of Risk
Management asserting that he had not received requested
paperwork from Risk Management and that he needed the
paperwork to show to the School Board. Prater was responsible
for providing the paperwork to Risk Management, the School
Board, and H.S. Martin. Prater responded, asserting that the
agreed price estimate would require one large appraisal of
the loss because Risk Management preferred to issue one
payment per claim, and that he had not been able to complete
October 28, 2014, H.S. Martin contacted representatives of
the School Board and Risk Management to request payment of
additional funds for the Middle School project. The following
day, Ingles requested that Risk Management pay H.S. Martin
for the work completed to date.
November 13, 2014, Prater represented to the School Board and
H.S. Martin that the agreed price appraisal had been
completed and forwarded to Risk Management. Risk Management
inspected the property on November 18, 2014, with Garry
Smith, Vice President of H.S. Martin. On December 23, 2014,
Risk Management issued a check to H.S. Martin in the amount
of $692, 608.05, indicating that the money was payment for
“Roof Repair, First Dry Out, Second Dry Out, Third Dry
Out, Fourth Dry Out, Agg Shop building, Football Field
Lights, Alternative Ed Building, Janitorial Equipment
Building, Greenhouse Building, and Structural Repairs.”
(Am. Compl. ¶ 50, ECF No. 32.) Risk Management indicated
that an additional $88, 435.68 was owed for the work listed,
but that money was being withheld pending receipt of further
information from H.S. Martin. The total price for all work
completed was $1, 491, 614.00, and the School Board and Risk
Management paid a total of $942, 608.05.
Martin provided the further information requested. On May 22,
2015, H.S. Martin completed all work and requested payment in
full for its services. Representatives of the School Board
forwarded the request for final payment to Risk Management.
School Board representatives were sent copies of
correspondence throughout the mitigation and construction
process and did not direct H.S. Martin to discontinue its
work at the Middle School. H.S. Martin has not received
payment of the outstanding balance of $549, 005.95 for work
performed at the Middle School.
January 6, 2015, the High School suffered damage from a
weather incident. The following day, Ingles contacted Smith
and informed him that an insurance claim had been submitted
to Risk Management for the weather damage. That day, at the
request of Ingles and the School Board, H.S. Martin began
making emergency repairs to the High School. On January 12,
2015, the Director of Maintenance, as a representative of the
School Board, signed an Authorization to Pay form for claim
number 052B2015118636, arising out of water damage at the
High School, that named H.S. Martin as the third party. The
text of the form was the same as the one that had been
executed about six months earlier in relation to the hail
damage at the Middle School.
the claims adjuster, requested that Smith submit estimates
directly to him for the High School. Prater also asked Smith
to assist him in preparing estimates for other schools
damaged by the same weather incident. On January 14, 2015,
Smith sent an email to Prater requesting estimates for three
other schools and asked Prater to let him know when he was
starting the estimate for the High School so that Smith could
tell him the number of labor hours that would be required to
perform certain work on the bleachers.
January 20, 2015, Smith sent Prater estimates for remediation
and repair of damages at the High School. Three days later,
Ingles informed Smith in an email that Mr. Carter, the
superintendent of schools, had the paperwork for Smith to
sign. The email also discussed a meeting of Carter, Smith,
and Prater to discuss the estimates, checks, and other
paperwork for the High School.
January 29, 2015, Smith, Carter, Ingles, and Prater met at
the High School and agreed that H.S. Martin would be the
contractor for the mitigation and reconstruction of multiple
buildings owned by the School Board. On February 4, 2015,
Prater contacted Smith to request an email about the moisture
readings from the High School gym floor.
Martin performed temporary repairs to the roof and windows of
the High School and dried out the gym, which had sustained
rain damage. On April 14, 2015, H.S. Martin submitted an
invoice for this mitigation work to the School Board
requesting payment in the amount of $123, 569.51.
Reconstruction work on the High School was scheduled to begin
on May 16, 2015, and Smith sent an email to Prater stating
that H.S. Martin would start performing reconstruction work
on the gym on that date. By April 2, 2015, the School Board,
Risk Management, and Prater had received estimates for all of
the work to be performed at the High School. The estimates
referred to H.S. Martin as the general contractor and
referred to the estimates as contracts.
H.S. Martin could begin reconstruction work on the High
School, Prater contacted Scott Flooring and began to
negotiate for reconstruction of the High School gym floor. On
May 8, 2015, Prater told H.S. Martin that H.S. Martin was not
to perform the reconstruction work, in breach of the alleged
contract between H.S. Martin and the School Board. H.S.
Martin asserts that it suffered damages in the amount of $24,
842.85, representing supplies purchased for the
reconstruction work and lost profits. H.S. Martin also
alleges that it has not received payment for the mitigation
work it performed at the High School.
of the Amended Complaint asserts a breach of contract claim
against the School Board based on failure to make payments
arising out of the High School project. Count II asserts a
breach of contract claim against the School Board based on
failure to make payments due for the work performed at the
III asserts a claim of bad faith breach of contract against
Risk Management for failure to make payments to H.S. Martin
as directed by the School Board for work performed at the
Middle School and the High School. H.S. Martin asserts that
it is a third-party beneficiary of the contract between the
School Board and Risk Management and relied on the promises
and covenants in the insurance policy to its detriment. Count
IV asserts a claim against Prater, Robinson, and HCS for
intentional interference with prospective economic advantage.
procedural history of this case is unduly complex. The
original Complaint by H.S. Martin named as a defendant
Virginia Association of Counties (“VACO”) instead
of Risk Management. On June 16, 2016, the School Board moved
to dismiss that Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), arguing that (1) any alleged contract
between the School Board and H.S. Martin was void for failure
to comply with the Virginia Public Procurement Act; (2) the
allegations failed to establish a breach of contract under
Virginia law; (3) to the extent that the plaintiff invoked
the Uniform Computer Information Transactions Act
(“UCITA”) to support its breach of contract
claims, the UCITA is inapplicable to the facts presented; (4)
H.S. Martin did not properly appeal the School Board's
disallowance of his claim; and (5) the School Board cannot be
liable to H.S. Martin for bad faith denial of an insurance
claim or tortious interference with prospective economic
same day that the School Board moved to dismiss the original
Complaint, “Risk Management Programs Inc. f.k.a. VACO
Risk Management Programs, Inc.” filed with H.S. Martin
a Joint Motion to Amend Complaint and for Extension of Time
to Respond. (ECF No. 28.) The motion sought leave for the
plaintiff to amend the Complaint “to reflect the proper
name of the entity described in Plaintiff's Complaint
which should be Risk Management Programs Inc., formerly known
as VACO Risk Management Programs Inc., a separate and
distinct legal entity from Virginia Association of
Counties.” (Id. at 1.) The magistrate judge
granted this motion, and on July 11, 2016, the plaintiff
filed an Amended Complaint that named as a defendant
“Risk Management Programs, Inc.” rather than
VACO. (Amended Compl. 1, ECF No. 32.) The Amended Complaint
is substantially identical to the original Complaint in all
29, 2016, H.S. Martin moved for leave to amend the Amended
Complaint again, and without waiting for leave of court
simultaneously filed a “First Amended and Restated
Complaint” (hereafter “FARC”). (ECF No.
38.) H.S. Martin asserts that the FARC
more precisely sets forth the facts giving rise to the causes
of actions [sic] against the named Defendants, removes
certain causes of actions [sic] and adds new causes of
action, more clearly sets forth the applicable state laws
that impact the lawsuit against the Defendants, is not
futile, does not prejudice any of the Defendants as no
answers have been filed to the original complaint and no
discovery has taken place in this lawsuit.
(Mot. for Leave to Amend Compl. 1, ECF No. 37.)
little more than two hours later on July 29, 2016, Risk
Management moved to dismiss the Amended Complaint for failure
to state a claim, contending that (1) Risk Management is not
a party to the School Board's insurance policy, (2) H.S.
Martin is not a third party beneficiary of the insurance
policy, and (3) under Virginia law, there is no independent
cause of action for bad faith breach of contract. In its
response to Risk Management's motion to dismiss, filed
about two hours later on July 29, 2016, H.S. Martin relies on
allegations from both the Amended Complaint and the FARC.
H.S. Martin also filed that day a response to the School
Board's Motion to Dismiss, which likewise relied on
allegations from the FARC as well as the Amended Complaint.
August 5, 2016, the School Board filed a Reply Memorandum in
support of its Motion to Dismiss. In addition to responding
to the plaintiff's arguments regarding the Amended
Complaint, the School Board also requests the court to deny
the Motion for Leave to Amend Complaint, arguing that
amendment would be futile and the FARC does not resolve the
problems present in the Amended Complaint.
August 15, 2016, Risk Management filed a Brief in Opposition
to Plaintiff's Motion for Leave to Amend Complaint. In
its brief, Risk Management argued that (1) Virginia law does
not recognize a cause of action for bad faith breach of
insurance contract; (2) H.S. Martin is neither a party to the
insurance coverage contract nor a third-party beneficiary;
(3) H.S. Martin has failed to state a claim of unjust
enrichment against Risk Management, referring to a new claim
asserted in the FARC, and (4) the FARC failed to set forth a
viable claim of tortious interference with contract against
Risk Management. On the same day, the School Board followed
suit and filed a Response in Opposition to Plaintiff's
Motion for Leave to Amend Its Complaint, which simply
incorporated by reference Risk Management's brief and its
own reply brief to its Motion to Dismiss. On August 18, 2016,
H.S. Martin filed a response to Risk Management's Motion
to Dismiss. On August 23, 2016, Risk Management filed a reply
brief in support of its motion to dismiss.
pending motions have been fully briefed and orally argued and
are ripe for decision. I will first consider the motions to
dismiss as they relate to the Amended Complaint. I will then
address the plaintiff's motion for leave to amend.
purpose of a Rule 12(b)(6) motion is to test the sufficiency
of a complaint.” Edwards v. City of Goldsboro,
178 F.3d 231, 243 (4th Cir. 1999). Rule 12(b)(6) does
“not require heightened fact pleading of specifics, but
only enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “[I]t does not
resolve contests surrounding the facts, the merits of a
claim, or the applicability of defenses.”
Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir. 1992).
deciding whether a complaint will survive a Rule 12(b)(6)
motion to dismiss, the court evaluates it and any documents
attached or incorporated by reference. Sec'y of State
for Defence v. Trimble Navigation Ltd., 484 F.3d 700,
705 (4th Cir. 2007). In ruling, the court must regard as true
all of the factual allegations contained in the complaint,
Erickson v. Pardus, 551 U.S. 89, 94 (2007), and must
view those facts in the light most favorable to the
plaintiff. Christopher v. Harbury, 536 U.S. 403, 406
Claims Against the School Board.
School Board argues that any purported contract between H.S.
Martin and the School Board is ultra vires and void ab initio
for failure to comply with the competitive bidding
requirements and other strictures of the Virginia Public
Procurement Act, Va. Code Ann. §§ 2.2-4300 - 4377
(“VPPA”). The School Board further contends that
the Amended Complaint fails to aver that the representatives
who allegedly contracted on behalf of the School Board were
authorized to do so.
response, H.S. Martin argues that the VPPA does not apply to
the contracts at issue here. H.S. Martin asserts that the
crucial contracts for purposes of this lawsuit are the
Authorization to Pay forms, not construction contracts. H.S.
Martin further argues that it is exempt from complying with
the VPPA because the School Board adopted a different
standard operating procedure for addressing mitigation and
restoration projects. H.S. Martin contends it has adequately
pleaded that the representatives of the School Board were
authorized to contract on the School Board's behalf and
did so, and that the School Board breached its contracts with
VPPA was enacted to ensure that
public bodies in the Commonwealth obtain high quality goods
and services at reasonable cost, that all procurement
procedures be conducted in a fair and impartial manner with
avoidance of any impropriety or appearance of impropriety,
that all qualified vendors have access to public business and
that no offeror be arbitrarily or capriciously excluded.
Va. Code Ann. § 2.2-4300(C). The VPPA states that
“[a]ll public contracts with nongovernmental
contractors for . . . the purchase of services, insurance, or
construction, shall be awarded after competitive sealed
bidding, or competitive negotiation as provided in this
section, unless otherwise authorized by law.” Va. Code
Ann. § 2.2-4303(A). More specifically, the VPPA states:
Construction may be procured only by competitive sealed
bidding, except that competitive negotiation may be used in
[certain specified] instances upon a determination made in
advance by the public body and set forth in writing that
competitive sealed bidding is either not practicable or not
fiscally advantageous to the public, which writing shall
document the basis for this determination[.]
Va. Code Ann. § 2.2-4303(D).
“‘Construction' means building, altering,
repairing, improving or demolishing any structure, building
or highway, and any draining, dredging, excavation, grading
or similar work upon real property.” Va. Code Ann.
emergencies, the VPPA states:
In case of emergency, a contract may be awarded without
competitive sealed bidding or competitive negotiation;
however, such procurement shall be made with such competition
as is practicable under the circumstances. A written
determination of the basis for the emergency and for the
selection of the particular contractor shall be included in
the contract file. The public body shall issue a written
notice stating that the contract is being awarded on an
emergency basis, and identifying that which is being
procured, the contractor selected, and the date on which the
contract was or will be awarded. This notice shall be posted
on the Department of General Services' central electronic
procurement website or other appropriate websites, and in
addition, public bodies may publish in a newspaper of general
circulation on the day the public body awards or announces
its decision to award the contract, whichever occurs first,
or as soon thereafter as is practicable. Posting on the
Department of General Services' central electronic
procurement website shall be required of any state public
body. Local public bodies are encouraged to utilize the
Department of General Services' central electronic
procurement website to provide the public with centralized
visibility and access to the Commonwealth's procurement
Va. Code Ann. § 2.2-4303(F).
Martin has not alleged compliance with these competitive
bidding and negotiation requirements. Instead, H.S. Martin
argues that the VPPA does not apply because it was hired to
perform mitigation and restoration rather than new
construction. That argument is unavailing, as the
statute's definition of “construction”
expressly includes “repairing” a structure. Va.
Code Ann. § 2.2-4301. H.S. Martin also contends that its
breach of contract claim against the School Board is based on
the Authorization to Pay forms rather than a construction
contract, but I find this to be a distinction without a
difference. The Authorization to Pay forms address payment
for construction services performed for the School Board.
H.S. Martin cannot rely on these forms to get around the VPPA
and its requirements.
VPPA provides an exemption for:
Any county, city or town whose governing body has adopted,
by ordinance or resolution, alternative policies and
procedures which are (i) based on competitive principles and
(ii) generally applicable to procurement of goods and
services by such governing body and its agencies, except as
stipulated in subdivision 12.
Va. Code § 2.2-4343(A)(10) (emphasis added). H.S. Martin
does not allege that that School Board had passed any
resolution adopting alternative procurement policies and
procedures. It is clear from counsel's representations at
oral argument that H.S. Martin has no reason to believe that
any such resolution exists. H.S. Martin is not relieved of
the VPPA requirements based solely on an alleged prior course
of conduct that is inconsistent with the VPPA.
school board in Virginia can only exercise “those
powers expressly granted by the General Assembly, those
necessarily or fairly implied therefrom, and those that are
essential and indispensable.” W.M. Schlosser Co. v.
Sch. Bd. of Fairfax Cty., 980 F.2d 253, 255 (4th Cir.
1992) (internal quotation marks and citation omitted).
“Significantly, ‘[i]f there is any
reasonable doubt whether legislative power exists, that doubt
must be resolved against the local governing
body.'” Id. (quoting City of Richmond
v. Confrere Club of Richmond, Va., Inc., 239 Va. 77, 387
S.E.2d 471, 473 (1990)). Through the VPPA, the General
Assembly has limited a school board's power to enter into
certain kinds of contracts.
school board attempts to enter into a contract without
complying with the VPPA, the school board seeks to exercise
powers beyond those granted to it by the General Assembly,
and the resulting contract is therefore ultra vires. A
contract that is ultra vires is void ab initio and has no
legal effect. Richard L. Deal & Assocs., Inc. v.
Commonwealth, 299 S.E.2d 346, 348 (Va. 1983).
“[N]o performance by either party thereto can give the
unlawful contract validity or serve as the basis of any right
of action upon it and the doctrine of estoppel has no
application.” Cty. of York v. King's Villa,
Inc., 309 S.E.2d 332, 335 (Va. 1983). To allow a party
to enforce a contract that was executed without complying
with the VPPA would undermine the strength of the VPPA and
thwart its purposes. H.S. Martin's claims against the
School Board fail as a matter of law, and Counts I and II of
the Amended Complaint must be dismissed for failure to state
claims upon which relief can be granted.
Claim Against Risk Management.
Management contends that H.S. Martin's claim against it
is not viable because (1) Risk Management is not an insurer
and is not the entity that issued the School Board's
insurance policy; (2) H.S. Martin is not a third party
beneficiary to the insurance policy; (3) Virginia does not
recognize an independent cause of action for bad faith breach
of contract; and (4) the absence of an enforceable contract
between the School Board and H.S. Martin is fatal to H.S.
Martin's claim against Risk Management.
final issue is dispositive. A contract that is void and
unenforceable against the School Board is equally
unenforceable against Risk Management, the School Board's
insurance administrator. H.S. Martin cannot recover funds
under the insurance policy that it claims are due to it based
on its invalid contract with the School Board.
the Authorization to Pay forms did not make H.S. Martin an
intended third-party beneficiary of the School Board's
insurance policy, nor do the forms constitute contracts in
their own right. First and foremost, Risk Management did not
sign the Authorization to Pay forms. See Copenhaver v.
Rogers, 384 S.E.2d 593, 596 (Va. 1989) (“The
essence of a third-party beneficiary's claim is that
others have agreed between themselves to bestow a
benefit upon the third party but one of the parties to the
agreement fails to uphold his portion of the bargain”
(emphasis added).) Second, the Authorization to Pay forms do
not purport to require Risk Management to do anything; they
merely authorize Risk Management to list H.S. Martin as a
payee on future checks.
these reasons, Count III of the Amended Complaint fails to
state a cognizable claim against Risk Management, and it will
the rules, a complaint may be amended once without leave
within 21 days of service of a motion under Rule 12(b).
Fed.R.Civ.P. 15(a)(1)(B). H.S. Martin could not avail itself
of this rule, however, because it had already amended its
complaint once, to substitute Risk Management for VACO,
before seeking leave to file the FARC.
15(a)(2) of the Federal Rules of Civil Procedure provides
that courts should freely give leave to amend pleadings when
justice so requires. Fed.R.Civ.P. 15(a)(2). I may only deny a
motion to amend a pleading where there is prejudice to the
opposing party or bad faith on the part of the moving party,
or where the proposed amendment would be futile. Laber v.
Harvey, 438 F.3d 404, 426-27 (4th Cir. 2006).
FARC, H.S. Martin alleges the following additional facts. The
Authorization to Pay forms are essentially assignments and
gave H.S. Martin a security interest in any payments made by
Risk Management to the School Board relating to the
mitigation work at the Middle School and High School. Risk
Management approved certain work and authorized H.S. Martin
to perform that work. Risk Management and the School Board
both assured H.S. Martin that additional payments would be
made. The School Board received a new roof as a result of
H.S. Martin's work and did not fully pay the new roof.
The School Board received a significant amount of other
restoration work for which it did not fully pay H.S. Martin.
The School Board received some of the insurance proceeds and
did not remit them to H.S. Martin. Prater, Robinson, and HCS
acted negligently in processing the claims.
on these and the original allegations, the FARC asserts new
claims of unjust enrichment and conversion against the School
Board. The FARC also asserts claims of unjust enrichment and
interference with contract against Risk Management. Finally,
the FARC asserts a new claim of negligence against Prater,
HCS, and Robinson.
School Board and Risk Management ask the court to deny leave
to amend because the proposed amendments would be futile. I
agree. The proposed new claims against the School Board and
Risk Management are merely additional attempts to recover
under the alleged contracts despite failure to comply with
the requirements of the VPPA. To permit these claims to
proceed would undermine the purposes of the VPPA.
the new claim against Prater, HCS, and Robinson, only
Robinson is properly before the court at this time, and it
mistakenly filed an answer - which which is called a
“Response” (ECF No. 51) - to the FARC, apparently
unaware that the court had not granted H.S. Martin leave to
amend. Robinson has not argued that the FARC fails to state a
claim against it. Nevertheless, I find that the FARC fails to
set forth a viable claim of negligence in light of the
invalidity of the alleged underlying contract, Robinson's
alleged status as an agent of Risk Management, and
Virginia's economic loss doctrine. See Gerald M.
Moore & Son, Inc. v. Drewry, 467 S.E.2d 811, 813
(Va. 1996) (explaining that where a plaintiff sues an agent
for negligently performing a contract to which his principal
is a party, “even if the agent's negligence is
established, absent privity of contract, Virginia's
economic loss doctrine precludes the recovery of damages
based on economic loss alone”). Therefore, I will deny
the Motion for Leave to Amend Complaint as to the negligence
claim as well.
foregoing reasons, it is ORDERED as follows:
Motion to Dismiss filed by Lee County School Board (ECF No.
18) is GRANTED;
Motion for Leave to Amend Complaint (ECF No. 37) is DENIED;
Defendant Risk Management Programs, Inc.'s Motion to
Dismiss Amended Complaint (ECF No. 40) is GRANTED; and
Robinson must respond to the Amended Complaint (ECF No. 32)
within 14 days of the date of this Opinion and Order.
 HCS has not yet entered an appearance
or otherwise participated in this litigation.