LA BELLA DONA SKIN CARE, INC.
BELLE FEMME ENTERPRISES, LLC, ET AL.
THE CIRCUIT COURT OF CHESTERFIELD COUNTY Frederick G.
Rockwell, III, Judge
W. LEMONS CHIEF JUSTICE
appeal of a civil action, we consider whether the Circuit
Court of Chesterfield County ("circuit court")
erred when it held, as a matter of law: 1) that a fraudulent
conveyance under Code § 55-80 cannot serve as the
predicate unlawful act needed to support a claim for
statutory or common law conspiracy; 2) that a prima facie
case of fraudulent conveyance cannot be established when the
recipient is a third party creditor with a higher security
interest; and 3) that successor liability claims must be
proven by "clear and convincing" evidence. In
addition, we consider whether the circuit court erred by
concluding that the evidence was insufficient to impose
Facts and Proceedings
20, 2015, La Bella Dona Skin Care, Inc. ("LBD")
filed a third amended complaint against eleven defendants,
including three former LBD employees, as well as those former
employees' counsel, certain of their family members, and
two competing spa businesses. The complaint sought damages
and injunctive relief from the defendants as a result of
their involvement in a series of allegedly fraudulent
conveyances designed to avoid an outstanding judgment in
favor of LBD.
to the complaint, on September 28, 2012, LBD obtained a
judgment against three of its former employees, Brooke Miller
("Mrs. Miller"), Molly Smoot ("Mrs.
Smoot"), and Betty Gail Boyd ("Ms. Boyd"), and
their competing business, Bon Air Med Spa, LLC
("BAM") (collectively, the "Judgment
Debtors"), for misappropriation of trade
secrets.[*] The Judgment Debtors were represented in
the trade secret litigation by Mark Schmidt
("Schmidt"), an attorney with the law firm of Ayers
& Stolte, P.C. ("Ayers & Stolte"). While
the lawsuit was pending, the Judgment Debtors executed a $85,
000 promissory note ("Note") in favor of Ayers
& Stolte for past and future legal expenses. The Note was
secured, in part, by an assignment of rights to BAM's
assets. According to LBD's complaint, Ayers & Stolte
demanded payment on the Note shortly after final judgment was
entered against the Judgment Debtors, and then "declared
the Note in default" a week later.
October 17, 2012, Ms. Boyd's adult son, Anthony Boyd
("Anthony"), formed Belle Femme Enterprises, LLC
("Belle Femme"). Schmidt assisted with the creation
and incorporation of the new business, and BAM paid him $350
for his services. Mrs. Miller's husband, Jason Miller
("Mr. Miller"), and Mrs. Smoot's husband, Dan
Smoot ("Mr. Smoot"), subsequently acquired
ownership interests in Belle Femme.
to the complaint, BAM "apparently ceased doing
business" upon the formation of Belle Femme, but
"the public face of [BAM] did not change." Both
businesses operated from the same location, under the same
lease, and with the same employees, including Ms. Boyd, Mrs.
Miller, and Mrs. Smoot. Belle Femme also operated under
BAM's tradename, "Bon Air Med Spa, " using the
same telephone number, domain name, and internet blog.
LBD's complaint alleged that, in essence, Belle Femme
"was and is the same business" as BAM.
complaint further alleged that beginning on October 18, 2012,
"the individuals running [BAM] and Belle Femme made no
effort to separate the assets belonging to [BAM] versus Belle
Femme." The businesses' assets were instead
"comingled and lumped together, " and some of
BAM's assets were fraudulently conveyed directly to Belle
Femme without compensation. These fraudulently conveyed
assets included "the customer appointments,
relationships, and products used to serve those appointments
that [BAM] misappropriated from [LBD]."
December 5, 2012, Ayers & Stolte conducted an auction to
sell BAM's remaining assets. The auction notice specified
that only cash bids would be considered and that an immediate
deposit would be required from successful bidders. Moreover,
the auction schedule did not list "the customer
appointments, relationships, and products used to serve those
appointments." No representatives from BAM or Belle
Femme attended the auction; "Ayers & Stolte itself
was the buyer." According to the complaint, Ayers &
Stolte's winning bid "was a credit bid against the
Note, not the required cash bid."
the auction, Ayers & Stolte's "President or
Manager, " Charles E. Ayers, Jr., signed a Bill of Sale,
which "seemingly shows a December 10, 2012 sale of the
[BAM] Assets to Belle Femme." At that time, the price of
the sale "was an unknown" and "apparently was
not even discussed until . . . more than three months after
March 2013, the individual Judgment Debtors, along with
Anthony, Mr. Miller, and Mr. Smoot met at Ayers &
Stolte's law offices, where a $40, 000 promissory note
payable to Ayers & Stolte was executed. Anthony, Mr.
Miller, and Mr. Smoot signed the promissory note
individually, and Anthony also signed the note on behalf of
complaint further alleged that, as of its filing, LBD had
been "unable to collect more than a de
minim[is] amount of the 2012 judgments entered
against the [Judgment Debtors]." As a result, LBD filed
this civil action in the circuit court against the Judgment
Debtors, Belle Femme, Anthony, Mr. Miller, and Mr. Smoot
(collectively, the "Belle Femme Defendants") as
well as Ayers & Stolte and Charles Ayers, Jr.
(collectively, "Ayers & Stolte"). LBD advanced
eight counts, four of which are relevant to this appeal:
• Count I: Successor Liability;
• Count II: Fraudulent Conveyance under Code §
• Count VII: Common Law Civil Conspiracy; and
• Count VIII: Statutory Conspiracy under Code
§§ 18.2-499 and -500.
Belle Femme Defendants and Ayers & Stolte demurred to
counts II, VII, and VIII, and subsequently moved for summary
judgment as to count II. The circuit court sustained the
demurrers to counts VII and VIII, and granted summary
judgment as to count II.
circuit court sustained the demurrers to counts VII and VIII
on the basis that the complaint failed to state a cause of
action for common law or statutory conspiracy to fraudulently
convey assets under Code § 55-80. The court stated that
the fraudulent conveyance statute only provides for
"sanctions, " which are fundamentally distinct from
damages. Therefore, because tort damages were not available
for the predicate unlawful act of fraudulent conveyance, the
circuit court concluded that tort damages could not be
obtained through a claim of conspiracy to commit that
predicate unlawful act.
circuit court dismissed count II on summary judgment because
there was no "genuine issue of material fact" that
Ayers & Stolte "held a senior lien on [BAM's]
assets and were thus entitled to have the proceeds of the
public auction." The court explained that LBD conceded
this fact in responses to the following pre-trial requests
• Admit that, since on or about May 21, 2012, Ayers
& Stolte has had a lien against [BAM's] personal