FRANCIS HOSPITALITY, INC., ET AL.
READ PROPERTIES, LLC, D/B/ACOLDWELL BANKER COMMERCIAL READ & COMPANY
THE CIRCUIT COURT OF THE CITY OF LYNCHBURG John T. Cook,
All the Justices
ELIZABETH A. McCLANAHAN JUSTICE
Properties, LLC ("Read Properties") filed a
complaint against Francis Hospitality, Inc. ("Francis
Hospitality") and Delta Educational Systems, Inc.
("Delta") asserting claims for breach of contract,
intentional interference with contract, and statutory
business conspiracy under Code §§ 18.2-499 and
-500. The circuit court found in favor of Read Properties on
all claims and entered judgment against Francis Hospitality
and Delta on an award of three-fold damages and
attorney's fees pursuant to Code § 18.2-500.
Hospitality and Delta contend that the circuit erred in
ruling that they were liable for tortiously interfering with
their own contract and, therefore, in finding that their
tortious interference could serve as the predicate unlawful
act for statutory business conspiracy. We agree with
appellants and will reverse the circuit court's judgment
against them as to the claims for tortious interference and
statutory business conspiracy and will enter final judgment
in favor of Read Properties as to its claims for breach of
contract on which it prevailed in the circuit court.
2002, Richard Read, a commercial real estate broker with
Coldwell Banker Commercial Forehand & Co.
("Forehand"), assisted in negotiating a lease
agreement between Creekside Development Company, Inc.
("Creekside"), as lessor, and Delta, as lessee. The
agreement, dated September 25, 2002, provided for the lease
of approximately 2.668 acres with a building containing 21,
600 square feet located on Creekside Lane in Lynchburg. The
term was five years with an option to renew the lease
agreement under the same terms and conditions for two
additional periods of five years each. Creekside and Delta
renewed the lease agreement in 2007 and 2012, with the second
extension expiring on September 30, 2017.
relevant here, the lease agreement required payment of a
monthly leasing fee to Forehand. Specifically, the agreement
stated that the parties "acknowledge that Coldwell
Banker Forehand & Co. and Rick Read are licensed Realtors
in the State of Virginia and are representing the LESSEE in
this transaction" and that "Coldwell Banker
Forehand & Co. is to receive a leasing fee equal to five
percent (5%) of the gross rents as received during the Lease
term or applied options (not to exceed $810 monthly)."
The lease agreement also stated that "[t]he terms,
conditions and covenants" of the agreement "shall
apply to, inure to the benefit of and be binding upon the
parties hereto, their respective successors in interest and
to the terms of the lease agreement, Forehand received a
monthly leasing fee of $810 through December 2010, when Read
Properties, a limited liability company formed by Richard
Read, purchased Forehand's commercial real estate
division. On December 22, 2010, Read Properties and Forehand
entered into an asset purchase agreement under which
Forehand's rights and obligations with regard to certain
contracts were assigned to Read Properties. The Creekside
property was listed as one of the contracts included in the
assignment. Beginning in January 2011, Read Properties
received the $810 monthly leasing fee provided for in the
lease of the Creekside property.
2013, Creekside entered into a real estate purchase agreement
with Francis Hospitality for the sale of the property under
lease to Delta. The real estate purchase agreement was made
subject to the lease agreement and its amendments, which were
attached as exhibits to the real estate purchase agreement.
On March 19, 2014, the sale of the Creekside property closed
and Creekside assigned the lease agreement to Francis
Hospitality. Read Properties did not receive a leasing fee in
April 2014 or thereafter.
Properties filed a warrant in debt against Francis
Hospitality and Delta in the Lynchburg General District Court
in June 2014, seeking damages for breach of the lease
agreement. On August 27, 2014, Francis Hospitality and Delta
executed a third amendment to the lease agreement, in which
the provision for payment of the leasing fee was eliminated.
Francis Hospitality and Delta also executed an
indemnification agreement whereby Francis Hospitality agreed
to indemnify Delta "against all losses, claims, damages,
liabilities, cost or expenses, arising out of" the third
amendment to the lease agreement and the lawsuit filed by
Read Properties. Read Properties nonsuited the general
district court action and filed the current action in the
Properties asserts three causes of action in its complaint.
In Count I, Read Properties alleges breach of contract by
Francis Hospitality and Delta and asserts that as the
successor-in-interest to Forehand, an intended third-party
beneficiary of the lease, it was entitled to receive the
leasing fees through September 30, 2017. In Count II, Read
Properties alleges intentional interference with contract by
Francis Hospitality and Delta and asserts that Francis
Hospitality and Delta tortiously interfered with Read
Properties' right to receive the leasing fees under the
lease agreement when they entered into the third amendment to
the lease, terminating the provision for payment of leasing
fees. In Count III, Read Properties alleges a statutory
business conspiracy by Francis Hospitality and Delta in
violation of Code §§ 18.2-499 and -500 and asserts
that Francis Hospitality and Delta conspired to tortiously
interfere with Read Properties' right to receive the
leasing fees under the lease agreement, entitling it to
three-fold damages and attorney's fees.
bench trial, the circuit court issued a letter opinion in
which it separately "address[ed] each of the causes of
action." Finding that Forehand "transferred the
right to the leasing fees to Read Properties," the
circuit court ruled in favor of Read Properties as to its
claim in Count I that Francis Hospitality and Delta breached
the lease agreement under which Read Properties was entitled
to the leasing fees as an intended third-party beneficiary.
Therefore, with regard to Read Properties' claim of
"$34, 020 of leasing fees until the end of the lease in
September of 2017," the circuit court found that
"Delta and Francis Hospitality are jointly liable for
the leasing fees."
regard to Count II for intentional interference with
contract, the circuit court ruled that Read Properties
"proved all elements of this cause of action against
both Francis Hospitality and Delta." The circuit court
rejected the appellants' argument that "they cannot
intentionally interfere with their own contract," ruling
that "Francis Hospitality and ...