United States District Court, E.D. Virginia, Richmond Division
J. IRVIN BEATLEY, Plaintiff,
CHARLES E. AYERS, JR., et al., Defendants.
A. Gibney, Jr., United States District Judge
case, the plaintiff has sued three former business colleagues
for breach of contract, conspiracy to breach a contract,
fraud, and conspiracy to commit fraud. The Court finds that
the defendants breached their contract with the plaintiff,
and awards damages, jointly and severally against each
defendant, in the amount of $157, 195. In addition, the Court
finds that one defendant, Charles E. Ayers, Jr., committed
fraud, resulting in damages to the plaintiff in the amount of
$157, 195. The Court also awards punitive damages against
Ayers in the amount of $25, 000. The Court finds for the
defendants on the other claims. The following Opinion states
the reasons for the Court's decision.
case arises from an unsuccessful attempt to create a
waterfront project called Anchor Point in Hopewell, Virginia.
The plaintiff, J. Irvin Beatley, teamed up with the
defendants, Charles E. Ayers, Jr., Ralph L. Costen, Jr., and
Jesse L. Barber, to develop a community with condominiums,
single-family homes, a marina, and other facilities along the
Appomattox River. A fifth person, John Woodfin, Sr., also
took part in the project, apparently primarily as a financial
backer. Woodfin died before this case began. His son, John
Woodfin, Jr., took over his role in the project. For ease of
identification in this Opinion, the Court will refer to the
Woodfins as Woodfin Sr. and Woodfin Jr. Neither Woodfin is a
party to this case.
parties presented almost all their evidence in documentary
form. Plaintiff Beatley has suffered a stroke that renders
him unable to testify. Defendant Barber did not testify or
even appear. Defendant Costen testified by deposition; he did
not show up at trial. Defendant Ayers appeared in person and
testified. The Court observed Ayers' testimony, and found
him largely incredible. In fact, his business partner,
Costen, testified that Ayers has a bad reputation for
truthfulness in the community.
Court does not have an official copy of the transcript of the
trial, but has a rough copy of the transcript upon which it
has relied to supplement its memory of the incidents of
The Anchor Point Development
Point never got off the ground, and it lost a great deal of
money-much of which the parties had borrowed. Not
surprisingly, the developers wound up fighting each other in
a lawsuit. Beatley sued Ayers, Costen, and Barber in the
Circuit Court of the City of Richmond. In state court,
Beatley alleged that he had put millions of his own dollars
into Anchor Point, that he had borrowed a great deal of
additional money for the project, and that Ayers, Costen, and
Barber had agreed to shoulder a proportionate share of the
financing. Beatley claimed that the defendants did not pay
their share and left him holding the bag. (Pl's Ex. 2.)
state court litigation resulted in a settlement that would
allow Beatley to recoup part of his loss from his colleagues.
Unfortunately, history repeated itself: Beatley's
co-developers did not perform the settlement as agreed,
leading to this litigation.
Anchor Point's Financing
discussing the settlement agreement and the defendants'
performance, the Court must describe the outstanding debt
from the project. The outstanding loans are important in this
case because the defendants say that they figured in their
performance of the settlement agreement.
financing of Anchor Point was complicated and confusing. Of
the myriad loans related to Anchor Point, two are especially
important to this case. Both came from Resource Bank, which
later became Fulton Bank. First, Beatley, Ayers, Costen, and
Barber each personally signed notes to get loans of $157, 195
to help finance the project. (Pl's Ex. 21.) Woodfin Sr.
guaranteed the loans. (Pl's Ex. 39.) Woodfin Sr. also
posted a certificate of deposit as collateral to cover all
four $157, 195 notes. Ayers falsely testified that he did not
know about Woodfin's collateral. At trial, Ayers
testified, "I didn't know at the time that John
Woodfin had made a deposit at the bank which facilitated [the
$157, 195 loans]." (Trial Tr. 120:9-12.) A June 29,
2017, letter to Fulton Bank, however, shows that Ayers'
testimony is false. In the letter, Ayers said, "I
realize that the Woodfins have provided collateral for [the
$157, 195] loan." (Pl's Ex. 8.) The collateral later
proved important to the defendants' defense of this case.
second important loan, MPD Ventures, LLC,  borrowed
approximately $1.8 million dollars for the project. The
parties and Woodfin Sr. guaranteed the MPD loan. Apparently
the MPD loan went into default, or was called by the Bank for
other reasons. The Woodfins stepped in and bought the MPD
loan through a company they owned called Grove & Libbie
Service Co. LLC. At the times relevant to this suit, Grove
& Libbie held the MPD loan, with a balance of $885, 522,
57. (Pl's Ex. 35.)
The Settlement Agreement for the State Suit
state court litigation, Beatley wanted to recover as damages
the money that Ayers, Costen, and Barber should have paid to
carry their share of the financing. On June 16, 2017, the
parties mediated the case. All four parties to this case
attended the mediation. So did Kevin Walsh, a representative
of the Woodfins' interests. By the time of the mediation,
Woodfin Sr. had died, and Woodfin Jr. served as administrator
of his estate. Although the Woodfins were not parties to the
state court litigation, Woodfin Jr. sent Walsh to the
mediation. Walsh serves as a financial monitor or advisor of
Woodfin Jr.'s many business affairs. Although he attended
the mediation, he did not sign the settlement agreement.
settlement agreement contained two provisions pertinent to
this litigation. They state as follows:
2. Defendants [Ayers, Costen, and Barber] shall pay plaintiff
[Beatley] $134, 000 on or before July 17, 2017.
3. Defendants agree to assume all of plaintiff s obligations
on the loan from Fulton Bank to plaintiff in the original
principal amount of $157, 000. Defendants agree to use all
best efforts to obtain Fulton Bank's consent to their
assumption of the loan and the release of plaintiff from all
obligations relating to the laon. Defendants further agree
that their responsibility under this paragraph includes the
payment of the monthly interest charge due on or about July
agreement also provided that Beatley would release a deed of
trust he held on the planned site of planned condominiums.
(Pl's Ex. 3.)
the agreement would result in a cash payment of $134, 000 to
Beatley, due 31 days after the mediation. The defendants
would also use their best efforts to get the Bank to release
Beatley from his $157, 195 loan. The agreement recognizes
that the Bank might not agree to take Beatley off the note,
so it also provides that the defendants would pay ongoing
interest on the note and would eventually assume
Beatley's duty to pay the note off.
Performance of the Settlement Agreement
defendants did not perform the settlement as agreed. They did
not pay $134, 000 on time. They used, at best, minimal
efforts to get the Bank to release Beatley from the $157, 195
note. They did not pay the $157, 195 note when due. But they
offer a number of excuses for their failure to perform.
Payment of $134, 000
immediately after signing the settlement agreement, Ayers
took the lead in the defendants' attempts to get out of
the deal. His efforts to evade making the $134, 000 payment
illuminate his intent to perform the entire agreement.
tried to use Woodfin Jr. to put pressure on Beatley so that
the defendants would not have to make the $134, 000 payment
due on July 17, 2017. Three business days after the
settlement, Ayers emailed Woodfin Jr. to tell him that, as
part of the settlement, "[w]e did get the release of
[Beatley's] deed of trust on the condominium." (Pl.
Ex. 6.) As to the rest of the settlement, Ayers told the
vacationing Woodfin Jr., "I have a strategy and we can
discuss it when you get back." (Id.)
Woodfin Jr. returned from his vacation, Ayers tried to
implement his "strategy." On Wednesday, July 12,
2017, Ayers emailed Woodfin Jr. to ask him to have Kevin
Walsh contact Beatley's lawyer and demand $100, 000 of
the $134, 000 due in a matter of days. Ayers asked Woodfin
Jr. to "pursue that vigorously because Friday will be
here before you know it." (Pl's Ex. 9.) Friday was
the last business day before the due date of the $134, 000
payment. Costen knew about Ayers' scheme, as demonstrated
by his email to Ayers on July 13 asking whether he had heard
from Woodfin Jr. Id.
came, and the defendants did not pay the money. On August 1,
Ayers again tried to get Woodfin Jr. to turn up the heat on
Beatley. Ayers said in an email,  "I really need to talk
to you about Irv Beatley and put together some plan to
finalize that settlement." (Pl's Ex. 12.) By using
the words "finalize that settlement," Ayers could
only have meant to get out of paying the money to Beatley:
the agreement was already in final form, and nothing remained
except the defendants' performance. Ayers ratcheted up
his efforts to get Woodfin Jr. to pressure Beatley to give up
trying to collect the money. Ayers offered to write a demand
letter to Beatley for Woodfin Jr.'s signature. As an
incentive for Woodfin to sign the letter, Ayers said Beatley
would otherwise "get the money" and "do
something with it before you can get to it."
(Id.) Whatever his motives toward Woodfin Jr., Ayers
clearly did not want Beatley to get the money due to him.
Ayers got Woodfin Jr. to move, albeit in halting and
inconsistent steps. On August 4, 2017, Woodfin Jr. wrote to
Beatley ostensibly on behalf of Grove & Libbie, the
Woodfin-controlled company that now held the MPD loan
guaranteed by Beatley, Woodfin Sr., and all three defendants.
Grove & Libbie demanded payment of $100, 000 from the
money in the mediation-the precise amount suggested by Ayers
in his July 12 email. (Pl's Ex. 15.)
on August 17, 2017, Woodfin Jr. sent a second demand letter
on behalf of Grove & Libbie. This second letter went to
Beatley, Ayers, Costen, and Barber, and demanded that they
pay the entire MPD note. Specifically related to the $134,
000, however, the letter said any amount to be paid through
the mediation should go immediately to Grove & Libbie. Of
course, the only amount due through the mediation was the
$134, 000 due to Beatley. (Pl's Ex. 17.) Ayers, Costen,
and Barber never replied to the August 14 demand, and never
paid any money to Grove & Libbie. From these facts, the
Court concludes that the two demand letters existed only as a
way to dissuade Beatley from pursuing the money from the
around this time, what Ayers considered a fortuitous event
occurred. Beatley's lawyer left his firm and went out on
his own. Beatley's former firm sent the defendants'
lawyer a notice of attorneys' fees lien for unpaid fees
and costs. (Pl's Ex. 14.) The defendants' lawyer
referred to the lien in a status conference held to discuss
the defendants' failure to pay the settlement amount. The
lawyer claimed that the assertion of the lien played a role
in the failure to pay the $134, 000 because it caused
"confusion" among the defendants. (Pl's Ex. 13,
at 5.) Unfortunately for the defendants, their
"confusion" could not have existed at the time
payment was due, because the letter asserting the lien did
not go out until a month after the due date.
the defendants said in the status conference that they
intended to pay the $134, 000, (Pl's Ex.13, at 11),
August 25, 2017, Ayers tried a new tactic to get Woodfin Jr.
to move more aggressively against Beatley. First, Ayers said
that a letter from Fulton Bank needed to go out. This
apparently referred to a demand from Fulton to pay the $157,
195 notes. Somehow, Ayers seems to have believed that Woodfin
could get the Bank to demand payment. (Pl's Ex. 18.) It
took a while, but on February 9, 2018, the Bank finally did
demand payment. (Pl's Ex. 21.)
importantly, Ayers came up with a plan to get Barber and
Costen out of the project, leaving Ayers and Woodfin Jr. as
the sole principals. Ayers said that Barber would drop out of
the project if Fulton Bank would forgive the $157, 195 note,
and if Barber could get out of paying for two lots on the
project. With respect to Costen, Ayers said that Costen would
give up his position if Woodfin Jr. would take over the loans
from Fulton Bank and accept $100, 000 of the $134, 000 due to
Beatley. (Pl's Ex. 18.)
"shifting to Irv Beatley," Ayers begged Woodfin Jr.
to sue Beatley. (Id.) He suggested that Woodfin Jr.
might even have a confession of judgment note against
Beatley. (Id.) This bait, however, did ...