Decisive Analytics Corp. v. Chikar

75 Va. Cir. 337, 2008 Va. Cir. LEXIS 79
CourtFairfax County Circuit Court
DecidedJuly 15, 2008
DocketCase No. CL 2008-6171
StatusPublished
Cited by1 cases

This text of 75 Va. Cir. 337 (Decisive Analytics Corp. v. Chikar) is published on Counsel Stack Legal Research, covering Fairfax County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Decisive Analytics Corp. v. Chikar, 75 Va. Cir. 337, 2008 Va. Cir. LEXIS 79 (Va. Super. Ct. 2008).

Opinion

By Judge Randy I. Bellows

The present motion before the Court is Defendants’ Motion to Compel Arbitration. On June 13,2008, the Court heard oral argument on this motion, following which the Court took the matter under advisement. For the reasons stated below, the Defendants’ Motion to Compel Arbitration is granted in its entirety.

I. Background

On May 9,2008, PlaintiffDecisive Analytics Corporation (hereinafter “DAC”), a Delaware corporation operating as a small business in Virginia, filed a complaint against six individual defendants. These defendants include Defendant B2C, Inc., a terminated Virginia corporation (hereinafter “B2C”), defendants Ragina M. Chikar and Michelle D. Brantley, in their individual capacities as sole officers of the former B2C, as well as in their capacities as trustees in liquidation (hereinafter “Brantley Trustee” and “Chikar Trustee”) of B2C. In addition, the complaint names Defendant Walter Cotton, III, trading as Management Resources International Trust (hereinafter “Cotton”). Walter Cotton is Defendant Brantley’s husband. (Compl. ¶ 8.) The present lawsuit stems from a contract (hereinafter “Prime Contract”) between the Undersecretary of Defense, aU.S. Department of Defense official, and B2C. [338]*338DAC, in turn, served as a subcontractor to B2C under the Prime Contract. Compl. ¶ 1. At the core of DAC’s complaint, which seeks both equitable and legal relief against Defendants, is the allegation that B2C and its related Defendants stole $169,116.42 out of the total $198,648.82 “entrusted to them by the Undersecretary of Defense, which was to be paid promptly to DAC as a small business protected by the U.S. Government.” Compl. ¶ 1.

Relevant facts alleged include the following. On September 18,2006, B2C and DAC entered into a subcontract, attached as Exhibit 1 to the Complaint (hereinafter “Subcontract”). Defendant Chikar signed the Subcontract for Defendant Brantley, in Brantley’s capacity as President and CEO of B2C. Clause H of the Subcontract contains an arbitration provision which states as follows:

H. Arbitration. In the event of dispute arising between the parties which cannot be resolved by good faith negotiations, upon 45 days prior written notice by either party, the dispute shall be submitted to arbitration. Such arbitration shall be conducted in accordance with the rules of the American Arbitration Association existing at the time of submission by three arbitrators, one of whom shall be selected by B2C, one of whom shall be selected by Subcontractor, and the other by the American Arbitration Association. The costs of the actual arbitration activity shall be assumed and paid one-half by B2C and one-half by Subcontractor, but the individual costs and expenses of each party (including travel costs and attorney’s fees) shall be assumed and paid by the party incurring the costs. Any arbitration shall be binding and enforceable against the parties hereto and judgment may be entered thereon in any court of competent jurisdiction. Any arbitration hearing shall take place in Alexandria, Virginia.

Pursuant to the Prime Contract, B2C was to “serve as a pass through, through which work performed by DAC as Subcontractor under the Subcontract, would directly be used by and would directly benefit the Undersecretary of Defense.” (Compl. ¶ 24.) The Undersecretary of Defense was to pay B2C, as the prime contractor, a “ ‘pass through fee’ to cover the costs of performing pass through services and properly administering the DAC Subcontract, as well as an additional amount to allow B2C a profit on the work DAC performed under the Subcontract.” (Compl. ¶ 25.) In addition, the Undersecretary of Defense would pay B2C, intending that B2C would serve as [339]*339a “lockbox for specific funds to be remitted promptly by B2C to DAC, with B2C serving as a trustee and as a fiduciary with respect to [the specific] funds, for the benefit of DAC.” (Compl. ¶ 27.) DAC further alleges that it “ftilfilled all of its requirements under the Subcontract,” in that “[a]ll deliverables1 that DAC was required to produce were in fact produced to the satisfaction of the Undersecretary of Defense and B2C.” (Compl. ¶ 31.)

During the first three months of the Subcontract, B2C properly “remitted to DAC the payments received by B2C from the Undersecretary of Defense for the first three invoices.” These were the invoices issued by DAC for B2C to, in turn, submit to the Undersecretary of Defense. (Compl. ¶ 33.) Subsequently, however, DAC alleges that, beginning on December 15,2006, DAC issued a series of eleven invoices to B2C that were submitted to Chikar’s attention and were paid to B2C by the Undersecretary of Defense, but then were never ultimately paid to DAC. DAC alleges that this is because the Defendants kept the funds for themselves.

In addition, DAC alleges that, on July 2, 2007, the Virginia State Corporation Commission automatically terminated B2C’s corporate existence due to B2C’s failure to file its annual report as required by the Virginia Stock Corporation Act. (Compl. ¶ 55.) DAC states that “B2C intentionally withheld from DAC the fact that, on July 2, 2007, the Virginia State Corporation Commission automatically terminated the corporate existence of B2C.” (Compl. ¶ 75.) Following this automatic termination, “[B2C’s] properties and affairs automatically passed to Brantley and Chikar, its directors, as trustees in liquidation.” (Compl. ¶ 93.) In addition, although the exact timeframe is not clear, at some point Chikar, Brantley, and Cotton are alleged to have informed DAC that B2C was “being merged into Cotton’s business, Management Resources International Trust,” and that “all assets and liabilities were transferred to Cotton.” (Compl. ¶ 112.) Cotton is further alleged to have stated to DAC that “his business was assuming B2C’s liability to its creditor, DAC.” (Compl. ¶ 112.)

Counts I through V of the Complaint seek equitable relief. Count I (Accounting) seeks “an equitable accounting ... of all funds that came into the hands of any one or more of the[] Defendants from August 1,2006, to the present.” (Compl. ¶ 121.) Count II (Imposition of Constructive Trust) asks that a constructive trust be imposed of the $169,116.42 that Plaintiff claims “has been defalcated, converted, and taken by one or more of these Defendants.” (Compl. ¶ 127.) Count III (Setting Aside Fraudulent [340]*340Conveyance Pursuant to § 55-80) asks that this Court “set aside [the] said fraudulent conveyance or conveyances,” of one or more of the Defendants, and “[t]hat these funds be located, specifically traced, accounted for, and sequestered,” and that these funds be turned over to Plaintiff. (Compl. ¶ 13 3.) Count IV (Setting Aside Voluntary Conveyance Pursuant to § 55-81) alleges that one or more of the Defendants transferred “by gift, or conveyance, or assignment, or transfer of, or charge upon,” a portion of the $169,116.42 in violation of Va. Code § 55-81. Count V (Piercing the Corporate Veil) seeks relief against all Defendants except Cotton and alleges various acts and omissions of Defendants that justify piercing the B2C corporate veil.

Counts VI through XVII seek legal relief. Counts VI through XI are filed against all Defendants except Cotton and include Breach of Fiduciary Duty (Count VI), Conversion (Count VII), Wrongful Taking of Funds (Count Vm), Fraud (Count IX), Constructive Fraud (Count X), and Negligence (Count XI). Counts XII and XIII (Breach of Contract and Open Account) seek relief against Defendants Chikar Trustee, Brantley Trustee, and B2C.

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Cite This Page — Counsel Stack

Bluebook (online)
75 Va. Cir. 337, 2008 Va. Cir. LEXIS 79, Counsel Stack Legal Research, https://law.counselstack.com/opinion/decisive-analytics-corp-v-chikar-vaccfairfax-2008.