Wachovia Bank, N.A. v. Ranson Tyler Chevrolet, L.L.C.

73 Va. Cir. 143
CourtRoanoke County Circuit Court
DecidedMarch 27, 2007
DocketCase No. CL05000199-00
StatusPublished

This text of 73 Va. Cir. 143 (Wachovia Bank, N.A. v. Ranson Tyler Chevrolet, L.L.C.) is published on Counsel Stack Legal Research, covering Roanoke County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wachovia Bank, N.A. v. Ranson Tyler Chevrolet, L.L.C., 73 Va. Cir. 143 (Va. Super. Ct. 2007).

Opinion

By Judge Charles N. Dorsey

This matter is before the Court on Wachovia Bank’s (“Wachovia”) demurrers to an Amended Counterclaim filed by Michael Ranson and Ranson Tyler Chevrolet, L.L.C. (“the Dealership”). For the following reasons, Wachovia’s demurrer to dismiss Ranson from Count Two of the Amended Counterclaim is sustained. Wachovia’s demurrers to dismiss Counts Four and Five of the Amended Counterclaim are also sustained. All of Wachovia’s remaining demurrers to the Amended Counterclaim are overruled.

[144]*144I. Facts and Procedural Disposition

This action arises from a commercial financing agreement entered into between Wachovia, Ranson, Kenneth Tyler, and the Dealership on May 9, 2003. Compl. Ex. A (“May 2003 Agreement”). The agreement was for the purpose of securing financing for the new Dealership and for resolving differences relating to previous dealership financing relationships. As part of the agreement, Wachovia limited Ranson’s liability for all previous financing arrangements to a Limited Guaranty of $500,000. Under the agreement, Ranson was not to be held liable for the guaranty amount if Wachovia terminated its financing of the Dealership without cause and the Dealership was in compliance with the minimum expectations set forth in the agreement.

The Dealership subsequently failed. Wachovia filed suit to collect on amounts allegedly owed by Ranson, Tyler, and the Dealership. Ranson and the Dealership, collectively, filed responsive pleadings, including a counterclaim and Amended Counterclaim. Wachovia filed a Demurrer to the Amended Counterclaim, asking the court to:

(1) Dismiss Ranson from the breach of contract, intentional interference with contract, and intentional interference with expectancy counterclaims;

(2) Dismiss the breach of contract claim because the implied duties were inapplicable;

(3) Dismiss the breach of contract claim because no breach existed;

(4) Dismiss the intentional interference with contract claim;

(5) Dismiss the intentional interference with business expectancy claim;

(6) Dismiss the tortious or wrongful repossession/conversion claim;

(7) Dismiss the fraud claim because of a failure to plead with specificity;

(8) Dismiss the fraud claim because implied misrepresentations were insufficient; and

(9) Dismiss the punitive damages claim.

It is upon these demurrers that the Court is now prepared to rule.

II. Standard of Review

“A demurrer tests the legal sufficiency of facts alleged in pleadings, not the strength of proof. We accept as true all facts properly pleaded in the bill of complaint and all reasonable and fair inferences that may be drawn from these facts.” Glazebrook v. Board of Supervisors, 266 Va. 550, 554, 587 S.E.2d 589 (2003) (citations omitted). When considering a demurrer, the trial court cannot [145]*145evaluate and decide the merits of a complaint, but may only determine whether the factual allegations are sufficient to state a cause of action. Riverview Farm Associates, Virginia Gen. P’ship v. Board of Supervisors, 259 Va. 419, 427, 528 S.E.2d 99 (2000).

“To survive a challenge by demurrer, a pleading must be made with 'sufficient definiteness to enable the court to find the existence of a legal basis for its judgment. In other words, despite the liberality of presentation which the court will indulge, the motion must state a cause of action’.” Hubbard v. Dresser, Inc., 271 Va. 117, 123, 624 S.E.2d 1 (2006) (quoting Moore v. Jefferson Hosp., Inc., 208 Va. 438, 440, 158 S.E.2d 124 (1967)).

HI. Analysis

A. Demurrer 1: Dismissal of Counterclaims Asserted by Ranson

1. Breach of Contract Counterclaim

Wachovia first argues that Ranson’s breach of contract counterclaim should be dismissed because Ranson was not a party to some of the agreements at issue. Ranson claims, and the record shows, that he was a party to the May 2003 Agreement. Ranson also claims that he is a third-party beneficiary of the underlying financing documents, explaining that the agreements were entered into “with the intention of allowing Mike Ranson to protect his personal estate. . . .” Ranson Am. Countercl. ¶ 40. Additionally, Ranson asserts, he was a guarantor of the underlying financing documents. While some of Ranson’s assertions have no bearing on the issue, Ranson has alleged sufficient facts to establish that he is a proper party to the Dealership’s breach of contract counterclaim.

A shareholder, as an individual, cannot bring an action for injuries to a corporation. Simmons v. Miller, 261 Va. 561, 573, 544 S.E.2d 666 (2001). Balanced with this rule, however, is the general proposition that a party who has a personal stake in the outcome of a controversy has standing to request relief. Goldman v. Landsidle, 262 Va. 364, 371, 552 S.E.2d 67 (2001). Ranson has alleged that Wachovia breached the May 2003 Agreement, and that he was a party to that agreement. Therefore, Ranson clearly has standing to claim that Wachovia has breached that agreement.

Ranson has also implied, by alleging his status as third-party beneficiary and guarantor of the underlying financing documents, that he should be allowed to recover personally for Wachovia’s alleged breach of those agreements. In general, “when a creditor sues a guarantor and does not [146]*146name the principal debtor in the action, the guarantor is not entitled to raise defensively the claims of the principal debtor against the creditor.” First Texas Serv. Corp. v. Roulier, 750 F. Supp. 1056, 1060 (D. Colo. 1990). The purpose of this rule is to protect the interests of the principal and minimize litigation. See Wallace Hardware Co. v. Abrams, 223 F.3d 382, 402 (6th Cir. 2000). While the Virginia Supreme Court has not spoken directly to the issue, courts in other jurisdictions almost uniformly allow counterclaims by guarantors if, as here, the principal is a party to the action. See, e.g., Wallace Hardware Co., supra; Roulier, supra; Bloor v. Shapiro, 32 B.R. 993, 1001 (S.D. N.Y. 1983); Restatement, Security § 133(2) (1941). Because the Dealership is a party to this action, its interests are adequately protected. Ranson has sufficiently shown standing as guarantor to allege a breach of contract counterclaim.

Additionally, if Wachovia has in fact breached its agreement, as Ranson alleges, such a breach would arguably relieve Ranson of any obligations as a surety to the agreement.

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Bluebook (online)
73 Va. Cir. 143, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wachovia-bank-na-v-ranson-tyler-chevrolet-llc-vaccroanokecty-2007.