Present: Hassell, C.J., Keenan, Koontz, Kinser, and Lemons,
JJ., and Russell and Lacy1, S.JJ.
BETTE L. BANKS
v. Record No. 061348
MARIO INDUSTRIES OF VIRGINIA, INC.
OPINION BY JUSTICE DONALD W. LEMONS
September 14, 2007
TROY COOK, ET AL.
v. Record No. 061355
MARIO INDUSTRIES OF VIRGINIA, INC.
FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
Charles N. Dorsey, Judge
In these consolidated appeals from civil actions in which
a company alleged that certain former employees and agents
formed a competing business, we consider whether the trial
court erred by denying a motion to strike, submitting a breach
of fiduciary duty claim to the jury, submitting a verdict form
to the jury, instructing the jury, admitting a pre-resignation
memorandum into evidence, and failing to set aside a punitive
damages award.
I. FACTS AND PROCEEDINGS
A. The Parties
These consolidated appeals involve claims by Mario
Industries of Virginia, Inc. ("Mario"), a lighting
1
Justice Lacy participated in the hearing and decision of
this case prior to the effective date of her retirement on
August 16, 2007.
manufacturer and supply company, against its former employee,
Troy Cook ("Cook"); Cook's new company, Renaissance Contract
Lighting & Furnishings, Inc. ("Renaissance"); the other
principal in Renaissance, Joseph Cassell ("Cassell"); and two
of Mario's former sales representatives, The Darnell Group
("Darnell") and Bette L. Banks ("Banks").
B. Facts
The facts will be stated in the light most favorable to
Mario, the prevailing party at trial. Bitar v. Rahman, 272
Va. 130, 141; 630 S.E.2d 319, 325-26 (2006).
1. Background
Mario, a company that started more than eighty years ago,
manufactures and sells lighting products. Louis Scutellaro
("Scutellaro"), who purchased Mario from his uncle in 1988, is
Mario's president, and Delores Scutellaro, his wife, is its
secretary.
Mario maintains two separate divisions, namely a
residential retail sales division and a contract lighting
division ("contract lighting" or "contract sales"). This case
involves the contract lighting division which sells lighting,
lamps and other lighting products to hotels, nursing homes,
and government entities.
Mario did not require its employees to sign non-compete
or confidentiality agreements. However, Mario's employee
2
handbook explained that outside employment must not conflict
with Mario's interests and that employees had an obligation to
prevent actual or potential conflicts of interest. Mario's
employee handbook also specifically addressed the protection
of confidential information. Mario's employee handbook
prohibited: the unauthorized removal of files from the
computer and information systems, removing or copying Mario's
documents, removing company property, and personal use of
Mario's computer and information systems that was detrimental
to Mario.
Additionally, Mario restricted access to its sales
figures. Deidre Frank (“Frank”), the controller at Mario,
testified that Cook knew sales information was confidential.
Mario also took steps to protect its customer list that it
spent eighty years developing and, as Scutellaro testified,
was “worth millions” to Mario. Mario also treated as
confidential its computer assisted drawings, costing sheets,
target price points, selling prices, and key suppliers. Mario
“copyrights [some of its] items,” and its catalogs are
protected by copyright.
2. Independent Sales Representatives
Mario uses independent sales representatives in its
contract sales division to promote and sell Mario's products.
Each of Mario's sales representatives has an exclusive
3
territory. Scutellaro explained that "[i]n exchange [for an
exclusive territory], [Mario] expect[s] their loyalty. That's
the way it's done in this industry." In other words, in
exchange for an exclusive territory, Mario did not permit its
sales representatives to represent a competing company.
Mario's sales representatives are not Mario employees.
Mario does not provide its sales representatives with a
salary, health insurance, or pension benefits. Instead, the
sales representatives are only paid commissions. Mario's
commission rate is generally 8%, but that rate may fluctuate.
Mario withholds no taxes on commissions paid and issues IRS
1099 forms to its sales representatives rather than W-2 forms.
Mario pays for the catalogs, swatches, and samples it gives to
its sales representatives. Mario also pays most of the sales
representatives' expenses for attendance at Mario business
meetings.
Cook began working at Mario in 1990. Cook, an at-will
employee, served as the manager for Mario's contract sales
division from 1995 to November 7, 2003.
Banks was Mario's sales representative in Virginia,
Maryland, and D.C. from January 26, 1998 until her resignation
on June 1, 2004. Banks testified that she "was a contract
agent, an independent sales representative" and "was not an
employee of Mario."
4
Darnell Group is a sales organization formed by Joseph
Darnell in 1992. Darnell was Mario's sales representative for
Illinois and Michigan from 1988 through the date of its
resignation on January 29, 2004.
3. Cook Forms Renaissance and Leaves Mario
In March 2003, Cook considered leaving Mario to establish
his own business. Cook prepared a memorandum ("Renaissance's
business plan") outlining some of his ideas and ambitions.
Cook intended for his business, Renaissance, a lighting and
furniture manufacturer, to compete with Mario's contract sales
division. Cook also contacted Cassell, who had previously
been the warehouse manager for Passport, a Mario company,
about forming Renaissance. At that time, Cassell was working
on his own plans to start a metal furniture manufacturing
business. Cassell was unfamiliar with contract lighting, so
Cook shared Renaissance's business plan with Cassell.
Renaissance's business plan contained confidential
information about Mario's growth rate, yearly sales totals,
past projects, target price points for customers, profit
margin, vendor lists, key accounts and suppliers, marketing
plans and strategies, production costs, commissions, trade
secrets, and intellectual property. Cassell and Cook admitted
that it was improper for Cook to reveal Mario's confidential
information. Cassell also admitted that he would not want his
5
competitor to have this information. Cassell admitted that
the information about Mario's business helped Renaissance
become "highly competitive."
By April 2003, Cook and Cassell had selected
Renaissance's name, chosen a facility, and created company
letterhead. Renaissance was incorporated in October 2003.
From March to November 2003, Cook and Cassell were
Renaissance's two employees. Cassell was the president of
Renaissance, and Cook was the vice president.
Cook worked for Renaissance while employed by Mario and
did so during normal working hours at Mario. Cook and Cassell
planned to take fifteen of Mario's sales representatives to
Renaissance. While employed at Mario, Cook spoke to at least
three sales representatives about Renaissance, including
Darnell.
Prior to his resignation, Cook sought legal advice with
regard to his resignation. He prepared a memorandum for his
attorney on a computer owned by Mario summarizing issues
regarding Mario, the contract lighting industry, Cook's
planned resignation, and Renaissance ("pre-resignation
memorandum"). In the pre-resignation memorandum, Cook stated:
"I feel sure I will be presented with opportunities for
previously negotiated projects.”
6
When Cook resigned in November 2003, Cook gave Scutellaro
a letter indicating that he left company information in a box
in his office. However, Scutellaro did not find the box.
Cook's business cell phone was returned to Mario, but the cell
number was not. Cook also deleted emails, quotes, files, and
electronic spreadsheet forms from his computer. Mario's
forensic computer expert testified that he found documents
related to the formation of Renaissance on the hard disk drive
of the computer Cook had used at Mario. The forensic expert
also recovered the pre-resignation memorandum. The computer's
hard drive also contained an electronic spreadsheet showing
all of the open projects associated with the Hilton Garden
Inns, a chain of hotels owned by a hotelier who was, at the
time, one of Mario’s most significant customers. All of these
documents had been printed from Mario's computer.
Cassell admitted that it was wrong for a sales
representative to take a contract from one manufacturer to
another. Nevertheless, after he resigned, Cook testified that
he "encouraged" Mario's sales representatives to send business
to Renaissance. Cook also used Mario's business phone book,
which contained valuable and confidential contact information
for Mario's customers, vendors, and sales representatives, to
help him at Renaissance. Cook and Cassell used Mario's
confidential information to obtain financing for Renaissance.
7
Also, Renaissance took Mario's vendor and customer list and
Mario's pricing and sales figures "to use to their advantage."
4. Banks and Darnell Help Renaissance
While Still at Mario
Banks testified that Cook and Cassell did not ask or
encourage her to divert projects from Mario to Renaissance.
Nevertheless, after Cook resigned from Mario, Banks
"pretended" to be Mario's sales representative. Banks thought
Mario trusted her. Banks, however, admitted that she "had no
loyalty to Mario at all," and her only “boss” is her
“checkbook.” Banks admitted that confidential quotes should
normally not be sent to competitors because the information is
"commercially sensitive" to Mario. Banks also knew that Mario
expected her to act as its representative, and “if [she] did a
deal with a customer for which [Mario] gave a quote, [Mario]
would be the manufacturer.” Banks knew that Mario would not
let her represent both Mario and Renaissance. Banks, however,
admitted that, while representing Mario, she sent quotes to
Renaissance instead of sending them to Mario. Even Cook
conceded that Banks was disloyal to Mario and acted in her own
best interest. Banks would send a confidential Mario quote to
a competitor if "it was to [her] advantage" and "[i]f it means
putting a dollar in my checkbook."
Banks diverted the following projects from Mario to
Renaissance: Residence Inn Capitol, Fisherman's Wharf,
8
Sheraton Key Largo, Big Sur Lodge, and Annapolis Marriott.
Banks explained that she did this because she felt that "[i]t
would have either cost Mario money or Bette Banks money. I
think that Mario has a whole lot more money than I do." On
June 1, 2004, Banks resigned from Mario and joined Renaissance
because Renaissance offered her a 10% commission.
Similar to Banks, Darnell diverted the Hyatt Deerfield
project from Mario to Renaissance. When Scutellaro confronted
Darnell with this information, he resigned and joined
Renaissance.
C. Causes of Action
Mario sued Banks for damages and in a separate action,
Mario sued Cook, Cassell, Renaissance, and Darnell. The two
suits against Banks and Cook and his co-defendants
(collectively “the defendants”) were consolidated into a
single action. Mario's case proceeded on the following
theories: (1) tortious interference with business relations
(against all the defendants); (2) common law conspiracy
(against all the defendants); (3) statutory conspiracy
(against all the defendants); (4) breach of fiduciary duty
(against Cook, Banks, and Darnell); (5) misappropriation of
trade secrets (against Cook, Cassell, and Renaissance); and
(6) conversion (against Cook, Cassell, and Renaissance).
9
D. Pre-Trial Objection
Prior to trial, Cook objected, on grounds of attorney-
client privilege, to Mario introducing Cook's pre-resignation
memorandum into evidence. The trial court overruled the
objection.
E. Alleged Damages & 40% Gross Profit Margin
At trial, Scutellaro qualified, without objection, as an
expert in "lighting manufacturing and quoting of lighting
products." Scutellaro testified about Mario’s lost revenues
and lost profits, allegedly resulting from the defendants’
actions that caused Mario to lose specific contract lighting
projects. Evidence offered by Mario regarding lost revenues
and lost profits (applying a 40.5434% gross profit margin) was
as follows:
PROJECT LOST REVENUES LOST PROFITS
Hilton Garden Inn $2,000,000 $810,868
Benjamin West $3,532,400 $1,419,019
Fisherman's Wharf $48,950 $19,845.99
Big Sur Lodge $25,793.08 $10,457.39
Annapolis $37,806.50 $15,328.04
Marriott
Residence Inn $12,420 $5,035.49
Capitol
Sheraton Key $32,615.12 $13,223.28
Largo
Hyatt Deerfield $96,480.62 $39,116.52
Other Contract $876,740 $400,000
Sales
File Recovery & N/A $25,625.90
Reconstruction
TOTAL $6,663,205.32 $2,758,519.61
10
Mario’s lost profits figures were necessarily dependent
upon Scutellaro applying Mario’s 40.5434% gross profit margin
to its lost revenues. When asked what Mario's lost profits
were with respect to the Benjamin West project, Scutellaro
testified that Mario's gross profit margin is 40.5434% and
that it "is calculated by [Mario's] accountant." The
defendants then objected "[a]s to entering figures reportedly
given [to Scutellaro] by his accountant." Mario's counsel
indicated that the accountant was present. The trial court
sustained the objection on hearsay grounds. The question was
posed again. Notably, the parties did not condition
Scutellaro's response regarding the 40% gross profit margin on
Mario's accountant testifying. Upon posing the question
again, Scutellaro testified, without objection, that Mario's
gross profit margin was 40.5434%.
Mario never called its accountant to testify. Instead,
Scutellaro testified about the gross profit margin using an
exhibit demonstrating Mario’s gross profit margin. The
defendants again objected to Scutellaro testifying to Mario's
40% gross profit margin, arguing that Scutellaro was not
qualified as an expert in accounting. The trial court
overruled the objection, saying "I don't think he is
testifying as to anything that would require any expertise so
far."
11
Finally, the defendants objected, arguing that Mario did
not lay a proper foundation to Scutellaro applying the 40%
gross profit margin to Mario's lost revenues for each of the
projects. The trial court overruled the objection on the
grounds that "the foundation is his knowledge as an owner of
the business."
F. Motion to Strike
At the conclusion of Mario's case in chief and again at
the conclusion of all of the evidence, the defendants moved to
strike Mario's evidence. First, the defendants argued that
all damage claims based on the 40% gross profit margin should
be struck. The defendants argued that the Mario's "basic
underlying measure of gross profits . . . is so flawed as to
render the calculations speculative." The defendants further
argued that the 40% gross profit margin "is derived by
calculations that incorporate extraneous factors and look in
the wrong direction." Specifically, the defendants claimed
that "any damages that are derived using the 40 percent figure
should be struck because the 40 percent figure is so
inaccurate that it results in speculation or distortion."
Second, the defendants argued that the damages evidence
related to certain, specific lost projects should be struck
either because there was no evidence of what the winning bid
was for the project, there was no evidence that a purchase
12
order had been issued, the purchasing agent picked a different
vendor than Mario, or Mario never submitted a bid for the
projects.
Finally, the defendants argued that the breach of
fiduciary duty claim should be struck because Darnell and
Banks had no fiduciary duty to Mario. The trial court
overruled the motion to strike on each of these bases.
G. Jury Instructions
The defendants only objected to three of the jury
instructions. First, the defendants objected to jury
instructions 15 and 20 because the instructions were
"inconsistent with the requirements found in Williams v.
Dominion Technology Partners, 265 Va. 280[, 576 S.E.2d 752
(2003)], which requires that the Court determine whether a
fiduciary duty exists. That is an issue of law for the Court,
and that the breach of any such duty is an issue for the
jury." Jury instruction number 15 instructed the jury that
"[t]he issues raised by Mario Industries[’] breach of
fiduciary duty claim are as follows: 1) Did a fiduciary
relationship exist between the defendant[s] and Mario
Industries? 2) If so, did the defendant[s] violate the
fiduciary obligation?" Jury instruction number 20 instructed
the jury to determine whether the defendants "breached a
fiduciary duty that [they] owed to Mario Industries" and
13
whether the defendants' "breach of fiduciary duty was a
proximate cause of damage[s] to Mario." The trial court
overruled the defendants' objections.
The defendants also objected to jury instruction 16,
defining the status and duties of an employee. The defendants
specifically objected to the portion of Instruction 16 that
provides that "[e]mployees must exercise the utmost good faith
and loyalty toward their employer." The defendants argued the
language "sets a higher standard than is required by law."
The trial court overruled the objection. Other than the jury
instructions related to fiduciary duty, the defendants did not
object to any other jury instructions, including any of the
instructions on common law conspiracy.
H. Verdict Form
The verdict form was tendered without objection. The
verdict form was divided into sections permitting awards on
different theories and against all or some of the defendants.
The jury found in favor of Mario and against all of the
defendants as to Mario's compensatory damages claims, except
for the statutory conspiracy claim, in the amount of
$1,528,342.00. As to punitive damages, the jury found in
favor of Mario and against Cook in the amount of $56,700.00.
The defendants filed post-trial motions which were heard and
denied by the trial court. The trial court then entered a
14
final order consistent with the jury's verdict. The
defendants filed timely notices of appeal to this Court.
II. ANALYSIS
A. Standard of Review
We review this appeal under well-settled principles.
When parties come before us with a jury verdict
that has been approved by the trial court, they
hold the most favored position known to the
law. The trial court's judgment is presumed to
be correct, and we will not set it aside unless
the judgment is plainly wrong or without
evidence to support it. We view the evidence
and all reasonable inferences fairly deducible
from it in the light most favorable to the
prevailing party at trial.
Xspedius Mgmt. Co. v. Stephan, 269 Va. 421, 424-25, 611 S.E.2d
385, 387 (2005) (quotations and citations omitted). We review
matters of law de novo. Hubbard v. Dresser, Inc., 271 Va.
117, 122, 624 S.E.2d 1, 4 (2006).
B. Verdict Form and Damages Instructions
On appeal, Banks argues that the trial court erred “by
using a verdict form that lumped all of the defendants
together for the compensatory damage claim (other than
statutory conspiracy) and in not providing the jury with an
opportunity to differentiate between the damages recoverable
against the various defendants.” Instead, the verdict form
“lumped” Banks with the other defendants for claims for which
she was not sued. Banks also argues that the trial court
erred “by failing to instruct the jury on the elements of
15
damages which Mario may be entitled to recover.” There was no
objection made concerning the verdict form; however, Banks
urges the Court to apply the “plain error doctrine” and
reverse the trial court because there is "(1) error, (2) that
is plain, (3) that is substantial and (4) . . . seriously
affects the fairness, integrity and public reputation of the
judicial system." Of course, we consider such challenges
under the “ends of justice” exception found in Rule 5:25.
As previously mentioned, Banks did not object to the
verdict form. Additionally, the trial court was not required
to instruct the jury, sua sponte, on the elements of damages
Mario was entitled to recover in the absence of a request from
Banks to do so. Because Banks raises these arguments for the
first time on appeal and we find no reason to invoke the ends
of justice exception, the arguments are waived. Rule 5:25.
C. Breach of Fiduciary Duty
On appeal, Banks challenges the trial court’s decisions
on Mario’s breach of fiduciary duty claim with the following
assignments of error:
1. The trial court committed reversible error when it
refused to determine as a matter of law whether Ms. Banks
owed a fiduciary duty to Mario and instead submitted to
the jury the issue of whether a fiduciary relationship
existed between Ms. Banks and Mario.
2. The trial court committed reversible error when it failed
to strike Mario’s evidence regarding the breach of
fiduciary duty claim filed against Ms. Banks.
16
Cook also challenges the trial court’s decisions on Mario’s
breach of fiduciary duty claim:
1. The trial court committed reversible error when, despite
timely objection, it failed to follow the rule
established in Williams v. Dominion Technology Partners,
L.L.C., 265 Va. 280, 289, 576 S.E.2d 752, 758 (2003),
gave instructions Nos. 15, 16, and 20 over objection,
failed to determine as a matter of law whether defendants
Darnell Group and Cook owed a fiduciary duty of loyalty
to the plaintiff, failed to rule as a matter of law on
the extent of any such duty, and instead submitted the
existence of the duty to the jury.
2. The trial court committed reversible error in overruling
the defendants’ motions to strike, in giving over
objection instructions Nos. 15, 16, and 20 submitting the
existence and breach of a fiduciary duty to the jury, and
in overruling the defendants’ post-trial motion to set
aside, where the evidence showed as a matter of law that
Darnell Group owed no fiduciary duty to the plaintiff and
where the trial court failed to define and instruct on
the limited and changing duties Cook owed Mario under the
circumstances of this case.
The trial court did not err in submitting the breach of
fiduciary duty claim to the jury. Instruction 17, given
without objection, stated:
Agency is a fiduciary relationship between two
parties in which one party agrees to act on
behalf of and subject to the control of the
other party. In an agency agreement, the
parties agree that the agent shall act on
behalf of and subject to the control of the
principal. If a party is not an agent, that
party is not a fiduciary.
In other words, instruction number 17 informed the jury that
if agency was found, then the agent owed a fiduciary duty to
the principal. This instruction became the law of the case.
Ulloa v. QSP, Inc., 271 Va. 72, 80, 624 S.E.2d 43, 48 (2006).
17
Cook was an employee of Mario and admitted he owed Mario
a duty of loyalty. Banks admitted that she was Mario's agent
and that she owed a duty of loyalty to Mario. These party
admissions combined with the fact that Banks' job was to
faithfully represent Mario's interests in her territory,
support the claim of a fiduciary duty. Finally, while Darnell
did not admit that it was Mario's agent, it was a sales
representative for Mario, under the same circumstances as
Banks. Pursuant to the instructions given, the jury could
have reasonably found that Darnell was Mario's agent.
Pursuant to instruction 17, once an agency relationship was
established, Cook, Banks, and Darnell necessarily owed a
fiduciary duty to Mario.
D. Pre-resignation Memorandum
Cook next argues that the trial court erred in allowing
Mario “to introduce into evidence, over objection, the
confidential pre-resignation memorandum Cook prepared for the
purpose of seeking legal advice from his lawyer.”
Specifically, Cook argues that "[t]he trial court violated
Virginia's longstanding recognition of the sanctity of
attorney-client communications when it allowed Mario to
introduce, over objection, and to emphasize repeatedly a
confidential memorandum that Cook prepared exclusively for the
18
purpose of seeking legal advice from his attorney." Cook’s
argument is without merit.
"Confidential communications between attorney and client
made because of that relationship and concerning the subject
matter of the attorney's employment are privileged from
disclosure, even for the purpose of administering justice."
Commonwealth v. Edwards, 235 Va. 499, 508-09, 370 S.E.2d 296,
301 (1988) (quotation omitted). This privilege, however, is
not absolute and may be waived. See Virginia Elec. & Power
Co. v. Westmoreland-LG&E Partners, 259 Va. 319, 326, 526
S.E.2d 750, 755 (2000).
Pursuant to Mario's employee handbook, Mario permitted
employees to use their work computers for personal business.
However, Mario's employee handbook provided that there was no
expectation of privacy regarding Mario's computers. Cook
created the pre-resignation memorandum on a work computer
located at Mario's office. Cook printed the document from
this computer, and Cook sent it to his attorney for the
purposes of seeking legal advice. Cook then deleted the
document from the computer. Mario's forensic computer expert,
however, retrieved the document from the computer's hard
drive. We held in Clagett v. Commonwealth, 252 Va. 79, 92,
472 S.E.2d 263, 270 (1996), that “the [attorney-client]
privilege is waived where the communication takes place under
19
circumstances such that persons outside the privilege can
overhear what is said.” See Edwards, 235 Va. at 509, 370
S.E.2d at 301 (“The privilege may be expressly waived by the
client, or a waiver may be implied from the client's
conduct.”). Therefore, we hold that the trial court did not
err in admitting the pre-resignation memorandum into evidence.
E. Damages
On appeal, Cook, Cassell, Renaissance, and Darnell
challenge the damages award, asserting that:
The trial court committed reversible error in
overruling the defendants’ motions to strike
and post-trial motion to set aside regarding
the plaintiff’s proof of damages where, as a
matter of law, the plaintiff’s damages evidence
was speculative, contingent, uncertain, failed
to show the claimed damages with any reasonable
certainty, failed to show that the defendants’
acts or omissions were the direct and proximate
cause of the claimed damages, and rested on the
testimony of an unqualified expert.
Banks also challenges the damages award, asserting that
“[t]he trial court committed reversible error when it failed
to sustain the motion to strike Mario’s evidence because its
proof of damages was speculative, counterfactual, unsupported
by the evidence, and failed to prove proximate cause.”
We review the trial court's ruling denying the motion to
strike in accordance with well-settled principles:
When the sufficiency of a plaintiff's evidence
is challenged by a motion to strike, the trial
court should resolve any reasonable doubt as to
20
the sufficiency of the evidence in plaintiff's
favor and should grant the motion only when it
is conclusively apparent that plaintiff has
proven no cause of action against defendant, or
when it plainly appears that the trial court
would be compelled to set aside any verdict
found for the plaintiff as being without
evidence to support it.
Saks Fifth Ave., Inc. v. James, Ltd., 272 Va. 177, 188, 630
S.E.2d 304, 311 (2006) (quotations omitted).
In order to recover damages for lost profits from the
defendants, Mario
had the burden of proving with reasonable
certainty the amount of damages and the cause
from which they resulted; speculation and
conjecture cannot form the basis of the
recovery. When an established business, such
as [Mario], is injured, interrupted, or
destroyed, the measure of damages is the
diminution in value of the business by reason
of the wrongful act, measured by the loss of
the usual profits from the business.
Id. (quotations and citations omitted). Therefore,
where the loss of prospective profits is the
direct and proximate result of the breach . . .
and they can also be proved with a reasonable
degree of certainty, such loss is recoverable,
but it is equally well settled that prospective
profits are not recoverable in any case if it
is uncertain that there would have been any
profits, or the alleged profits are so
contingent, conjectural, or speculative that
the amount thereof cannot be proved with a
reasonable degree of certainty.
Id. at 188-89, 630 S.E.2d at 311 (quotations omitted).
Accordingly, first Mario "must show a causal connection
between the defendant[s'] wrongful conduct and the damages
21
asserted. Second, [Mario] must prove the amount of those
damages by using a proper method and factual foundation for
calculating damages." Id. at 189, 630 S.E.2d at 311.
The admissibility of evidence and the sufficiency of
evidence are distinct issues. It follows that objections to
the admissibility of evidence and the sufficiency of evidence
are also distinguishable.
" '[A]n objection to the admissibility of evidence must
be made when the evidence is presented. The objection comes
too late if the objecting party remains silent during its
presentation and brings the matter to the court's attention by
a motion to strike made after the opposing party has
rested.' " Bitar v. Rahman, 272 Va. 130, 139, 630 S.E.2d 319,
324 (2006) (quoting Kondaurov v. Kerdasha, 271 Va. 646, 655,
629 S.E.2d 181, 185 (2006)). However, “[i]n some
circumstances, a defect in an expert witness’ testimony may
not be apparent until the testimony of that witness is
completed.” Id. at 140, 630 S.E.2d at 324-25. Therefore, an
objection to the admissibility of the evidence “raised at that
first opportunity is timely.” Id.; see also Vasquez v.
Mabini, 269 Va. 155, 163, 606 S.E.2d 809, 813 (2005). In
contrast,
an objection to the sufficiency of the evidence
is properly made by a motion to strike, rather
than when the evidence is first offered.
Obviously, the objecting party cannot be sure,
22
nor can the court decide, until the offering
party has rested, whether the various fragments
of evidence have added up to a justiciable
whole.
Kondaurov, 271 Va. at 655, 629 S.E.2d at 185-86 (citation
omitted).
In this case, nothing prohibited the defendants from
moving to strike Mario’s evidence at the conclusion of its
case in chief or at the conclusion of all of the evidence.
However, such a motion testing sufficiency of the evidence
must be weighed by the evidence that has been admitted. Here
Scutellaro qualified as an expert witness in the lighting
industry. After a preliminary challenge based upon hearsay,
the evidence of a 40% gross profit margin was elicited without
objection. The trial court observed that Scutellaro was
testifying from knowledge “as an owner.” Pursuant to our
prior holdings in Bitar, Kondaurov, Vasquez, and Countryside
Corp. v. Taylor, 263 Va. 549, 552 & n.2, 561 S.E.2d 680, 682 &
n.2 (2002), such evidence was admitted without objection and
the question of admissibility of this evidence is not the
proper subject of a motion to strike which tests sufficiency.2
2
There may be circumstances where evidence is admitted
conditioned upon further foundational support and the
satisfaction of that condition may not be known until the
conclusion of the case-in-chief or at the end of presentation
of all of the evidence. The proper motion at that time is a
motion to exclude the evidence. Assuming that exclusion of
the evidence creates deficiencies in the quantum of proof, a
23
1. Hilton Garden Inn
The following evidence regarding Mario’s damages from
losing the Hilton Garden Inn project was admitted without
objection. In 1999, Mario entered “a contract or program”
with Hilton “making their lighting exclusively for [Hilton
Garden Inn’s] guest rooms.” During the course of this
exclusive contract or program, in April 2003, Cook received a
request for pricing from Hilton on a Hilton Garden Inn
project. In May 2003, Cook submitted a bid for the Hilton
Garden Inn project without properly working out the pricing.
Scutellaro testified that “there were no calculations done.
This was just really a guess . . . I have to assume it was an
educated guess.” Scutellaro testified that "[b]ecause of
[Cook's] improper quote [Mario] lost the job, [Mario] lost the
business." Scutellaro further testified that his calculation
for the project was 10% lower than Cook's calculation for the
job. This difference "means the difference between getting a
job and losing a job." As a result of losing this project,
Mario is "no longer the exclusive vendor for lighting for
Hilton Garden Inn." Additionally, Scutellaro testified that
Mario had "a reasonable expectation of getting all of these
projects."
motion to strike may then test the sufficiency of the
evidence.
24
As a result of losing the Hilton Garden Inn project,
Mario claimed $2,000,000 in lost revenue and $810,868 in lost
profits. Scutellaro testified that he knew who was awarded
the project; however, he had no evidence of the amount of the
winning bid. This evidence was admitted without objection.
Having been admitted, the evidence was sufficient to support a
jury finding that Mario would have won the Hilton Garden Inn
project based on Mario's long-term relationship with Hilton
and Mario’s contract or program as “the exclusive guest room
lighting manufacturer” for Hilton Garden Inn.
2. Benjamin West
The following evidence regarding Mario’s damages from
losing the Benjamin West project was also admitted without
objection. Mario had a prior working relationship with
Benjamin West. Benjamin West solicited bids from Mario and
two other companies to supply lighting products to unspecified
buyers. Cook submitted Mario's bid on his last day of work.
Scutellaro learned of Cook's bid after Cook resigned when
Benjamin West contacted Mario to inquire about samples. When
Scutellaro reviewed the project's file, Scutellaro learned
that Cook attended a meeting in September 2003 with the
president of Benjamin West and two other lighting
manufacturers. Scutellaro testified that he reviewed Cook's
notes from the meeting with Benjamin West and testified that
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"this [wa]s not a speculation project, this [wa]s [a]
reality." Scutellaro asserted that Cook "ball parked" the
pricing for the project, failing to do the work necessary to
get an accurate quote. Scutellaro testified that Cook “did
nothing to quote this three and a-half million dollar project,
potentially a $30 million project.” Scutellaro also testified
that Cook submitted a bid to Benjamin West that was a million
dollars too high. Scutellaro stated that "because of [Cook's]
bogus bid, [Benjamin West] had eliminated us from the
project."
As a result of losing the Benjamin West project, Mario
claimed $3,532,400 in lost revenue and $1,419,019 in lost
profits. Scutellaro testified that Ashley Lighting won the
project. The evidence was admitted without objection. Having
been admitted, the evidence was sufficient to support a jury
verdict finding that Mario would have won the Benjamin West
project based on Mario's long-term relationship with Benjamin
West.
The combined lost profits from the Hilton Garden Inn
project, $810,868, and the Benjamin West project, $1,419,019,
were $2,229,887, exceeding the compensatory damages award. We
hold that the evidence was sufficient to support the jury’s
conclusion that the defendants’ wrongful conduct caused
Mario’s damages and that there was sufficient evidence from
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both the Hilton Garden Inn project and the Benjamin West
project to support the compensatory damages award.
Accordingly, we need not consider the remaining projects from
which Mario alleges damages. Bitar, 272 Va. at 141, 630
S.E.2d at 325-26 (“[W]here the trial court has declined to
strike the plaintiff's evidence or to set aside a jury
verdict, the standard of appellate review in Virginia requires
this Court to consider whether the evidence presented, taken
in the light most favorable to the plaintiff, was sufficient
to support the jury verdict in favor of the plaintiff.”).
Additionally, the evidence was sufficient to support the
compensatory damages verdict against all the defendants. As
previously noted, some theories of recovery were not asserted
against all the defendants. However, on the claim of common
law conspiracy, each of the defendants was alleged to have
conspired with the others to injure Mario in its legitimate
business expectations. The jury instructions on the subject,
given without objection, were:
Jury Instruction No. 7
The issues with regard to Mario Industries
common law conspiracy claim are as follows:
1). Did two or more defendants combine to
accomplish, by some concerted action, a
criminal or unlawful purpose; or
2). Did two or more defendants combine to
accomplish, by some concerted action, a lawful
purpose by criminal or unlawful means.
27
On either of these issues, the plaintiff
has the burden of proof by the greater weight
of the evidence.
Jury Instruction No. 8
A common law conspiracy consists of two or
more persons combining to accomplish, by some
concerted action, some criminal or unlawful
purpose or some unlawful purpose by criminal or
unlawful means.
Jury Instruction No. 9
No cause of action for common law
conspiracy may exist without resulting injury
and the damage produced must arise as the
effective result of the conspiracy.
Jury Instruction No. 10
You shall find for Mario Industries on its
claim of common law conspiracy and against the
defendants, or two or more of them, if it
proves by a preponderance of evidence either
that:
1). Two or more defendants combined to
accomplish, by some concerted action, a
criminal or unlawful purpose which resulted in
damage to the plaintiff; and
2). Two or more defendants combined to
accomplish, by some concerted action, some
lawful purpose by either criminal or unlawful
means which resulted in damage to plaintiff.
You shall find for the defendants, or any
of them, if the plaintiff fails to prove either
of these elements.
Jury Instruction No. 14
When two or more persons join in a
conspiracy, then each one is liable for any
tortious acts of the other that is committed
within the scope of the conspiracy.
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Upon review of the evidence presented, we conclude that
it was sufficient to support the compensatory damages verdict
for common law conspiracy against all the defendants.
F. Punitive Damages
Finally, Cook argues that the trial court erred in not
setting aside “the punitive damages verdict against Cook,
because no awardable compensatory damages were proved, and
because as a matter of law Cook did not act with the required
level of misconduct and did undertake reasonable efforts to
ensure that his resignation and subsequent conduct were
lawful.” Phrased differently, Cook argues that punitive
damages should not have been awarded because "the evidence, as
a matter of law, fails to prove malice, willfulness, or
wantonness by Cook." Therefore, the evidence does not support
a punitive damages award. Cook's argument is without merit.
The purpose of punitive damages “is not so much to
compensate the plaintiff but to punish the wrongdoer and to
warn others,” and such damages “may be recovered only where
there is misconduct or actual malice, or such recklessness or
negligence as to evince a conscious disregard of the rights of
others.” Hamilton Dev. Co. v. Broad Rock Club, 248 Va. 40,
45, 445 S.E.2d 140, 143 (1994) (quotation omitted). Jury
instruction 47, given without objection, defined “actual
malice” as ”a sinister or corrupt motive such as hatred,
29
personal spite, ill will, or a desire to injure the
plaintiff.”
In this case, Cook formed Renaissance while he was
employed at Mario, and Cook admitted that he intended for
Renaissance to compete with Mario. Based upon this evidence,
the jury could have concluded and did conclude that Cook had
the requisite malice to injure Mario. We hold that the trial
court did not err in refusing to set aside the award of
punitive damages against Cook.
III. CONCLUSION
For the reasons stated, we will affirm the judgment of
the trial court.
Affirmed.
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