Williams v. Dominion Technology Partners, L.L.C.

Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ., and Carrico, 1 S.J.

DONALD WILLIAMS
OPINION BY
v. Record No. 020392 JUSTICE LAWRENCE L. KOONTZ, JR.
February 28, 2003
DOMINION TECHNOLOGY PARTNERS, L.L.C.

FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY
Cleo E. Powell, Judge

This appeal arises from a judgment in favor of an employer

against a former at-will employee on a motion for judgment

seeking damages for an alleged breach of a fiduciary duty,

tortious interference with a business relationship, and business

conspiracy in violation of Code §§ 18.2-499 and 18.2-500.

BACKGROUND

Under well-settled principles of appellate procedure, we

“consider the facts, some of which are disputed, in the light

most favorable to the plaintiff, who is here armed with a jury

verdict confirmed by the trial judge.” Norfolk Southern Railway

Co. v. Trimiew, 253 Va. 22, 25, 480 S.E.2d 104, 107 (1997).

Dominion Technology Partners, L.L.C. (Dominion), based in

Chesterfield County, is an employment firm specializing in

recruiting qualified computer consultants and placing them,

either directly or through third-party brokers, on a temporary

1
Chief Justice Carrico presided and participated in the
hearing and decision of this case prior to the effective date of
his retirement on January 31, 2003.
basis with various companies. Sometime in late 1998 or early

1999, Dominion learned that Stihl, Inc. (Stihl), a power tool

manufacturing firm, was seeking a computer consultant to oversee

the installation of a new software package on computer systems

at Stihl’s facilities in Virginia Beach.

Dominion recruited Donald Williams as a possible candidate

to fill the position at Stihl. At that time, Dominion prepared

two employment offers and presented them to Williams. One offer

provided that Williams would be a salaried employee of Dominion

and receive compensation of $100,000 per year and various fringe

benefits, regardless of whether Dominion was actually able to

place Williams in a temporary position during the year. This

offer further provided that Williams would be required to “sign

the standard confidentiality agreement” at a later date.

Alternately, Dominion offered to employ Williams as an at-will

employee, paying Williams $80 per hour. As an at-will employee,

Williams would receive no fringe benefits and would receive

compensation only for work actually performed for a Dominion

client. Williams elected to work as an at-will employee.

Williams was referred to Stihl for a placement interview.

Stihl found that Williams was qualified to provide the computer

consulting services that it required. On January 22, 1999,

2
Stihl entered into a contract with ACSYS Information Technology,

Inc. (ACSYS), an employment brokerage company with its principal

offices in the State of Georgia, to employ Williams for an

initial period of three months. The contract provided that if

Stihl chose to directly employ Williams at a later date, ACSYS

would receive a “conversion fee.” The contract made no

reference to Williams’ employment by Dominion.

On January 28, 1999, ACSYS entered into a contract with

Dominion for Williams’ services. 2 The contract provided that

ACSYS would “act as a brokering agent for [Dominion] to provide

Information Systems Services . . . to clients of ACSYS.” The

contract was terminable by either party upon thirty days written

notice, and included a provision requiring Dominion not to

solicit business from any client of ACSYS during the term of the

contract or for one year thereafter. The contract did not

include any terms prohibiting ACSYS from recruiting or directly

employing current or former employees of Dominion.

Subsequently, Williams performed computer consulting

services for Stihl under a work order from ACSYS to Dominion

beginning in January 1999. Shortly after he began work at

2
The dates of the contracts seem to be inconsistent.
However, the parties do not dispute that these dates are not
significant because from the beginning, “ACSYS had the position
at STIHL. [It] did not have a person [to fill the position].”

3
Stihl, ACSYS required Williams to sign a “project assignment”

letter that included provisions, similar to those in the

contract between ACSYS and Dominion, that Williams could not

directly solicit Stihl or any other ACSYS client for additional

work during the term of his assignment or for one year

afterwards.

According to Walt Yancey, information systems manager for

Stihl’s Virginia Beach facility, Williams was responsible for

the installation of a new software package related to Stihl’s

computer word processing, production and materials planning, and

customer shipment functions. The installation was to be

completed by April 1999 at the end of Williams’ initial three-

month assignment at Stihl. The installation was completed on

time, and Stihl decided to retain Williams in “a support and

maintenance role” for an indeterminate period. Williams’

assignment at Stihl was extended by agreement with ACSYS as

reflected in a series of work orders from ACSYS to Dominion.

The final work order, accepted by Dominion on January 14, 2000,

provided that the duration of the assignment would be on “a

monthly basis as dictated by client.”

Under its contract with Stihl, ACSYS received $165 for each

hour of work performed by Williams. Dominion billed ACSYS $115

for each hour of work performed by Williams, and, in turn, paid

4
Williams $80 per hour. 3 At some point during his work at Stihl,

a copy of a work order from ACSYS to Dominion was mistakenly

sent to Williams. As a result, Williams learned that Dominion

received $115 for each hour that he worked at Stihl.

ACSYS learned that Stihl was considering a further software

upgrade to its computer systems. On February 17, 2000, Ryan

Lenox, the “asset retention manager” for ACSYS, 4 contacted

Williams in an effort to determine whether Stihl had decided to

go ahead with the software upgrade. Williams told Lenox that,

although no firm decision had been made, Yancey had indicated

that Stihl would probably delay making the upgrade until

sometime in June 2000 when a new version of the software was

expected to be released. Williams indicated to Lenox that “this

is just an idea floating around STIHL.”

During their conversation, Williams told Lenox that there

had been a change in the ownership and management of Dominion

and that, because of personality conflicts with the new

management, Williams wanted to terminate his employment with

3
The work orders from ACSYS to Dominion also provided for
an expense per diem, and Dominion billed ACSYS for Williams’
travel, lodging, and meals.
4
Lenox’s duties as asset retention manager required him to
contact clients and the employees placed by ACSYS to determine
the status of their projects and to learn of any possible
extensions or new business opportunities.

5
Dominion. Williams indicated that he would prefer to continue

working at Stihl under a direct agreement with ACSYS. However,

he also told Lenox that he would seek other employment if that

agreement could not be reached.

Lenox was concerned initially that directly employing

Williams might violate ACSYS’s contract with Dominion and

advised Williams that he would “look into the matter.”

Apparently after determining that the contract with Dominion did

not bar ACSYS from recruiting Williams, Lenox called Williams

later that same day. He then inquired whether Williams was free

to leave Dominion to work directly for ACSYS and, if so, what

hourly rate of compensation Williams would want from ACSYS.

Williams told Lenox about having learned that Dominion was paid

$115 per hour for Williams’ work at Stihl and stated that he

would accept $100 per hour from ACSYS. Williams also told Lenox

that he was “99.9% certain that he did not sign anything with

Dominion” which would prohibit him from leaving his employment

with Dominion to work directly for ACSYS.

On February 21, 2000, Williams and Lenox had several

telephone conversations concerning Williams’ desire to terminate

his employment with Dominion, and Lenox subsequently was

contacted by Dominion the following day. Lenox recorded the

substance of these conversations in a memorandum dated February

22, 2000:

6
 Talked with Donald [Williams] yesterday several times.
He has signed no paperwork with Dominion Technology.
He wants to move ahead & come on board with us as a W2
at $100@hr pay rate. Discussed with [another ACSYS
employee] & came up with following plan: Donald will
contact Dominion and ask how much notice they have to
give us—two weeks or longer (our contract with
Dominion has a 30 day notice). Donald plans not to
tell them that he [is] staying at Stihl via us. Got a
call today from [Joseph] Delfino @ Dominion. He said
he was calling to let me know that Scott Webster [was]
no longer at Dominion . . . “we got rid of him he did
not leave us.” He then asked whether we [were] still
active in SAP marketplace as he was going to be in
Atlanta next month and would like to come by and see
us (This was his story since he did not know where
ACSYS IT was located until he asked me – he thought we
were in Richmond, VA). He then asked how much longer
Donald was going to be at Stihl. I told him it was a
month to month setup based on Stihl. He wanted to
know how often I talked with Stihl – every other
month. How often I talked with Donald – about once a
month. I called Donald after hanging up with Joe.
Donald talked with [James] Delfino (Joe’s son who
really runs Dominion Technology) last night and asked
him how much notice he had to give them to give us as
he was thinking about leaving. I am sure that this is
what triggered call from Joe. Jim Delfino is going to
get back with Donald later today.

Williams told James Delfino that he wanted to terminate his

employment with Dominion in order to pursue work opportunities

closer to his home in the Richmond area. James Delfino advised

Williams that he was required to give Dominion at least 30 days

notice before terminating his employment. In a letter dated

March 4, 2000, Williams formally tendered his resignation as an

at-will employee of Dominion to be effective April 14, 2000.

Williams stated in the letter that Dominion should advise ACSYS

of his decision.

7
 James Delfino thereafter made inquiries to ACSYS concerning

the possibility of “backfilling” Williams’ position at Stihl,

that is, having Dominion supply another employee to take

Williams’ place. Although ACSYS did not expressly tell Dominion

so, James Delfino concluded from the response to his inquiries

“that there was no opportunity for us to fill the position.” In

May 2000, Dominion learned that Williams had continued working

at Stihl as an ACSYS employee after April 14, 2000. Ultimately,

Williams remained at Stihl as an ACSYS employee until June 1,

2001. During that time, ACSYS paid Williams $115 per hour,

rather than the $100 per hour that had been previously

discussed, and Stihl continued to pay $165 per hour to ACSYS for

Williams’ work at Stihl.

On July 11, 2000, Dominion filed a motion for judgment

against Williams alleging breach of contract, tortious

interference with business relationships and prospective

business relationships, breach of fiduciary duty, and business

conspiracy in violation of Code §§ 18.2-499 and 18.2-500.

Although the allegations of the motion for judgment relevant to

the business conspiracy count named ACSYS as a party to the

alleged conspiracy, ACSYS was not named as a defendant in the

suit. For each theory of liability, Dominion sought damages of

“$150,000, an amount Dominion estimates it would have earned

under its ACSYS contract with Williams, or another employee

8
performing the service Williams now provides to Stihl.”

Dominion also sought punitive damages of $100,000 for breach of

fiduciary duty and business conspiracy. Finally, Dominion

sought an award of treble damages for the business conspiracy

pursuant to Code § 18.2-500, and requested that it be awarded

attorneys’ fees.

Williams filed a demurrer to the claim for breach of

contract and grounds of defense asserting general denials

regarding all counts of the motion for judgment. In a letter

opinion dated September 13, 2000, the trial court opined that

there were insufficient allegations of a contract between

Williams and Dominion in the motion for judgment and that the

demurrer to the breach of contract claim would be sustained.

Although the trial court never entered an order memorializing

this ruling, the parties thereafter agreed that Williams was an

employee-at-will and that he was not bound by any express

confidentiality or non-compete agreement with Dominion.

A jury trial was held on August 22, 2001, at which evidence

in accord with the above-recited facts was received. At the

conclusion of Dominion’s case-in-chief and again at the

conclusion of the presentation of all evidence, Williams moved

to strike Dominion’s evidence on the ground that it had not

proved the existence of a fiduciary duty owed by him as an at-

will employee to Dominion or that his actions had breached any

9
duty. Williams further asserted that he could not be guilty of

a business conspiracy with ACSYS because he was effectively an

agent of ACSYS, and an agent cannot conspire with a principal.

The trial court denied the first motion to strike, but took the

remaining motion to strike under advisement and submitted the

case to the jury. The jury returned its verdict in favor of

Dominion, awarding it $27,000 compensatory damages and $20,000

punitive damages for breach of fiduciary duty, $27,000 damages

for tortious interference with business relationships, and

$27,000 damages for participation in a business conspiracy in

violation of Code §§ 18.2-499 and 18.2-500.

Williams filed a motion to set aside the jury’s verdict.

In a letter opinion dated October 26, 2001, the trial court

addressed the argument made by Williams in moving to strike the

business conspiracy claim. The trial court concluded that

whether Williams was an agent of ACSYS during his employment by

Dominion was a factual matter and that the jury had resolved the

issue against Williams. The trial court further opined that

Williams’ breach of fiduciary duty constituted sufficient “lack

of legal justification” to support finding a business

conspiracy.

In a final order dated November 14, 2001, the trial court

entered judgment on the jury’s verdict, awarding treble damages

for the business conspiracy under Code § 18.2-500, and

10
attorneys’ fees and costs totaling $22,801.05. In an order

dated April 23, 2002, we awarded Williams this appeal.

DISCUSSION

Although the judgment awarded to Dominion against Williams

in the trial court was founded upon three different theories of

liability: breach of a fiduciary duty, interference with

business relationships, and statutory business conspiracy, the

essential facts asserted to support each theory are intricately

interrelated in this particular case. The significance of that

interrelationship will become apparent hereafter as we consider

each of these theories of liability.

We have long recognized that under the common law an

employee, including an employee-at-will, owes a fiduciary duty

of loyalty to his employer during his employment. See, e.g.,

Horne v. Holley, 167 Va. 234, 241, 188 S.E. 169, 172 (1936).

Subsumed within this general duty of loyalty is the more

specific duty that the employee not compete with his employer

during his employment. Hilb, Rogal & Hamilton Co. of Richmond

v. DePew, 247 Va. 240, 249, 440 S.E.2d 918, 923 (1994).

Nonetheless, in the absence of a contract restriction regarding

this duty of loyalty, an employee has the right to make

arrangements during his employment to compete with his employer

after resigning his post. The employee’s right in such

circumstances is not absolute. Rather, “[t]his right, based on

11
a policy of free competition, must be balanced with the

importance of the integrity and fairness attaching to the

relationship between employer and employee.” Feddeman & Co. v.

Langan Assoc., 260 Va. 35, 42, 530 S.E.2d 668, 672 (2000).

Thus, “[u]nder certain circumstances, the exercise of the right

may constitute a breach of fiduciary duty. . . . Whether

specific conduct taken prior to resignation breaches a fiduciary

duty requires a case by case analysis.” Id.

In Glass v. Glass, 228 Va. 39, 51, 321 S.E.2d 69, 76-77

(1984), we recognized the existence of the tort of interference

with a business relationship. We summarized the elements of a

cause of action for this tort as follows: “(1) the existence of

a business relationship or expectancy, with a probability of

future economic benefit to plaintiff; (2) defendant’s knowledge

of the relationship or expectancy; (3) a reasonable certainty

that absent defendant’s intentional misconduct, plaintiff would

have continued in the relationship or realized the expectancy;

and (4) damage to plaintiff.” Id. at 51-52, 321 S.E.2d at 77.

Code § 18.2-500 provides civil damages for violation of

Code § 18.2-499, which, in pertinent part, imposes such

liability against “[a]ny two or more persons who combine,

associate, agree, mutually undertake or concert together for the

purpose of (i) willfully and maliciously injuring another in his

. . . business . . . by any means whatever.” In order to

12
sustain a claim for this statutory business conspiracy, the

plaintiff must prove by clear and convincing evidence that the

defendants acted with legal malice, that is, proof that the

defendants acted intentionally, purposefully, and without lawful

justification, and that such actions injured the plaintiff’s

business. See Feddeman & Co., 260 Va. at 44, 530 S.E.2d at 673-

74.

Dominion concedes that because he was an at-will employee,

Williams could have terminated his employment with Dominion at

any time and without any requirement, in terms of a fiduciary

duty, to show good cause for doing so. Moreover, Dominion also

concedes that had Williams terminated his employment and then

immediately offered his services to ACSYS, there would be no

basis for asserting that this constituted a breach of a

fiduciary duty to his former employer. Thus, the essence of

Dominion’s assertions against Williams for damages under each

theory of liability, whether denominated as a “breach of a

fiduciary duty,” “intentional misconduct,” or a conspiratorial

act of “legal malice,” is that Williams, after having learned

that his services as a computer consultant were likely to be

needed at Stihl for an extended period of time, and while still

an employee of Dominion, arranged with ACSYS to become its

employee effective upon his resignation from Dominion.

13
 The dispositive question to be resolved regarding all three

theories of liability is whether this conduct, which was

undoubtedly proved by the evidence, was sufficient to constitute

a breach of Williams’ fiduciary duty of loyalty to Dominion.

Whether such a duty exists is a question of law to be determined

by the trial court. If the evidence is sufficient to establish

a duty as a matter of law, only then will it become a matter for

the jury to determine whether the duty has been breached.

In applying a case by case analysis to determine whether

specific conduct taken by an employee breaches a fiduciary duty

of loyalty, the courts must be mindful that the fact that

particular conduct of an employee caused harm to his employer

does not establish that the conduct breached any duty to the

employer. This is so because the law will not provide relief to

every “disgruntled player in the rough-and-tumble world

comprising the competitive marketplace,” especially where,

through more prudent business practices, the harm complained of

could easily have been avoided. ITT Hartford Group, Inc. v.

Virginia Financial Assocs., Inc., 258 Va. 193, 204, 520 S.E.2d

355, 361 (1999).

We have recognized that certain conduct by an employee

during the term of his employment will clearly constitute a

breach of the duty of loyalty he owes to his employer.

Principally, an employee must not have “misappropriated trade

14
secrets, misused confidential information, [or] solicited an

employer’s clients or other employees prior to termination of

employment.” Feddeman & Co., 260 Va. at 42, 530 S.E.2d at 672.

While this list is by no means exhaustive, it is indicative of

the types of conduct by an employee that the common law will not

condone in an employment relationship.

Dominion does not contend that the information that Stihl

was considering a further upgrade to its software was a “trade

secret” or “confidential information” that was exclusive or

proprietary to Dominion. To the contrary, James Delfino

testified that Dominion subsequently obtained the same

information from an independent source. In his testimony,

Delfino agreed with the characterization of the information as

“important,” asserting that it would have led Dominion to make

inquiries as to whether “we could help them with that.” 5 In

effect, Dominion considered the information a business

opportunity or “lead” not unlike the information that caused

them to seek out Williams as a potential employee in the first

instance.

5
Delfino further maintained that because Dominion had prior
contacts with Stihl, it could have directly solicited Stihl
without going through ACSYS. Although the issue is not before
us, we note that under the terms of its contract with ACSYS, the
prohibition on Dominion against soliciting additional work from
ACSYS’s clients contains no express exceptions.

15
 In this context, Williams simply knew that there was a

possibility, perhaps even a probability, that within four to six

months Stihl would make a business decision that would require

it to continue his services as a computer consultant or to

acquire the services of someone equally qualified. Williams had

the right to make the necessary arrangements to resign from his

employment with Dominion in such a way as to take advantage of a

higher level of compensation if his services at Stihl were

needed beyond the month-to-month arrangement then in place, so

long as these arrangements were not disloyal or unfair to

Dominion.

Williams tendered his resignation to Dominion in such a

manner as to permit Dominion to comply with its contractual

obligation to ACSYS. Williams and ACSYS both took care to

assure that there was no contractual bar to their contemplated

actions. As Williams and ACSYS discovered, Dominion had not

sought a non-compete agreement from Williams or ACSYS, which

would have prohibited their subsequent contractual arrangement.

In such circumstances, it cannot be said that Williams’ conduct

to safeguard his own interests was either disloyal or unfair to

Dominion. Rather, we are of opinion that Dominion’s contracts

provided it with nothing more than “a subjective belief or hope

that the business relationship[s] would continue and merely a

possibility that future economic benefit would accrue to it.”

16
Commercial Business Systems, Inc. v. Halifax Corp., 253 Va. 292,

303, 484 S.E.2d 892, 898 (1997).

Moreover, Williams’ conduct, certainly taken out of self-

interest, did not rob his employer of any objective or tangible

business opportunity or expectancy. To the contrary, by

providing reasonable notice of his intent to resign his post and

permitting Dominion to fulfil its obligation to ACSYS, Williams

allowed Dominion to receive all the benefits for which it had

bargained. Dominion’s disappointment that its hopes did not

bear the expected additional benefit it might have obtained

under a different contractual agreement with ACSYS does not

translate into a breach of any fiduciary duty Williams owed to

Dominion.

CONCLUSION

For these reasons, we hold that the trial court erred in

ruling as a matter of law that Dominion’s evidence was

sufficient to establish that Williams had a fiduciary duty to

Dominion under the circumstances of this case and permitting the

jury to determine whether Williams breached such a duty.

Because the same conduct was alleged to constitute the proof of

the “intentional misconduct” and “legal malice” elements of the

two other theories of liability presented by Dominion, there was

no basis for the jury finding for Dominion on those counts as

17
well. Accordingly, we will reverse the judgment in favor of

Dominion, and enter final judgment for Williams.

Reversed and final judgment.

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