Breach of Contract Will Not Support Statutory Business Conspiracy Claim in Virginia

In an important new case, the Supreme Court of Virginia has clearly held that breach of contract will not support a claim of statutory business conspiracy under Sections 18.2-499 and 500 of the Code of Virginia. The case, Station #2, LLC v. Lynch, (Virginia, June 10, 2010), click here, involved a claim that Lynch and others had conspired to deny Station #2 the ability to soundproof a portion of leased space above a restaurant it operated in Norfolk, Virginia. As a result of the dispute, the City of Norfolk ordered the restaurant to cease all live musical performances, and ultimately the restaurant failed.

In its Complaint, Station #2 argued that the breach of Lynch's agreement to allow the soundproofing satisfied the unlawful act or unlawful purpose requirement of Sections 18.2-499 and 500. The Supreme Court disagreed.

The Court held that: "[W]e presently are of opinion that a conspiracy merely to breach a contract that does not involve an independent duty arising outside the contract is insufficient to establish a civil claim under Code Section 18.2-500." It added: "To permit a mere breach of contract to constitute an 'unlawful act' for the purposes of the conspiracy statute would be inconsistent with the diligence we have exercised to prevent 'turning every breach of contract into an actionable claim for fraud,'" quoting Dunn Constr. Co. v. Cloney, 682 S.E.2d 943, 946 (Va. 2009); Augusta Mut. Ins. Co. v. Mason , 645 S.E.2d 290, 295 (Va. 2007); Richmond Metro Auth. v. McDevitt Street Bovis, Inc., 507 S.E.2d 344, 348 (Va. 1998). According to the Court, to support a statutory conspiracy claim, the duty must arise from a statute or independently by common law.