Petr Bocek v. JGA Associates, LLC

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 1:11-cv-00546-CMH-JFA. Copies to all parties and the district court/agency. [999604565]. [14-1208]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-1208

PETR BOCEK, M.D., PHD,
Plaintiff - Appellant,
v.
JGA ASSOCIATES, LLC; JOSEPH P. AMATO,
Defendants – Appellees,
and
ALLERGY
INC.,

CARE

CENTERS,

VIRGINIA,

INC.;

A2

MEDICAL

GROUP,

Defendant,
LENA BOCEK,
Movant.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
Claude M. Hilton, Senior
District Judge. (1:11-cv-00546-CMH-JFA)

Argued:

March 24, 2015

Decided:

June 18, 2015

Before TRAXLER, Chief Judge, and WILKINSON and NIEMEYER, Circuit
Judges.

Reversed and remanded by unpublished opinion.
Chief
Traxler wrote the opinion in which Judge Niemeyer joined.
Wilkinson wrote a separate concurring opinion.

Judge
Judge

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ARGUED: S. Micah Salb, LIPPMAN, SEMSKER & SALB, LLC, Bethesda,
Maryland, for Appellant.
Kristen Michelle Kanaskie, SHER,
CUMMINGS AND ELLIS, PLLC, Arlington, Virginia, for Appellees.
ON BRIEF: Mary E. Kuntz, Ph.D., LIPPMAN, SEMSKER & SALB, LLC,
Bethesda, Maryland, for Appellant.
David E. Sher, Mark D.
Cummings, SHER, CUMMINGS AND ELLIS, PLLC, Arlington, Virginia,
for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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TRAXLER, Chief Judge:
Petr Bocek brought this action against business consultant
Joseph Amato and two companies associated with Amato after the
defendants purchased a medical practice for themselves rather
than for Bocek.

Following a bench trial, the district court

granted judgment in favor of the defendants, and Bocek appeals.
We reverse and remand for a new trial.
I.
Plaintiff Petr Bocek is a medical doctor specializing in
the

treatment

manager

and

of

sole

allergies.
member

of

Defendant
defendant

Joseph

JGA

Amato

Associates,

is

the

LLC,

a

business consulting firm.
Bocek contacted Amato seeking assistance with the formation
and

financing

November

10,

of

a

2010,

new
the

allergy

medical

entered

parties

care

into

practice.
a

On

contract

(the

“Consulting Agreement”) through which JGA agreed “to review and
report

on

the

feasibility

of

the

proposed

allergy

medicine

practice and prepare a business proposal for funding a start-up
medical

practice”

and

“render

such

agreed upon by [Bocek] and [JGA].”

other

services

J.A. 221.

as

may

be

The agreement

provided that JGA would have “the right to act [as] an agent
representing [Bocek] to Interested Parties during the term of
this Agreement.”

J.A. 221.

(Amato clarified that “Interested

Parties” in that context referred to prospective lenders.)
3

The

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agreement also provided that JGA would be compensated through
“development fees” (hourly billing for consulting services) and
a “completion fee” of two percent of the face amount of any
business loan that JGA arranged.
On

November

15,

five

days

after

signing

the

Consulting

Agreement, Bocek asked Amato about the feasibility of buying an
existing medical practice rather than starting a new practice.
Bocek told Amato that Allergy Care Centers (“ACC”), where Bocek
had

previously

worked,

was

being

offered

for

sale

by

the

administrator of the estate of ACC’s owner, who had died two
years earlier.

Bocek noted that the Estate was burdened with

taxes and that the practice was profitable, and he suggested
that reductions in offices and staff could make it even more so.
Amato responded positively, explaining that “[t]he acquisition
of an existing operating practice is always more attractive if
the price and the historic financial performance make sense.”
J.A. 225.
Bocek informed Amato in an email on December 1 that ACC was
currently

owned

“Estate”)

and

Estate.

by

that

the

estate

Peter

Klenk

of

Charles

was

the

M.

Valentine

lawyer

handling

(the
the

The email stated that Bocek was unsure how to confirm

that ACC was for sale and, if it was, what price the estate was
asking,

but

regardless.

that

Bocek

would

want

an

independent

appraisal

Bocek also told Amato that his acquisition of ACC
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might be complicated because he had been fired from ACC and was
in the process of negotiating a severance package, and Bocek
asked

Amato

to

pursue

the

purchase

of

ACC

without

revealing

Bocek’s identity as the buyer.
By that afternoon, Amato had communicated with Klenk and
informed Bocek that ACC was in fact on the market.

Amato told

Bocek that he would assemble a checklist of information that he
would need to review and he would include any special requests
from Bocek when he communicated again with Klenk.

Amato also

told Bocek that the purchase would “be considered an asset-only
transaction.”

J.A. 237.

On December 15, JGA sent Bocek an

email containing a historical financial analysis, a preliminary
business valuation report, as well as an excel document he had
created regarding ACC’s accounting summaries.

Bocek spoke to

Amato the next day regarding these documents.
The evidence regarding the conversations between Bocek and
Amato is somewhat in dispute.

Nevertheless, it appears that

Bocek was concerned that he might not have the cash available to
make a sufficient down payment.

Amato testified that for that

reason, and because Bocek wanted to keep his name out of the
transaction
different

with

ways

the

to

lending structure.
some

rights

to

Estate,

structure

he
the

was

exploring

deal,

including

a

number
a

of

mezzanine

Under that structure, a lender would have

convert

its

loan
5

to

an

ownership

or

equity

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interest in the practice if the loan were not timely repaid in
full.
On December 23, Amato sent Bocek an email informing him
that JGA had “put in a closed bid to purchase ACC on Monday . .
. to attempt to secure a position in the possible acquisition of
ACC,” that the law firm Klenk had hired was considering the
offer, and that they “could begin a formal due diligence process
with ACC.”
questions

J.A. 265.
both

transaction.”

our

Amato added that “there are still many
firm

J.A. 265.

and

you

may

have

regarding

the

For that reason, Amato stated that he

“intend[ed] to move forward based on a few specific parameters.”
J.A. 265.
alternate

As is relevant here, Amato stated that “[JGA] (or an
holding

company)

intends

to

initially

purchase

the

practice with the direct intention of selling the practice (or
the holding company) to” Bocek.
In

response,

on

J.A. 265.

December

27

Bocek

sent

Amato

an

email

confirming that he understood that he would “be the owner of ACC
from the day of purchase.”

J.A. 267.

However, he expressed

uncertainty regarding how the purchase would be structured and
who would provide the down payment.

The next day Amato emailed

Bocek, once again confirming that JGA’s goal was to make Bocek
the owner of ACC from the day of purchase.

In the end, however,

although Amato and Bocek discussed several options regarding how
the deal would be structured, they never resolved that issue.
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On January 22, 2011, Amato sent Bocek an invoice for his
services.

The

invoice

reflected

Bocek’s

prior

payment

of

$3,800.00 and sought an additional $4,574.40 “for expanded hours
and third-party costs associated with the project development
and acquisition negotiations for the purchase of the Allergy
Care Center business operation on behalf of JGA Associates and
Dr. Petr Bocek.”

J.A. 291.

On January 31, Bocek sent an email

to JGA indicating that his lawyers would be in contact with JGA
to put in place a new written contract since the Consulting
Agreement was created under the assumption that Bocek would be
developing and obtaining financing for a new practice rather
than acquiring an existing one.
On February 3, Amato sent the Estate a Letter of Intent
(“LOI”)

through

which

“JGA

Associates,

LLC,

or

offered to purchase ACC’s assets for $1,000,000.

its

assigns”

J.A. 301.

The

LOI obligated the parties to negotiate in good faith, but it was
otherwise

not

binding;

until

the

execution

of

a

mutually

agreeable asset purchase agreement, either side could walk away
from the transaction without penalty.

The Estate accepted the

offer and returned an executed copy of the LOI to Amato late in
the afternoon on February 8.
Earlier that same day (February 8), Amato had visited one
of the ACC offices to meet with Terri Crook, ACC’s practice
manager.

During the meeting, Crook told Amato that Bocek had
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been fired after he sexually harassed employees and used another
doctor’s prescription pad to forge prescriptions for himself.
This was the first Amato had heard of these issues; although
Bocek

had

told

Amato

that

he

had

been

fired,

he

had

never

provided any details about what happened, and Amato had never
asked.

After meeting with Crook, Amato stalled and put off

Bocek’s

various

inquiries

until

he

could

Estate

filed

verify

what

he

had

learned.
On

February

15,

the

a

petition

in

a

Pennsylvania “Orphan’s Court” seeking approval for the sale of
Bocek was then unaware that the sale was moving forward −

ACC.

Amato had not informed Bocek that he submitted the LOI to the
Estate on February 3 or that the LOI had been accepted.
On February 17, after reviewing documents that confirmed
Crook’s information, Amato sent a letter notifying Bocek of his
intent to terminate their contractual relationship in 10 days,
in accordance with the terms of the Consulting Agreement.

Amato

explained the termination in general terms, stating that during
the due-diligence process, “it became apparent . . . that your
involvement in any potential transaction would . . . sour the
deal.

It also became evident that we could not move forward

with your participation in any potential transaction without the
possibility of serious repercussions thereafter.”

8

J.A. 317.

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Counsel for Bocek responded on February 22.
things,

counsel

noted

that

Amato,

as

Among other

Bocek’s

agent,

had

a

continuing duty of loyalty to Bocek and that Amato would be
breaching his contractual and fiduciary duties “if [he] were to
turn the acquisition of ACC into a deal which is of benefit to
[him].”

J.A. 629.

Nevertheless, on March 2, Amato incorporated

a new company, A2 Medical Group, Inc. (“A2”), to serve as the
purchaser of ACC’s assets.

Brian August, Jeffrey Renzulli, and

Amato were named as directors of A2, with Amato and Brian August
each owning 49 percent of A2’s shares and Carolyn August owning
two percent.
transaction

JGA at some point assigned its interests in the
to

A2,

and

the

Estate

purchase agreement on May 13.

and

A2

executed

an

asset

Ten days later, the Orphan’s

Court approved the sale, and the sale closed on June 22.
Bocek testified that after Amato terminated the agreement,
Bocek

simply

wanted

Amato

to

give

Bocek

the

due

diligence

documents and analysis that Amato had developed for him, and
that Bocek was prepared to purchase ACC himself.

Bocek never

made an offer, however.
After

unsuccessfully

seeking

an

injunction

to

prohibit

Amato and JGA from buying ACC, Bocek filed an Amended Complaint
asserting four causes of action against Amato, JGA, and A2:
fraudulent
fiduciary

conveyance
duties;

(3)

and

constructive

breach

of
9

trust;

contract;

and

(1)

(2)

breach

of

(4)

breach

of

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fiduciary duties as joint venturers.

The district court granted

summary judgment in favor of the defendants and dismissed the
case.
It is the breach-of-fiduciary-duties claim that is at issue
in this appeal.

In his Amended Complaint, Bocek alleged that

Amato and JGA, as his agents, owed him various fiduciary duties,
including a duty of loyalty.

Bocek alleged that he brought the

ACC

JGA

business

opportunity

to

during

the

existence

of

the

agency relation, and that JGA was acting on behalf of Bocek when
it

began

negotiating

diligence.

with

the

Estate

and

conducting

due

Bocek alleged that the defendants breached their

fiduciary duties by, inter alia, using information obtained on
Bocek’s behalf to pursue the acquisition of ACC for themselves,
refusing to return the due diligence materials to him, and, of
course, buying ACC for their own benefit rather than for Bocek's
benefit.
Regarding this claim, the district court held that because
the

fiduciary

duties

at

issue

arose

from

the

Consulting

Agreement, not independently of it, Bocek was precluded as a
matter

of

law

from

recovering

in

tort

for

the

breach.

See Augusta Mut. Ins. Co. v. Mason, 645 S.E.2d 290, 293

(Va. 2007) (where single act can support a claim for breach of
contract and a claim for breach of a duty arising in tort, “in
order to recover in tort, the duty tortiously or negligently
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breached must be a common law duty, not one existing between the
parties solely by virtue of the contract” (internal quotation
marks omitted)); see also Station #2, LLC v. Lynch, 695 S.E.2d
537, 540 (Va. 2010) (“[A]n omission or non-performance of a duty
may sound both in contract and in tort, but only where the
omission

or

non-performance

of

the

contractual

duty

also

violates a common law duty.”).
On

appeal,

we

affirmed

regarding

the

breach-of-contract,
See Bocek v.

fraudulent-conveyance, and joint-venture claims.
JGA

Assocs.,

However,

we

LLC,

537

reversed

F.

App’x

169,

concerning

the

179

(4th

claim

for

Cir.

2013).

breach

of

fiduciary duties, with Chief Judge Traxler and Judge Niemeyer
articulating slightly differing rationales for their decisions,
and

with

Judge

Wilkinson

dissenting.

See

id.

at

176-77

(Traxler, C.J.); id. at 179-80 (Niemeyer, J., concurring in part
and concurring in the judgment); id. at 180-82 (Wilkinson, J.,
concurring and dissenting).
Chief Judge Traxler observed that
Bocek alleged that he brought the ACC business
opportunity to JGA during the existence of the agency
relation, and that JGA was acting on behalf of Bocek
when it began negotiating with the Estate and
conducting due diligence.
Bocek alleged that the
defendants breached their fiduciary duties by, inter
alia, using information obtained on Bocek’s behalf to
pursue the acquisition of ACC for themselves, refusing
to return the due diligence materials to him, and, of
course, buying ACC for their own benefit rather than
for Bocek’s benefit.
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Id. at 176 (Traxler, C.J.).
if

these

factual

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Chief Judge Traxler reasoned that

allegations

were

proven

at

trial,

the

defendants’ conduct would constitute a clear breach of fiduciary
duty.

See id. (Traxler, C.J.).

Chief Judge Traxler concluded

that Augusta Mutual, on which the district court had relied, did
not

bar

recovery

on

a

breach-of-fiduciary-duty

theory.

He

further concluded that even if the fiduciary duty arose from
contract, “recovery in tort is permitted in cases [such as this
one] where the tort was committed after the termination of the
parties’ contract.”

Id. at 177 (Traxler, C.J.).

In a separate opinion, Judge Niemeyer explained that the
actions Bocek alleged, if proven at trial, would “give rise to a
classic claim for breach of the duty of loyalty inherent in the
agency agreement that existed between Bocek and JGA.”

Id. at

179

in

(Niemeyer,

judgment).

J.,

concurring

in

part

and

concurring

the

Judge Niemeyer also concluded that “[t]he fact that

JGA terminated the agency agreement before taking advantage of
the opportunity that came to it while it was an agent provides
no defense.”

Id. at 179-80 (Niemeyer, J., concurring in part

and concurring in the judgment). 1

1

In
dissent,
Judge
Wilkinson
reasoned
that
the
defendants’ duty to refrain from using Bocek’s information arose
contractually, and thus that the defendants’ use of the
information they acquired from Bocek and on his behalf did not
give rise to a viable tort claim.
See Bocek v. JGA Assocs.,
(Continued)
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remand,

following

a

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bench

granted judgment to the defendants.

trial,

the

district

court

For reasons that we will

discuss, the district court ruled that Bocek did not prove that
the defendants had an agency relationship with him such that
fiduciary obligations would arise and that, even if they had
breached fiduciary duties owed to Bocek, Bocek failed to prove
damages from any breach.
II.
On appeal, Bocek challenges both the ruling that Amato was
not acting as Bocek’s agent with regard to the possible purchase
of ACC and the ruling that Bocek failed to prove any damages
even

if

he

did

prove

duties they owed to him.

that

the

defendants

breached

fiduciary

We consider these rulings seriatim.
A.

We begin by addressing the district court’s analysis of the
agency issue.

The district court stated that “[i]n seeking to

demonstrate an agency relationship, Bocek seemingly attempts to
implicate

two

different

‘agreements’:

(1)

the

written

Consulting Agreement; and (2) an oral straw-purchase agreement
for the purchase of Allergy Care Centers.”

J.A. 654.

The court

determined that the written agreement did not demonstrate that

LLC, 537 F. App’x 169, 180-82 (4th Cir. 2013) (Wilkinson, J.,
concurring and dissenting).

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the defendants agreed to act as Bocek’s agent to purchase the
ACC

because

that

agreement

provided

for

JGA’s

services

conjunction with a new, not an existing, medical practice.

in
And,

regarding a possible oral agency agreement, the district court
noted that there was no meeting of the minds between the parties
such as would be necessary to create a binding contract for the
defendants to make a straw purchase of ACC.
observed

that

while

the

parties

had

The district court

discussed

a

number

of

options of how such a purchase might be accomplished, they had
not agreed upon any particular method, and thus they had formed
only a nonbinding agreement to agree regarding a straw purchase.
For both of these reasons, the district court concluded that
“Bocek

did

not

carry

his

burden

to

establish

an

agency

relationship between himself and JGA or Amato, and therefore he
fail[ed] to establish that JGA or Amato owed him a fiduciary
obligation.”
On

J.A. 660.

appeal,

Bocek

does

not

specifically

challenge

either

premise of the district court’s conclusion that he failed to
establish the agency relationship.

Rather, Bocek’s position is

that the district court erred in concluding that, in attempting
to demonstrate the agency relationship, he relied only on the
existence

of

the

written

agreement

and

on

a

binding

contract for Amato to purchase ACC on Bocek’s behalf.

oral
Bocek

maintains that the parties’ conduct after they entered into the
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agreement

clearly

agency relationship. 2

Pg: 15 of 29

demonstrated

the

existence

of

the

And Bocek claims that he was not required

to show the formation of an oral agency contract in order to
show

that

Amato

actually

possible purchase.
show

that

the

became

Bocek’s

agent

regarding

the

Rather, Bocek maintains he needed only to

parties

each

consented

to

Amato’s

acting

on

Bocek’s behalf and under his control with regard to the efforts
to

purchase

ACC.

Bocek

contends

that

he

clearly

showing based on the undisputed facts proven at trial.

made

that

We agree

with Bocek on all of these points.
On consideration of an appeal following a bench trial, we
review the district court’s factual findings for clear error and
its legal conclusions de novo.

See Universal Furniture Int’l,

Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 427 (4th Cir.
2010) (per

curiam).

A

factual

finding

is

clearly

erroneous

“when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm

2

Indeed,
the
proposed
conclusions
of
law
Bocek
submitted to the district court following the trial included the
legal conclusion that “The Defendants were Bocek’s agents for
purposes of acquiring ACC.
Extensive email exchanges between
Dr. Bocek and Mr. Amato establish that Amato undertook steps
toward the purchase of ACC on behalf of, and at the direction
of, Bocek.
JGA’s billing for these services to Dr. Bocek
confirm the relationship.”
Plaintiff’s Proposed Findings of
Fact and Conclusions of Law 13-14, Docket No. 206, Civil Action
No. 1:11-cv-00546 (E.D. Va. Dec. 16, 2013).

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conviction that a mistake has been committed.”

United States v.

United States Gypsum Co., 333 U.S. 364, 395 (1948).
In

Virginia,

“[a]gency

is

a

fiduciary

relationship

resulting from one person’s manifestation of consent to another
person that the other shall act on his behalf and subject to his
control, and the other person’s manifestation of consent so to
act.”

Reistroffer v. Person, 439 S.E.2d 376, 378 (Va. 1994).

Such a fiduciary relationship is found when “special confidence
has been reposed in one who in equity and good conscience is
bound to act in good faith and with due regard for the interests
of the one reposing the confidence.”
257 S.E.2d 770, 773 (Va. 1979).

H-B Ltd. P’ship v. Wimmer,

Regarding the right to control,

“direct evidence is not indispensable – indeed frequently is not
available – but instead circumstances may be relied on, such as
the relation of the parties to each other and their conduct with
reference to the subject matter of the contract.”

Acordia of

Va. Ins. Agency v. Genito Glenn, L.P., 560 S.E.2d 246, 250 (Va.
2002)

(alteration

and

internal

quotation

marks

omitted); see Royal Indem. Co. v. Hook, 157 S.E. 414, 419 (Va.
1931)

(“Frequently

necessity,

to

be

[agency]
established

is

established

and

by

circumstantial

has,

of

evidence.”).

“Agency may be inferred from the conduct of the parties and from
the surrounding facts and circumstances.”
S.E.2d 186, 189 (Va. 1986).

Drake v. Livesay, 341

“Whether an agency relationship
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exists is a question to be resolved by the fact finder unless
the existence of the relationship is shown by undisputed facts
or

by

unambiguous

written

documents.”

Acordia

of

Va.

Ins.

Agency, 560 S.E.2d at 250 (alteration and internal quotation
marks omitted); see also Schwartz v. Brownlee, 482 S.E.2d 827,
829 (Va. 1997) (explaining that “[w]hen there is no substantial
conflict

in

the

facts

and

circumstances

disclosed

by

the

evidence, it becomes a question of law to be decided by the
court whether one party was the agent of another” (alterations
and internal quotation marks omitted)).
There can be no doubt as to the existence of an agency
relationship after the point that the parties entered into the
Consulting Agreement.
Amato’s services.

At that point, Bocek was paying JGA for

Amato himself conceded that he understood

that, at least initially, “what [he was] to be doing, [he would
be]

doing

it

for

Dr.

Bocek”

and

instructions and his directions.”

“acting

J.A. 88.

subject

to

his

And, the agreement

plainly established JGA’s authority to act as his agent with
regard to the lenders from whom Bocek sought financing.
It is certainly true, as the district court observed, that
the

parties

intention

entered

that

JGA

into
would

the

Consulting

provide

formation of a new medical practice.

Agreement

services

relating

with

the

to

the

However, five days after

entering into that agreement, Bocek raised the possibility that
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he might purchase ACC or that Amato might advise him or assist
him in so doing.

Amato immediately undertook to help Bocek

determine the feasibility of the idea, including communicating
with

the

information

trustee
about

responsible
ACC’s

for

assets

on

the

sale

Bocek’s

and

behalf.

obtaining
The

only

conclusion to be drawn from the record is that the parties both
assented to JGA’s acting as Bocek’s agent in their dealings with
the

Estate

selling

ACC

just

as

they

had

contemplated

JGA

representing Bocek to possible lenders.
Indeed, Amato himself testified that, at least initially,
he

was

“doing

the

due

diligence

work

regarding

ACC

at

Dr.

Bocek’s request” pursuant to their agreement “to help [Bocek]
with the medical practice.”

J.A. 104-05.

See also J.A. 221

(language in Consulting Agreement stating that JGA, in addition
to the services specified in the agreement, would “render such
other services as may be agreed upon by” Bocek and JGA).

And it

is undisputed that Amato reported to Bocek regularly regarding
his progress and billed Bocek for work regarding the possible
purchase of ACC.

It is also undisputed – and unsurprising –

that Bocek continued to provide instruction to Amato regarding
the

work

that

Amato

was

performing

on

his

behalf.

That

instruction included Bocek’s directive that Amato not disclose
his identity in the course of Amato’s communications with ACC.

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When the defendants shifted toward actually negotiating for
the purchase of ACC, the parties’ communications and conduct
continued

to

point

unmistakably

toward

the

conclusion

that

Amato’s actions with regard to that purchase were made in the
context of the parties’ established plan for Amato to act on
Bocek’s

behalf

possible

issues

sufficient
would

be

to

obtain

regarding

capital

practice

Bocek’s

complicated

structured,

unmistakably

the

the

demonstrated

the

parties’
that

for

ability
question

Bocek.

Although

to

come

up

with

how

the

deal

of

communications

their

work,

and

conduct

including

Amato’s

placing of a closed bid to purchase ACC, continued to be part of
the defendants’ efforts on Bocek’s behalf to obtain the practice
for Bocek, as the parties’ emails of December 23, 27, and 28,
2010, plainly reflect.
The only reasonable inference that can be drawn from all of
these facts, none of which are in dispute, is that Amato and
Bocek, by their conduct and communications with each other, both
assented to Amato’s acting on Bocek’s behalf and subject to his
control in helping Bocek evaluate the feasibility of purchasing
ACC and in working toward actually obtaining the practice for
Bocek.

And this fact, in turn, establishes the legal conclusion

that Amato was acting as Bocek’s agent.
The district court’s analysis notwithstanding, there was no
reason

that

Bocek

was

required
19

to

show

that

an

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relationship was established by a separate contract in order to
show that the parties both assented by their conduct to Amato’s
acting

as

purchase.

Bocek’s

agent

regarding

Bocek’s

possible

Cf. Bloxom v. Rose, 144 S.E. 642, 644 (Va. 1928)

(concluding that evidence was sufficient to support finding of
agency even though facts did not suggest that the parties had
agreed to any specific contractual terms).

That the parties

never reached a meeting of the minds as to the manner in which
ACC would ultimately be transferred to Bocek simply does not
bear on the question of whether the parties had both assented to
the agency relationship.
Moreover,
demonstrate
confidence

the

that
has

undisputed
this

been

facts

situation

reposed

in

is
one

proven
one
who

at
in

in

trial
which

equity

clearly
“special
and

good

conscience is bound to act in good faith and with due regard for
the interests of the one reposing the confidence.”
P’ship, 257 S.E.2d at 773.

H-B Ltd.

Bocek paid JGA – and JGA accepted

payment – for Amato’s expertise and assistance in determining
the worth of a business opportunity that Bocek had identified
for Amato for that purpose.

Under such facts, the law precludes

Amato

conscience

in

equity

opportunity

for

and

good

himself

once

he

from

determined

appropriating
that

it

in

the
fact

carried with it the very potential for substantial profit that
Bocek had hoped it would.

See Bocek, 537 F. App’x at 17620

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77; id. at 180 (Niemeyer, J., concurring in part and concurring
in the judgment) (“The law would be a buffoon if it allowed JGA
to

take

Bocek’s

opportunity

simply

by

ending

the

agency

relationship and proceeding thereafter in furtherance of its own
interest.”).
The defendants take the position that at some point after
their

initial

work

regarding

acting on Bocek’s behalf.
opinion,

once

the

the

ACC

purchase,

they

ceased

However, as we explained in our prior

defendants’

duty

of

loyalty

toward

Bocek

arose, they could not extinguish it simply by terminating the
agency relationship.
C.J.);

id.

at

See Bocek, 537 F. App’x at 177 (Traxler,

179-80

(Niemeyer,

J.,

concurring

in

part

and

concurring in the judgment).
For all of these reasons, we hold as a matter of law that
Bocek

proved

that

the

defendants

breached

their

fiduciary

obligations to Bocek by appropriating the ACC opportunity for
themselves. 3

In so doing, we certainly acknowledge the district

3

In the prior appeal, Bocek appealed the grant of
summary judgment against him, and we determined that the facts
alleged, if proven at trial, would establish that the defendants
breached their fiduciary obligations to Bocek.
We were not
called upon to decide whether the evidence was sufficiently onesided that Bocek would have been entitled to summary judgment on
that issue had he sought it. See Appellees’ brief at 27 (noting
“the dissimilar postures between the First Appeal and the
instant appeal” in that the facts that Bocek claims he proved at
trial were “mere allegations” in the prior appeal).

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court’s role as the trier of fact as well as the deference we
must

afford

material
(and

the

facts

the

district

court’s

regarding

facts

the

regarding

factual

parties’

the

findings.

conduct

parties’

are

secret,

intentions are immaterial to the agency issue).

But

the

undisputed
subjective

Whether those

undisputed facts establish the agency relationship is a legal
question for us to decide, see Acordia of Va. Ins. Agency, 560
S.E.2d

at

250,

and

for

the

reasons

we

have

explained,

we

conclude that they did establish the agency relationship.
B.
Bocek

also

argues

that

the

district

court

erred

in

concluding that even assuming that the defendants’ appropriation
for themselves of the ACC opportunity constituted a breach of
their fiduciary obligations to Bocek, Bocek failed to prove any
damages from the breach.

We agree.

In Bocek’s Amended Complaint regarding this cause of action
he requested, among other remedies, money damages in the amounts
of “the difference between the purchase amount set forth in the
Asset Purchase Agreement and the true value of ACC’s assets on
[the]

date

of

the

Asset

Purchase

Agreement

or,

in

the

alternative, at the time that JGA transferred or assigned its
rights in the Asset Purchase Agreement to A2.”
Complaint

33,

Docket

No.

(E.D. Va. July 22, 2011).

66,

Civil

Action

Verified Amended
No.

1:11-cv-00546

He also requested the “profits that
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Bocek would have derived as the owner of ACC’s assets . . . for
such period of time in the future as can be calculated to a
reasonable degree of probability.”

Id.

To recover damages for lost profits, a plaintiff “ha[s] 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.”
Mario

Indus.

of

Va.,

Inc.,

650

S.E.2d

687,

696

Banks v.
(Va.

2007)

(internal quotation marks omitted).
Bocek testified that when he left ACC, he was earning a
salary of $450,000 per year and that the practice would have
paid him at least that amount in annual salary had he returned
as an owner.

He also testified that that salary was within the

range that a doctor with Bocek’s research experience and years
of practice would be expected to earn.

He testified that having

started a new medical practice in 2011 when he was not able to
purchase

ACC’s

assets,

he

had

not

yet

been

able

to

turn

a

profit, but that he hoped to break even with the new business by
2015 and proceed from there.
Bocek

also

presented

the

report

of

Certified

Public

Accountant Joseph S. Estabrook, who serves as a consultant in
the

areas

resolution.

of

business

Examining

valuation,
ACC’s

litigation,

financial

documents

and

dispute

through

May

2011, Estabrook conducted a detailed analysis and projected the
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practice’s net income would steadily increase from $478,271 in
2012 to $559,509 in 2016.

Based on this and other factors,

Estabrook determined that ACC’s fair market value as of June 22,
2011, was $2,232,000. 4
On the other hand, Amato testified that although ACC had
been profitable in the past, under A2’s ownership, the practice
was not profitable in the tax years 2011 and 2012.

He testified

that on A2’s 2011 tax return, “after taking into consideration .
.

.

interest,

taxes,

depreciation,

reported a loss of about $2,000.

and

J.A. 67.

amortization,”

A2

Amato also testified

that near the end of 2011 an insurance audit revealed that the
billing practices of the prior management were inconsistent with
what the insurance companies required.

He testified that “there

was going to be a drop of as much as 40 percent of top-line
revenue

because

opposed

to

what

[A2]
was

sought
done

to

bring

previously.”

in

proper
J.A.

68.

billing

as

And,

he

testified that A2 reported a loss of about $152,000 on its 2012
tax return.

4

Although A2 actually purchased ACC’s assets for
$1,000,000, Estabrook opined that “due to the financial
difficulties experienced by the Valentine Estate, coupled with
the fact that the Estate apparently did not employ traditional
marketing and sales efforts to maximize the sales price of the
practice, the offers and ultimate sales price for the practice
was substantially and artificially depressed.” J.A. 365.

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Addressing the damages issue, the district court concluded
(1) that the direct and proximate cause of Bocek’s failure to
collect an income or prospective profits was Bocek’s termination
from ACC and the conduct that precipitated it, and (2) that A2
had not earned any profits since purchasing ACC that Bocek would
have earned had he purchased the business.

Regarding the second

point, the district court referenced the tax losses A2 reported
for 2011 and 2012.
We conclude that neither of these reasons supported the
conclusion that Bocek had failed to prove damages.

First of

all, whether Bocek was to blame for being terminated from his
position

at

ACC

simply

entitlement to damages.

has

no

bearing

whatsoever

on

his

Regardless of whether he harmed himself

financially by taking actions that brought about his termination
at ACC, any such conduct occurred prior to his dealings with
JGA.

Bocek sought to prove that purchasing ACC’s assets was an

opportunity for him to turn his financial fortunes around and
that the defendants harmed him by appropriating that opportunity
for themselves.
Additionally, the fact that A2 reported losses on its 2011
and 2012 tax returns also does not show that Bocek would not
have profited in those years from his purchase of ACC’s assets.
First, even assuming arguendo that the practice’s revenues did
not exceed its expenses in those years, there was no evidence
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that the practice was not able to pay its expenses, including
doctor

salaries.

And

one

would

certainly

expect

that

the

reintroduction of Bocek to the practice would have reduced the
practice’s salary expenses for other physicians, increased its
ability to generate revenue, or both.

In this regard, Bocek

testified that when he was working with ACC, he “carried 40
percent of the load of the practice because [he] was the only
board-certified allergist and the only full-time doctor.”
175.

J.A.

Accordingly, the fact that A2 reported tax losses without

Bocek does not undercut Bocek’s claim that had he been back at
ACC practicing medicine, the practice would have generated the
revenue necessary to at least provide him with the income to
which he was accustomed. 5
In
analysis,

light

prove

we

damages

of

these

conclude
from

problems

that

the

its

with

finding

defendants’

the
that

alleged

district
Bocek

court’s

failed

breach

of

to

their

fiduciary obligations was clearly erroneous and cannot serve as
a

basis

for

affirming

the

judgment

5

in

the

defendants’

Moreover, Amato himself conceded that the calculation
of A2’s tax losses included “paper losses” such as amortization
and
depreciation
that
offset
revenue
that
the
business
generated. And, Amato conceded that he drew $75,000 from A2 as
salary in 2011.

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favor. 6
(“In

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See Wileman v. Frank, 979 F.2d 30, 38 (4th Cir. 1992)

the

unusual

reasoning
constitute

from

case

the

clear

where

evidence

error,

we,

the

district

adduced
as

a

is

court

responsibility to correct that error.).

court[’s]
so

of

flawed
appeals,

.

.

as
have

.
to
a

We therefore reverse

the judgment in favor of the defendants and remand for entry of
judgment in favor of Bocek on the issue of liability and for a
new

trial

on

the

issue

of

what,

if

any,

remedies

Bocek

is

entitled to as a result of the defendants’ breach. 7

6

The defendants maintain that Bocek’s damages theories
that involve him returning to practice at ACC do not account for
the facts that (1) “he was prohibited from trespassing on the
four ACC locations in Maryland – pursuant to non-trespassing
orders issued by the Montgomery County, Maryland Department of
Police,” and (2) the entity that owned ACC could face liability
if it hired him with knowledge of his prior history. Appellees’
Brief at 32. However, there was no basis for concluding that if
Bocek owned or partly owned the practice, he still would have
been prohibited from entering ACC’s premises. There is likewise
no evidence suggesting that fear of negligent hiring liability
would have affected Bocek’s decisions regarding what role he
would assume.
7

We offer no view regarding Bocek’s entitlement to any
remedy he has requested, including the imposition of a
constructive trust.
We note that Bocek requests that this case be assigned to a
different district court judge on remand.
We have previously
reviewed such requests by employing a three-factor test:
(1) whether the original judge would reasonably be
expected upon remand to have substantial difficulty in
putting out of his or her mind previously expressed
views or findings determined to be erroneous or based
on evidence that must be rejected,
(Continued)
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III.
For the foregoing reasons, we reverse the judgment in favor
of the defendants and remand for entry of judgment in favor of
Bocek on the issue of liability and for a new trial on the issue
of what, if any, remedies Bocek is entitled to in light of the
defendants’ breach of their fiduciary obligations to him.

REVERSED AND REMANDED

(2) whether reassignment is advisable to preserve the
appearance of justice, and
(3) whether reassignment would entail waste and
duplication
out
of
proportion
to
any
gain
in
preserving the appearance of fairness.
United States v. Guglielmi, 929 F.2d 1001, 1007 (4th Cir. 1991)
(quoting United States v. Robin, 553 F.2d 8, 10 (2d Cir. 1977)).
Having considered these factors, we conclude that reassignment
would not be appropriate here.

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WILKINSON, Circuit Judge, concurring:
The reasoning in my earlier dissent, Bocek v. JGA Assocs.,
LLC, 537 F. App’x 169, 180-82 (4th Cir. 2013) (Wilkinson, J.,
concurring and dissenting), now being precluded by the law of
the case, I concur in the majority’s opinion.

29