Jones v. Shooshan et al

Filing 24

MEMORANDUM OPINION: For the foregoing reasons, defendants' Motion to Dismiss will be granted as to all counts against all defendants except for Counts 1, 2, 3, and 6 for fraud and breach of fiduciary duty, which will proceed against defendant Demas. An appropriate Order will issue along with this Memorandum Opinion.Signed by District Judge Leonie M. Brinkema on 2/29/12. (yguy)

J_JL_I_i'
IN THE UNITED STATES DISTRICT COURT FOR THE

IT

FEB 2 9 2012

EASTERN DISTRICT OF VIRGINIA

Alexandria Division

STUART A.

CLERK, US DISTRICT COUnT
Al FVANORIA, VinniMIA

JONES,

Plaintiff,

I:llcvll48 (LMB/JFA)

v.

JOHN SHOOSHAN, et al.,
Defendants.

MEMORANDUM OPINION

Before the Court is defendants' motion to dismiss, in which
they argue that all of the claims in this lawsuit are either

time-barred or should be dismissed for failure to state a claim.
For the reasons discussed below, defendants' motion will be

granted and this civil action will be dismissed with prejudice

as to all defendants except William N. Demas, against whom only
the fraud and fiduciary duty counts will go forward.
I.

BACKGROUND

On October 21, 2011, plaintiff Stuart A. Jones filed a ten

count complaint against five individual defendants, John

Shooshan, Colin W. Uckert, William N. Demas, Jon E. Hass, Sr.,

and Jonathan C. Kinney, and six business entities, Jones Lang
LaSalle, Inc., Ashton Park Associates, LLC, Ashton Park

Associates I, LLC, Ashton Park Associates II, LLC, Ashton Park

Associates III, LLC, and Ashton Park Associates IV, LLC,1 for

claims arising out of a business relationship between Jones and

four of the defendants, Hass, Demas, Kinney, and Spaulding &

Slye,2 which relationship was terminated in December 2004.3
As alleged in the complaint, plaintiff is a "brownfield

redevelopment expert and brownfield developer" who was contacted

in 1997 by private parties "seeking to acquire and remediate"
land then owned by the Washington Metropolitan Area Transit
Authority ("WMATA").

Compl. 1 16.

In the fall of 1998,

plaintiff asked defendant Hass whether he would be interested in

"arrang[ing] a group of partners to bid for, acquire, remediate,

and re-develop the Site from WMATA."

Id. U 17.

According to

the complaint, in early 1999, plaintiff and defendants Hass,

Demas, Kinney, and Spaulding & Slye "formed a partnership" with

1 This Memorandum Opinion will refer to the four Ashton Park
Associates LLCs I-IV, formed in 2008, collectively as the
"Ashton Park Affiliates" and to Ashton Park Associates as
"Ashton Park."

Jones Lang LaSalle, Inc. appears to be the successor-in-

interest to Spaulding & Slye.

See Compl. H 10.

At oral

argument on the pending motion, plaintiff agreed to dismiss
Jones Lang LaSalle, Inc. Accordingly, Jones Lang LaSalle, Inc.
will be dismissed and the Court will not discuss the motion to
dismiss as to this defendant.

3 Subject matter jurisdiction is based on the diversity of the
parties; plaintiff is a resident of Texas, and the defendants

are residents of Maryland, Virginia, and Florida.

Compl. ff 4-

15. The amount in controversy far exceeds the $75,000
jurisdictional requirement.

the intent "to 'carry on' the partnership for the purpose of

livelihood or profit, and not merely to carry on some single

transaction."

Id^ f 18.4

Each of the alleged partners

purportedly held a 20% interest in the partnership and was

responsible for different elements of the business; plaintiff
was in charge of environmental matters and was "to assist in the
strategy for bidding and acquisition."

Id. Hfl 18, 19.

Defendant Hass was responsible for financial, Demas for asset

management, and Kinney for legal matters.

Id. U 19.

On April 27, 1999, defendant Kinney organized Ashton Park
Associates, LLC and drew up papers for that entity; however,

neither plaintiff nor the other partners signed the documents,
and plaintiff contends that "[a]t all times, [he] viewed his

business relationship with Defendants Hass, Demas, Kinney, and
Spaulding & Slye to be a partnership."

Compl. U 20.5

Plaintiff

alleges that between 1999 and 2002, he undertook extensive

environmental work on behalf of the alleged partnership,
culminating in a February 20, 2003 partners meeting in which
No written evidence of this partnership was attached to either

the complaint or any of the briefs addressing the pending
motion; however, during oral argument, plaintiff's counsel
stated that he had seen a memorandum of understanding which set
out the parameters of the alleged partnership.

5 Plaintiff alleges that all of the partners referred to
themselves in written and oral communications as partners, but
again, no documentation of such communications is attached to

the complaint or the pleadings addressing the motion to dismiss.

plaintiff provided the original partners a copy of the Virginia
Department of Environmental Quality final closure/no further
action letter, which indicated that the environmental

remediation of the site was complete and the site was fit to be

commercially developed.

Id^ U 24.

In addition to his

environmental efforts, plaintiff claims that he "assisted

strategically in (a) the initial bid process, (b) the final

presentation to WMATA, (c) the selection of the partnership by
WMATA, and ultimately,

(d) the agreement with WMATA."

Id.

Plaintiff also contends that in the spring of 2003, he
"endeavored to assist with the acquisition of the Shell Gas

Station located on the Site," which "became part of the

assemblage that now supports the ongoing development by the
Defendants."

Id^ U 25.

The complaint goes on to allege that on December 11, 2003,

defendant Demas wrote a "capital contribution cash call private
letter" to plaintiff, in which he "demand[ed]" that plaintiff
make an $8,000 capital contribution by December 18, 2003.6

Compl. U 26.

Plaintiff contends without explanation that he

"was not required to make such a contribution."

id.

Plaintiff

responded by letter on December 18, 2003, stating that he "was

taken by surprise by the suddenness and inexplicable urgency

6 Neither party has included any documentation of these
communications with its pleadings.

of...[Defendant Demas']...demand," and contended that Demas "did
not have the right to terminate" plaintiff's interest in the

partnership.

Id. fl 27 (alterations in original).

The complaint

alleges that plaintiff continued to work on behalf of the

partnership throughout 2004, but on December 17, 2004, defendant

Demas wrote plaintiff a letter "purport[ing] to unilaterally
terminate Plaintiff's interest in the partnership," due to

plaintiff's refusal to make the capital contribution requested
in the December 2003 letter.

Id^ f 28.

Plaintiff alleges that

Demas' reliance on the capital contribution issue was a pretext
for defendants' true desire to "not have to compensate Plaintiff
for his environmental work."

Id.

In March 2005, defendant Demas phoned plaintiff and stated:
"We lost it

Our deal with WMATA is dead

going through

The deal is over

with us anymore."

Compl. f 29.

The deal is not

WMATA does not want to deal

Plaintiff characterizes Demas'

statements as "emphatic" and contends that Demas "was

emotionally choked up and disturbed" during the
conversation.

Id^

Plaintiff alleges that, at the time of this

conversation, Demas knew that the deal was "not 'dead'...and

that WMATA was still dealing with the partnership."

id.

Plaintiff contends that Demas intentionally misled him so that
plaintiff would not contest his December 2004 termination from

the alleged partnership.

Id^ fl 29.

Plaintiff further alleges

that his conversation with Demas had a "profound impact" on him,
in that he reasonably relied on Demas' statements that the deal
was dead and consequently did not contest his termination or

follow any activity at the site.

Id. U 30.

Although the complaint alleges that the deal was not "dead"

at the time of the March 2005 phone call, it was not until May
2, 2011 when plaintiff learned "that (a) the deal with WMATA

actually went through, (b) the Spaulding & Slye.partners were
paid off by the Defendants, and (c) the Defendants went forward

with the original plan for re-development of the Site (presented
to WMATA in 1999), which Plaintiff participated and assisted
strategically with."

Compl. % 33.

Plaintiff also learned from

Arlington County property records that WMATA had sold three

parcels of land to defendants, one sale occurring on October 22,
2009 and the other two on December 16, 2010.

Lastly, plaintiff

discovered that defendants and Landesbank entered into a $98

million construction loan agreement on January 12, 2011 and that
defendants had entered into a long-term lease and long-term loan
with two other entities.

Id. U 34.

Plaintiff filed suit on October 21, 2011, contending that
he was wrongfully terminated from the WMATA project in 2004,
that the defendants committed fraud by informing him that the
WMATA deal was dead knowing it was not and continuing to conceal
the truth, and that they conspired to injure plaintiff's

business by hiding this information.

As a result, plaintiff

claims he was not compensated for the work he contributed to the
WMATA project and was cut out of lucrative deals and his

rightful partnership interest.
complaint are:

The ten counts alleged in the

(1) Actual fraud;

(2) Constructive fraud;

(3) Fraudulent concealment; (4) Statutory conspiracy; (5) Common
law conspiracy; (6) Breach of fiduciary duty; (7) Breach of
contract; (8) Breach of implied-in-law contract;

(9) Unjust

enrichment7; and (10) Accounting.
Other than the accounting claim, the complaint is not clear
as to which defendants are accused in each count, but in the

prayer for relief, plaintiff seeks all categories of damages
against all defendants.

Because Counts 1 and 2 (actual and

constructive fraud) are based exclusively on Demas' alleged
misrepresentations made in March of 2005, the Court construes

these claims as brought solely against defendant Demas, even

though in the prayer for relief, plaintiff seeks punitive
damages against all defendants based on Count I.

The Court also

construes the breach of express contract claim (Count 7) as

In his claims for unjust enrichment and breach of implied
contract, plaintiff seeks compensation for the environmental

work he did on behalf of the original alleged partnership, which
work concluded in 2003. Compl. HU 78, 84. At oral argument,
plaintiff's counsel conceded that his client is not entitled to

such compensation.

Accordingly, the unjust enrichment and

breach of implied contract claims (Counts 8 and 9) will be
dismissed without further discussion.

brought only against plaintiff's original alleged partners,
defendants Demas, Hass, Kinney, and Spaulding & Slye (now Jones
Lang LaSalle, Inc.), as neither Ashton Park nor any of the

Ashton Park Affiliates are described as parties to any initial
contractual arrangement.
10)

Plaintiff seeks an accounting (Count

as to Ashton Park and the Ashton Park Affiliates defendants

only.

The Court construes the remaining counts of the complaint

as brought against all defendants.

Plaintiff seeks to be

reinstated to the partnership; $25 million in actual damages

against all defendants; treble damages of $75 million against
all defendants; $350,000 in punitive damages against all

defendants; an accounting; attorneys' fees and costs; and preand post-judgment interest.
II.

STANDARD OF REVIEW

In evaluating a motion to dismiss under Fed. R. Civ. P.

12(b)(6), the Court must accept all of the complaint's wellpleaded allegations as true and view them in a light most
favorable to the plaintiff.

(4th Cir. 1999).

Smith v. Sydnor, 184 F.3d 356, 361

However, that requirement applies only to

facts, not to legal conclusions.

1937, 1949 (2009).

Ashcroft v. Iqbal, 129 S. Ct.

In addition, "if the well-pleaded facts do

not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not 'show[n]'-

'that the pleader is entitled to relief.'"

Id. at 1950 (citing

Fed. R. Civ. P. 8).

"Factual allegations must be enough to

raise a right of relief above the speculative level, on the
assumption that all of the allegations in the complaint are
true."

Bell Atl. Corp. v. Twombly,

(internal citations omitted).

550 U.S.

544,

555 (2007)

Accordingly, a party must

"nudge[] their claims across the line from conceivable to
plausible" to survive a Rule 12(b)(6) motion to dismiss.

Id. at

570.

Fed. R. Civ. P. 9(b) requires that, "[i]n alleging fraud or
mistake, a party must state with particularity the circumstances
constituting fraud or mistake."

A plaintiff must therefore

specify "the time, place, and contents of the false

representations, as well as the identity of the party making the
misrepresentation and what was obtained by making the
misrepresentation."

Brown v. HSBC Mortg. Corp., 2011 U.S. Dist.

LEXIS 80943, at *3 (E.D. Va. July 22, 2011)

(quoting Harrison v.

Westinghouse Savannah River Co., 176 F.3d 776; 784 (4th Cir.
1999)) (internal quotation marks omitted).
III.

A.

DISCUSSION

Claims Against Post-Termination Defendants

All claims against defendants Shooshan, Uckert, Ashton
Park, and the Ashton Park Affiliates will be dismissed, because

plaintiff has not alleged that any of these defendants was

involved with the plaintiff or the alleged partnership when

plaintiff claims to have been a partner conducting work on its

behalf.8

Accordingly, these defendants could not have been

parties to any contractual partnership agreement or employment
arrangement with plaintiff, and thus cannot be liable for

breaching a contractual obligation.

Similarly, they owed no

fiduciary duty to plaintiff, as plaintiff has not alleged that
he was ever a partner to whom they owed duties of loyalty and
care.

Moreover, plaintiff has wholly failed to plead a plausible
claim for relief against these defendants for fraud, fraudulent

concealment, or conspiracy.
actual fraud relate to Demas'

The complaint's only allegations of
March 2005 statements.

Plaintiff

has pleaded no facts suggesting that the post-termination
defendants took action to conceal their business operations or

relationship with plaintiff's former partners or that they
conspired to cut plaintiff out of the future deals; rather, he
appears to suggest that these defendants are liable due to their

association with the other defendants, which does not establish
a plausible claim to relief.

8Defendants Shooshan and Uckert entered the WMATA project in
March 2005. Compl. H 31. Although plaintiff alleges that
Ashton Park was organized in 1999 by defendant Kinney, he also
alleges that he never signed any papers associated with that
LLC. Id. H 20. The Ashton Park Affiliates were formed after
plaintiff was terminated from the WMATA project. See Defs.'
Mem. Ex. 14 (showing that Ashton Park Associates I, II, III, and
IV were formed in October of 2008).
10

Plaintiff argues that he bases his claims against these

defendants on the contention that they are necessary to afford
complete relief for his injuries.
v. Stitely, 2007 Va.

Plaintiff relies on Greenfeld

Cir. LEXIS 7 (Fairfax Cir. Ct. Jan. 5,

2007), to support his claim that Ashton Park and the Ashton Park

Affiliates should remain in this action, despite plaintiff's
lack of involvement with them.

In Greenfeld, a Virginia state

trial court held that a PLLC "became an agent of [defendants']
conspiracy" and was thus properly a "separate party to the

conspiracy because it became the recipient and repository of the
assets and value of" a dissembled partnership.
Defendants correctly respond that,

Id. at *31.

in contrast to Greenfeld,

plaintiff's complaint does not provide any plausible indication
that Ashton Park or the Ashton Park Affiliates acted as agents

of the alleged conspiracy, as plaintiff has pleaded no specific
factual allegations regarding these entities.
in Greenfeld,

Moreover, unlike

the four Ashton Park Affiliates were not in

existence until years after plaintiff's termination and Demas'
allegedly fraudulent March 2005 statements.

For these reasons, all of plaintiff's claims against
defendants Shooshan, Uckert, Ashton Park,
Affiliates will be dismissed.
B.

Statutes of Limitations

11

and the Ashton Park

Defendants vigorously argue that all of plaintiff's claims
are barred by the applicable statutes of limitations, and that

plaintiff cannot plausibly argue that his reliance on a single
alleged misrepresentation by one of the defendants excuses his

nearly seven-year delay in filing suit.

Plaintiff responds that

none of his causes of action accrued until May 2011, when he
learned that the WMATA deal had gone through and he "knew that

he had been hurt."

Invoking the "discovery rule" for all of his

claims, plaintiff maintains that his claims are not time-barred

because the statutes of limitations did not begin to run until

he discovered the full extent of his injuries in May 2011.
The Virginia Code enumerates the causes of action to which

the discovery rule applies.

Relevant to this motion, Va. Code

Ann. § 8.01-249(1) provides in pertinent part that a cause of

action for fraud accrues "when such fraud...is discovered or by
the exercise of due diligence reasonably should have been
discovered."

Otherwise, "the right of action shall be deemed to

accrue and the prescribed limitation period shall begin to run

from the date the injury is sustained in the case of injury to
the person or damage to property, when the breach of contract

occurs in actions ex contractu and not when the resulting damage

is discovered, except where the relief sought is solely
equitable

"

Va. Code Ann. § 8.01-230 (emphasis added).

12

Defendants' statute of limitations arguments will be evaluated

against this statutory background.
1. Breach of Contract (Count 7)

In Count 7, plaintiff pleads "[i]n the alternative" that

he, along with defendants Demas, Hass, Kinney, and Spaulding &
Slye, were members of Ashton Park Associates, LLC and that the

"Defendant partners breached their obligations to Plaintiff as a

member of Ashton Park Associates, LLC by unlawfully terminating

Plaintiff's interest in the limited liability company."

U 19.

Compl.

Elsewhere in the complaint, however, plaintiff

specifically states that neither he nor his alleged partners
"ever signed any documents to become a member" of the LLC, and

he "[a]t all times... viewed his business relationship...to be a

partnership."

Id_^ f 20.

Furthermore, it is not clear whether

plaintiff claims a breach of a written or oral contract in Count

7, although the complaint never mentions a written agreement

signed by the "partners."
in his opposition.

Plaintiff does not clarify this point

Because the breach of contract claim is so

imprecisely pleaded and the basis for this claim is completely
unclear, it does not meet the pleading standards of Fed. R. Civ.
P. 8, Twombly, and Iqbal.

Even putting these deficiencies aside, any claim for breach
of contract based on plaintiff's termination from his original

business arrangement with Demas, Hass, Kinney, and Spaulding &
13

Slye is clearly time-barred.

Under Virginia law, a claim for

breach of an oral contract must be brought within three years of
the date of the breach, see Va. Code Ann.
246(4).

§§ 8.01-230, 8.01-

A claim for breach of a written contract must be

brought within five years of the breach, see Va. Code Ann.
§§8.01-230, 8.01-246(2).

As discussed above, in Virginia the

statute of limitations for breach of contract begins to run at

the time of the breach, not when the resulting damage is
discovered.

The complaint alleges that a contract was breached

when plaintiff was terminated on December 17, 2004.

Because

plaintiff filed his complaint on October 21, 2011, any breach of
contract claim, regardless of whether the contract was oral or

written, is untimely under both the three and five-year statutes
of limitations.

Plaintiff generally argues that his cause of action for
breach of contract accrued in May 2011 when he learned that the
WMATA deal had gone through and therefore that he had been hurt.

Plaintiff relies on Nasim v. Warden, Md. House of Corrs., 64
F.3d 951 (4th Cir.

1996), in which the Fourth Circuit held that

"[u]nder federal law a cause of action accrues when the

plaintiff possesses sufficient facts about the harm done to him
that reasonable inquiry will reveal his cause of action."
at 955.

Id.

Nasim does not help the plaintiff because it involved a

federal cause of action brought under 42 U.S.C. § 1983 rather
14

than a state law cause of action.

Although the state statute of

limitations is used for § 1983 claims, the rules for accrual of

the cause of action are governed by federal law, and the Nasim

court made clear that "a federal cause of action accrues upon

inquiry notice."

Id.9

All of plaintiff's claims in this action

are purely state law claims brought under the Court's diversity
jurisdiction and, accordingly, state law statutes of limitations
and state accrual rules apply.

See Va. Imps., Inc. v. Kirin

Brewery of Am., LLC, 296 F. Supp. 2d 691, 699 (E.D. Va. 2003)

("State law governs the existence and interpretation of any
statute of limitation in a federal diversity action.").

In

addition to the clear language of the Virginia statute, the

Virginia Supreme Court has consistently adhered to "the general
rule that the applicable period of limitation begins to run from
the moment the cause of action arises rather than from the time

of discovery of injury or damage, and...that difficulty in
ascertaining the existence of a cause of action is irrelevant."
Va. Military Inst, v. King, 217 Va. 751, 759 (1977).

In the alternative, plaintiff argues that he did not suffer
harm for which he could recover until the WMATA deal went

through in October 2009, and if his claims are considered to

have accrued on that date, they are timely.
9

That argument

Moreover, Nasim relied on United States v. Kubrick, 444 U.S.
Ill, 122-24 (1979), which also addressed a federal claim, the
Federal Tort Claims Act.
15

contradicts the allegations in the complaint, which specify that
the breach at issue was plaintiff's unlawful termination in
December 2004, at which point he was cut off from all future

profits from the venture.

Compl. 1 71.

Under long-standing

Virginia law,

where an injury, though slight, is sustained in consequence
of the wrongful or negligent act of another and the law
affords a remedy therefor the statute of limitations

attaches at once. It is not material that all the damages
resulting from the act should have been sustained at that

time and the running of the statute is not postponed by the
fact that the actual or substantial damages do not occur
until a

later date.

Richmond Redevelopment & Hous. Auth. v. Laburnum Constr. Corp.,
195 Va. 827, 839 (1954) (citations and alterations omitted).
For these reasons, defendants' motion to dismiss Count 7 will be
granted, as plaintiff's breach of contract claim is time-barred.

2. Statutory/Common Law Conspiracy (Counts 4 and 5)
The parties agree that the statute of limitations for

plaintiff's statutory conspiracy claim is five years, and

plaintiff maintains that the common law conspiracy count is

subject to a two-year statute of limitations.

Again, the

parties dispute whether these causes of action accrued when

plaintiff discovered in May 2011 that the defendants had secured

the WMATA deal or, as defendants contend, when plaintiff was

terminated in December 2004.

The Fourth Circuit, quoting the

Virginia Supreme Court, has held contrary to plaintiff's

16

contention that the cause of action for conspiracy accrues at
the time he "first suffered any damages resulting from the acts

committed in furtherance of the conspiracy."

Detrick v.

Panalpina, Inc., 108 F.3d 529, 543 (4th Cir. 1997).

Plaintiff

was clearly aware of his termination from the WMATA project in

2004, and it is from that event that any injury arises.
Therefore, the statute of limitations began to run at that time.
For these reasons, plaintiff's conspiracy claims are time-barred
as to all defendants.10

3. Breach of Fiduciary Duty (Count 6)
The complaint alleges that defendant Demas breached his

fiduciary duty to plaintiff by informing him in March 2005 that
the WMATA deal was dead.

Compl. H 66(a).

Plaintiff also

alleges that all defendants continued to breach their fiduciary

duties by not disclosing the various WMATA deals into which they
entered over the years.

The parties agree that plaintiff's

breach of fiduciary duty claim (Count 6) is subject to a twoyear statute of limitations under Va. Code Ann.

§ 8.01-248.

See

also Broyhill v. Bank of Am., N.A., 2010 U.S. Dist. LEXIS

106766, at *10 (E.D. Va. Oct. 6, 2010).

The parties dispute

10 Demas is the only defendant as to whom the plaintiff has
alleged any misconduct that could possibly give rise to

equitable estoppel; however, a conspiracy requires the
involvement of at least two co-conspirators. See Va. Code Ann.
§ 18.2-499, et seq. Therefore, because the conspiracy claims

against all other defendants will be dismissed, the conspiracy
claims against Demas must also be dismissed.
17

whether the discovery rule applies to such claims in light of
competing lines of authority.
In 1988,

the Fourth Circuit held that the statute of

limitations for a breach of fiduciary duty claim begins to run
when the plaintiff discovers the breach.
Ins. Co. v. Marsh & McLennan, Inc.,

1988).

Int'1 Surplus Lines

838 F.2d 124, 128 (4th Cir.

In so holding, the court relied on the statutory section

providing for the discovery rule in actions for fraud.

Id.

However, the Virginia Code explicitly lays out the causes of

action subject to the discovery rule, and breach of fiduciary
duty is not an enumerated category.

Since the International

Surplus Lines decision, Virginia courts have repudiated the
discovery rule for breach of fiduciary duty claims, and the
majority of the federal courts in Virginia have followed suit.
See, e.g., Informatics Applications Grp., Inc. v. Shkolnikov,

2011 U.S. Dist. LEXIS 148357 (E.D. Va. Dec. 27, 2011); Tabler v.

Litton Loan Servicing, LP, 2009 U.S. Dist. LEXIS 70768 (E.D. Va.

Aug. 12, 2009) (holding that breach of fiduciary duty claim
accrues at the time the injury occurred); Katz v. Holland &

Knight LLP, 2009 U.S. Dist. LEXIS 10721 (E.D. Va. Feb. 12, 2009)

(finding that breach of fiduciary duty claim accrues upon date
of breach, not date of discovery); Rossmann v. Lazarus, 2008

U.S. Dist. LEXIS 68408 (E.D. Va. Sept. 3, 2008) (declining to
apply discovery rule); Smith v. CNA Fin. Corp., 2003 U.S. Dist.
18

LEXIS 28240 (W.D. Va. Nov. 26, 2003) (reviewing cases and

rejecting discovery rule); Goldstein v. Malcolm G. Fries &
Assocs., 72 F. Supp. 2d 620 (E.D. Va. 1999) (declining to follow

International Surplus Lines reasoning given Virginia case law
refuting discovery rule); Pathek v. Trivedi, 61 Va. Cir. 572,

576 (Chesterfield Cir. Ct. 2003) (declining to apply discovery
rule); Professionals I, Inc. v. Pathak, 47 Va. Cir. 476 (Fairfax

Cir. Ct. 1998) (holding that discovery rule does not apply to
breach of fiduciary duty claims).

But see Russell v. Gennari,

2007 U.S. Dist. LEXIS 83771 (E.D. Va. Nov. 8, 2007), aff'd, 284

F. App'x 98 (4th Cir. 2008) (applying discovery rule).

In light

of the weight of the precedent, plaintiff's claim for breach of
fiduciary duty accrued at the time of the breach, not at the
time plaintiff discovered the breach.

Plaintiff has not specifically alleged that any defendant

other than Demas made any statement or engaged in any conduct

that could constitute a breach of fiduciary duty.

As to Demas,

the only breach specifically alleged is the purported
misrepresentation he made in March 2005, and as such, a

resulting claim for breach of fiduciary duty would be timebarred unless subject to equitable estoppel, as discussed

further below.

For these reasons, the breach of fiduciary duty

claims against all defendants except for Demas will be
dismissed.

19

C.

The Fraud Counts (Counts 1, 2, and 3)

In Counts 1 and 2, plaintiff alleges actual and
constructive fraud based on Demas' March 2005 statements that

the WMATA deal was dead, and in Count 3, he alleges fraudulent
concealment based on the defendants'

failure to inform him that

the WMATA project went forward and of the subsequent related
deals.

"Fraud allegations ought to specify the time, place,
speaker, and content of the alleged misrepresentations."

Hirschler v. GMD Inv. Ltd. P'ship, 1990 U.S. Dist. LEXIS 20885,
at *31 (E.D. Va. Dec. 18, 1990) (quoting Di Vittorio v. Equidyne
Extractive Indus., 822 F.2d 1242, 1247 (2d Cir. 1986)).

Plaintiff has not alleged a single specific example of
fraudulent conduct by any defendant other than Demas.

In his

allegations of actual and constructive fraud, plaintiff focuses

exclusively on Demas' March 2005 statements.
43, 45.

See Compl. Hfl 40,

In Count 3, plaintiff makes only vague and conclusory

allegations that any of the other defendants fraudulently
concealed material facts, totally failing to specify statements
or conduct to support his claim.

Because "[g]uilt by

association is not sufficient to meet the strict requirements of
Rule 9(b)" and because plaintiff fails to identify specific acts
of concealment or details of a fraudulent scheme, Count 3 will
be dismissed for failure to state a claim as to all defendants
20

other than Demas.

Hirschler, 1990 U.S. Dist. LEXIS 20885, at

*31; see also Tabler v. Litton Loan Servicing, LP, 2009 U.S.

Dist. LEXIS 70768, at *13 (E.D. Va. Aug. 12, 2009) (holding that
"[mjerely alleging Defendants 'intentionally suppressed and
concealed' a kickback" was insufficient to meet Rule 9(b)
standard).

As to Demas, defendants argue that the fraud claims are

barred by the two-year statute of limitations for fraud under

Va. Code Ann. § 8.01-243(A).

Va. Code Ann. § 8.01-249 provides,

in pertinent part, that a cause of action for fraud accrues when

the "fraud...is discovered or by the exercise of due diligence
reasonably should have been discovered."

The plaintiff bears

the burden of showing that he acted with due diligence.
Informatics Applications Grp., Inc. v. Shkolnikov, 2011 U.S.

Dist. LEXIS 148357, at *60 (E.D. Va. Dec. 27, 2011).
In response to plaintiff's argument that his fraud claims
accrued in May 2011, when he learned that the WMATA deal had

gone through, defendants ask the Court to take judicial notice

of a series of public documents, including WMATA Board of

Directors meeting minutes and agendas and press releases, which

defendants assert put the plaintiff on notice well before May
2011 that the real estate deal was going forward.

Over

plaintiff's objection, the Court has taken judicial notice of
the documents proffered by defendants.
21

The existence of these

public documents does not answer the question whether plaintiff
exercised due diligence, which is a question of fact, "not
measured by any absolute standard, but depending on the relative
facts of the special case."

Va. Imps., Inc. v. Brewery of Am.,

LLC, 296 F. Supp. 2d 691, 699 (E.D. Va. 2003)

omitted).

(citation

Whether these records were reasonably accessible to

plaintiff at the time, and whether he acted with the requisite

diligence in monitoring the WMATA project, are factual questions
that cannot be resolved at the motion to dismiss stage.
Accordingly, defendants' motion will be denied as to the fraud

claims against Demas but granted as to all other defendants.
D.

Equitable Estoppel

Plaintiff contends that, even if his claims were not

brought within the relevant statutory periods, defendants should
be estopped from raising a statute of limitations defense under

the doctrine of equitable estoppel, which "bars a statute of

limitations defense by a defendant who, by his own conduct,
lulls another into a false security."

Lamers v. Org.

Strategies, Inc., 2008 U.S. Dist. LEXIS 23037, at *4-5 (E.D. Va.
Mar. 24, 2008) (quoting Datastaff Tech. Grp., Inc. v. Centex
Constr. Co., 528 F. Supp. 2d 587, 593 (E.D. Va. 2007)).

For

equitable estoppel to apply, a party must show
(1) concealment or misrepresentation of a material fact;

(2) that the misrepresentation was made with knowledge of
the fact; (3) that the other party was ignorant of the
22

truth; (4) that the representation was made with the
intention that the other party rely on it; (5) that the
other party was induced to act on it; and (6)
party was harmed.

that the

Neal v. Stryker Corp., 2011 U.S. Dist. LEXIS 23037, at *8-9
(E.D.

Va. Mar. 8, 2011).

Plaintiff must also demonstrate that

his reliance on a defendant's statement was reasonable and "that

he diligently pursued his legal claims after the cessation of
defendant's misrepresentations."

23037, at *5-6.

Lamers, 2008 U.S. Dist. LEXIS

At the motion to dismiss stage, the plaintiff

has the burden of pleading facts that would support a finding of
equitable estoppel.

Neal, 2011 U.S. Dist. LEXIS 23037, at *9.

Although plaintiff focuses on various allegations in the
complaint which he asserts establish all of the elements of

equitable estoppel, at best these statements only implicate
defendant Demas.

See PL's Opp'n at 16-18.

Again, the

complaint is absolutely devoid of factual allegations suggesting
misconduct by any defendant other than Demas and, as such,

equitable estoppel will not apply to any of the claims brought
against the other defendants.

Moreover, the single allegation of fraud against Demas is

insufficient to establish that equitable estoppel should apply
to the breach of contract claim.

The purported breach of

contract occurred in December 2004 when Demas told plaintiff
that he was terminated from the project.

23

As defendants

correctly argue, Demas' March 2005 statement about the WMATA

deal being dead does not "purport to undo" plaintiff's
termination.

Therefore,

irrespective of the March 2005

statements, plaintiff was injured when his interest in the WMATA

project was terminated in December 2004.

At that point,

plaintiff knew his involvement in the WMATA project had been
terminated and the time in which he needed to pursue a breach of

contract claim began to run.

For these reasons, plaintiff

cannot rely on equitable estoppel to save his breach of contract

claims against any defendant, including Demas, and those claims
will be dismissed as to all defendants as time-barred.

Because factual development is necessary to determine

whether plaintiff's fraud and breach of fiduciary duty claims
against Demas are subject to equitable estoppel, and

particularly whether plaintiff exercised due diligence, these
claims will not be dismissed as to Demas.

Plaintiff briefly argues in a footnote that his claims

should be subject to equitable tolling under Va. Code Ann.
§ 8.01-229(D), which tolls the statute of limitations "[w]hen

the filing of an action is obstructed by a defendant's...using
any other direct or indirect means to obstruct the filing of an

action...."

There is no allegation in the complaint that any

defendant affirmatively obstructed plaintiff from filing suit
either at the time he was terminated in December 2004 or
24

thereafter.

Accordingly, plaintiff's claims are not subject to

equitable tolling.11
IV.

CONCLUSION

For the foregoing reasons, defendants' Motion to Dismiss

will be granted as to all counts against all defendants except
for Counts 1, 2, 3, and 6 for fraud and breach of fiduciary
duty, which will proceed against defendant Demas.

An

appropriate Order will issue along with this Memorandum Opinion.

Entered this p?7 day of February, 2012.

Alexandria, Virginia

M
Leonie M. Brinkema

United States District Judge

11 Defendants raise a series of other grounds on which they argue
that the Court can dismiss the various counts in plaintiff's
complaint, including that the economic loss doctrine bars the

fraud claims and that the intracorporate immunity doctrine
precludes relief on the conspiracy counts.

Because the Court

finds that all counts against defendants who were not original
members of the alleged partnership of which plaintiff claims he
was a part must be dismissed and because all other claims

(except for the fraud and breach of fiduciary duty claims
against Demas) are time-barred, the Court declines to address
defendants' other arguments.
25