Slaey v. Harrington
Filing
9
MEMORANDUM OPINION. Signed by District Judge T. S. Ellis, III on 9/1/15. (gwalk, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
Bankruptcy No. 13-10541-RGM
IN RE: MARY D. SLAEY,
Debtor.
MARY D. SLAEY,
Appellant,
Civil Action No. I:14cvl210
V.
P.H. HARRINGTON, JR.,
Appellee.
MEMORANDUM OPINION
This bankruptcy appeal presents the question whether the Bankruptcy Court erred in
allowing a creditor's claim against the debtor for a defaulted loan where, as here, the claim is
barred by the statute of limitations unless the debtor's written agreement not to assert the
limitations bar is given effect. A Virginiastatute, Va. Code § 8.01-232(A), limitsand defines the
circumstances under which agreements not to assert the statute of limitations can be enforced.
Thus, the question presented in this appeal is, more precisely, whether the Bankruptcy Court, in
allowing the creditor's claim, correctly construed and applied this statute. For the reasons that
follow, the Bankruptcy Court did not do so and hence the allowance of the barred claim must be
reversed.
I.
Only a brief recitation of the pertinent facts and procedural history is necessary for
resolution of the instant appeal. Thus, the record reflects that on July 10, 2002, appellee P.H.
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Harrington, Jr., an attorney, loaned $235,000 to his then-friend and client, appellant Mary D.
Slaey. This loan took the form of a $235,000 cashier's check made out to "M.L. Denese Slaey"
drawn from Harrington's personal bank account at Branch Banking and Trust Company. Slaey
contemporaneously executed a Promissory Note with respect to this loan (the "2002 Note").
Pursuant to the terms of the 2002 Note, Slaey promised to repay "P.H. Harrington Jr. Pension
Plan" the total amount of$235,000, with interest at the rate of8% per annum on the unpaid balance
from July 10,2002, until the date of maturity. In this regard, the 2002 Note had an express term
of only one month, providing that the unpaid balance was "payable in one lump sum installmentof
principal and interest on or before August 10,2002."
According to Harrington, Slaey failed to satisfy the terms of the 2002 Note anytime
between 2002 and 2008. Slaey and Harrington nonetheless remained in contact with one another
throughout these years, apparently both for legal and personal reasons. And, given his legal
background, Harrington was aware that legal enforcement of the 2002 Note was governed by
Virginia's six-year statute oflimitations applicable to negotiable instruments.' Thus, on August
7, 2008—^three days before expiration of the six-year limitations period—Harrington drafted an
agreement for Slaey's approval and signature. This agreement provided that Slaey agreed not to
raise a statute of limitations defense "in any legal proceeding that relates to fimds borrowed" by
' Section 8.3A-118 of the Virginia Code prescribes a six-year statute of limitations fornegotiable
instruments like the 2002 Note. See Va. Code § 8.3A-118(a) (providing that "an action to enforce
the obligation of a party to pay a note payable at a definite time must be commenced within six
years afterthe duedatestated in the note or, if a duedate is accelerated, within six years after the
accelerated due date"). Given that the 2002 Note had an express maturity date of August 10,
2002, the six-year statuteof limitations for legal enforcement of the 2002 Note expired on August
10,2008.
Slaey from Harrington between 2002 and 2008. This written agreement—hereinafter referred to
as the 2008 SOL Waiver—specifically provided, in its entirety, as follows:
AGREEMENT
For Ten Dollars ($10.00) cash in hand paid, receipt of which is
hereby acknowledged by the undersigned, and for other good and
valuable consideration, the undersigned agrees that she will not
raise the defense of the statute of limitations in any legal proceeding
that relates tofiinds borrowed by either DeNese Slaey orSIM^ from
P.H. Harrington, Jr. Esquire and/or P.H. Harrington, Jr. pension
plan from January 1,2002 through January 1,2008.
Signed this 7th day of August, 2008.
The six-year loan period covered by the 2008 SOL Waiver—^January 1, 2002 to January 1,
2008—clearly includes the $235,000 loan extended to Slaey on July 10,2002, that resulted in the
contemporaneous 2002 Note. The record also clearly reflects that Slaey signed the 2008 SOL
Waiverpresented to her by Harrington, and Harrington, in turn, signed the 2008 SOL Waiveras a
witness.
Nearly five years later, on February 4,2013, Slaey initiated bankruptcy proceedings in the
EasternDistrictofVirginiaby filinga petition for bankruptcy pursuant to Chapter 11 ofthe United
States Bankruptcy Code.
Harrington, by counsel, then filed a creditor's claim in Slaey's
bankruptcy proceeding on September 4, 2013. The standard proofof claim form submitted by
Harrington identified the basis of the claim as "Money Loaned and Unjust Enrichment," and the
claim was in the total amount of $523,706.38. This total amount included, inter alia, $235,000
for the entire principalamount ofthe 2002 Note, as well as intereston the 2002 Note fromJuly 10,
^ SIM is a government contracting company that appears to have been owned and operated by
Slaey during periods relevant to this action.
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2002, to February 4,2013.^
In the course of the bankruptcy proceedings, Slaey, by counsel, objected to Harrington's
claim on multiple grounds.
With respect to the 2002 Note, in particular, Slaey raised four
objections, namely (i) that Harrington's claim was barred by the statute of limitations, (ii) that
Slaey had not executed the 2002 Note, (iii) that the majority of the 2002 Note had already been
repaid to Harrington, and (iv) that Slaey was not personally liable on the 2002 Note. Slaey also
challenged the validity of the 2008 SOL Waiver, arguing that it could not operate to save
Harrington's time-barred claim because it did not meet the statutory requirements of a valid
written waiver of the statute of limitations pursuant to Virginia Code § 8.01-232, which is the
Virginia statute that limits and defines the circumstances under which agreements not to assert the
statute of limitations can be enforced.
On March 20,2014, the Bankruptcy Court held an evidentiary hearing on Slaey's objection
to Harrington's claim. Harrington and Slaeywere the only two witnesses. At the conclusion of
the hearing, the Bankruptcy Court made certain preliminary factual determinations, including (i)
that Slaey, rather than her company, SIM, personally incurred the $235,000 debt covered by the
2002 Note, (ii) that Slaey had not made any payments on the 2002 Note, and (iii) that Slaey and
Harrington hadjointly executed the 2008 SOL Waiverpriorto expiration of the six-year statute of
limitations applicable to negotiable instruments in Virginia.
The Bankruptcy Court also
concluded that failure to enforce the 2008 SOL Waiver would "operate as a fraud" on Harrington
^ Harrington's claim against Slaey filed inthe bankruptcy court also included additional amounts
not pertinent to the instant appeal. It is worth noting, however, that the materials submitted in
support of Harrington's claim reflect that the July 10, 2002 loan at issue here was not the only
instance in which Harrington loaned significant sums of money to Slaey and/or Slaey's company.
within the meaning of Virginia Code § 8.01-232 given that Harrington detrimentally relied on the
2008 SOL Waiver in not filing a lawsuit against Slaey based on the 2002 Note within the six-year
limitations period. In other words, the Bankruptcy Court held that the 2008 SOL Waiver was
valid and enforceable in these circumstances, and that expiration of the six-year statute of
limitations did not preclude Harrington's claim against Slaey's bankruptcy estate. In the end,
therefore, by Order entered May 14, 2014, the Bankruptcy Court allowed Harrington's claim
against Slaey on the 2002 Note (with some minor adjustments not pertinent to the instant appeal)
in the total amount of $234,420,67. See In re: Mary D. Slaey, Case No. 13-10541-ROM (Bankr.
E.D. Va. May 14,2014) (Order).
On May 28, 2014—two weeks after the Bankruptcy Court rendered its decision allowing
Harrington's claim—Slaey filed a motion to reconsider based on what she claimed was "newly
discovered evidence" that Harrington had already been repaid on the 2002 Note. Harrington filed
a prompt written objection to Slaey's motion to reconsider, and the Bankruptcy Court ultimately
denied the motion by Order dated July 15, 2014. See In re: Mary D. Slaey, Case No.
13-10541 -ROM (Bankr. E.D. Va. July 15,2014) (Order). Slaey then filed the instant appeal with
this Court pursuant to 28 U.S.C. § 158.'*
In the appeal, Slaey initially raised two distinct arguments, namely (i) that the Bankruptcy
Court erred in concluding that the 2008 SOL Waiver was valid and enforceable under Virginia
Code § 8.01-232, thereby allowing Harrington's time-barred claim on the 2002Note, and (ii) that
the Bankruptcy Court erred in denying Slaey's motion for reconsideration based on alleged newly
'' That statute provides, in pertinent part, that "[t]he district courts of the United States shall have
jurisdiction to hear appeals . . . from final judgments, orders, and decrees [of the bankruptcy
court]." 28U.S.C.§ 158(a)(1).
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discoveredevidence. Not surprisingly, Slaey, by counsel, later withdrew the argument pertaining
to newly discovered evidence in the course of these appeal proceedings. See Tr. of 12/12/14
Hearing (where appellant's counsel states that "on the new evidence issue ... I don't want you to
waste your time on it. I am prepared to withdraw that issue and focus only on the Statute of
Limitations issue"). Thus, the sole remaining issue on appeal is whether the Bankruptcy Court
erred in allowing Harrington's otherwise time-barred claim on the 2002 Note in light of the 2008
SOL Waiver. In other words, the precise question presented here is whether the Bankruptcy
Court correctly concluded that the 2008 SOL Waiver is valid and enforceable under Virginia Code
§ 8.01-232 on the ground that failure to enforce the 2008 SOL Waiver would "operate as a fraud"
on Harrington within the meaning of that statute. See Va. Code § 8.01-232(A) (providing that
"[w]henever the failure to enforce a promise, written or unwritten, not to plead the statute of
limitations would operate as a fraud on the promisee, the promisor shall be estopped to plead the
statute").
II.
The standard of review applicable to a bankruptcy appeal filed with a district court is the
same standardthat is applied by a court of appeals reviewing a district court proceeding. See 28
U.S.C. § 158(c)(2) (providing that "[a]n appeal under subsections (a) and (b) of this section shall
be taken in the same manner as appeals in civil proceedings generally are taken to the courts of
appeals from the district courts and in the time provided by Rule 8002 of the Bankruptcy Rules").
Thus, a district court reviews the bankruptcy court's factual findings for clear error and its legal
conclusions de novo. See National Heritage Found., Inc. v. Highbourne Found., 760 F.3d 344,
347 (4"' Cir. 2014); SG Homes Associates, LP v. Marinucci, 718 F.3d 327, 334 (4"' Cir. 2013).
Moreover, "[m]ixed questions of law and fact are also reviewed de novo." In re J.A. Jones, Inc.,
492 F.3d 242,249 (4"* Cir. 2007), The issue presented in the instant appeal is amixed question of
law and fact that must be reviewed de novo.
III.
Analysis properly begins with the plain language of the applicable Virginia statute. As
already noted, Va. Code § 8.01-232 governs the validity and legal effect of written and unwritten
promises not to plead the statute of limitations in Virginia. That statute—entitled "Effect of
promises not to plead statute"—provides, in pertinent part, as follows:
Whenever the failure to enforce a promise, written or unwritten, not
to plead the statute of limitations would operate as a fraud on the
promisee, the promisor shall be estopped to plead the statute. In all
other cases, an unwritten promise not to plead the statute shall be
void, and a written promise not to plead the statute shall be valid
when (i) it is made to avoid or defer litigation pending settlement of
any case, (ii) it is not made contemporaneously with any other
contract, and (iii) it is made for an additional term not longer than
the applicable limitations period.
Va. Code § 8.01-232(A).
Thus, carefully read, the governing language of Va. Code § 8.01-232(A) may be viewed as
consisting of essentially three parts, with two of those parts setting forth general rules regarding
the validity and enforceability of (i) unwritten and (ii) written promises not to plead the statute of
limitations, and the third part setting forth (iii) a limited exception to those general rules.
Specifically, Part I provides that, with one limited exception set forth in Part III, unwritten
promises not to plead the statute of limitations are generally void and unenforceable in Virginia.
Part II of the statute provides that, again, with one limited exception set forth in Part III, a written
promise not to plead the statute is generally valid and enforceable only if three specified
requirements are met, namely, ifthe written promise (i) is made to avoid or defer litigation pending
settlement of a case, (ii) is not made contemporaneously with any other contract, ^
(iii) is made
for an additional term not longer than the applicable limitations period. Va. Code § 8.01-232(A),
Finally, Part III of the statute—^and the part at issue in the instant appeal—^provides a limited
exception to the general rules set forth in Parts I and II, That limited exception specifically
provides that "[w]henever the failure to enforce a promise, written or unwritten, not to plead the
statute of limitations would operate as a fraud on the promisee, the promisor shall be estopped to
plead the statute," Va. Code § 8.01-232(A).
Here, the parties do not dispute that the facts of this case do not fall within Parts I or II of
the statute. Specifically, not onlyis there no oral agreement involved in this case, but theparties'
written agreement—^the 2008 SOL Waiver—clearly does not meet all three requirements of a valid
and enforceable written promise not to plead the statute oflimitations.® Thus, the sole question
presented here is whether failure to enforce the 2008 SOL Waiver would "operate as a fi-aud" on
Harrington in this instance, so as to place this case within the limited exception set forth in Part III
of § 8.01-232(A).
Thus, to resolve this appeal, it is necessary to determine precisely what is meant by the
phrase "operate as a fraud," as used in the limited exception set forth in Part III of § 8.01-232(A).
Regrettably, the statute provides no additional guidance in this regard. And given the dearth of
®To besure, nothing intherecord supports theconclusion thatthe2008 SOL Waiver was made to
defer litigationpending settlement ofany case, asrequired by Part IIof § 8.01 -232(A). Nor was it
made for an additional term not exceeding the applicable six-year limitations period. Id. In fact,
the 2008 SOL Waiver did not include any time limitation at all, and instead purports to be an
indefinite promise on Slaey's part not to plead the statute of limitations with respect to any loans
extended to her by Harrington from January 1,2002 through January 1,2008. Such an indefinite
promise, of course, does not fit within the statutory framework for valid written promises not to
plead the statute of limitations.
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applicable case law, it is also apparent that this statutory exception is rarely addressed or cited in
either the state or federal court systems. In fact, only two published cases have addressed the
operative statutory language at issue here. Both cases were decided more than 75 years ago in the
context of the previous version of the Virginia statute, which was then codified at Va. Code §
5821Specifically, the Court ofAppeals for the Fourth Circuit was the first to address the issue in
Tucker v. Owen, 94 F.2d 49(4*'' Cir. 1938), and the Supreme Court ofVirginia's decision inSoble
V. Herman, 9 S.E.2d 459 (Va. 1940) followed shortly thereafter.
In concluding that failure to enforce the 2008 SOL Waiver would "operate as a fraud" on
Harrington in this instance, the Bankruptcy Court relied exclusively on the Fourth Circuit's 1938
decision in Tucker.
There, the Fourth Circuit addressed the question whether an unwritten
promisenot to pleadthe statuteoflimitations to a claim for a debt, whichpromisewasmade before
the statute of limitations had expired and was relied on by the plaintiffin that case, was enforceable
by reason of waiver or estoppel after expiration of the limitations period. And, as in the instant
^ Like the current version of Va. Code § 8.01-232(A), the earlier version contained a provision
that estopped a promisor from raising a statute of limitations defense "[wjhenever the failure to
enforce a promise, written or unwritten, not to plead the statute of limitations would operate a
fi-aud on the promisee." Tucker v. Owen, 94 F.2d 49, 50 (4*'' Cir. 1938). The former version of
Va. Code § 8.01-232(A) provided, in ftill, as follows:
Promise not to plead the statute.—Wheneverthe failure to enforce a
promise, written or unwritten, not to plead the statute of limitations
would operate a fraud on the promisee, the promisor shall be
estopped to plead the statute. In all other cases an unwritten
promise not to plead the statute shall be void, and a written promise
not to plead it shall have the effect of a promise to pay the debt or
discharge the liability.
Tucker, 94 F.2d at 50; see also Soble v. Herman, et ai, 9 S.E.2d 459, 461 (Va. 1940) (quoting
former version of the statute). Thus, the most notable distinction between the two versions ofthe
statute is in the addition ofthe three enumerated requirements that written waivers must now meet
to be valid and enforceable under § 8.01-232(A).
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case, the analysis in Tucker focused sharply on whether it would "operate a fraud" on the plaintiff
not toenforce defendant's oral promise not to plead the statute oflimitations/
The district court in Tucker had determined that the circumstances presented there did not
fall within the statute's limited fraud exception because "mere proof that a promise has been made
and broken is not sufficient to establish fraud unless it is shown that when the promise was made
the promisor then had the intention not to fiilfill it." Tucker, 94 F.2d at 50-51 (emphasis added).
In other words, "[f]inding no evidence that the defendant had such an intention when the promise
was made, the [district court] judge concluded that no fraud had been proved and that the plea of
limitations should be upheld." Id. at 51.
A panel majority of the Fourth Circuit, however, disagreed with the district court's
decision in Tucker, and instead interpreted the word "fraud," as used in the Virginia statute, more
broadly.® In doing so, the Fourth Circuit noted that the Supreme Court of Virginia had, at the
time, not yet spoken on the issue and, "in the absence of a pronouncement by the courts of
Virginia," thedistrict court'sstrict interpretation of the word "fraud," as used in thestatute, didnot
appear "to be in harmony with the purpose of the act." Id. In this regard, the Fourth Circuit
specifically noted the following:
The broad intention [of the statute] is manifest to protect a creditor
who has relied on the promise of his debtor and to make it
impossible for the debtor to secure immunity from an honest claim
' There is no discernible difference in meaning or effectbetween thecurrentversion of Va. Code §
8.01-232(A), which states "operate as a fraud," and the predecessor statute which used the phrase
"operate a fraud."
® The Tucker majority opinion was authored by Circuit Judge Soper and joined in by District
Judge McClintic, who was then sitting with the Fourth Circuit by designation. Circuit Judge
Northcott wrote a dissenting opinion in Tucker.
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through the medium of his broken word. Such conduct may not be
fraud in the sense ofa false pretense, that is, a false representation of
an existing fact, but if successful, it makes possible a gross injustice
and lacks the elements of honesty and fair dealing which are the
antitheses of fraud. Indeed, using the expression in an intelligent
and proper sense, such conduct would, in the words of the statute,
'operate a fraud' and would be regarded as an act of bad faith.
Id. The Fourth Circuit further concluded that in the absence of any controlling Virginia case law
interpreting the operative language of the statute, there was "no compulsion ... to restrict the
scopeof the statute by a narrowinterpretation of the word'fraud.'" Id. at 52. Instead, the Fourth
Circuit found "sound basis for the conclusion that the [Virginia] Legislature intended to stigmatize
as fraudulent the failure of a debtor to keep a promise of this sort upon which his creditor has
relied, and to estop the debtor from pleading the defense when at his request the suit has been
delayed." MatSS.*^
It should be noted that had Tucker been the only pertinent judicial opinion available at the
time the Bankruptcy Court rendered its decision in this case, its conclusion that the failure to
enforce the 2008 SOL Waiver would "operate as a fraud" on Harrington within the meaning of §
8.01 -232(A) would have beenconsistent withapplicable precedent. Indeed, it appears quiteclear
on this record that Harrington detrimentally relied on the 2008 SOL Waiver in not filing a suit
against Slaey within the statute of limitations period. But, as it happens, the Supreme Court of
'
This, in essence, is the general legal standard applicable to a claim for promissory estoppel or
detrimental reliance, rather than a typical fraud claim. See. e.g., Mongold v. Woods, 677 S.E.2d
288, 292 (Va. 2009) (stating that "[w]here it is available, the cause of action based on promissory
estoppel consists of four elements, recently defined as: '(1) a promise, (2) which the promisor
should reasonably expect to cause action by the promisee, (3) which does cause such action, and
(4) which should be enforced to prevent injustice to the promisee'") (quoting Bamhill v. Vemman,
524 F.3d 458,475-76 (4'" Cir. 2008)).
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Virginia subsequently addressed the issue two years after Tucker, in Soble v. Herman, 9 S.E.2d
459 (Va. 1940). And significantly, the Soble decision makes unmistakably clear that the Fourth
Circuit's broad interpretation of the word "fraud" in Tucker is not the view adopted by the
Supreme Court of Virginia.
Like Tucker, Soble was decided in the context ofVa. Code § 5821—^the previous version of
Va. Code § 8.01-232(A). The facts ofSoble are relatively straightforward and can be summarized
as follows: A Maryland citizen named Benjamin Hermandied in 1931 and his widow was named
the sole beneficiary and executrix of his estate. At the time of his death, Mr. Herman was
indebted to the plaintiff, J. Soble, in the sum of $2,500, as evidenced by a note due 90 days from
July 14, 1931. Soble did not file suit on the note within the applicable five-year statute of
limitations in light of an oral statement made by Mr. Herman's widow that "she would never see
him [Soble] lose anything and would never plead the statute of limitations against said note, and
that she would pay [the note]." Soble, 9 S.E.2d at 461. Soble eventually filed suit against the
widow's estate after she, too, died before the note had been satisfied.
On these facts, the question presented in Soble was, as the Supreme Court of Virginia put
it, "whetheran oral promise not to pleadthe statuteof limitations, made by the executrix and sole
beneficiary of an estate, [wa]s sufficient to remove the bar of the statute in a suit filed by the
creditor to subject [decedent's] real estate ... to the payment of a debt due by decedent." Id.
Soble, the creditor, argued in that case that the failure to enforce the widow's oral promise not to
assert the statute of limitations would "operate a fraud" on Soble within the meaning ofVa. Code §
5821. Soble thus argued that his claim on the note should be permitted to proceed despite
expiration of the applicable limitations period.
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Significantly, the Supreme Court of Virginia flatly rejected Soble's argument in this
regard. In doing so, the court relied on the well-settled principle that "[f]raud must relate to a
present or a pre-existing fact, and cannot ordinarily be predicated on unfulfilled promises or
statements as to future events." Soble, 9 S.E.2d at 464. In other words, the court specifically
held that the word "'fraud,'—as used in the phrase 'will operate a fraud upon the
promisee'—'must relate to a present or a pre-existing fact' and cannot be established by allegation
or proof of a non-fulfilled, naked, oral promise." Id. at 464. This sensible conclusion is
consistent with the notion that "a mere promise to perform an act in the future is not, in a legal
sense, a representation, and a failure to perform it does not change its character." Id. Indeed,
"the very nature of a promise to do something in the future is such that its truth or falsity, as a
general rule, cannot be determined at the time it is made." Id.
There is, however, a well-established exception to this general rule "where an action for
fi-aud anddeceit is 'predicated on promises which aremade with apresent intention notto perform
The Supreme Court of Virginia acknowledged the Fourth Circuit's earlier decision in Tucker,
specifically noting as follows:
The views stated herein are believed to be sound, notwithstanding
the contrary views ably expressed in the majority opinion of the
Circuit Court of Appeals for the Fourth Circuit in Tucl^r v. Owen,
94 F.(2d) 49. However, the strength of that case, as an authority to
be followed, is weakened by the strong dissenting opinion of Judge
Northcott and the well-stated opinion ofthe district judge, Robert N.
Pollard, both of whose conclusions are in accord with those
expressed here.
Soble, 9 S.E. 2d at 465. Here, the Bankruptcy Courtdid not address or mention theSoble decision
in its ruling, and instead relied exclusively on the Fourth Circuit's earlier decision in Tucker. Of
course, it is the Supreme Court of Virginia that has the final sayon the correct interpretation of a
Virginia statute.
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them, or on promises made without any intention to perform them.'" Patrick v. Summers^ 369
S.E.2d 162, 164 (Va. 1988) (citing Lloyd v. Smith, 142 S.E.2d 363, 365 (Va. 1928)) (emphasis
added). In that circumstance, "if a defendant makes a promise that, when made, he has no
intention of performing, that promise is considered a misrepresentation ofpresent fact and may
form the basis for a claim of actual fraud." Supervalu, Inc. v. Johnson, 666 S.E.2d 335,342 (Va.
2008) (citations omitted) (emphasis added). Thus, in cases falling within this exception to the
general rule, "[t]he gist of fraud ... is not the breach of the agreement to perform, but the
fraudulent intent" present in the promisor's mind at the time the promise is made. Patrick, 369
S.E.2d at 164.
And, as with all claims of fraud and deceit, such fraudulent intent must be
established by clear and convincing evidence. See id. (concludingthat "[wjhile the evidence may
be sufficient to raise doubts concerning the defendant's intention when the time came for
performance of his promise . . ., it is insufficient as a matter of law to show he had the intent to
defraud at the time he made thepromise,"" and such evidence was thus "inadequate to qualify as the
clear, cogent, and convincing proofrequired to establish an action for fraud and deceit") (emphasis
added).
Here, the record discloses no evidence, let alone clear and convincing evidence, that Slaey
made any misrepresentation of present fact to Harrington at the time she signed the 2008 SOL
Waiver. Indeed, a review of Harrington's testimony from the underlyingbankruptcy proceedings
confirms just the opposite, as illustrated by the following exchange between Harrington and
Slaey's counsel:
Q. And at the time of the waiver of the statute of limitations, did
Ms. Slaey make any representations to you that caused you to
proceed with the waiver?
A, No, no. She came on in to sign it. And we just met, and she
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signed it, and that was it, .. You know, she just signed it. And I
said thank you, now we can get on with our lives.
Q. So there was no - there was [sic] no statements that you relied
on? She just - you gave it to her, she signed it?
A.
Yeah.
Q. That was that.
A.
Yeah.
Tr. of 3/20/14 Bankr. Ct. Hearing, p. 129-30.
Simply put, therefore, the circumstances presented here involve merely an unfulfilled
written promise on Slaey's part not to asserta statuteof limitations defense in a future suit brought
by Harrington. Soble, 9 S.E.2d at 464. Such a naked, imlulfilled promise is precisely what the
Soble court made clear would not satisfy the limited fraud exception set forth in Va. Code §
8.01-232(A). Indeed, in the absence any clear and convincing evidence that Slaey made a
misrepresentation of present fact at the time she signed the 2008 SOL Waiver, which the record
confirms she did not, Harrington's argument that failure to enforce the 2008 SOL Waiver would
"operate as a fraud" within the meaning of the Virginia statute must be rejected and the
Bankruptcy Court's allowance ofHarrington's time-barred claim must be reversed."
IV.
In sum, therefore, the 2008 SOL Waiver does not meet the statutory requirements for a
valid written promise not to plead the statute of limitations in Virginia, and failure to enforce the
2008 SOL Waiver in this instance would not "operate as a fraud" on Harrington within the
meaning of Va. Code § 8.01-232(A). Given this, Harrington's claim based on the 2002 Note is
'' Were Harrington's argument to beaccepted, virtually all situations where an individual makes
a written or oral promise not to raise a statute of limitations defense, and then later asserts the
defense contrary to the earlier promise, would arguably fall within the limited statutory fraud
exception. This, of course, was not contemplated by the General Assembly in enactingVa. Code
§ 8.01-232(A), as was confirmedby the Supreme Court of Virginiain Soble.
15
clearly barred by the six-year statute of limitations applicable to negotiable instruments in
Virginia, and the Bankruptcy Court's decision allowing Harrington's claim in Slaey's bankruptcy
proceeding must be reversed.
An appropriate orderwill issue.
Alexandria, Virginia
September 1,2015
T.S. Ellis, m
United States DiJ trict Judge
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