JTH Tax, Inc. v. Grabert

Filing 20

AMENDED OPINION AND ORDER (Nunc pro tunc December 30, 2013): The instant "Amended Opinion and Order" replaces the Opinion and Order entered in this case on December 30, 2013, ECF No. 15. The final relief ordered with respect to contractual damages and attorney's fees remains unchanged from the relief ordered in the Court's prior Opinion and Order. The Judgment entered on December 31, 2013, ECF No. 16, remains in full effect. (See Order and Footnotes for Specifics). re 15 OPINION AND ORDER. Copy mailed to Pro se Defendant Grabert and copy provided to counsel for Liberty as directed on 3/26/2014. Signed by District Judge Mark S. Davis and filed on 3/26/2014. (bgra)

FILED
UNITED

STATES

EASTERN

DISTRICT

DISTRICT

OF

COURT

VIRGINIA

MAR 2 6 2014

Norfolk Division

JTH TAX,

INC. ,

CLERK, US DISTRICT COURT
NORFOLK. VA

D/B/A LIBERTY TAX SERVICE,
Plaintiff,
Civil

v.

No.:

2:13cv47

TRISHA GRABERT,
Defendant.

AMENDED OPINION AND ORDER1

This matter is before the Court on an unopposed Motion for
Default

Judgment

Liberty

Tax

("Grabert"

filed

Service
or

by

Plaintiff,

("Liberty").

"Defendant")

has

JTH

Tax,

Defendant
not

filed

Inc.,

Trisha
a

d/b/a
Grabert

response

in

opposition to the instant motion, and the time for doing so has
long since passed.
Motion

for

WITHOLDS

For the reasons

Default Judgment

ruling,

in

set forth below,

is GRANTED,

part,

until

an

in part,

Liberty's

and the Court

evidentiary

hearing

is

conducted.

The

instant

Order entered

final

"Amended Opinion
in

relief

attorney's

this

case

ordered

v/ith

modify

judgments,

its
at

warranted.").

remains

respect

unchanged

replaces

30,

to

interlocutory
any

time

from

2013.

the Opinion
ECF

contractual
the

No.

15.

damages

judgments,

prior

to

final

relief

ordered

including

partial

and
The

and

the
Court's prior Opinion and Order.
Accordingly, the Judgment entered on
December 31, 2013, ECF No. 16, remains in full effect.
The only
substantive changes contained herein consist of revisions
to the
Court's interlocutory defamation analysis contained in Part III.C.
See American Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514-15
(4th Cir. 2003) ("[A] district court retains the power to reconsider

and

fees

and Order"

on December

judgment

when

in

summary
such

is

I.

Liberty
promoting,

FACTUAL AND PROCEDURAL BACKGROUND

is

and

engaged

in

licensing a

the

system of

throughout the United States.

2008

and

2012,

Grabert

business

Compl.

signed

four

advertising,

tax preparation
3

6, ECF No.

franchise

Liberty for four separate "Liberty Tax"
executed four promissory notes

of

1.

centers
Between

agreements

with

franchise locations and

payable

to Liberty.

Id. $ 12.

Each of the franchise agreements expressly sets forth Grabert's

contractual
amounts

post-termination

due

to

Liberty,

duties

ceasing

to

including:
associate

paying
herself

all
with

Liberty, transferring all telephone numbers, customer files, and
operations manuals to Liberty, and adhering to limited covenants
not to compete.

Aff.

On April 20,

of Robert Oliver, Exs. 2-5, ECF No. 6.

2012, Liberty terminated all four of Grabert's

franchise agreements due to her failure to submit contractually
required reports
Compl.

9[

13.

and failure
The

to pay monies

promissory

notes

owed to Liberty.

associated

with

the

terminated franchises expressly provide that failure to timely
pay the amounts due constitutes a default and authorizes Liberty
to accelerate the entire outstanding debt.

Exs. 1-4, ECF No. 4.

of all

attorney's

Aff. of Danilo Jose,

Each promissory note also requires payment

fees,

costs,

incur in enforcing the notes.

Id.

or expenses

that

Liberty may

On

January

28,

2013,

Liberty

filed

a

Court against Grabert alleging breach of
breach
Compl.

of
ff

equitable

the

franchise

6-12.

agreements,

complaint

this

the promissory notes,

and

defamation

per

se.

Liberty's complaint seeks monetary damages and

relief

in

the

form

of

a

permanent

Liberty's claimed damages result from Grabert's

timely

in

payments,

refusal

to

abide

by

injunction.

failure to make

her

post-termination

obligations, and defamatory postings on the internet.

On April
of

the

8,

summons

2013,
and

Grabert was properly served with a copy

complaint.

Summons,

ECF

No.

Grabert failed to file a responsive pleading.
Liberty

requested

Entry

default on May 7, 2013.

the

instant

motion

of

Default,

ECF No. 10.

for

default

and

Liberty,

Grabert's response has long since passed.

However,

On May 6,

the

judgment,

8.

Clerk

entered

thereafter,

and

the

2013,

time

filed

for

Liberty's motion for

default judgment is therefore ripe for review.
II.

STANDARD OF REVIEW

"A court confronted with a motion

required

to exercise

sound

judicial

for default

discretion

in

judgment is

determining

whether the judgment should be entered, and the moving party is
not

entitled to default

April Music,
2009).

When

well-pleaded

judgment as a matter of right."

Inc. v. White,
a

defendant

allegations

618 F. Supp.
defaults

of

fact."

he

2d 497,

admits

Ryan

v.

505

"the

EMI

(E.D. Va.

plaintiff's

Homecomings

Fin.

Network,

253

F.3d 778,

780

(4th Cir.

marks and citations omitted);

In

determining

allegations of

whether
fact,

a

2001)

(internal quotation

see also Fed.

plaintiff

R. Civ.

has

P. 8(b)(6).

presented

well-pled

the Supreme Court of the United States has

interpreted the Federal

Rules of Civil

Procedure as requiring

that a complaint "contain sufficient factual matter, accepted as
true,

to

face.'"
Bell

'state

a

claim

Ashcroft v.

Atl.

Corp.

Accordingly,
allegations

in

Iqbal,

v.

in

to

that

556 U.S.

Twombly,

the
the

relief

662,

550

default

complaint

is

678

U.S.

544,

(2009)

on

its

(quoting

deemed

570

(2007)).

context,

judgment
are

plausible

factual

admitted

and

the

"appropriate inquiry is whether or not the face of the pleadings
supports the default judgment and the causes of action therein."

Anderson v. Found,
Indians,

187

opinion)

F.3d

for Advancement,
628

(4th

Educ.

Cir.

1999)

(citing Nishimatsu Constr. Co.

515 F.2d 1200,

1206

(5th Cir.

award of:

instant

(1)

all

(unpublished

table

v. Houston Nat'l Bank,

1975)).

III.

Liberty's

& Employment of Am.

motion

DISCUSSION

for

default

judgment

seeks

an

amounts due on the promissory notes and the

attorney's fees incurred in conjunction with enforcement of such

notes;

(2)

a

permanent

termination

obligations

compensatory

damages,

of

injunction
the

punitive

to

franchise
damages,

enforce

the

agreements;
and

a

post-

and

(3)

permanent

injunction based on Defendant's
discussed

below,

the

default judgment as
withholds

Court:

to

judgment as

defamation

(1)

grants

for

the promissory notes;

(2)

injunctive relief claim;

Liberty's

Liberty's

As

motion

and

the breach of
to

of Liberty.2

(3) grants Liberty's motion for default judgment as to liability
on

the defamation claim,

but withholds ruling on the amount of

defamation damages.
A. Breach of Promissory Notes
1. Outstanding Balance on the Notes

First,

Liberty asserts a claim against Grabert based on the

four unpaid promissory notes, seeking damages
amount of $170,814.77.

Pi's Mem.

J.

ECF No. 12; Aff.

("Pi's Mem.")

at 3-4,

in Supp.

As set forth in Liberty's complaint,

into

four

enforceable

associated promissory

Under Virginia law,

written
notes.

a

of Mot.

for Default

of Danilo Jose,

Ex. 5.

Liberty and Grabert entered

franchise
Aff.

in the aggregate

of

agreements

Danilo

Jose,

and

four

Exs.

1-4.

breach of contract occurs if a party

"without legal excuse fails to perform an obligation in a timely

manner."

Va. Code Ann. § 59.1-507.1(a).3

2 Liberty requests $40,000

Assuming the truth of

in compensatory damages

for the claimed

defamation, which represents an amount "equal to the loss of one new
franchise sale."
Pi's Mem. in Supp. of Mot. for Default J. at 8, ECF
No. 12.
As for punitive damages, Liberty requests $80,000, which is
"equal to the loss of two unsold franchises."

Id.

at 9.

3 Both the franchise agreements and the notes expressly provide that
the

contractual

terms

are

to

be construed and enforced according

to

the facts stated in the complaint,

the Court

finds

that Grabert

has materially breached the

franchise agreements and associated

promissory notes

to make

result of

failing

such breaches,

contractual

Liberty

by

right

has

themselves,

to

Liberty has

accelerate

presented

scheduled payments.

the

Court

As

a

appropriately invoked its

the

outstanding

with

the

balances.

promissory

notes

as well as affidavits setting forth the outstanding

balances on such notes, and there has been no challenge to the
enforceability or validity of the notes.

reveal

an

outstanding

balance

of

Liberty's submissions

$170,814.77.

Accordingly,

Liberty's motion for default judgment is GRANTED as to the claim

asserting a breach of the promissory notes,

and judgment

is

entered in Liberty's favor in the amount of $170,814.77.
2. Attorney's Fees

In addition to seeking the balance due on the promissory
notes,

Liberty

seeks

enforce such notes.

attorney's
Pi's

Mem.

at

fees

incurred

4-5.

in

In each of

order
the

to
four

promissory notes signed by Grabert, there is a provision stating
"[t]he undersigned agrees to pay all attorneys'

fees and other

costs and expenses that Liberty may incur in connection with the

collection or enforcement of this Note."
Exs.

of Danilo Jose,

1-4.

Virginia law.
Exs.

Aff.

1-4.

Aff. of Robert Oliver, Exs.

2-5; Aff. of Danilo Jose,

Despite
attorney's

Grabert's

fee

award,

failure
"the

to

Court

review the fee award request

is

appear

516,

525

attorney's
figure"

(E.D.

fees

which

Va.

award,
is

an

obligated

to

independently for reasonableness."

2011) .
the

contest

nevertheless

Kennedy v. A Touch of Patience Shared Hous.,
2d

to

To

Court

calculated

by

Inc.,

calculate

must

779 F.

the

determine

multiplying

appropriate
a

"the

reasonable hours expended times a reasonable rate."

Equifax Info.

Servs.,

To

the

determine

Court's

discretion

LLC,

560

"reasonable"

should

be

F.3d 235,

243

number

hours

guided

of

by

the

Supp.

"lodestar
number

of

Robinson v.

(4th Cir.
and

2009).

rate,

following

the

twelve

factors:

(1) the time and labor expended; (2) the novelty and
difficulty of the questions raised;
(3)
the skill
required
to
properly
perform
the
legal
services
rendered;
(4)
the attorney's opportunity costs in
pressing the instant litigation; (5) the customary fee
for like work; (6) the attorney's expectations at the
outset of the litigation;
(7) the time limitations
imposed by the client or circumstances; (8) the amount
in controversy and the results obtained;
(9)
the

experience, reputation and ability of the attorney;
(10) the undesirability of the case within the legal
community in which the suit arose;

length
of
the
professional
attorney and client; and (12)

(11)

the nature and

relationship
between
attorneys' fees awards

in similar cases.

Id. at 243-44
226 n.28

(quoting Barber v. Kimbrell's Inc.,

(4th Cir.

1978)).

"the court need not address

577 F.2d 216,

In determining the lodestar figure,
in detail every single one of these

factors."

Dollar

Associates, LLC,

Tree

Stores,

Inc.

v.

Norcor

Bolingbrook

699 F. Supp. 2d 766, 768 (E.D. Va. 2009).

Here, Liberty is represented by David Lindley,

associate
asserts

acting

that

consisting

as

he

of

lead

spent

counsel

17.7

drafting

in

compensable

Liberty's

assembling associated exhibits,

Aff.

To

Mr.

and

such assertion,

exhibit

this

containing

matter.

Mr.

hours

Mr.

Lindley

this

on

complaint,

matter,

drafting

and
and

of David Lindley, ECF No. 13.
Lindley

detailed

Lindley's

case.

pursuing entry of default,

pursuing default judgment.
support

this

a fifth year

time

submitted an

entries

affidavit

for

also

affidavit

his

sets

work

forth

on

his

credentials in an effort to justify the requested rate of $225
per hour.

Id.

that

number

the

Having reviewed such submission,

of

hours

billed

by

Liberty's

reasonable based on the work performed.
rates

claimed

awards

in

Virginia,
another

the

are

Norfolk

including:
fifth

before

another

Potts,

No.

reasonable

year

and

Division

Further,

consistent
of

the Court finds

the

with

Eastern

counsel

is

the hourly
recent

fee

District

of

(1) a recent fee award of $225 per hour to
associate

judge of

2:09-cv-108

this

(E.D.

representing
Court,

Va.

JTH

Jan.

Liberty

Tax,

11,

recent fee award of $225 per hour to Mr.

Inc.

2013);

in

a

v.

Cochise

and

case

(2)

a

Lindley himself in a

case before

the undersigned

judge,

JTH Tax,

Inc.

v.

Callahan,

No. 2:12-cv-691 (E.D. Va. July 8, 2013)."
Multiplying

the

number

of

reasonable hours

(17.7)

by

the

reasonable rate ($225) would result in a fee award of $3,982.50.
However,

as

discussed herein,

its complaint,
notes

fees.
fees

that

Liberty advances

only one of which

three claims

in

is related to the promissory

include a provision for

the

recovery of

attorney's

Liberty offers no legal basis for recovery of attorney's
for

the

Furthermore,

time

spent

pursuing

the

other

two

claims.

Liberty fails to effectively document the division

of time between tasks for which there is a valid legal basis to
recover fees,

and tasks

Proper

documentation

proper

calculation

of

of

for which no
compensable

a

fee

legal

hours

award,

basis

is

is asserted.

essential

and

to

the

"[ijnadequate

documentation is a basis for reducing or denying a fee award."
E.E.O.C.

v.

Nutri/Sys.,

Inc.,

685 F. Supp.

568,

573

(E.D.

Va.

4 The primary support for the hourly rate charged by Liberty's counsel
is Mr. Lindley's own sworn statement that he inquired with other
attorneys and determined that $225 is a customary fee for a fifth year
Aff. of David Lindley, fl 6.
The Court
associate in this region.
awards the unchallenged requested hourly rate of $225 in this case
because of the Court's own familiarity with recent cases before this
Court and reasonable rates in the area, including the two cases cited
above, both of which included an affidavit from counsel that did not
represent Liberty.
However, Mr. Lindley is reminded that it is his

burden to prove that his fee request falls within prevailing market
rates and that an affidavit from disinterested counsel is typically
submitted to satisfy such burden.
See Project Vote/Voting for
America, Inc. v. Long, 887 F. Supp. 2d 704, 710 (E.D. Va. 2012)
(discussing the types of evidence that is typically submitted to
demonstrate prevailing market rates).

1988)

(quoting Hens ley v. Eckerhart,

see Hensley,
recover

461 U.S.

for hours

461 U.S. 424, 433

(1983));

at 434 (indicating that counsel should not

that

are

"excessive,

redundant,

or otherwise

unnecessary").

Here,

even

though

three

claims

are

asserted,

it

appears

that Liberty may have been able to recover fees for the majority
of

the

17.7

hours

requested

had

Liberty

more

effectively

documented the division of its counsel's time and/or presented
evidence demonstrating that many of the hours claimed (such as

time

spent drafting

would have been

affidavits

and reviewing the contracts)

expended regardless

of

whether

Liberty also

pursued injunctive relief and relief for defamation.
because

matters,

it

is

improper

and in light

division of time,

for

the Court

of the

to

However,

speculate on

lack of such detail

such

regarding

the fee award will be reduced to $1,600,

reduction of approximately sixty percent,

a

based on Liberty's

failure to differentiate the time spent on compensable hours and
non-compensable hours.

Liberty is therefore AWARDED attorney's

fees in the amount of $1,600.
B. Breach of the Franchise Agreements

Liberty's

comply with

second

claim

the contractual

asserts

that

Grabert

post-termination

forth in each of the four franchise agreements.

Based

on

such

failure,

Liberty
10

seeks

a

failed

obligations

to

set

Pi's Mem. at 6.

permanent

injunction

enforcing

the

written

determining whether
Court

must

a permanent

evaluate

demonstrate the

post-termination

whether

obligations.

injunction

Liberty

is

pled

Id.

In

appropriate,

facts

sufficient

the
to

following four factors:

(1) that it has suffered an irreparable injury; (2)
that remedies available at law,
such as monetary
damages, are inadequate to compensate for that injury;
(3) that, considering the balance of hardships between
the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not
be disserved by a permanent injunction.

Legend Night Club v. Miller,
(quoting eBay Inc.

v.

637 F.3d 291,

MercExchange,

297 (4th Cir.

L.L.C.,

547 U.S.

2011)

388,

391

(2006)).

Considering whether

harm,

Liberty

has demonstrated

irreparable

the Court finds that Liberty's complaint and supporting

materials include limited facts,

are somewhat conclusory,

and

therefore are not sufficient to support entry of an injunction.
See Ryan,

253 F.3d at 780

(explaining that while well-pleaded

allegations of fact in a complaint are accepted as true for the
purposes of default

judgment, a party's

failure to defend does

not constitute an admission of conclusions of law).

Similarly,

Liberty's brief in support of default judgment relies on little

more than the citation to prior Liberty cases, heard by other

judges

of

permanent

this

Court,

where

the

injunction based on a

See JTH Tax,

Inc.

v. Lee,

514 F.
11

Court

similar
Supp.

granted
franchise

2d 818,

826

Liberty

a

agreement.
(E.D.

Va.

2007);

*3

JTH Tax,

(E.D.

former

Va.

and

Smith,

No.

2006).

franchisees

subsequent

Liberty,

former

v.

June 23,

Liberty

business

with

Inc.

to

potential

However,

actively

the

resulting

2:06cv76,

in

clients,

at

such prior cases involved

operating

termination

the

2006 WL 1982762,

of

in

competing

their

irreparable
and,

a

loss

the

tax

relationship

of

Smith

Liberty's
case,

the

continued improper use of Liberty's trademarks.
In contrast,

failed

to

here,

turn

over

previous

offices,

manual."

Compl.

conclusion

of

irreparable

harm

Liberty's

customer

and

her

gist

law

and

files,

copy

41-43.

that:

will

complaint states

of

phones

the

Liberty

"Liberty

continue

numbers

Liberty does not

her

"operations

further

offers

suffer

irreparable harm because of [Grabert's] breaches."
Notably,

of

Liberty

suffered

to

that Grabert

damages

damages

the

and

and

Compl. 5 46.

include facts asserting that Grabert

has improperly used any of such retained materials to compete
with Liberty,

nor

does

Liberty reveal

the number of customers

Grabert served at the former franchises, whether the phone lines

remain active or disconnected,

or whether Liberty has reopened

franchises in the locations (or near the locations) of Grabert's
former tax preparation businesses.

Although

the

Court

does

not

question

irreparable harm on the instant facts,

the

potential

for

it is improper for the

Court to award the extraordinary equitable remedy of a permanent
12

injunction

based

irreparable

injury.

130

2743,

S.

Ct.

on

See

Co.

("An

to
v.

the

possibility

Geertson

injunction

is

a

of

Seed Farms,
drastic

and

which should not be granted as a matter of

Because

determination

as

Monsanto

2761 (2010)

extraordinary remedy,

course.").

speculation

remain

facts

relevant

undeveloped,

the

to

Court

the

injunction

concludes

that

an

evidentiary hearing is warranted on this issue pursuant to Fed.
R. Civ.

P.

55(b)(2).

The Court

therefore WITHHOLDS

Liberty's motion seeking entry of default

ruling on

judgment in the form

of a permanent injunction.5
C.

Defamation Per se

Third, Liberty seeks damages for defamation per se based on
Grabert's

posting

of

Whether a statement

defamatory

statements

on

the

internet.

contains or infers

"provably false" facts,

and thus is capable of being defamatory,

or whether it is a non-

actionable "statement[]

of opinion," is a question of law for

the Court.

Hyland v. Raytheon Technical Services Co., 277 Va.

40,

670

46-47,

statement

that

it

challenged

is

S.E.2d

actionable,

constitutes
statements:

746,

750-51

there

are

"defamation
*[1]

(2009).
several

per

impute[]

se,"
the

Moreover,
ways

to

if

a

establish

including
commission

if
of

the
a

5 In light of the limited facts before the Court and the Court's ruling
permitting Liberty an opportunity to submit additional evidence to
support its claim for injunctive relief, the Court does not comment on
the remaining three prongs of the injunction test.
13

criminal offense involving moral turpitude for which a party may
be

convicted;

...

[2]

impute []

an

unfitness

to

perform

the

duties of a job or a lack of integrity in the performance of the
duties;

or

trade."

S.E.2d

889,
its

[3]

prejudice[]

Yeagle v.

136,

138

(1998)

skills

or

or

635

(1981)).

trade,

character

"the

Products

(quoting Fleming,

Div.,

credit,

profession

293,

Moore,

297 n.2,

221

Va.

or
497

884,

To prejudice a plaintiff in

to

carry

must

out

Swengler v.

F.2d 1063,

relate

the

"the

particular

ITT Crop.

1070-71

to

Electro-

(4th Cir.

1993)

as well as individuals,

that cast aspersions

on

can be defamed per se

the target's

"'honesty,

efficiency or its prestige or standing in its field of

business.'"

Id. at 1071

Meredith Corp.,

a

her

221 Va. at 890, 275 S.E.2d at 636).

Corporations,

by statements

v.

statements

required

993

in

255 Va.

(citing Fleming

occupation of the plaintiff.'"
Optical

party

Collegiate Times,

275 S.E.2d 632,
profession

the

plaintiff

(quoting General Products Co., Inc. v.

526 F. Supp.

proves

546, 549-50

defamation

per

se,

(E.D. Va.

1981)).

"Virginia

law

Once

presumes

that the plaintiff suffered actual damage to its reputation and,
therefore,
such

[the plaintiff]

damages."

Id.

does

(citing

not

Fleming,

have

to

221

present

Va.

at

proof

889-90,

of
275

S.E.2d at 636) .

In

addition

to

damages

compensating

a

plaintiff

for

defamation per se, "'punitive damages may be awarded even though
14

actual

damages

Newspaper

S.E.2d

are

Publishing

132,

136

plaintiff must
that

Id.

neither

the

Corp.

found
v.

(1976)).

nor

Burke,

To

(citations

made

the

omitted).

Virginia law to include

216

recover

demonstrate through

defendant

shown.'"

Id.

Va.

(quoting

800,

punitive

805,

224

damages,

a

"clear and convincing proof

statements

"Actual

with

malice"

'actual

is

malice.'"

defined

under

"a statement made with 'knowledge that

it was false or with reckless disregard of whether or not it was
false.'"
136).

Id.

(quoting

Burke,

216

Va.

at

805,

224

S.E.2d

at

"[A] plaintiff is entitled to prove the defendant's state

of mind through circumstantial evidence,

and it cannot be said

that evidence concerning motive or care never bears any relation
to the actual malice inquiry."
v.

Connaughton,

491

U.S.

Harte-Hanks Communications, Inc.

657,

668

(1989)

(internal

citations

omitted).

Applying these principles,
pled

facts

Liberty

in

has

Liberty's

presented

and assuming as true all well-

complaint,

sufficient

the

Court

facts

to

concludes

that

demonstrate

that

portions of Grabert's internet postings constitute defamation
per se.

Grabert's

assertions

(1)

"deceptive";

include

false

factual

that prejudice Liberty in its profession or trade.

Specifically,
that:

defamatory statements

Grabert's
Liberty's
(2)

internet

postings

quarterly

results

Liberty was

engaged in
15

include
were

assertions
"lies"

and

"unlawful actions"

that

interfered

with

Grabert's

success;

(3) Liberty

"encouraged/

persuaded and ordered" its franchisees to falsify their business

records;

(4)

Liberty's system is

"a scam,

a scheme,

a con";

and

(5)

Liberty's CEO "is being investigated for Racketteering [sic]

and

training

a

tax

scheme"

and Liberty

"steal[s]"

franchisees and pays nothing for them.

Ex.

2;

Aff.

statements
Liberty

Pamela

impute

in

Liberty's

of

its

a

Evans

lack

of

profession

honesty,

Ex.

1,

trade,

efficiency,

field of business.

See Compl.

ECF

integrity

or

to

and

prestige,

Therefore,

stores

No.

I 48; Compl.

3-1.6

Liberty,
cast

and

from

These

prejudice

aspersions

standing

in

on

its

in light of Grabert's failure to

appear in this case and defend the accuracy of her statements,

the five statements identified above constitute defamation per
se.

Having
whether

were

Liberty has

made

wrote

found defamation per

the

with

demonstrated

actual

above

malice.

statements

se,

the

that

the

Liberty
"with

Court

the

next

statements

alleges

considers
at

issue

that Grabert

knowledge

that

said

statements are false and for the sole purpose to damage the good

will

and reputation

of

Liberty."

Compl.

f

50.

Liberty,

however, does not rely solely on such conclusory assertion, but
instead

attached

exhibits

to

its

complaint

and

submitted

6 All but one of Grabert's defamatory postings appear on a website
called "Unhappy Franchisee."

See http://www.unhappyfranchisee.com.
16

affidavits

with

additional

postings made by Grabert.

Car

Auto

Racing,

(indicating that

Inc.,

a

exhibits

that

detail

the

online

Cf. Mayfield v. Nat'l Ass'n for Stock

674

F.3d

complaint

369,

377-78

is deficient

in

(4th

Cir.

alleging

2012)

"actual

malice" when it is limited to the conclusory assertion that the

disputed statements were made "malicious[ly]" or "with reckless
disregard as to their veracity").
Based

on

the

complaint

and

affidavits and exhibits thereto,

exhibits

thereto,

and

the

the Court finds that Liberty

has demonstrated, by clear and convincing evidence, that Grabert

acted

with

actual

malice

in

that

she

made

statements with the knowledge that they were

minimum,

the

false or,

with "reckless disregard for the truth."

Va. at 805, 224 S.E.2d at 13 6.
statements

identified

actionable

opinions

above,

regarding

defamatory

Burke,

at a

216

In addition to the defamatory
Grabert

published

Liberty,

as

well

lengthy

as

non-

personal

attacks on Liberty's officers, which taken together, suggest an

intentional and purposeful effort to injure Liberty's reputation
at any cost.

Grabert

Moreover,

acknowledges:

most notably,

"I simply

think

in one internet post,

[Liberty]

incompetant [sic], unresponsive, and indifferent.

for a second that they promote anything illegal.
Maybe if you interpret it that way."
at 4.

corporate is
I don't think

Unethical?

Compl. Ex. 2, ECF No. 1-2

Such post, which is dated after all of the posts found to
17

be

actionable

defamation

Liberty's

contention

alleging

unlawful

information,

in

that

this

Grabert's

conduct,

operating

franchisees

to

falsely

"steal[ing]"

franchisees'

a

Liberty has

their

businesses,

alleged facts

claim for defamation per se,
disputed

statements

were

and

made

supports

defamatory

reporting

"scam"

report

clearly

earlier

false

that such statements were false.

that

case,

a

of

financial

"con,"

business

posts,

ordering

revenue,

and

were made with knowledge

Accordingly,

the Court finds

supporting each element of

its

and further demonstrated that

the

with

actual

malice.

The

Court

therefore GRANTS Liberty's motion for entry of default judgment
on its defamation claim as to liability.

Having determined liability,
claims

for

attempted

defamation

to

prove

that

the Court turns to Liberty's

damages.

Although

Grabert's

Liberty

statements

has

resulted

not

in

the

loss of actual revenue, Liberty has linked its damages request,

and punitive damages request,
franchise.

to the cost of a new Liberty tax

As previously noted,

Liberty is not obligated to

prove actual damages because it has demonstrated defamation per
se.

Swengler,

993 F.2d at 1071 (citing Fleming,

90, 275 S.E.2d at 636).

However,

221 Va. at 889-

in light of the fact that the

Court has already determined that a hearing should be conducted

to address whether Liberty is entitled to a permanent injunction
based on Grabert's breach of the franchise agreements,
18

the Court

finds that the better course is
to

present

oral

elaborate

its

defamation

is

55(b)(2)

argument

theory

appropriate

(authorizing

hearing in

as

the

default

a

to allow Liberty an opportunity

on

this

issue

to

why

an

in

this

district

in

order

award

case.

court

of

See

to

judgment context).

to

further

$120,000

Fed.

R.

conduct
The Court

for

Civ.

a

P.

damages

therefore

GRANTS Liberty's request for a hearing on this issue and DEFERS

ruling on the amount of defamation damages.7
IV.

CONCLUSION

For the reasons discussed above, the Court GRANTS Liberty's

motion for default judgment on the issue of liability as to:
(1) breach of the promissory notes and (2)

Furthermore,

defamation per se.

as to the breach of the promissory notes,

Liberty

has advanced sufficient evidence to support a damages award at
this time.

Accordingly, default Judgment is ENTERED in favor of

Liberty in the following amounts: (1) $170,814.77, the aggregate
outstanding balance owed by Defendant on the four promissory
notes;

and

(2)

$1,600.00

in

attorney's

fees

associated

with

Liberty enforcing such promissory notes.
As to the propriety of entering a permanent injunction, and

as to the damages for defamation,

the Court GRANTS Liberty's

7 The Court notes that Liberty's complaint also seeks an injunction
instructing Grabert to remove her internet postings. However, Liberty
has failed at this time to demonstrate either that any harm that may
have resulted from such postings is "irreparable" or that a monetary
award is inadequate.
19

request
this

for

time

as

(permitting

a

hearing
to

the

such

Court

on

issues

matters.

to

"determine the amount of
matter").

such

See

conduct

damages"

At such hearing,

and WITHHOLDS
Fed.

an
or

R.

Civ.

P.

evidentiary

to

ruling

at

55(b)(2)

hearing

to

"investigate any other

Liberty will be permitted to present

any relevant evidence and argue as to the appropriate resolution
of the outstanding matters.

Liberty's counsel is DIRECTED

to contact

judge's calendar clerk to schedule a hearing.
a hearing date is selected,

the undersigned
Furthermore,

Liberty is INSTRUCTED to:

(1)

once
file

on the public record in this case a "Notice" of such hearing;
and (2) consistent with its obligation as to all filings, mail a
copy of such "Notice" to Defendant Grabert.

The Clerk is DIRECTED to provide a copy of this Opinion and
Order

to counsel

Defendant

Grabert,

for Liberty and
v/ho

is

not

a

to mail

a copy

registered

to pro

e-filer

in

se

this

Court.

IT

IS

SO

ORDERED.

VPJ55

/S/

Mark S.

Davis

United States District Judge
Norfolk., Virginia

March £& . 2014
Nunc pro tunc to December 30,

2013,

the date the original Opinion and Order
was signed and entered
20